Sagimet Biosciences Inc. (SGMT) August 2026 Conference Transcript

Hi, good afternoon, everyone. My name is Edward Nash, Senior Biotech Analyst here at Canaccord Genuity. I'm joined here by the management team of Sagemet Biosciences. With us from Sagemet, we have Dave Heppelt, who's the CEO, and Andreas Grauer, Chief Medical Officer. And we actively cover Sagemet with a buy rating. Welcome to you both. Thanks for joining us. Thank you for the invitation. So maybe to kick off the conversation, maybe could you just give us a little bit of background to our audience on just Sagumet as a company and what your clinical programs are really kind of encompassing from a therapeutic standpoint? Sure.

So we're a, Sagumet is a clinical stage biopharmaceutical company, and our focus really is on understanding how fatty acid synthase or FASN, or I should say overexpression or overactivity of FASN plays such a critical role in the development of a number of underserved conditions with our lead program being in acne. And we also have, obviously, really positive data in the liver and in some tumors as well that are dependent on FASN for progression of disease. To solve for this overexpression of FASN, we have developed a portfolio of FASN inhibitors led by our lead program, Denny Fanstad, that really target an underlying cause that is common to all of these conditions. And that underlying cause is de novo lipogenesis or fat accumulation. And that manifests itself in different diseases. In acne, where we have spent and focused our attention most recently, it results in increased sebum production, inflammation, increased bacterial load for these patients, and hyperkeratinization or skin plugging. And our molecule, Denifanstad, really targets the two primary drivers of the condition in acne, and that is sebum and inflammation. And by doing so, you reduce, obviously, the bacterial load and the hyperkeratinization. And where our programs are at this stage, we're getting ready to launch into a Phase III study with denifanstad and moderate to severe acne patients, and that will take place in the next couple of months where we will dose our first patient. We expect to have last patient, last dose by roughly this time next year and top-line data shortly thereafter. We have an open IND with Denny van Stad to begin treatment in Phase 3, and the FDA has been great to work with. We have a study may proceed. So we're really excited to get that off the ground. We also have a second oral FASN inhibitor that will start phase two at the end of this year. We're wrapping up phase one as we speak. And so we'll have phase two data from our second oral FASN inhibitor next year, at the end of next year, at roughly the same time we have phase three data with Denny Phanstat. And then thirdly, we have a topical FASN inhibitor that is in formulation development, which will allow us to branch out and reach more mild acne patients in the population that we're pursuing development. And we'll begin first in human studies with topical in the beginning of 2028. So we raised a significant sum of money in April. The market has kindly received our transition and really excited to get going.

So you guys obviously had very positive value. We were usually going after MASH as an indication, and you had really strong Phase 2a and 2b data in that indication. And then acne really kind of presented itself, which was given, for those who don't know, There's just the world of new drug development. Acne has been pretty much nonexistent, I think, especially when it comes to orals that are not antibiotics.

For 45 years.

Yeah, it's a major medical need there. A huge market. So for us to better understand it, this obviously starts in part of the whole, I think, underlying interesting part about the story is that we really feel is that the defense, that an acne is de-risked for the reasons of what we see with the athleticist phase 3 trial in China. So maybe you could just walk us through the results of that phase 3 before we jump into what your design is going to look like or my next question specifically on how that design would look. Just talk about that data and what was so compelling that made you decide to choose this. Andreas, you want to tackle that?

Yeah, so the phase 3 study that our partners in China have performed And Esclatus is a study that they randomized 480 patients one-to-one. These patients had moderate to severe acne. Moderate to severe means the IGA score, the investigator global assessment, was 3 to 4, which is pretty severe. If you turn that into lesion counts, it means they had 30 to 75 inflammatory lesions and 30 to 100 non-inflammatory lesions. So very significant acne. And in order to be called successfully treated, IGA success, they had to arrive at an IGA score of 0 to 1. 0 to 1 means clear, like really clear, or almost clear skin. So really, the bar is very high for success. And so what we've seen in this trial was strongly significant data for the two primary endpoints of this trial, which were IGA success and reduction in inflammatory lesions, and also significant data for the secondary endpoints like reduction in non-inflammatory lesions. What we've seen for the IGA success is an improvement of about 20 percentage points, which is really very significant over placebo. And similarly, very strong reductions in inflammatory and non-inflammatory lesions. And the safety profile, which is obviously also very important here, was very positive. There are a number of on-target events that we would expect and that, frankly, you would also expect with many other acne treatments, in particular dry skin and, to some extent, dry eye. so we saw dry eye all mild or at best moderate in a little more than ten percent in the active group and nine percent in the placebo group so it was common in both but a little more frequent in the active group and dry skin we saw in about six percent versus two percent in the placebo group and And apart from that, we didn't see any great three adverse events. We didn't see any serious adverse events. So overall, the drug was very well tolerated.

So now the phase three that you're looking to initiate, how will that design look as compared to the one that was run in Asia?

Yeah, I mean, very similar. Why change, right? This worked great. So we're trying to take as many of the learnings into our phase three. There's one important difference, though. based on our conversations with the FDA they've actually requested we include adolescents in that trial so we will include and and they have in order to have an appropriate exposure with the drug in adolescents they would like to include at least 300 adolescents on drug which means two-to-one randomization we will include 450 12 to 17 year olds total of 800 patients that will be two to one randomized in this trial primary endpoint will be 12 weeks population will be the same moderate to severe acne as in the China trial and we will have a primary endpoint structure based on the FDA standards of three primary endpoints and it will be the success of IGA or what we're going to be using EGSS which is a very similar scoring system inflammatory lesions and non inflammatory lesions so very standard endpoint structure and if we replicate the results that our Chinese colleagues have have produced then we should be very generously powered to observe those any expectation or reasons why you would think there should be a difference in the work of a fast inhibitor between because obviously there's always variability about race yeah great question and and we actually don't think so right the pathogenesis of acne is really the same across ethnicities there is when you look at the literature there are some differences when it comes to the sequelae of acne like the scarring can be different in more darker skin but the pathogenesis is the same the treatments should work the same so we're really not expecting a significant difference nor do we expect a significant difference in you know Treating the younger population it should that treatment differences that have been observed are generally of the same order of magnitude And normally with with the clinical trials we usually see trials initially run in the adult population

Then you run separate trials of the pediatric and adolescent population So what is the drive here why the agency wants you to include which is obviously a big plus?

But why are they yeah doing this well first that there is a precedent in acne, right? We're not the first one doing this in acne. And I think the simple reason is this is where the problem is, right? It's really the adolescent. The problem extends into adulthood, but it really starts when puberty hits. And so it makes a lot of sense that you would include the patients that need it the most in your initial trial.

And I think I would just add that the FDA recognized and they cross-referenced our endophase 2 discussions with the hepatology division and became quite comfortable with how well this drug has been characterized over the course of time. So the recommendation to take it into 12-year-olds was not taken lightly, and we're obviously real excited. We were going to ask anyway, but it was nice that they offered that up to us initially, And they certainly would not have done that had they not become comfortable with our safety tolerability profile, which I think, as Andreas pointed out, is as equally important in the dermatology community as having a medication or an intervention that is successful.

So my next question is I want you to talk about the market opportunity for a drug like denifan stat in acne in light of the world of antibiotics and Accutane that's out there. So maybe to preface it, maybe you could just talk a little bit about what is the current, what's currently, I don't want to say first line, usually it's obviously the over-the-counter, but maybe you walk us through kind of the day in the life of a patient that suffers with acne that drives them to then end up having to get to the point of prescriptions.

Yeah, I think that's a great question, Ed. So right now in the United States, there are 50 million Americans that suffer from acne. 20% of those have what is characterized as moderate to severe, those that have IgA 3s and 4s. And you'll see numbers as you do your research that suggest a number between 10 and 15 million Americans. Roughly half of those right now, or a little less than half of those, are actually receiving prescription medications to treat the disease. And those prescriptions, to answer your question specifically, are largely oral antibiotics and topicals. Those are the bulk of the medications. Accutane is used in a very small subset of the severe population, those that have severe nodular inflammatory legions, and it can work pretty well. Unfortunately, it's somewhat of a high cost from a toxicity perspective. So the population that we would necessarily think that denifanstat would be used extensively in is in everything else except really patients that are receiving Accutane, and that really is the bulk of the population. Patients currently right now typically start, as you pointed out, with topicals, maybe benzoyl peroxide, are not satisfied with the results, and then they start to gravitate as the disease becomes more severe, and they then start to go into the dermatology community, and then they begin taking oral antibiotics usually, initially, and then they tack on topicals, topical antiandrogens or topical retinoids to try to control the condition. The problem is that most of these patients have torso acne. When you get to a moderate to severe stage and you have the number of lesions, you start dealing with truncal or torso acne. And then you're really limited in your options. Oral antibiotics work modestly at best, and topicals are really only applied on the neck and above. So having a systemic application that's safe and well-tolerated that can attack and target the torso is really critical, and that's why likely a medication like this can work so effectively. It should, frankly, reduce and replace oral antibiotics almost entirely and probably limit the amount of topicals that are used. As you reduce, this is really the first agent that really targets sebum. Even Accutane, which we don't really quite understand yet what the mechanism is, it is a sebaceous gland shrinker, and it really affects sebum secondarily, not directly, Whereas our molecule, because it targets de novo lipogenesis, fat accumulation, it targets sebum directly. It reduces sebum. It reduces really the fuel for what drives acne as the disease progresses. So we should expect to see it largely and liberally used in this population.

So, obviously, I think from the world of physicians and the researchers out there, the ability to remove antibiotics from being used in acne because of compliance and resistance, I'm sure, is going to be an easy choice to make there. So maybe could you talk a little bit, because this is something in biotech that we just have. You're really kind of plowing new territory here in a massive area from a biotech standpoint. With having a therapeutic to treat acne, could you talk about a bit about what kind of an infrastructure from a commercial standpoint that you would need for such a large market?

Yeah, I think we can take a lot of information from how the psoriasis and the atopic derm markets have been built. There's a significant similarity between what the acne market looks like today as opposed to what the atopic derm and psoriasis markets look like. before the large molecules, the IL-413s, the dupixins of the world, the IL-23s came in for psoriasis. Even some of the smaller molecules, the JAK inhibitors, the PDE4s, those markets were absolutely littered with low-cost alternatives, topical corticosteroids, immunosuppressants, which in many ways are kind of like isotretinoin in the acne world, work well but highly toxic. and some of the other molecules, so the oral steroids. So this market functions and looks a lot like those markets did. So building it out from a commercial perspective will look very similarly, with the exception of the fact that we're not really competing against any share of voices we enter into this. There don't appear to be any other, frankly, any other therapeutics that are in development for acne right now. So we will be largely alone, which means that we can take a bit of a hybridized approach. I've had the pleasure of launching and commercializing well over a dozen drugs in my career, and I look at this very similarly to sort of a hybrid rare disease, large commodity pharma type of play where direct-to-consumer interaction and social media interaction content creation is going to be critical to getting the word out and then using a modified physical footprint to be able to work directly with the dermatology community.

And then how does an oral for moderate to severe acne, how would that fit in with pricing, versus other drugs that you're currently using now, such as I don't like to use antibiotics because antibiotics are used not just for acne, right? They're used across multiple areas. But you probably will price much higher than you would with the topical. But how have you guys been thinking about pricing?

So we haven't guided to that yet, but we are doing work. And we were fortunate enough to do some early payer research after the phase two asclatus data. was released, and fortunately that data looked nearly identically to the phase three. And what we learned from that was that pairs are pretty flexible given the treatment response and the safety tolerability profile that was seen, meaning that the efficacy in the phase two was roughly twice as good as any of the oral antibiotics or topicals that are currently being used. And the most recent oral antibiotic that was approved was seracycline, and that's priced at roughly $1,000 to $1,200 a month. The two most recent topicals were also about $1,000 a month. So it appears as though the floor, and I mean the floor for a product like ours, would be sort of in the $1,200 to $1,500 a month range. But we'll have to determine that. And we're about to embark on further payer research, but we want to get through the release of the open label extension data that Ascleitus will disclose at the European DERM meeting next month. And that data is important because it shows that the molecule over the course of the 52 weeks not only showed an outstanding safety tolerability profile, but also continued to demonstrate improvements in treatment response. not only for IGA, but also for lesion count reduction, markedly so. And you may think that, well, if you're on a drug like this for acne over a period of time, that you should see a continued response, but that's not typically what is seen in acne. Most drugs tend to plateau after about 12 to 13 weeks of treatment. Antibiotics can actually show a rebound effect at that point, and so that's why you see them go on and off episodically. And topicals largely because most patients just have a difficult time applying it consistently over a period of time. So what you'll see in the data from a scletus is really quite important. We're seeing lesion count reductions that although we're not trying to invade the accutane space, We're starting to see lesion count reductions that tread awfully close, which has been really well received by our dermatologists, KOLs, who have actually had an opportunity to see the data. So we're really excited by that. And that will better inform what the price point will likely be for this drug.

So I don't think I've heard you mention it. Maybe you did, and I missed it, but the term disease-modifying effect, whether it comes to denifam. First of all, my question is, do you believe that the endofanistate has a disease-modifying effect with regards to acne treatment? And if so, how important does that fit in versus the safety and efficacy in a selling point to physicians, or are those really just hand-in-hand?

Realistically, the way the mechanism of this drug works is to normalize fasting levels while you're on the drug. Once you go off the drug, and we know this from our MASH studies as well, that patients' fasting levels return to baseline within about four to six weeks. So in an acne patient, we're going to see sebum levels start to begin to rise at four weeks. We're going to see the formation of pimples and acne to return within that period of time. And interestingly, we actually saw that in a microcosm in the open label extension data from a scletus we had patients that had achieved an iga score of zero one clear almost clear during the 12 weeks and then continued in that vein for a period of time and then we saw some patients pop up in their iga for about a month to iga scores of two or three and when we went back and looked it was because they quit taking it and then once they started taking it again their IGA scores return to zero or one within about four weeks, which is kind of the normal period of what we've seen with Denny and acne, which also makes it unique as a sebum blocker, is that it works very quickly. We start to see lesion count reductions within two weeks and separation from placebo within four. And when you look at antiandrogen topicals, it takes much longer than that for it to work, which is why many patients fall off.

So with the time we have left, I know that this is one of the things that you mentioned at the beginning is that you have other FASA inhibitors in the pipeline, and then you mentioned the FASA inhibitor you have for the topical indication for acne as well. So clearly you aren't, while it's nice for denifan stat to have a significant impact in maybe replacing topicals to some degree, you obviously don't expect those to go away. So, yeah, so just wanted to kind of understand how do you see that in a world where both are approved, how do you see that mix coming to play?

So I think with a topical, what it really offers is the opportunity to extend the reach into more mild patients who maybe aren't dealing with significant torso or truncal acne like moderate to severe patients do. And so a topical can be used in the 80% of the patients that aren't moderate to severe, or it may be used in combination with Denifanstad and moderate to severe as well. I think it's certainly going to afford that opportunity, and that should be where it lands. The second FASN inhibitor, oral FASN inhibitor, that we're developing is really a more potent version of Denifanstad, and what we're seeking to find out is whether that increased potency translates into increased treatment response without sacrificing any of the safety tolerability profile that we've been able to bring forward with Denny.

Well, really liked the Denefans, that story, and MASH. Really love it now in acne, given that you don't have the competition, you don't have the super long trials. The cost, exactly. Running with this, so I think this is really exciting times for the company.

It's a unique molecule, for sure, to have something that works so desperately in two different organs, right, the skin and the liver and work equally well as in both yes very cool we really appreciate you taking the time to tell us the story thank you thank you so much