We're Hopeful That Sagimet Biosciences (NASDAQ:SGMT) Will Use Its Cash Wisely

We can readily understand why investors are attracted to unprofitable companies. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com? So, the natural question for Sagimet Biosciences (NASDAQ:SGMT) shareholders is whether they should be concerned by its rate of cash burn. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). Let's start with an examination of the business' cash, relative to its cash burn. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. When Might Sagimet Biosciences Run Out Of Money? A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at September 2025, Sagimet Biosciences had cash of US$117m and no debt. Looking at the last year, the company burnt through US$45m. That means it had a cash runway of about 2.6 years as of September 2025. Arguably, that's a prudent and sensible length of runway to have. Depicted below, you can see how its cash holdings have changed over time. NasdaqGM:SGMT Debt to Equity History January 12th 2026 See our latest analysis for Sagimet Biosciences How Is Sagimet Biosciences' Cash Burn Changing Over Time? Because Sagimet Biosciences isn't currently generating revenue, we consider it an early-stage business. So while we can't look to sales to understand growth, we can look at how the cash burn is changing to understand how expenditure is trending over time. Over the last year its cash burn actually increased by 16%, which suggests that management are increasing investment in future growth, but not too quickly. That's not necessarily a bad thing, but investors should be mindful of the fact that will shorten the cash runway. While the past is always worth studying, it is the future that matters most of all. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company. How Hard Would It Be For Sagimet Biosciences To Raise More Cash For Growth? While Sagimet Biosciences does have a solid cash runway, its cash burn trajectory may have some shareholders thinking ahead to when the company may need to raise more cash. Companies can raise capital through either debt or equity. Many companies end up issuing new shares to fund future growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn. Sagimet Biosciences' cash burn of US$45m is about 22% of its US$202m market capitalisation. That's fairly notable cash burn, so if the company had to sell shares to cover the cost of another year's operations, shareholders would suffer some costly dilution. How Risky Is Sagimet Biosciences' Cash Burn Situation? Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Sagimet Biosciences' cash runway was relatively promising. Cash burning companies are always on the riskier side of things, but after considering all of the factors discussed in this short piece, we're not too worried about its rate of cash burn. On another note, we conducted an in-depth investigation of the company, and identified 3 warning signs for Sagimet Biosciences (1 makes us a bit uncomfortable!) that you should be aware of before investing here. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts)