Buy Rating for Sagimet Biosciences on Strong Phase 2b Results and Favorable Valuation Model

Ed Arce, an analyst from H.C. Wainwright, maintained the Buy rating on Sagimet Biosciences, Inc. Class A (SGMT – Research Report). The associated price target remains the same with $32.00.

Ed Arce has given his Buy rating due to a combination of factors surrounding Sagimet Biosciences, Inc.’s developmental drug, denifanstat. The drug recently received the FDA’s Breakthrough Therapy Designation (BTD) for the treatment of non-cirrhotic MASH with moderate to advanced liver fibrosis. This designation is a result of compelling data from the Phase 2b FASCINATE-2 trial, which demonstrated statistically significant improvements in patients over placebo. These results suggest a strong potential for the drug’s efficacy, and the BTD is expected to expedite denifanstat’s development and regulatory processes, enhancing its prospects for a timely market entry.

Moreover, the valuation model by Ed Arce places a price target of $32.00, factoring in the potential U.S. net sales and EU royalties for denifanstat, as well as a placeholder value for another of Sagimet’s drugs, TVB-3567. He employs a risk-adjusted Net Present Value (rNPV) approach, considering a realistic probability of success and a discount rate that reflects the overall risks associated with the company. However, Arce also notes risks such as possible negative outcomes from future trials, challenges in regulatory approval, market competition, and financial sustainability—all of which are critical considerations for investors.

Arce covers the Healthcare sector, focusing on stocks such as Travere Therapeutics, Ardelyx, and Mirum Pharmaceuticals. According to TipRanks, Arce has an average return of 8.8% and a 42.75% success rate on recommended stocks.

In another report released yesterday, JMP Securities also reiterated a Buy rating on the stock with a $32.00 price target.

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Sagimet Biosciences, Inc. Class A (SGMT) Company Description:

Sagimet Biosciences Inc., a clinical-stage biopharmaceutical company, develops therapeutics called fatty acid synthase (FASN) inhibitors for the treatment of diseases that result from dysfunctional lipid metabolism pathways. Its lead drug candidate is Denifanstat, a FASN inhibitor for the treatment of nonalcoholic steatohepatitis and acne. The company is also developing TVB-3567, a FASN inhibitor for the treatment of various types of cancers. The company was formerly known as 3-V Biosciences, Inc. and changed its name to Sagimet Biosciences Inc. in August 2019. Sagimet Biosciences Inc. was incorporated in 2006 and is headquartered in San Mateo, California.