Good afternoon, everyone. My name is Edward Nash, Senior Biotech Analyst here at Canaccord Genuity. I am joined here by the management team of Sagimet Biosciences. With us from Sagimet, we have David Happel, who is the CEO, and Andreas Grauer, Chief Medical Officer. We actively cover Sagimet with a buy rating. Welcome to you both. Thanks for joining us. Thank you for the Thank you. invitation. To kick off the conversation, could you just give us a little bit of background to our audience on Sagimet as a company and what your clinical programs are really encompassing from a therapeutic standpoint? Sure. Sagimet 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. 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, denifanstat, that really target an underlying cause that is common to all of these conditions. That underlying cause is de novo lipogenesis or fat accumulation. 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. Our molecule, denifanstat, really targets the two primary drivers of the condition in acne, and that is sebum and inflammation. By doing so, you reduce obviously the bacterial load and the hyperkeratinization. Where our programs are at this stage, we're getting ready to launch into a phase III study with denifanstat in 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 denifanstat to begin treatment in phase III and the FDA has been great to work with. We have a study may proceed. We're really excited to get that off the ground. We also have a second oral FASN inhibitor that will start phase II at the end of this year. We're wrapping up phase I as we speak. We'll have phase II data from our second oral FASN inhibitor next year, at the end of next year, at roughly the same time we have phase III data with denifanstat. 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. We'll begin first in human studies with the topical in the beginning of 2028. We raised a significant sum of money in April. The market has kindly received our transition and really excited to get going. You guys obviously had very positive value. You were originally going after MASH as an indication, and you had really strong phase II-A and II-B data. Yes In that indication, and then acne really kind of presented itself. Yes. 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. I mean, it's a major medical need there. Yes and a huge market. 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 denifanstat in acne is de-risked for the reasons of what we see with the Ascletis phase III trial in China. Maybe you could just walk us through the results of that phase III before we jump into what your design's 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. Sure. Andreas, you want to tackle that? Yeah. The phase III study that our partners in China have performed, Ascletis, is a study. 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. What we have 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 have 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, non-inflammatory lesions. 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, that is in particular dry skin, and to some extent dry eye. We saw dry eye, all mild or at best moderate, in a little more than 10% in the active group and 9% in the placebo group. It was common in both, but a little more frequent in the active group. Dry skin, we saw in about 6% versus 2% in the placebo group. Apart from that, we did not see any Grade 3 adverse events. We did not see any serious adverse events. Overall, the drug was very well tolerated. Now the phase III that you are looking to initiate, how will that design look? Yeah As compared to the one that was run in Asia? Yeah. Very similar. Why change, right? This worked great. We are trying to take as many of the learnings into our phase III. There is one important difference, though. Based on our conversations with the FDA, they have actually requested we include adolescents in that trial. 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 2: 1 randomization. We will include 450 12- 17 year olds, total of 800 patients that will be 2: 1 randomized in this trial. Primary endpoint will be 12 weeks. Population will be the same, moderate to severe acne as in the China trial. 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 are going to be using, EGSS, which is a very similar scoring system, inflammatory lesions and non-inflammatory lesions. Very standard endpoint structure. If we replicate the results that our Chinese colleagues have produced, then we should be very generously powered to observe this. Any expectation or reasons why you would think there should be a difference in the work of a FASN inhibitor between, because obviously, there is always variability about race. Yeah. It is a great question. We actually do not think so. Yeah. Right. The pathogenesis of acne is really the same across ethnicities. When you look at the literature, there are some differences when it comes to the sequelae of acne. The scarring can be different in more darker skin. But the pathogenesis is the same. The treatments should work the same. We are really not expecting a significant difference, nor do we expect a significant difference in treating the younger population. The treatment differences that have been observed are generally of the same order of magnitude. Normally with the clinical trials, we usually see trials initially run in the adult population. Then you run separate trials in the pediatric and adolescent population. 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, there is a precedent in acne, right? We're not the first one. Yeah doing this in acne. I think the simple reason is this is where the problem is, right? Yeah. It's really the adolescent. The problem extends into adulthood, but it really starts when puberty hits. Yeah. It makes a lot of sense that you would include the patients that need it the most in your initial trial. Yeah. I would just add that the FDA recognized, and they cross-referenced our end of phase II discussions with the hepatology division and became quite comfortable with how well this drug has been characterized over the course of time. 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 Grauer pointed out, is as equally important in the dermatology community as having a medication or an intervention that is successful. My next question is I want you to talk about the market opportunity for a drug like denifanstat in acne in light of the world of antibiotics and Accutane that's out there. Maybe to preface it, maybe you could just talk a little bit about what's currently, I would say first line, usually it's obviously the over-the-counter, but maybe walk us through kind of the day in the life of a patient that suffers with acne and that drives them to then end up having to get to the point of prescriptions. Yeah, I think that's a great question, Ed. Right now in the U.S., there are 50 million Americans that suffer from acne. 20% of those have what is characterized as moderate to severe, those that have IGAs 3s and 4s. And you'll see numbers as you do your research that suggest a number between 10 million 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 lesions, and it can work pretty well. Unfortunately, at somewhat of a high cost from a toxicity perspective. 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, Ed, 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 anti-androgens, 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. Having a systemic application that is safe and well-tolerated that can attack and target the torso is really critical, and that is 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 do not really quite understand yet what the mechanism is, it is a sebaceous gland shrinker, and it really affects sebum secondarily, not directly. 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. We should expect to see it largely and liberally used in this population. 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 am sure, is going to be. Huge An easy way. Yeah. An easy choice to make there. Yeah. Could you talk a little bit, because this is something in biotech that we just have. You are 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 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 is a significant similarity between what the acne market looks like today as opposed to what the atopic derm and psoriasis markets looked like before the large molecules, the IL-4/13s, the Dupixents 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, the oral steroids. This market functions and looks a lot like those markets did. Building it out from a commercial perspective will look very similarly, with the exception of the fact that we are not really competing against any share of voice as we enter into this. There do not appear to be frankly any other therapeutics that are in development for acne right now. We will be largely alone, which means that we can take a bit of a hybridized approach. I have had the pleasure of launching and commercializing well over a dozen drugs in my career, and I look at this very similarly to a sort of a hybrid, rare disease, large commodity pharma type of play, where direct 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. How does an oral from moderate to severe acne, how would that fit in with pricing, given versus other drugs that you are currently using now, such as I do not like to use antibiotics because antibiotics are used not just for acne, right? Sure. They're used across multiple areas. You probably will price much higher than you would with a topical. But how have you guys been thinking about pricing? We haven't guided to that yet. Yeah. We are doing work, and we were fortunate enough to do some early payer research after the phase II Ascletis data was released. Fortunately, that data looked nearly identically to the phase III. What we learned from that was that payers are pretty flexible given the treatment response and the safety tolerability profile that was seen, meaning that the efficacy in the phase II was roughly twice as good as any of the oral antibiotics or topicals that are currently being used. The most recent oral antibiotic that was approved was sarecycline, and that's priced at roughly $1,000-$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-$1,500 a month range. We'll have to determine that, and we're about to embark on further payer research. We want to get through the release of the open label extension data that Ascletis will disclose at the European Derm meeting next month. 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. 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 it episodically. Topicals, largely because most patients just have a difficult time applying it consistently over a period of time. What you'll see in the data from Ascletis 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. We're really excited by that, and that will better inform what the price point will likely be for this drug. I don't think I heard you mention it, maybe you did, and I missed it, but the term disease modifying effect, when it comes to denifanstat. I guess first of all, my question is, do you believe that denifanstat has a disease modifying effect with regards to acne treatment? If so, how important does that fit in versus the safety and efficacy in a selling point to physicians? Are those really just hand in hand? No, realistically, the way the mechanism of this drug works is to normalize FASN levels while you're on the drug. Once you go off the drug, and we know this from our MASH studies as well, patients' FASN levels return to baseline within about four to six weeks. 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. Interestingly, we actually saw that in a microcosm in the open label extension data from Ascletis. We had patients that had achieved an IGA score of 0-1, clear or almost clear, during the 12 weeks, and then continued in that vein for a period of time. Then we saw some patients pop up in their IGA for about a month to IGA scores of 2 or 3. When we went back and looked, it was because they quit taking it. Then once they started taking it again, their IGA scores returned to 0 or 1 within about four weeks. Which is kind of the normal period of what we've seen with deni in 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. When you look at anti-androgen topicals, it takes much longer than that for it to work, which is why many patients fall off. 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 FASN inhibitors in the pipeline. Then you mentioned the FASN inhibitor you have for the topical indication for acne as well. Yes. Clearly you aren't, while it's nice for denifanstat to have a significant impact in maybe replacing topicals to some degree, you obviously don't expect those to go away. Correct. Yeah. 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? I think with the 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. 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 denifanstat in 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 denifanstat. 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 deni. Well, really liked the denifanstat story in MASH. Really love it now in acne, given that you don't have the competition, you don't have the super long trials. Cost The cost. Exactly. Running with this, I think this is really exciting times for the company. It's a unique molecule for sure. Yeah. To have something that works so desperately in two different organs, right? The skin and the liver, and work equally well as in both. Yeah. Very cool. Well, really appreciate you taking the time to tell us the story. Thank you. Thanks, Ed. Thank you so much.