This is an open label phase 1b trial of QX1206 in patients with T2DM and with NAFLD. Laboratory tests and other measurements will be assessed prior to the first dose of study treatment and throughout the study to determine the recommended phase 2 dose. In addition, the preliminary effects of QX1206 on antidiabetic activity and other metabolic parameters will also be evaluated.

Inclusion Criteria:

• Signed written informed consent must be obtained and documented
• 18 years of age and < 65 years old
• BMI ≥ 18 kg/m^2 and < 45 kg/m^2
• T2DM diagnosed per 2021 American Diabetes Association criteria
• Diagnosis of NAFLD
• For male or female patients of child producing potential: must agree to use contraception or take measures to avoid pregnancy during the study
• Women of child-bearing potential (WOCBP) must have a negative pregnancy test
• Serum creatinine < 1.5×ULN or creatinine clearance ≥ 60 ml/min
• Participating patients must be able to comply with all study requirements and the study center must have appropriate means of ensuring protocol compliance for each participating patient

Exclusion Criteria:

• Uncontrolled diabetes
• Patients with an active, serious medical disease that limit activities of daily living
• Patients with current, significant alcohol consumption or a history of significant alcohol consumption
• Patients with any of the following clinical laboratory abnormalities at screen and confirmed by a single repeat if deemed necessary:
• Fasting triglycerides > 500 mg/dL
• Fasting direct LDL-C > 190 mg/dL
• AST > 5.0 × upper limit of normal (ULN)
• ALT > 5.0 × ULN
• Alkaline phosphatase (ALP) ≥ 2 × ULN
• HbA1c > 10.5%
• Fasting plasma glucose (FPG) > 240 mg/dL (13.3 mmol/L)
• Platelets count < 140,000/mm^3
• Patient takes drugs historically associated with NAFLD and other known hepatotoxins
• Treatment with drugs (e.g., vitamin E > 400 IU/day) or herbal supplements with potential anti-NAFLD effect