Sagimet Biosciences Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and related notes included elsewhere in this Report on Form 10-Q for the quarter ended September 30, 2024 (Quarterly Report). This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Quarterly Report. You should carefully read the “Risk Factors” section of this Quarterly Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together**with our unaudited condensed financial statements and related notes included elsewhere in this report on Form 10-Q for the quarter ended March 31, 2025 (Quarterly Report). This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Quarterly Report. You should carefully read the “Risk Factors” section of this Quarterly Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

Previous wording

We are a clinical-stage biopharmaceutical company developing novel therapeutics called fatty acid synthase (FASN) inhibitors that target dysfunctional metabolic and fibrotic 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 Phase 2 FASCINATE-1 and Phase 2b FASINATE-2 clinical trials.

Current wording

We are a clinical-stage biopharmaceutical company developing novel therapeutics called fatty acid synthase (FASN) inhibitors that target dysfunctional metabolic and fibrotic 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), acne, and select forms of cancer.

Previous wording

In January 2024, we announced positive topline results from the Phase 2b FASCINATE-2 clinical trial evaluating denifanstat in 168 biopsy-confirmed MASH patients with stage F2 or F3 fibrosis compared to placebo at week 52. The Phase 2b FASCINATE-2 clinical trial achieved statistically significant results on primary and multiple secondary endpoints at week 52 in MASH patients in the modified intention to treat (mITT) population, including:

Current wording

Denifanstat has been studied in over 740 people to date in our clinical trials, including our Phase 2 FASCINATE-1 and Phase 2b FASCINATE-2 clinical trials. In January 2024, we announced positive topline results from the Phase 2b FASCINATE-2 clinical trial evaluating denifanstat in 168 biopsy-confirmed MASH patients with stage F2 or F3 fibrosis compared to placebo at week 52. The Phase 2b FASCINATE-2 clinical trial achieved statistically significant results on primary and multiple secondary endpoints at week 52 in MASH patients in the modified intention to treat (mITT) population, including:

Previous wording

In June 2024, we presented positive data from the Phase 2b FASCINATE-2 clinical trial of denifanstat versus placebo in biopsy-confirmed MASH patients at the European Association for the Study of the Liver (EASL) Congress. Our EASL presentation included the following 52-week data from the intention to treat (ITT), mITT, and F3 mITT patient populations:

Current wording

In June 2024, we presented positive data from the Phase 2b FASCINATE-2 clinical trial of denifanstat versus placebo in biopsy-confirmed MASH patients at the European Association for the Study of the Liver (EASL) Congress. Our EASL presentation included the following 52-week data from the ITT, mITT, and F3 mITT patient populations:

Previous wording

In October 2024, we completed successful end-of-Phase 2 interactions with the FDA, supporting the advancement of denifanstat into Phase 3 in MASH. Based on our ongoing discussions with the FDA, the phase 3 program will consist of two double-blind, placebo-controlled multicenter registrational trials:

Current wording

In October 2024, we completed successful end-of-Phase 2 interactions with the FDA, supporting the advancement of denifanstat into Phase 3 clinical trials in MASH. The Phase 3 program design includes two double-blind, placebo-controlled multicenter registrational trials: FASCINATE-3, evaluating patients with F2/F3 (non-cirrhotic) MASH, and FASCINIT, evaluating patients with suspected or confirmed diagnosis of metabolic dysfunction-associated steatotic liver disease (MASLD)/MASH. While we are operationally ready to dose patients in the Phase 3 trials, we do not intend to initiate these trials until such time as we have sufficient funding to do so. We are currently exploring various alternatives to fund the ongoing development of denifanstat as a monotherapy.

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 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. In November 2024, Ascletis announced completion of enrollment of 480 patients in the acne Phase 3 clinical trial and that it expects to announce topline results in the second quarter of 2025. We expect these results to inform our development strategy in these indications. We have completed Investigational New Drug (IND)-enabling studies for a second FASN inhibitor, TVB-3567.

Current wording

In addition to MASH, we are exploring our FASN inhibitors inacne, in which dysregulation of fatty acid metabolism also plays a key role. Denifanstat is currently being tested in China in moderate to severe acne vulgaris by our license partner, Ascletis BioScience Co. Ltd. (Ascletis), a subsidiary of Ascletis Pharma Inc. (Ascletis Pharma), in a Phase 3 clinical trial. In November 2024, Ascletis announced completion of enrollment of 480 patients in the acne Phase 3 clinical trial and that it expects to announce topline results in the second quarter of 2025.

Previous wording

Research and development expenses represent costs incurred in performing research, development and manufacturing activities in support of our own product development efforts and include personnel-related costs (such as salaries, employee benefits and stock-based compensation) for our personnel in research and development functions; costs related to acquiring, developing and manufacturing supplies for preclinical studies, clinical trials and other studies, including fees paid to contract manufacturing organizations (CMOs); costs and expenses related to agreements with contract research organizations (CROs), investigative sites and consultants to conduct non-clinical and preclinical studies and clinical trials; professional and consulting services costs; and facility and other allocated costs.

Current wording

Research and development expenses represent costs incurred in performing research, development and manufacturing activities in support of our own product development efforts and include internal personnel-related costs (such as salaries, employee benefits and stock-based compensation) for our personnel in research and development functions; as well as external costs, including costs related to acquiring, developing and manufacturing supplies for preclinical studies, clinical trials and other studies, including fees paid to contract manufacturing organizations (CMOs); costs and expenses related to agreements with contract research organizations (CROs), investigative sites and consultants to conduct non-clinical and preclinical studies and clinical trials; professional and consulting services costs; and facility and other allocated costs.

Previous wording

Research and development – Research and development expense increased by $7.7 million, or 155%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This increase was primarily due to (i) a $5.5 million net increase in clinical trial expenses related primarily to start-up costs incurred for our Phase 3 program of denifanstat in MASH, which was partially offset by lower clinical trial expenses for the Phase 2b FASCINATE-2 trial as the trial was substantially complete in the first quarter of 2024 and topline results for the trial were announced in January 2024, (ii) a $1.3 million increase in manufacturing costs for clinical batches of denifanstat in preparation for the Phase 3 clinical development program, and (iii) a $0.9 million increase in other non-clinical study costs for denifanstat.

Current wording

Research and development expenses increased by $10.1 million, or 192%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. This increase was primarily due to (i) a $9.6 million net increase in clinical trial expenses related primarily to start-up costs incurred for our Phase 3 program of denifanstat in MASH, which was partially offset by lower clinical trial expenses for the Phase 2b FASCINATE-2 trial as the trial was substantially complete in the first quarter of 2024 and topline results for the trial were announced in January 2024, and (ii) a $0.3 million increase in personnel costs due to an increase in headcount. External research and development expenses for denifanstat represent substantially all of the external expenses for the three months ended March 31, 2025 and 2024.

Previous wording

*General and administrative –*General and administrative expenses decreased by $0.2 million, or 5%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023 primarily due to (i) a $0.3 million decrease in stock-based compensation expense and (ii) a $0.2 million decrease in tax expense recognized in conjunction with the development milestone received from Ascletis under the Ascletis license agreement in July 2023. This decrease in general and administrative expenses was partially offset by a $0.3 million increase in professional fees largely due to public company compliance activities.

Current wording

*General and administrative –*General and administrative expenses increased by $1.0 million, or 29%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024 primarily due to (i) a $0.3 million increase in professional fees, largely due to public company compliance activities, and (ii) a $0.7 million increase in stock-based compensation.

Previous wording

To date, we have financed our operations primarily through public and private equity and debt financings, including our IPO of Series A common stock in July 2023 and our follow-on offering in January 2024, from which we received aggregate net proceeds of $190.9 million. Prior to these public offerings, we raised $233.3 million in gross proceeds from the sale of our redeemable convertible preferred stock and convertible notes.

Current wording

To date, we have financed our operations primarily through public and private equity and debt financings, including our IPO of Series A common stock in July 2023 and our follow-on offering in January 2024, from which we received aggregate net proceeds of $190.9 million. Prior to becoming a public company, we raised $233.3 million in gross proceeds from the sale of our redeemable convertible preferred stock and convertible notes.

Previous wording

In August 2024, we entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. to establish an at-the-market offering (ATM Offering) through which we may sell, from time to time at our sole discretion up to $75.0 million of shares of our Series A common stock. There were no sales under the ATM Offering during the three and nine months ended September 30, 2024.

Current wording

In August 2024, we entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. (Cantor) to establish an at-the-market offering (ATM Offering) through which we may offer and sell, from time to time at our sole discretion, up to $75.0 million of shares of our Series A common stock through Cantor acting as our sales agent. There were no sales under the ATM Offering during the three months ended March 31, 2025.

Previous wording

As of September 30, 2024, we had cash, cash equivalents and marketable securities of $170.0 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 anticipate that we will continue to incur significant expenses for the foreseeable future as we continue to advance our drug candidates through preclinical and clinical trials; manufacture supplies for our preclinical studies and clinical trials; expand our corporate infrastructure, including the costs associated with being a public company; pursue regulatory approval of our drug candidates; hire additional personnel; acquire, discover, validate and develop additional drug candidates; and obtain maintain, expand and protect our intellectual property portfolio.

Current wording

As of March 31, 2025, we had cash, cash equivalents and marketable securities of $144.6 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 anticipate that we will continue to incur significant expenses for the foreseeable future as we continue to advance our drug candidates through preclinical and clinical trials; manufacture supplies for our preclinical studies and clinical trials; expand our corporate infrastructure, including the costs associated with being a public company; pursue regulatory approval of our drug candidates; hire additional personnel; acquire, discover, validate and develop additional drug candidates; and obtain maintain, expand and protect our intellectual property portfolio.

Previous wording

*Cash flows from operating activities.*Net cash used in operating activities was $31.4 million for the nine months ended September 30, 2024, and primarily related to cash used to fund clinical development, manufacturing and other non-clinical activities for denifanstat, inclusive of clinical-batch manufacturing and other trial start-up costs for our Phase 3 program of denifanstat in MASH, as well as costs to build out our corporate infrastructure and costs associated with being a public company.

Current wording

*Cash flows from operating activities.*Net cash used in operating activities was $14.5 million for the three months ended March 31, 2025, and primarily related to cash used to fund clinical development, manufacturing and other non-clinical activities for denifanstat, inclusive of clinical-batch manufacturing and other trial start-up costs for our Phase 3 program of denifanstat in MASH, as well as costs to build out our corporate infrastructure and costs associated with operating as a public company.

Previous wording

*Cash flows from investing activities -*Net cash used in investing activities was $71.5 million for the nine months ended September 30, 2024 and related to purchases of marketable securities of $94.3 million, partially offset by proceeds received from the sale and maturity of marketable securities of $22.8 million.

Current wording

*Cash flows from investing activities -*Net cash used in investing activities was $3.4 million for the three months ended March 31, 2025 and related to proceeds received from the sale and maturity of marketable securities of $19.0 million, partially offset by purchases of marketable securities of $15.6 million.

Previous wording

Net cash provided by investing activities was $32.2 million for the nine months ended September 30, 2023, which related solely to proceeds received from sales of marketable securities.

Current wording

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

Previous wording

*Cash flows from financing activities -*Net cash provided by financing activities was $104.8 million for the nine months ended September 30, 2024, which primarily related to net cash proceeds of $105.7 million received from the sale of Series A common stock in our January 2024 follow-on offering and $0.1 million in proceeds from stock option exercises during the period, offset by the payment of financing costs related to the January 2024 follow-on offering of $1.0 million.

Current 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 cash proceeds of $105.7 million received from the sale of our Series A common stock in the January 2024 follow-on offering and $0.1 million in proceeds from stock options exercised during the period, partially offset by the payment of financing costs related to the January 2024 follow-on offering of $1.0 million.

Previous wording

During the nine months ended September 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.

Current wording

During the three months ended March 31, 2025, 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, 2024.

Previous wording

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the JOBS Act). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less extensive disclosure about our executive compensation arrangements. We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Current wording

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the JOBS Act). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less

Previous wording

See Note 2. Significant Accounting Policies, included in our unaudited interim financial statements in Item 1 of this Quarterly Report for more information.

Current wording

See “Notes to the Financial Statements—Note 2” included in our unaudited interim financial statements in Item 1 of this Quarterly Report for more information.