This Biotech Stock Soared 1,400%. Investors Are Optimistic About Its Rare-Disease Drug.

Spruce Biosciences stock rose more than 1,000% Monday. (Dreamstime)

Key Points

• Spruce Biosciences shares surged 1,378% to $121.58 after receiving a Breakthrough Therapy Designation from the FDA.
• The FDA designation will expedite the review process for Spruce’s tralesinidase alfa enzyme replacement therapy for Sanfilippo Syndrome.
• Spruce Biosciences plans to submit the Biologics License Application for its Sanfilippo Syndrome treatment in the first quarter of 2026.

Shares of the microcap biotech Spruce Biosciences just had their best day on record after it said the Food and Drug Administration had granted it a special designation that would allow its rare-disease drug to move through the review process quicker.

The stock rallied 1,378% Monday to close at $121.58 after several trading pauses for volatility. It gained another 51% to $197.50 in early trading Tuesday.

While that sounds dramatic, it isn’t unheard of among clinical-stage pharma companies. Drugmakers at that stage of development typically don’t generate any revenue and operate at a loss as they spend money to develop medicines, making them a risky but potentially hugely rewarding bet for investors.

Spruce is focused on therapies for neurological disorders with significant unmet medical need. It is currently developing a treatment of Sanfilippo Syndrome, or MPS IIIB. It is an ultrarare and fatal genetic disease affecting the brain and spinal cord, leading to deteriorating neurological function.

The FDA granted Spruce a so-called Breakthrough Therapy Designation, meaning that the review process for Spruce’s treatment of Sanfilippo Syndrome, called tralesinidase alfa enzyme replacement therapy, or TA-ERT, will be significantly streamlined. This designation is typically granted for drugs that could demonstrate a substantial improvement over available therapies.

“We are pleased to receive U.S. FDA Breakthrough Therapy Designation as we prepare to submit the Biologics License Application of TA-ERT for the treatment of MPS IIIB in the first quarter of 2026,” said CEO Javier Szwarcberg.

Write to Elsa Ohlen at elsa.ohlen@barrons.com