DEFA14A: Spruce Biosciences Secures Conditional Nasdaq Relisting Approval, Pending Stockholder Vote on Reverse Stock Split

Spruce Biosciences, Inc. has received conditional approval from Nasdaq to resume trading on the Nasdaq Capital Market, contingent upon stockholder approval of a reverse stock split to meet minimum bid price requirements by August 5, 2025.

Summary

• Spruce Biosciences, Inc. (OTC: SPRB), a late-stage biopharmaceutical company, announced it has received conditional approval from The Nasdaq Stock Market LLC to resume trading of its common stock on the Nasdaq Capital Market.
• Relisting is contingent upon Spruce regaining compliance with Nasdaq's minimum bid price requirement on or before August 5, 2025.
• To meet this requirement, the company is seeking stockholder approval for a reverse stock split of its common stock (Proposal No. 3) at its upcoming 2025 Annual Meeting of Stockholders.
• The Board of Directors strongly encourages all stockholders to vote in favor of the reverse stock split proposal, citing benefits such as ensuring continued Nasdaq listing, generating investor interest, enabling future financing, and aiding employee attraction and retention.
• The 2025 Annual Meeting of Stockholders will be held virtually on July 22, 2025, at 11:00 a.m. Pacific Time.
• Stockholders of record on May 30, 2025, are urged to vote by 11:59 p.m. Eastern Time on July 21, 2025.

Sentiment

Score: 7

Explanation: The announcement is generally positive as it provides a clear path for Spruce Biosciences to regain its Nasdaq listing, which is crucial for investor confidence and future financing. However, the underlying reason for the need for a reverse stock split (low stock price) and the contingency on stockholder approval introduce some uncertainty and reflect past challenges.

Positives

• Received conditional approval from Nasdaq to resume trading, providing a clear path to relisting on a major exchange.
• Relisting on Nasdaq Capital Market could generate increased investor interest and potentially facilitate future financing activities.
• A higher stock price, post-split, may help the company attract and retain employees.
• Removes barriers for institutional investors and brokerage firms that have policies against holding or recommending lower-priced stocks.

Negatives

• The necessity of a reverse stock split indicates the company's stock price has fallen below Nasdaq's minimum bid requirement, often a sign of poor market performance or sentiment.
• The relisting is not guaranteed and is contingent upon stockholder approval of the reverse stock split.
• A reverse stock split does not fundamentally alter the company's underlying business operations or valuation.

Risks

• Failure to obtain stockholder approval for the reverse stock split (Proposal No. 3) would prevent the company from meeting Nasdaq's minimum bid price requirement.
• If compliance with Nasdaq's minimum bid price requirement is not regained on or before August 5, 2025, the company may not be able to resume trading on the Nasdaq Capital Market.
• Actual results may differ materially from forward-looking statements due to various risks and uncertainties, including those associated with Spruce's business, geopolitical and macroeconomic events, and other risks detailed in SEC filings.
• A reverse stock split does not guarantee a sustained increase in stock price or improved investor interest.

Future Outlook

The company anticipates its common stock will resume trading on the Nasdaq Capital Market on or before August 5, 2025, provided it meets the minimum bid price requirement. Management believes that approving and implementing a reverse stock split will lead to a higher stock price, which may generate investor interest, enable potential future financing activity, and help the company attract and retain employees.

Management Comments

• "We are pleased by Nasdaq's decision to lift its trading suspension and resume trading of our common stock on or before August 5, 2025, subject to our compliance with the minimum bid price requirement." Samir Gharib, President and Chief Financial Officer of Spruce.
• "We are diligently working to regain compliance with the minimum bid price requirement by seeking stockholder approval to effect a reverse stock split of our common stock at our upcoming 2025 Annual Meeting of Stockholders." Samir Gharib, President and Chief Financial Officer of Spruce.
• "We strongly encourage all stockholders entitled to vote at the 2025 Annual Meeting of Stockholders to vote in favor of the reverse stock split proposal (Proposal No. 3)." Samir Gharib, President and Chief Financial Officer of Spruce.

Industry Context

As a late-stage biopharmaceutical company, Spruce Biosciences' ability to maintain its Nasdaq listing is critical for attracting capital and maintaining investor confidence, which is a common challenge for smaller biotech firms navigating clinical development and commercialization without significant revenue streams. The need for a reverse stock split highlights the capital market pressures faced by companies in this sector, where stock performance is often tied to clinical trial progress and regulatory milestones, and maintaining exchange compliance is paramount for liquidity and visibility.

Corporate Governance

Stakeholder Impact

• **Shareholders:** Required to vote on a reverse stock split, which will reduce the number of shares they hold but aims to preserve the value and liquidity of their investment by maintaining Nasdaq listing. Potential for increased investor interest and improved trading conditions.
• **Employees:** A higher stock price may help the company attract and retain employees, particularly through equity compensation.
• **Institutional Investors:** A higher stock price removes policies prohibiting holding lower-priced stocks, potentially increasing the pool of purchasers and making the stock more accessible.
• **Brokerage Firms:** May be more willing to recommend higher-priced securities to clients, and investors may face lower brokerage commissions as a percentage of the total transaction value.
• **Investment Funds:** Analysts may begin monitoring and providing coverage, making the stock more attractive to a broader range of investment funds.

Next Steps

• Stockholders are encouraged to vote on Proposal No. 3 (reverse stock split) by July 21, 2025.
• The 2025 Annual Meeting of Stockholders will be held virtually on July 22, 2025.
• Spruce must regain compliance with Nasdaq's minimum bid price requirement on or before August 5, 2025.
• Trading on the Nasdaq Capital Market is anticipated to commence on or before August 5, 2025, subject to compliance.

Key Dates

Recommendation

Keywords

Spruce Biosciences, Nasdaq relisting, reverse stock split, biopharmaceutical, neurological disorders, SEC filing, proxy statement, stockholder meeting, corporate governance, minimum bid price