By Bill Alpert

Shares of Sagimet Biosciences were up as much as 12% Tuesday morning, on encouraging clinical trial results for its acne treatment and a new Buy recommendation from Guggenheim Securities.

For much of its history, the San Mateo, Calif-based firm played up the promise of its novel drug for treating liver diseases brought on by obesity. But lately, it is drawing attention for those drugs' success at clearing a more familiar affliction: acne.

Late Monday, Sagimet announced that young adults showed increased clearance of their blemishes when they stayed on its pill for a year. The study was an extension of a successful three-month Phase 3 trial conducted in China by the company's longtime backer and partner Ascletis Pharma. No serious safety problems emerged.

The news helped lift Sagimet stock Tuesday to $7.20 and bring the little company's market cap to $230 million. That is well below the $16 level where Sagimet came public in 2023. But in a Tuesday note launching coverage on the company, Guggenheim's Seamus Fernandez says the stock can rise as high as $27, if either the liver or acne drug reach his expectations.

Sagimet's drugs block an enzyme that helps the body produce fatty acids. One dire result of widespread obesity is an increase in diseases from accumulated fat in the liver. So Sagimet has been one of many companies testing treatments for the 20 million Americans who suffer from fatty liver diseases.

The company's denifanstat showed promising results in Phase 2 trials. But in 2024, Madrigal Pharmaceuticals got approval for its drug Rezdiffra as the first treatment for fat-damaged livers. Sales have quickly risen to a $1 billion annual level.

So now, Sagimet is ramping up studies of its drug in combination with Rezdiffra. The drugs work in different ways that could make them a potent combo for a liver disease market that Fernandez gauges at $10 billion.

Approval and sales for the liver drug wouldn't happen until around 2033, however. That may be why the company's fans have turned attention to a nearer term opportunity in acne.

Just as Sagimet's denifanstat blocks fat accumulation in the liver, it blocks the fatty acids that cause hair follicles to become pimples. In studies by Ascletis in China, those taking denifanstat had 20% fewer pimples after three months than those on a placebo.

Approval of the drug for acne in China could happen this year, says Fernandez. Phase 1 results for an improved version of the drug in the U.S. will also come this year, with a Phase 2 study initiated thereafter.

If approved and launched by 2030, he thinks the drug's sales as a first line treatment for acne could surpass a billion dollars. The existing treatments include generic versions of the Roche drug Accutane, which can't be given to pregnant women. Antibiotics are another standard treatment, and doctors are growing reluctant to prescribe them widely because of the spread of antibiotic-resistant germs.

"We forecast a potential blockbuster opportunity in moderate-to-severe acne," Fernandez writes.

Write to Bill Alpert at william.alpert@barrons.com

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February 03, 2026 15:27 ET (20:27 GMT)

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