Goldman Sachs, JMP, Piper Sandler bullish on Sagimet, cite upcoming data (NASDAQ:SGMT)

Goldman Sachs, JMP Securities and Piper Sandler all initiated coverage of Sagimet Biosciences with bullish ratings, citing the biotech’s promising drug candidate denifanstat for the treatment of the liver disease nonalcoholic steatohepatitis, or NASH.

Goldman, which has a buy rating on the stock, said that it believes upcoming biopsy data from a Phase 2 study for the drug will be a significant catalyst, as positive results would support advancing the drug into pivotal Phase 3 testing. The data is expected in Q1 2024.

The investment bank said that it believes denifanstat’s differentiated mechanism of action coupled with a predictive biomarker panel “could support a best-in-class profile” to capture a “blockbuster” opportunity of treating mid-stage NASH patients. It added that it sees peak sales of $3.7B in 2037 for the drug, if it is approved. Goldman set its price target for the stock at $33.

JMP Securities started its coverage with a market outperform rating and price target of $30.

JMP noted that while NASH was a large and growing market, no drugs were currently approved to treat the liver condition. It estimated that around 11M American will have mid-stage NASH by 2030 and “given the heterogeneity of the disease, we expect multiple therapeutic mechanisms will be needed.” It added that it sees the market opportunity for denifanstat in the US at more than $1B.

JMP said if the Phase 2 biopsy results are positive, Sagimet’s share price could double, “with potential for further upside based on the strength of the data.”Piper Sandler, which initiated its coverage with an overweight rating and price target of $67, also cited the upcoming Phase 2 biopsy data. The bank said its price target included $62 from anticipated US and EU sales along with royalties on Chinese sales for denifanstat in the treatment of mid-stage NASH, coupled with $5 per share from cash.

Sagimet held an upsized initial public offering in mid-July, raising $85M. Goldman Sachs, Cowen and Piper Sandler served as lead bookrunners, with JMP Securities as lead manager.

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