Sagimet Biosciences Inc

Previous wording

We are a clinical-stage biopharmaceutical company developing novel therapeutics called fatty acid synthase (FASN) inhibitors that target dysfunctional metabolic pathways in diseases resulting from the overproduction of the fatty acid, palmitate. Our lead drug candidate, denifanstat, is an oral, once-daily pill and selective FASN inhibitor in development for the treatment of metabolic dysfunction-associated steatohepatitis (MASH), formerly known as nonalcoholic steatohepatitis (NASH). Denifanstat has been studied in over 740 people to date in our clinical trials, including our FASCINATE-1 and -2 clinical trials, and we are currently designing a pivotal Phase 3 program for denifanstat in MASH, which we plan to initiate in the second half of 2024 following our expected End-of-Phase 2 meeting with the FDA in the second quarter of 2024. In January 2024, we announced positive topline results from the Phase 2b FASCINATE-2 clinical trial, evaluating denifanstat in biopsy-confirmed MASH patients with stage F2 or F3 fibrosis compared to placebo at week 52. The FASCINATE-2 Phase 2b clinical trial achieved statistically significant results on primary and multiple secondary endpoints at week 52 in 168 MASH patients, including statistically significant improvements in MASH resolution without worsening of fibrosis with ≥2-point reduction in NAFLD Activity Score (NAS) (denifanstat 36% vs. placebo 13%, p=0.0022), and ≥2-point reduction in NAS without worsening of fibrosis (denifanstat 52% vs. placebo 20%, p=0.0001). Denifanstat-treated patients also showed statistically significant fibrosis improvement by ≥ 1 stage with no worsening of MASH (denifanstat 41% vs. placebo 18%, p=0.0051), and also showed statistical significance in fibrosis improvement by an independent approach of artificial intelligence (AI) digital pathology-based qFibrosis assessment. Analyses of liver fat showed a greater proportion of MRI-derived proton density fat fraction (MRI-PDFF) ≥30% responders relative to placebo (denifanstat 65% vs. placebo 21%, p<0.0001). MRI-PDFF responders are patients with ≥8% liver fat content at baseline who achieve a ≥30% relative reduction of liver fat at the end of treatment. Additionally, our precision medicine approach is core to our development strategy in MASH and includes the identification of pharmacodynamic and predictive biomarkers to confirm target engagement and clinical response in patients treated with denifanstat.

Current wording

We are a clinical-stage biopharmaceutical company developing novel therapeutics called fatty acid synthase (FASN) inhibitors that target dysfunctional metabolic pathways in diseases resulting from the overproduction of the fatty acid, palmitate. Our lead drug candidate, denifanstat, is an oral, once-daily pill and selective FASN inhibitor in development for the treatment of metabolic dysfunction-associated steatohepatitis (MASH), formerly known as nonalcoholic steatohepatitis (NASH). Denifanstat has been studied in over 740 people to date in our clinical trials, including our FASCINATE-1 and -2 clinical trials. We are currently designing pivotal Phase 3 clinical trials for denifanstat in MASH and expect to initiate our Phase 3 development program in the second half of 2024.

Previous wording

We are also evaluating the promise of FASN inhibition, beyond MASH, in additional disease areas in which dysregulation of fatty acid metabolism also plays a key role, including in acne and certain forms of cancer. Denifanstat is currently being tested in China by the Company’s license partner, Ascletis, a subsidiary of Ascletis Pharma in a Phase 3 clinical trial for moderate to severe acne vulgaris, and a Phase 3 trial in recurrent glioblastoma multiforme (GBM) in combination with bevacizumab. These results will inform our development strategy in these indications. We have completed IND-enabling studies for a second clinical candidate FASN inhibitor, TVB-3567.

Current wording

We are also evaluating the promise of FASN inhibition, beyond MASH, in additional disease areas in which dysregulation of fatty acid metabolism also plays a key role, including in acne and certain forms of cancer. Denifanstat is currently being tested in China by our license partner, Ascletis BioScience Co. Ltd. (Ascletis), a subsidiary of Ascletis Pharma Inc. (Ascletis Pharma), in a Phase 3 clinical trial for moderate to severe acne vulgaris, and a Phase 3 clinical trial in recurrent glioblastoma multiforme (GBM) in combination with bevacizumab. We expect these results to inform our development strategy in these indications. We have completed Investigational New Drug (IND)-enabling studies for a second clinical candidate FASN inhibitor, TVB-3567.

Previous wording

As of March 31, 2024, we had cash, cash equivalents and marketable securities of $193.7 million. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our drug candidates, which we expect will take a number of years, if ever. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Current wording

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $188.5 million. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our drug candidates, which we expect will take a number of years, if ever. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Previous wording

We have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. Our revenues to date have been generated solely from the license agreement with Ascletis. We expect that our revenue for the next several years will be derived primarily from this agreement and any additional collaboration that we may enter into the future. We did not recognize any revenues from our Agreement with Ascletis during each of the three months ended March 31, 2024 and 2023.

Current wording

We have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. Our revenues to date have been generated solely from the license agreement with Ascletis. We expect that our revenue for the next several years will be derived primarily from this agreement and any additional collaboration that we may enter into the future. We did not recognize any revenues from the license agreement with Ascletis during each of the three and six months ended June 30, 2024 and 2023.

Previous wording

approval is costly and time-consuming. The actual probability of success for our drug candidates may be affected by a variety of factors, including the safety and efficacy of our drug candidates, early clinical data, investment in our clinical programs, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our drug candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our drug candidates.

Current wording

We expect our research and development expenses to increase substantially in absolute dollars for the foreseeable future as we advance our drug candidates into and through preclinical studies and clinical trials, pursue regulatory approval of our drug candidates and expand our pipeline of drug candidates. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our drug candidates may be affected by a variety of factors, including the safety and efficacy of our drug candidates, early clinical data, investment in our clinical programs, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our drug candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our drug candidates.

Previous wording

*Other income (expense), net.*Our other income (expense), net primarily includes interest income earned and changes in the fair value of our Series A common stock and redeemable convertible preferred stock related instruments. In connection with our IPO, all outstanding redeemable convertible preferred stock and related instruments were converted into Series A and Series B common stock and, with the exception of certain Series A common stock warrants, are no longer subject to remeasurement. Interest income consists of interest earned on our cash, cash equivalents and marketable securities.

Current wording

*Interest income and other.*Interest income and other primarily includes interest income earned and changes in the fair value of our Series A common stock and redeemable convertible preferred stock related instruments. In connection with our IPO, all outstanding redeemable convertible preferred stock and related instruments were converted into Series A and Series B common stock and, with the

Previous wording

Research and development. Our research and development expense increased by $0.8 million, or 17%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. This increase was primarily due to the net effect of (i) a $1.6 million increase in clinical manufacturing costs related to the conduct of clinical pharmacology trials of denifanstat, (ii) a $1.6 million decrease in clinical trial costs due to the completion of patient dosing in our FASCINATE-2 Phase 2b trial in 2023 and (iii) a $0.6 million increase in costs related to other research and pre-clinical activities.

Current wording

Research and development. Our research and development expense increased by $1.6 million, or 35%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This increase was primarily due to the net effect of (i) a $1.6 million increase in clinical manufacturing costs in preparation for the Phase 3 clinical development program for denifanstat in MASH, (ii) a $0.6 million decrease in consulting services and (iii) a $0.4 million increase in other research and development expenses, largely related to non-clinical activities.

Previous wording

*General and administrative.*Our general and administrative expenses increased by $1.2 million, or 54%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023 primarily due to (i) a $0.5 million increase in personnel related expenses, primarily related to a $0.3 million increase in salaries related to newly hired executives, (ii) a $0.4 million increase in insurance

Current wording

*General and administrative.*Our general and administrative expenses increased by $1.9 million, or 80%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023 primarily due to (i) a $1.2 million increase in professional fees largely due to public company compliance, (ii) a $0.3 million increase in stock-based compensation expense, due primarily to grants made to executives and members of our board of directors during the second quarter of 2024, and (iii) a $0.2 million increase in insurance expenses due to our Company becoming a public entity during 2023.

Previous wording

*Other income, net.*Our other income, net increased by $2.0 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to an increase of interest income earned on the cash proceeds received from the IPO and the January 2024 follow-on offering.

Current wording

*Interest income and other.*Interest income and other increased by $2.2 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to an increase of interest income earned on the cash proceeds received from the IPO and the January 2024 follow-on offering.

Previous wording

As of March 31, 2024, we have relied on private equity and debt financings and our public offerings to fund our operations. We have incurred net losses and negative cash flows from operations since inception, including net losses of $6.6 million and $6.6 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $193.7 million. We will require substantial additional capital to fund our research and development and ongoing operating expenses in the short and long term.

Current wording

As of June 30, 2024, we have relied on private equity and debt financings and our public offerings to fund our operations. We have incurred net losses and negative cash flows from operations since inception, including net losses of $14.7 million and $13.4 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $188.5 million. We will require substantial additional capital to fund our research and development and ongoing operating expenses in the short and long term.

Previous wording

Until we can generate a sufficient amount of revenue from the commercialization of our drug candidates or additional revenue from collaboration agreements with third parties, if ever, we expect to finance our future cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. The sale of equity or convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. Debt financings may subject us to covenant limitations or restrictions on our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Our ability to raise additional funds may be adversely impacted by macroeconomic conditions, disruptions to and volatility in the credit and financial markets and geopolitical turmoil. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable or acceptable to us. If we are unable to obtain adequate financing when needed or on terms favorable or acceptable to us, we may be forced to delay, reduce the scope of or eliminate one or more of our research and development programs.

Current wording

Until we can generate a sufficient amount of revenue from the commercialization of our drug candidates or additional revenue from collaboration agreements with third parties, if ever, we expect to finance our future cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. The sale of equity or convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. Debt financings may subject us to covenant limitations or restrictions on our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Our ability to raise additional funds may be adversely impacted by macroeconomic conditions, disruptions to and volatility in the credit and financial markets and geopolitical turmoil. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable or acceptable to us. If we are unable to obtain adequate financing when

Previous wording

*Cash flows from operating activities.*Net cash used in operating activities was $6.2 million for the three months ended March 31, 2024, consisting of a net loss of $6.6 million and net changes in our operating assets and liabilities of $0.2 million, partially offset by non-cash adjustments of $0.6 million. The non-cash adjustments primarily consisted of stock-based compensation expense of $0.8 million, partly offset by $0.2 million of non-cash accretion of the discount on our marketable securities. Changes in operating assets and liabilities primarily consisted of decreases in accounts payable and accrued expenses of $0.8 million and prepaid expenses and other current assets of $0.6 million.

Current wording

*Cash flows from operating activities.*Net cash used in operating activities was $11.8 million for the six months ended June 30, 2024, consisting of a net loss of $14.7 million and net changes in our operating assets and liabilities of $1.3 million, partially offset by non-cash adjustments of $1.6 million. Changes in operating assets and liabilities primarily consisted of a decrease in prepaid expenses and other current assets of $1.0 million and an increase in accounts payable and accrued expenses of $0.3 million. The non-cash adjustments primarily consisted of stock-based compensation expense of $2.2 million, partly offset by $0.7 million of non-cash accretion of the discount on our marketable securities.

Previous wording

*Cash flows from investing activities.*Net cash provided by investing activities was $3.0 million and$19.4 million for the three months ended March 31, 2024 and for the three months ended March 31, 2023, respectively, and related to proceeds received from the sale of marketable securities.

Current wording

*Cash flows from investing activities.*Net cash used in investing activities was $72.2 million for the six months ended June 30, 2024 and related to purchases of marketable securities of $83.0 million, partially offset by proceeds from the sales of marketable securities of $10.8 million.

Previous wording

*Cash flows from financing activities.*Net cash provided by financing activities was $104.8 million for the three months ended March 31, 2024, which primarily related to the net impact of (i) gross cash proceeds of $112.5 million received from the sale of Series A common stock in our January 2024 follow-on offering and (ii) cash payments of $7.8 million related to issuance costs from the sale of Series A common stock.

Current wording

*Cash flows from financing activities.*Net cash provided by financing activities was $104.8 million for the six months ended June 30, 2024, which primarily related to the net impact of (i) gross cash proceeds of $112.5 million received from the sale of Series A common stock in our January 2024 follow-on offering and (ii) cash payments of $7.8 million related to issuance costs from the sale of Series A common stock.

Previous wording

Net cash used in financing activities was $0.1 million for the three months ended March 31, 2023, and was attributable to the payment of deferred financing costs related to our IPO.

Current wording

Our net cash used in financing activities was $1.0 million for the six months ended June 30, 2023, which related entirely to the payment of deferred financing costs.

Previous wording

During the three months ended March 31, 2024, there were no material changes to our critical accounting estimates or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

During the six months ended June 30, 2024, there were no material changes to our critical accounting estimates or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) December 31, 2028, (iii) the date on which we are deemed to be a large accelerated filer, under the rules of the SEC, which means the market value of equity securities that is held by non-affiliates exceeds $700.0 million

Current wording

We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) December 31, 2028, (iii) the date on which we are deemed to be a large accelerated filer, under the rules of the SEC, which means the market value of equity securities that is held by non-affiliates exceeds $700.0 million as of the prior June 30th and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.