Sagimet Biosciences(SGMT) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information Registrant Information This section details Sagimet Biosciences Inc.'s Form 10-Q filing, including incorporation, SEC status, and stock information for Q2 2025 - The report is a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] - Sagimet Biosciences Inc. is incorporated in Delaware, headquartered in San Mateo, California[2][6] Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------------------ | :---------------- | :---------------------------------------- | | Series A Common Stock, $0.0001 par value per share | SGMT | Nasdaq Global Market | - The registrant is classified as a Non-accelerated filer, Smaller reporting company, and Emerging growth company[5] - Outstanding shares at August 5, 2025: Series A common stock: 31,001,109; Series B common stock: 1,520,490[5] Table of Contents Forward-Looking Statements Nature of Forward-Looking Statements The report contains forward-looking statements on future operations, financial position, and drug candidates, subject to risks and uncertainties - The report includes forward-looking statements about future results, financial position, business strategy, drug candidates, preclinical studies, clinical trials, R&D costs, regulatory approvals, and management plans[10] - These statements involve known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially from those expressed or implied[10] Key Areas of Forward-Looking Statements Forward-looking statements cover financial performance, funding, drug development (denifanstat, TVB-3567), regulatory approvals, and IP - Financial performance and ability to obtain additional cash[11][14] - Scope, progress, results, and costs of developing denifanstat, TVB-3567, and other drug candidates[11][14] - Timing and costs for regulatory approval and special designations[11][14] - Plans for commercializing drug candidates, if approved[11][14] - Ability to obtain sufficient funding or strategic collaboration for Phase 3 clinical trials for denifanstat in MASH[11][14] - Expectations regarding intellectual property protection and the impact of macroeconomic conditions[11][14] PART I - FINANCIAL INFORMATION Item 1. Condensed Financial Statements Presents unaudited condensed financial statements, including balance sheets, statements of operations, equity, cash flows, and related notes Condensed Balance Sheets (unaudited) Total assets and stockholders' equity decreased from December 31, 2024, to June 30, 2025, mainly due to reduced cash Condensed Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $42,327 | $75,840 | | Total current assets | $127,196 | $152,774 | | Total assets | $137,407 | $160,259 | | Total current liabilities | $7,247 | $4,454 | | Total stockholders' equity| $130,160 | $155,805 | - Accumulated deficit increased from $295.3 million at December 31, 2024, to $323.9 million at June 30, 2025, reflecting ongoing losses[16] Condensed Statements of Operations and Comprehensive Loss (unaudited) Net losses increased for Q2 and H1 2025 versus 2024, driven by higher operating expenses, especially in R&D Net Loss and Operating Expenses (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $7,248 | $6,313 | $22,590 | $11,575 | | General and administrative| $4,677 | $4,276 | $9,200 | $7,782 | | Total operating expenses | $11,925 | $10,589 | $31,790 | $19,357 | | Net loss | $(10,386) | $(8,118) | $(28,562) | $(14,747) | | Net loss per share (basic and diluted) | $(0.32) | $(0.25) | $(0.89) | $(0.48) | - Net loss increased by 28% for the three months ended June 30, 2025, and by 94% for the six months ended June 30, 2025, compared to the prior year periods[20] Condensed Statements of Stockholders' Equity (unaudited) Stockholders' equity decreased from $155.8 million to $130.2 million due to net losses, partially offset by stock-based compensation Stockholders' Equity Changes (in thousands) | Item | January 1, 2025 | March 31, 2025 | June 30, 2025 | | :--------------------------------- | :-------------- | :------------- | :------------ | | Total Stockholders' Equity | $155,805 | $138,992 | $130,160 | | Net loss (Q1 2025) | | $(18,176) | | | Net loss (Q2 2025) | | | $(10,386) | | Stock-based compensation expense (Q1 2025) | | $1,472 | | | Stock-based compensation expense (Q2 2025) | | | $1,598 | Condensed Statements of Cash Flows (unaudited) Net cash and equivalents decreased significantly in H1 2025 due to increased operating and investing cash usage, unlike prior year Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(23,637) | $(11,842) | | Net cash used in investing activities | $(9,877) | $(72,157) | | Net cash provided by financing activities | $1 | $104,819 | | Net (decrease) increase in cash and cash equivalents | $(33,513) | $20,820 | | Cash and cash equivalents at end of period | $42,327 | $95,959 | - Net cash used in operating activities increased by approximately 99% year-over-year for the six months ended June 30, 2025, driven by clinical development and manufacturing costs[25][126] - Financing activities provided minimal cash in 2025 ($1 thousand) compared to $104.8 million in 2024, which included proceeds from a follow-on offering[25][129][130] Notes to Condensed Financial Statements (unaudited) Notes provide context for financial statements, covering business, accounting policies, liquidity, fair value, and commitments 1. Description of Business and Basis of Presentation Sagimet Biosciences develops FASN inhibitors for metabolic and fibrotic diseases, with lead candidate denifanstat in MASH, acne, and cancer - Sagimet Biosciences Inc. is a clinical-stage biopharmaceutical company developing fatty acid synthase (FASN) inhibitors[27] - Denifanstat, the lead drug candidate, is in development for MASH (Breakthrough Therapy designation), acne (met all primary and secondary endpoints in Phase 3 trial by partner Ascletis), and select forms of cancer[27][90][95] - TVB-3567, a second FASN inhibitor, initiated a first-in-human Phase 1 clinical trial for acne in June 2025[27][98] - The company had an accumulated deficit of $323.9 million and cash, cash equivalents, and marketable securities of $135.5 million as of June 30, 2025[32] - Existing cash, cash equivalents, and marketable securities are expected to fund operating expenses for at least the next 12 months, but substantial additional capital will be required[35] 2. Significant Accounting Policies Outlines significant accounting policies, including net loss per share calculation and new pronouncements, with no material changes since last annual report - No material changes to significant accounting policies since December 31, 2024[36] - Basic and diluted net loss per share are the same due to net losses, making potentially dilutive securities anti-dilutive[37] Potentially Dilutive Securities Excluded from Diluted EPS (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Options to purchase Series A common stock | 5,738,868 | 4,464,067 | 5,738,868 | 4,464,067 | | Warrant to purchase Series A common stock | 1,000 | 1,000 | 1,000 | 1,000 | | Restricted stock units | 1,098,399 | 1,125,840 | 1,098,399 | 1,125,840 | | Total | 6,838,267 | 5,590,907 | 6,838,267 | 5,590,907 | - The company is evaluating the impact of ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures), with ASU 2023-09 to be adopted for the 2025 Annual Report on Form 10-K[40][41] 3. Fair Value Measurements and Fair Value of Financial Instruments Details fair value measurements for cash equivalents and marketable securities (Level 1 and 2), with no recognized impairment losses - Financial assets measured at fair value include cash equivalents (Level 1) and marketable securities (Level 2)[45] Fair Value of Cash Equivalents and Marketable Securities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Cash equivalents | $42,020 | $75,277 | | Short-term marketable securities | $83,080 | $75,410 | | Long-term marketable securities | $10,059 | $7,408 | | Total cash equivalents and marketable securities | $135,159 | $158,095 | - The company has not recognized any impairment or credit losses on its available-for-sale securities[46] 4. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets increased from $1.5 million to $1.8 million, mainly due to higher prepaid R&D costs Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Prepaid clinical costs | $312 | $436 | | Prepaid research and development costs | $581 | $48 | | Prepaid insurance | $103 | $577 | | Deferred financing costs | $620 | $306 | | Other | $1 | $5 | | Total prepaid expenses and other current assets | $1,789 | $1,524 | - Prepaid research and development costs saw a substantial increase from $48 thousand to $581 thousand[52] 5. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities significantly increased from $2.95 million to $5.17 million, driven by higher clinical and G&A costs Accrued Expenses and Other Current Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Accrued payroll-related costs | $865 | $1,358 | | Accrued clinical costs | $2,268 | $528 | | Accrued research and development costs | $780 | $516 | | Accrued general and administrative costs | $1,260 | $544 | | Other | $1 | $5 | | Total accrued expenses and other current liabilities | $5,174 | $2,951 | - Accrued clinical costs increased over four-fold from $528 thousand to $2.27 million[53] 6. Commitments and Contingencies Details license agreement with Ascletis for denifanstat, facility lease amendments, and confirms no material legal proceedings or indemnification claims - The company has a license agreement with Ascletis BioScience Co. Ltd. (now Gannex Pharma Co., Ltd.) for denifanstat in Greater China[54][57] - The company is eligible to receive up to $122.0 million in development and commercial milestone payments, plus tiered royalties on net sales in Greater China[55] - The facility lease agreement for its headquarters was amended in May 2025, extending the term through June 2026 and increasing the operating lease right-of-use asset and liability by $0.2 million[58] - The company is not party to any material legal proceedings as of June 30, 2025, and has not recorded liabilities for indemnification claims[60][61] 7. Stock-Based Compensation Stock-based compensation expense increased in Q2 and H1 2025, under the 2023 Stock Option Plan and Inducement Pool Total Stock-Based Compensation Expense (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock options | $1,316 | $1,138 | $2,539 | $1,587 | | Restricted stock units | $282 | $311 | $531 | $621 | | Total stock-based compensation expense | $1,598 | $1,449 | $3,070 | $2,208 | - As of June 30, 2025, there was $10.8 million of unrecognized compensation expense for stock options, expected to be recognized over 2.4 years[71] - Unrecognized compensation expense for unvested restricted stock units was $2.8 million, expected over 2.7 years[73] - The 2023 Stock Option and Incentive Plan had 1,226,994 shares automatically added on January 1, 2025, with 1,426,290 shares available for future grant as of June 30, 2025[62] - The Inducement Pool increased by 300,000 shares in February 2025, totaling 1,300,000 shares, with 404,017 shares available for future grants[65] 8. Related Party Transactions Discloses related party transactions, including the Ascletis license agreement, with $0.1 million in expenses recognized in H1 2024 - Jinzi J. Wu, Ph.D., former board member until June 2024, is the CEO of Ascletis, Gannex, and Ascletis Pharma, which are parties to the denifanstat license agreement[76] - The company recognized $0.1 million in research and development expenses under the Ascletis license agreement for the six months ended June 30, 2024[77] 9. Segment Reporting The company operates as a single segment, focusing on FASN inhibitors for MASH and other diseases, with net loss as the performance metric - The company operates as one business segment: development and commercialization of FASN inhibitors for MASH and other diseases[78] - The Chief Operating Decision Maker (CODM) uses net loss to evaluate segment performance and total assets as the measure of segment assets[79] 10. Subsequent Events Discloses the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, and its potential impact assessment - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, with provisions effective from 2025 to 2027[81] - The company is assessing the potential impact of OBBBA on its deferred tax assets, financial statements, and disclosures[81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and operational results, highlighting drug candidate developments, operating expenses, liquidity, and capital resources Overview Sagimet Biosciences develops FASN inhibitors, with denifanstat showing positive Phase 2b MASH and Phase 3 acne results, and TVB-3567 advancing - Sagimet is a clinical-stage biopharmaceutical company developing FASN inhibitors for metabolic and fibrotic diseases[83] - Denifanstat met both primary and multiple secondary endpoints in the Phase 2b FASCINATE-2 clinical trial for MASH, demonstrating anti-fibrotic activity and MASH resolution[85][87] - Denifanstat received FDA Breakthrough Therapy designation for non-cirrhotic MASH with moderate to advanced liver fibrosis in October 2024[90] - Ascletis announced denifanstat met all primary and secondary endpoints in its Phase 3 trial for moderate to severe acne vulgaris in China, with plans to submit for approval[95][97][101] - A first-in-human Phase 1 clinical trial for TVB-3567, a second FASN inhibitor for acne, was initiated in June 2025[98] - Preclinical data showed synergistic effects of denifanstat (via surrogate TVB-3664) and resmetirom in MASH mouse models, leading to a planned Phase 1 clinical trial for combination therapy[92][94] Components of Results of Operations Defines key components of operations: R&D, G&A expenses, and other income, outlining their scope and future trends - Research and development expenses include internal personnel costs, external costs for preclinical studies, clinical trials, manufacturing, and professional services[100] - General and administrative expenses cover personnel, legal, accounting, auditing, consulting, insurance, and IT costs[104] - Other income primarily consists of interest income from cash, cash equivalents, and marketable securities, offset by accretion of discounts[106] - Both R&D and G&A expenses are expected to increase substantially in the foreseeable future due to advancing drug candidates, regulatory pursuits, and public company operations[103][105] Results of Operations Net loss significantly increased in Q2 and H1 2025 due to higher R&D expenses for denifanstat and TVB-3567, increased G&A, and lower other income Operating Expenses and Net Loss (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $7,248 | $6,313 | $22,590 | $11,575 | | General and administrative| $4,677 | $4,276 | $9,200 | $7,782 | | Total operating expenses | $11,925 | $10,589 | $31,790 | $19,357 | | Net loss | $(10,386) | $(8,118) | $(28,562) | $(14,747) | - Research and development expenses increased by 15% for the three months and 95% for the six months ended June 30, 2025, primarily due to clinical trial costs for denifanstat's Phase 3 MASH program and TVB-3567's Phase 1 trial[108][112] - External R&D expenses for TVB-3567 increased dramatically by 9,140% (3 months) and 14,700% (6 months) due to the initiation of its Phase 1 clinical trial[109][113] - Other income decreased by $0.9 million (3 months) and $1.4 million (6 months) due to a lower cash, cash equivalents, and marketable securities balance[110][114] Liquidity and Capital Resources Operations funded by $190.9 million from equity/debt; $135.5 million cash as of June 30, 2025, expected to last 12 months, but substantial future capital is required - Since inception, operations have been financed primarily through public and private equity and debt financings, including $190.9 million net from IPO (July 2023) and follow-on offering (January 2024)[116] - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled $135.5 million[118] - Existing capital is expected to fund operating expenses for at least the next 12 months from the issuance of this report[125] - Future capital requirements are substantial and will depend on factors such as regulatory approval, clinical trial progress, manufacturing, and commercialization, requiring additional financing through equity, debt, or collaborations[118][119][120] Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(23,637) | $(11,842) | | Net cash used in investing activities | $(9,877) | $(72,157) | | Net cash provided by financing activities | $1 | $104,819 | | Net (decrease) increase in cash and cash equivalents | $(33,513) | $20,820 | - The company is an emerging growth company and a smaller reporting company, allowing it to take advantage of certain exemptions from reporting requirements and accounting standards[133][135] Item 3. Quantitative and Qualitative Disclosures About Market Risk Market Risk Disclosures As a smaller reporting company, Sagimet Biosciences Inc. is exempt from market risk disclosures - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[137] Item 4. Controls and Procedures Disclosure Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting - Disclosure controls and procedures are designed to ensure information required for Exchange Act reports is recorded, processed, summarized, and reported timely[138] - As of June 30, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective to provide reasonable assurance of timely and accurate information disclosure[140] Changes in Internal Control Over Financial Reporting No material changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[141] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any legal proceedings expected to materially adversely affect its financial condition or operations - No claims or actions pending against the company are expected to have a material adverse effect on its results of operations, financial condition, or cash flows[142] Item 1A. Risk Factors No material changes to risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[143] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales or issuer purchases of equity securities occurred during the reporting period - No unregistered sales of equity securities occurred during the reporting period[144] - No issuer purchases of equity securities were made[145] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - This item is not applicable[146] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[147] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[148] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including lease amendments, employment agreements, certifications, and XBRL documents - Exhibits include the third amendment to the Lease Agreement, second amended and restated executive employment agreements for key officers, and certifications (31.1, 31.2, 32.1)[149] - XBRL instance, schema, calculation, definition, and label linkbase documents are also filed[149] Signatures Report Signatures The Quarterly Report was signed on August 13, 2025, by David Happel (CEO) and Thierry Chauche (CFO) - The Quarterly Report was signed on August 13, 2025[153] - Signed by David Happel, President and Chief Executive Officer, and Thierry Chauche, Chief Financial Officer[153]