On Thursday, Oppenheimer initiated coverage on Sagimet Biosciences Inc (NASDAQ:SGMT), giving the stock an Outperform rating and setting a price target of $30.00. Currently trading at $4.66, the stock has analyst targets ranging from $6 to $67, with a strong consensus recommendation according to InvestingPro data.
The firm highlighted the potential of the company's lead asset, denifanstat, which is a first-in-class fatty acid synthase (FASN) inhibitor. This drug is currently being developed for metabolic dysfunction-associated steatohepatitis (MASH), a condition that is expected to have a market potential of approximately $15 billion.
The analyst noted the upcoming catalyst for Sagimet Biosciences, which involves the company's plan to raise roughly $200 million in additional capital. With a current market capitalization of $169 million and a strong financial position showing more cash than debt on its balance sheet, this funding is aimed at supporting ongoing Phase 3 registrational trials for denifanstat. The decision to raise capital is based on the competitive profile of the drug, which has been bolstered by promising Phase 2b data.
The coverage also suggests that Sagimet Biosciences could benefit from the efforts of Madrigal Pharmaceuticals (NASDAQ:MDGL) in establishing the MASH market. The stock has shown strong momentum with a 26.5% return over the past year, according to InvestingPro data.
As diagnosis rates increase and reimbursement scenarios improve, SGMT is likely to experience positive impacts. The analyst's optimistic view is informed by a comprehensive understanding of the MASH and obesity markets.
Additionally, the partnership with Ascletis provides another avenue for value creation for Sagimet Biosciences. The collaboration is set to yield Phase 3 readouts for denifanstat in two separate indications: glioblastoma (GBM) in the first half of 2025, and acne in the second half of 2025.
These milestones represent significant opportunities for the company to expand its portfolio and strengthen its position in the market. For deeper insights into SGMT's valuation and growth potential, access the comprehensive Pro Research Report available exclusively on InvestingPro, which includes detailed analysis of the company's financial health and market positioning.
In other recent news, Sagimet Biosciences has made significant strides in the development of its drug, denifanstat. The company's Phase 3 MASH program for denifanstat, which is slated to commence by the end of 2024, is expected to involve at least 1,800 patients across two major trials. The Phase 2b FASCINATE-2 trial of denifanstat has shown promising results, leading to significant improvements in disease activity, MASH resolution, and fibrosis among patients. H.C. Wainwright and UBS have both affirmed their Buy ratings for Sagimet Biosciences, while Leerink Partners maintained their Outperform rating.
However, Goldman Sachs (NYSE:GS) has downgraded Sagimet from "Buy" to "Neutral." In other recent developments, Sagimet Biosciences has initiated a $75 million equity offering in partnership with Cantor Fitzgerald & Co. and expanded its board of directors, appointing Jennifer Jarrett and Dr. Anne Phillips as new members.
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