Okay, let's get started. Welcome, everybody. With me is the management team of Sagimet Biosciences. Gentlemen, welcome. We have Dave Happel, did I pronounce that correctly? Dave Happel, CEO; Eduardo Martins, CMO; and Rob D'Urso, Senior VP of New Products. Gentlemen, welcome. Thanks so much for being here with us and making the trip down to Miami to speak with us. But before we kick off and delve into Q&A, maybe just give us a state of an overview of the business and where things are headed in the next 12 months or so.
Yeah, thanks, Mike, and thank you for the invitation. We greatly appreciate the opportunity. So we're obviously very excited about our molecule. It's a highly differentiated one in, frankly, in both MASH and in acne, which we're moving forward with rather quickly. But the company really started several years ago with a focus in virology and oncology. And after showing some great preliminary data in hepatitis, it also turned out that Gilead had a nice little molecule, Sovaldi, that was working well. So we shifted gears and started focusing on other potential areas where fatty acid synthesis enzyme that plays such a key role in a number of diseases functions. And our molecule is a very potent FASN inhibitor. And so we isolated the liver, the skin, and certain tumors that are dependent on FASN for progression of disease.
We flashed forward after a period of time in a number of preclinical and clinical studies in MASH. We've demonstrated that Denifenstat, our lead molecule, really targets the three drivers of the disease: fat, inflammation, and fibrosis. We don't simply rely on burning fat to translate into downstream benefits and inflammation and fibrosis. And we're the only molecule that does that. All of the other molecules in the space are either fat oxidizers or fat mobilizers, but they really rely on burning fat. And that includes FGF, GLPs, and THR molecules. So as we move forward through clinical development, this has translated exceptionally well into improvements in inflammation and fibrosis, and particularly as the disease advances into later stages of MASH.
In our Phase IIB study, we demonstrated that, particularly in F3 patients, that our data was really terrific as the liver becomes less fatty and the antifibrotic mechanism becomes more important, and most recently, we presented data at the European Liver Meeting this summer and then at AASLD in Washington, DC, a couple of weeks ago, where we showed patients that were digitally diagnosed as having advanced disease. Those with cirrhosis also benefited tremendously.
Those qF4 patients, right? The qF4.
That's correct. Yeah. We had 13 patients that were digitally diagnosed as having F4 stage disease, and 11 of the 13 had a one or two stage improvement of fibrosis. So we know the molecule works exceptionally well as the disease advances. And now, as we move forward, our focus is really on the combination program that we've started with resmiteram. We ran a preclinical study that we presented at EASL a couple of years ago that showed that when you combine the two molecules, there's an exaggerated response in improving inflammation and fibrosis more than either molecule alone. And that really was a program that we wanted to get started at that time, and now we have the opportunity to do that. So we'll be taking that combination molecule into cirrhosis, into cirrhotic patients.
We're wrapping up a phase I study now, a DDI PK study in combination with resmetirom, and we will be advancing into phase II next year.
Excellent.
That's on the MASH side. On the acne side, our partner in China, Ascletis, has conducted a couple of acne studies in moderate to severe acne patients. And the data are remarkably consistent, where we've shown roughly 20% placebo-adjusted improvements in lesion reduction and also in IGA score, which is critical for getting approved. So they're in the process of submitting to the Chinese regulatory authorities, the NMPA, and we expect to see an approval probably in that patient population in the first half of next year. For us, we're taking our next-gen molecule forward in that population. We're in the middle of a phase I study now. We expect to wrap that up next year and move into phase II by the end of next year. So we're really excited about being able to move both the MASH program forward and the acne program forward simultaneously.
Excellent. Well, a lot to unpack there, Dave. So let's just focus on MASH at first. Clearly, the mechanism of action of Denifenstat is the secret sauce. And really, in your phase II trial, you had something like a 30% placebo-adjusted effect in two-point fibrosis, a two-point fibrosis improvement, which is very robust.
That's correct. Unparalleled.
So I guess my question is, when you're at these medical meetings, when you're talking to hepatologists and KOLs, do they appreciate this mechanism of action? How excited are they for the mechanism?
Yeah, I mean, I'll defer to our resident hepatologist here, but I would say they're incredibly excited. I think they're really excited about the combination program and how we're moving into the F4 patients with this mechanism. It is rather unique. It is the only FASN inhibitor in development, and there are real benefits to that. But I'll defer to you.
No, I think just adding to this, what attracts their attention the most and what we talk about the most is the fibrosis effect. Because, as we know, fibrosis drives prognosis in any chronic liver disease, MASH included. And that's the ultimate goal. How do we allow fibrosis to be reabsorbed and the disease to regress? And this is where, as Dave said, the molecule excels.
Got it. So is it fair to say that, just looking at your F3 and qF4 data, that as the disease becomes more advanced, just based on the mechanism of Deni, the efficacy strengthens or gets better as the disease advances?
That's a very good question. Of course, Deni, as we mentioned, has probably the most potent mechanism out there for fibrosis regression. Now, it is effective across the board. What happens is, when you come from an F3 or, say, an F4 like we have, when a human looks at the biopsy, because of the way the classification is, which is based on architecture, it's easier to show a three going to a two or a three going to a one. It's more obvious to the eye as it is a two going down. And of course, our Phase 2b study, we had more F3s than F2s. So you do get also that imbalance, if you will, towards a more difficult-to-treat population. And that's probably a reflection. Actually, let me remove the word probably.
It is a reflection of the MOA tackling all three key drivers, all three key cell types directly, so the hepatocyte does defatting the Kupffer cells, in other words, activating inflammation or blocking that, and a direct effect on stellate cells to block the fibrosis production. In addition, I mentioned defatting. Deni is a very potent defatting agent, so the drug also induces benefits from the downstream effect of defatting, and I think that's, again, the big differentiator. It's not only defatting. It's defatting plus, plus.
Got it. Got it. Very helpful. So as we think about just the F2 and F3 population, your current status now is Sagimet's, you're phase III ready, at least in that patient population. But you've also said that you wouldn't initiate that study until it's fully funded.
That's correct.
So in terms of just that F2, F3 indication, where do things stand currently? And I know you're kind of emphasizing the F4 with the combination, but in terms of F2 and F3, what's the story for that population right now?
I think you captured it perfectly. It's certainly phase III ready. We went through the end of phase II discussions with the FDA last year in the last fall, almost a year ago. We did receive breakthrough designation for the molecule in the population. So there's little question that there's value there. The reality is that we have always communicated that we would not move that program forward until we could fully fund it. As it currently states right now, we need about $400 million to complete the phase III study. We have, as our last earnings report noted, $125 million in cash. You can do the math on the differential needed. It is ready to move forward. If we receive the adequate funding and we can do that, we certainly would consider it. Our focus right now is really in moving the F4 population forward.
We think there's real value there. We think there's going to be great synergy, as we've demonstrated with Resmiteram, a fat burner, fat oxidizer in the past. And the combination of the two programs should be a very effective medication in that population. Also, I think as we move that program forward, should that take precedence over the F2, F3, it doesn't mean that that combination would not also be used in F2, F3 as well. And I think that's an important consideration.
In the past, you've noted that the thyroid hormone receptor beta agonism can upregulate fatty acid synthase over time.
Correct.
So in that context of how do you think about sequencing F2, F3 monotherapy and then potentially F4 combination therapy? I guess, how important is the, I guess, mechanism in shaping the way you see Deni fitting into long-term therapy?
I think we have to accept that it's a great question because I think it speaks to how these patients ultimately are going to be treated going forward. It's going to require multiple medications. And I think that's you had asked earlier, how does the scientific community view our data? And obviously, everything that we've demonstrated to date gives them a great deal of confidence that Deni is going to be a great monotherapy in any population, F2, F3, F4. But the reality is that patients are probably going to need multiple medications to reach treatment goal. So developing this fixed-dose combination with a fat burner such as resmetirom makes a great deal of sense given the fact that, obviously, they're doing quite well in driving patients to treatment, and it likely will become a background therapy.
But to your point, the reality is also that patients that are on a THR or a fat oxidizer that elevate FASN are probably going to need FASN inhibition as they're being treated ultimately to achieve optimal outcome. So I think we're recognizing that as we move forward, moving that program, and then we'll see how the F2, F3 consideration evolves. It may be that the F4 program, the combination, those patients will ultimately get used. They'll get treated with the combination as well.
Got it. And you've recently applied or even got new IP on the combination.
We have filed for that, yes, in 2024. We do expect that to be realized here very shortly, and once that patent's granted, that will take us with the combination until 2044.
Obviously, you know that I cover Madrigal. I mean, if you are granted that patent, that does include resmetirom. I mean, how will you have freedom to operate?
I think there are a number of options that are ahead of us. The trial that we're running right now is with Resdifra. The goal is to make sure that the drug-drug interaction, the PK, and everything behaves as we anticipate. And then we can tackle the options from there. But there are options for versions of Resmiteram that may be available. First of all, our F4 combination dose is not going to be weight-based. So there's clear freedom to operate from our perspective there. And in terms of the IP, there's still a lot to be determined over time.
Okay. Okay. I just want to move over to acne if possible. So you said you plan to talk with the FDA about using Ascletis' phase III as one possibly, as one of two registrational trials for this indication. So what gives you confidence that that study could actually serve that role? And what are the key issues that you would need the FDA to agree with you on to use that study?
I'll let Rob take that on. Rob's our resident derm expert.
First off, the Ascletis data, I think, really demonstrates that oral FASN has the potential to be a significant contributor in efficacy for moderate to severe acne. And when you think about acne, it's about 50 million Americans in the US. And for those that aren't familiar with the acne market, you can think back to atopic dermatitis or psoriasis. Largely, before the large molecules were around, they were prescribed and treated with topical generics, oral generics. And when the large molecules came in, the value of these patients really skyrocketed, and the number of patients seeking therapy really increased as well.
And so we view the acne market very similarly, that when an effective, safe, well-tolerated product comes to market, the value per patient is going to go up, and also the number of moderate to severe acne patients seeking therapy are going to increase. But to get back to your question about the FDA, so we're going to seek guidance from the FDA by early 2026 to understand how they view the phase II and phase III data from China, from our partner Ascletis, and how that would fit into a potential regulatory pathway and development pathway in the U.S. The rationale behind that is that all acne patients, all acne, is caused by an elevated level of sebum.
Because our product has a direct effect on de novo lipogenesis and reducing the amount of sebum or normalizing sebum, it's very translatable that the Chinese data is very translatable into the U.S. because of the mechanism of action. To be clear, and I think Dave articulated this early in the conversation, our primary plan of action is to develop TVB-3567, which is a follow-on oral FASN product.
More potent?
A little more potent. So right now, we're in a phase I study understanding the PK/PD profile of it and how it relates to denifanstat. And after we get the data from that and also the feedback from the FDA, I think in 2026, we'll move into a phase II program, into a U.S. phase II acne study in moderate to severe.
Very basic question here. Why did you go with the next-gen version rather than just simply proceed with denifanstat for this?
Yeah, it's a good question. From a commercial standpoint, I think two things. One, the MASH market and the acne market are very similar or very different in pricing and reimbursement models. And so it gives us flexibility by having two different molecules. And also, from an IP landscape, by having the two different molecules in two different IP portfolios, we have a way to maximize the assets at a longer term in the commercial world.
Got it.
We have a very attractive patent pending on the next-gen molecule that would take it at least until 2046.
I see.
So that makes it, and when you consider that the time differential to bringing the two molecules to market, ultimately getting them approved, is only about 15-18 months difference, certainly leans heavily towards the next-gen molecule.
Got it. Got it. So assuming the FDA is open to that and using that first phase III as a pivotal, I mean, how do you envision the second registrational trial? Would it essentially mirror the first Chinese to kind of de-risk it or any major differences or no?
Nope. I mean, they have set a nice blueprint, and they followed it well. And their phase II and their phase III yielded nearly identical results across the board. So there's a lot of consistency. And that's how the programs run. They're all 12-week studies, and then we would have a safety period of time, follow up, and then submit.
Got it. Got it. Also, too, you're eligible for some meaningful milestones and royalties from Ascletis, the acne program in China. I think the next milestone is tied to approval.
Correct.
Which in that process is now pretty far advanced. So how do you think about that potential inflow? And do you feel its strategic importance and flexibility to offer Sagimet are underappreciated?
Yeah, no, I think it is. I mean, that's a great question. I do think that it maybe it is underappreciated. I think most analysts have captured the royalty stream effectively. All in at roughly $120 million in value. And that's a combination of the regulatory milestone plus the commercial performance milestones. And it should do exceptionally well in the Chinese market. Their population, they have the same percentage of patients that are dealing with moderate to severe acne, and it will do exceptionally well in that market.
Got it. Last question before we run out of time. If there's anything about Sagimet as a business that's perhaps underappreciated by the street, what would that be?
I'm not sure it's underappreciated. I think the capitalization requirements of what we have ahead of us are important, and while we have two years of cash that are available to us, and we haven't touched our ATM, I think that there's a recognition that there's, yes, we have exciting programs in both MASH and acne, but they cost money.
Got it. Got it. Well, gentlemen, this has been very helpful. Thank you so much for making time for us.
Thank you.
Appreciate the time.
Thank you.
Thank you.