Design Therapeutics Inc

Previous wording

We are a biopharmaceutical company pioneering the research and development of GeneTACTM molecules, which are a novel class of small-molecule gene targeted chimera therapeutic candidates designed to be disease-modifying by addressing the underlying cause of diseases caused by inherited nucleotide repeat expansion mutations. Certain diseases caused by inherited nucleotide repeat expansion, such as Friedreich ataxia (FA) and fragile X syndrome, can result in reduced gene expression and deficiency of vital proteins; in other diseases, such as myotonic dystrophy type-1 (DM1), Fuchs endothelial corneal dystrophy (FECD), and Huntington's disease (HD), the nucleotide repeat expansions result in the generation of toxic gene products, often associated with pathological nuclear foci and broad splicing disruptions or the expression of mutant proteins that form toxic aggregates. Our GeneTACTM small molecules are designed to selectively target expanded genetic repeat sequences, modulate gene expression either by dialing up or down mRNA transcription, depending on the cause of the disease, and restore cellular health. As a platform, we believe that GeneTACTM molecules have broad potential applicability across currently unaddressed degenerative, monogenic nucleotide repeat expansion diseases affecting millions of individuals worldwide.

Current wording

We are a clinical-stage biopharmaceutical company pioneering the research and development of GeneTACTM molecules, which are a novel class of small-molecule gene targeted chimera therapeutic candidates designed to be disease-modifying by addressing the underlying cause of diseases caused by inherited nucleotide repeat expansion mutations. Certain diseases caused by inherited nucleotide repeat expansion, such as Friedreich ataxia (FA) and fragile X syndrome, can result in reduced gene expression and deficiency of vital proteins; in other diseases, such as myotonic dystrophy type-1 (DM1), Fuchs endothelial corneal dystrophy (FECD), and Huntington's disease (HD), the nucleotide repeat expansions result in the generation of toxic gene products, often associated with pathological nuclear foci and broad splicing disruptions or the expression of mutant proteins that form toxic aggregates. Our GeneTACTM small molecules are designed to selectively target expanded genetic repeat sequences, modulate gene expression either by dialing up or down mRNA transcription, depending on the cause of the disease, and restore cellular health. As a platform, we believe that GeneTACTM molecules have broad potential applicability across currently unaddressed degenerative, monogenic nucleotide repeat expansion diseases affecting millions of individuals worldwide.

Previous wording

In preclinical studies for our lead program in FA, we have observed restoration of frataxin (FXN) levels in multiple cell types from FA patients and anin vivo murine model of FA using our FA GeneTACTM molecules. At doses that were observed to be well tolerated in rodents and non-human primates (NHPs), FA GeneTACTM molecules achieved biodistribution to brain and heart, key organs affected by FA, at concentrations that exceeded those observed to restore FXN levels in FA patient cells. Further, and consistent with this favorable target-organ biodistribution, we observed increased endogenous FXN expression in the brain and heart in an animal model of FA after treatment with our FA GeneTACTM molecules. In February 2022, the Investigational New Drug Application (IND) for our lead FA GeneTACTM small molecule, DT-216, formulated as the prior DT-216 product candidate, was cleared by the U.S. Food and Drug Administration (FDA) to commence Phase 1 clinical trials. In December 2022, we reported positive initial data from the single-ascending dose (SAD) Phase 1 clinical trial showing that DT-216 was generally well-tolerated and exhibited the ability to overcome the FXN transcription impairment that causes FA, with a greater than two-fold increase in FXN mRNA in the cohort with the highest response. These data supported the subsequent advancement of DT-216 in the multiple-ascending dose (MAD) Phase 1 clinical trial of the prior DT-216 product candidate. In August 2023, we reported data from the MAD Phase 1 clinical trial showing that after three weekly intravenous administrations of the prior DT-216 product candidate, DT-216 levels in plasma and skeletal muscle tissue were both transient. This transient exposure was sufficient to lead to an increase in FXN mRNA in tissue, but longer exposure is likely needed to drive sustained increase of FXN mRNA and protein. DT-216 was generally well-tolerated in the MAD study. In patients receiving the prior DT-216 product candidate in the MAD study, we observed five cases of injection site thrombophlebitis, which we believe were attributable to the formulation excipients. We then shifted focus to developing DT-216 with an improved formulation to enable higher exposure and chronic administration for treatment of FA. These efforts resulted in a new product candidate, DT-216P2, which uses the same drug substance, DT-216. In nonclinical studies, we observed higher and more sustained DT-216 plasma levels with DT-216P2 than was seen in studies previously conducted with the prior DT-216 product candidate. Additionally, we observed favorable injection site tolerability following multiple intravenous administrations of DT-216P2. We aim to complete GLP studies by the end of 2024 and, subject to regulatory clearance, expect to initiate clinical trials with DT-216P2 in FA patients in 2025.

Current wording

In preclinical studies for our lead program in FA, we have observed restoration of frataxin (FXN) levels in multiple cell types from FA patients and anin vivo murine model of FA using our FA GeneTACTM molecules. At doses that were observed to be well tolerated in rodents and non-human primates (NHPs), FA GeneTACTM molecules achieved biodistribution to brain and heart, key organs affected by FA, at concentrations that exceeded those observed to restore FXN levels in FA patient cells. Further, and consistent with this favorable target-organ biodistribution, we observed increased endogenous FXN expression in the brain and heart in an animal model of FA after treatment with our FA GeneTACTM molecules. In February 2022, the Investigational New Drug Application (IND) for our lead FA GeneTACTM small molecule, DT-216, formulated as the prior DT-216 product candidate, was cleared by the U.S. Food and Drug Administration (FDA) to commence Phase 1 clinical trials. In December 2022, we reported positive initial data from the single-ascending dose (SAD) Phase 1 clinical trial showing that DT-216 was generally well-tolerated and exhibited the ability to overcome the FXN transcription impairment that causes FA, with a greater than two-fold increase in FXN mRNA in the cohort with the highest response. These data supported the subsequent advancement of DT-216 in the multiple-ascending dose (MAD) Phase 1 clinical trial of the prior DT-216 product candidate. In August 2023, we reported data from the MAD Phase 1 clinical trial showing that after three weekly intravenous administrations of the prior DT-216 product candidate, DT-216 levels in plasma and skeletal muscle tissue were both transient. This transient exposure was sufficient to lead to an increase in FXN mRNA in tissue, but longer exposure is likely needed to drive sustained increase of FXN mRNA and protein. DT-216 was generally well-tolerated in the MAD study. In patients receiving the prior DT-216 product candidate in the MAD study, we observed five cases of injection site thrombophlebitis, which we believe were attributable to the formulation excipients. We then shifted focus to developing DT-216 with an improved formulation to enable higher exposure and chronic administration for treatment of FA. These efforts resulted in a new product candidate, DT-216P2, which uses the same drug substance, DT-216. In nonclinical studies, we observed higher and more sustained DT-216 plasma levels with DT-216P2 than was seen in studies previously conducted with the prior DT-216 product candidate. Additionally, we observed favorable injection site tolerability following multiple intravenous administrations of DT-216P2. We expect to initiate a SAD Phase 1 clinical trial of DT-216P2 in normal healthy volunteers in the first half of 2025, subject to regulatory clearance. We anticipate that we will begin FA patient dosing later in 2025.

Previous wording

In December 2022, we nominated our second GeneTACTM small molecule, DT-168, an eye drop for the treatment of FECD. When testedin vitro in FECD patient-derived corneal endothelial cells, our FECD GeneTACTM molecules led to robust reductions in the pathogenic nuclear RNA foci and corrected key mis-spliced transcripts to levels observed in control corneal endothelial cells from unaffected donors. DT-168 was well tolerated and distribution of DT-168 was observed in and through the cornea in animal models after administration via eye drop. We believe these preclinical data support the potential of our novel GeneTACTM small molecules to correct the most common underlying genetic cause of FECD. We submitted an IND for DT-168 in late 2023 and have received FDA clearance. We expect to initiate Phase 1 development for DT-168 in 2024. We are currently conducting an observational study in FECD patients where we plan to recruit 200 patients to confirm disease characteristics and deterioration in the context of running a trial and to identify characteristics of FECD patients at risk of more rapid disease progression. This will inform our subsequent clinical development efforts and we believe it could potentially increase the probability of DT-168 programmatic success.

Current wording

In December 2022, we nominated our second GeneTACTM small molecule, DT-168, an eye drop for the treatment of FECD. When testedin vitro in FECD patient-derived corneal endothelial cells, our FECD GeneTACTM molecules led to robust reductions in the pathogenic nuclear RNA foci and corrected key mis-spliced transcripts to levels observed in control corneal endothelial cells from unaffected donors. DT-168 was well tolerated and distribution of DT-168 was observed in and through the cornea in animal models after administration via eye drop. We believe these preclinical data support the potential of our novel GeneTACTM small molecules to correct the most common underlying genetic cause of FECD. We have initiated a Phase 1 clinical trial of DT-168 in normal healthy volunteers, which we expect to complete by year-end, with initial data expected in the first half of 2025. In addition, DT-168 is being evaluated in ongoing chronic toxicity studies of up to nine months in duration. In parallel, we are continuing our ongoing observational study in FECD patients, where we plan to recruit 200 patients to confirm disease characteristics and deterioration in the context of running a trial and to identify characteristics of FECD patients at risk of more rapid disease progression. This will inform our subsequent clinical development efforts and we believe it could potentially increase the probability of DT-168 programmatic success.

Previous wording

To date, we have incurred net losses and negative cash flows from operations since our inception and as of June 30, 2024 had an accumulated deficit of $200.5 million. Our cash, cash equivalents and investment securities balance as of June 30, 2024 was $261.0 million. Our net losses have resulted primarily from costs incurred in connection with organizing and staffing our company, business planning, raising capital, developing and optimizing our technology platform, identifying potential product candidates, undertaking research and nonclinical studies, clinical development activities, engaging in manufacturing for our development programs, and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales.

Current wording

To date, we have incurred net losses and negative cash flows from operations since our inception and as of September 30, 2024 had an accumulated deficit of $213.6 million. Our cash, cash equivalents and investment securities balance as of September 30, 2024 was $254.1 million. Our net losses have resulted primarily from costs incurred in connection with organizing and staffing our company, business planning, raising capital, developing and optimizing our technology platform, identifying potential product candidates, undertaking research and nonclinical studies, clinical development activities, engaging in manufacturing for our development programs, and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales.

Previous wording

We expect that our research and development expenses will increase for the foreseeable future as we continue the development of our FA, FECD, HD and DM1 programs and our other discovery programs, in particular as we advance our product candidates into clinical development. As of the date of this Quarterly Report, we cannot reasonably determine with certainty the timing of initiation, the duration or the completion costs of current or future nonclinical studies and clinical programs of our product candidates due to the inherently unpredictable nature of nonclinical and clinical development. Nonclinical and clinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future nonclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential. We will need to raise substantial additional capital in the future. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Current wording

We expect that our research and development expenses will increase for the foreseeable future as we continue the development of our FA, FECD, HD and DM1 programs and our other discovery programs, in particular as we advance our product candidates into and through clinical development. As of the date of this Quarterly Report, we cannot reasonably determine with certainty the timing of initiation, the duration or the completion costs of current or future nonclinical studies and clinical programs of our product candidates due to the inherently unpredictable nature of nonclinical and clinical development. Nonclinical and clinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future nonclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential. We will need to raise substantial additional capital in the future. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Previous wording

Research and Development Expenses. The decrease in research and development expenses compared to the same period of the prior year was primarily due to the completion of clinical activities for our FA program in 2023 and a reduction in expenses associated with our early-stage programs.

Current wording

Research and Development Expenses. The decrease in research and development expenses compared to the same period of the prior year was primarily due to completion of clinical activities for our FA program in 2023 and a reduction in expenses associated with our early-stage programs.

Previous wording

General and Administrative Expenses. The decrease in general administrative expenses was primarily due to lower headcount, resulting in a $1.5 million decrease in personnel-related costs inclusive of stock-based compensation, a $0.5 million decrease in professional services, a $0.2 million decrease in insurance expense and a $0.1 million decrease in other expenses incurred during the six months ended June 30, 2024 as compared to the same period in 2023.

Current wording

General and Administrative Expenses. The decrease in general and administrative expenses was primarily due to lower headcount, resulting in a $1.1 million decrease in personnel-related costs inclusive of stock-based compensation and a $0.1 million decrease in other expenses incurred during the three months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

The following table summarizes our operating expenses for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our operating expenses for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

The following table summarizes our research and development expenses by program, direct and indirect costs for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our research and development expenses by program, direct and indirect costs for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

General and Administrative Expenses. The decrease in general administrative expenses was primarily due to lower headcount, resulting in a $0.7 million decrease in personnel-related costs inclusive of stock-based compensation, a $0.1 million decrease in professional services and a $0.2 million decrease in other expenses incurred during the three months ended June 30, 2024 as compared to the same period in 2023.

Current wording

General and Administrative Expenses. The decrease in general and administrative expenses was primarily due to lower headcount, resulting in a $2.5 million decrease in personnel-related costs inclusive of stock-based compensation, a $0.8 million decrease in professional services and a $0.2 million decrease in other expenses incurred during the nine months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

As of June 30, 2024, we had $261.0 million of combined cash, cash equivalents and investment securities, a decrease of $20.8 million from the $281.8 million of cash, cash equivalents and investment securities at December 31, 2023. Further detail of the change in our cash and cash equivalents for the six months ended June 30, 2024 and 2023 is summarized below (in thousands):

Current wording

As of September 30, 2024, we had $254.1 million of combined cash, cash equivalents and investment securities, a decrease of $27.7 million from the $281.8 million of cash, cash equivalents and investment securities at December 31, 2023. Further detail of the change in our cash and cash equivalents for the nine months ended September 30, 2024 and 2023 is summarized below (in thousands):

Previous wording

Operating Activities. The decrease in our net cash used in operating activities was primarily due to the $16.3 million decrease in net loss, partially offset by an increase in net working capital for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Current wording

Operating Activities. The decrease in our net cash used in operating activities was primarily due to the $19.1 million decrease in net loss, partially offset by an increase in net working capital for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Previous wording

Investing Activities. The increase in net cash provided by investing activities was primarily due to a net increase in cash provided from the maturity of our investment securities during the six months ended June 30, 2024 compared to the six months ended June 30, 2023. We have classified our investment securities as available-for-sale and all investments are made in accordance with our investment policy.

Current wording

Investing Activities. The decrease in net cash provided by investing activities was primarily due to a net decrease in cash provided from the maturities and purchases of our investment securities during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. We have classified our investment securities as available-for-sale and all investments are made in accordance with our investment policy.

Previous wording

Financing Activities. Net cash provided by financing activities for the six months ended June 30, 2024 and 2023 was comprised of proceeds received from the issuance of common stock through our employee stock purchase plan and from employee stock option exercises.

Current wording

Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2024 and 2023 was comprised of proceeds received from the issuance of common stock through our employee stock purchase plan and from employee stock option exercises.

Previous wording

Until such time, if ever, as we can generate substantial revenues from product sales to support our cost structure, we expect to finance our cash needs through public or private equity offerings, debt financings, or other capital sources which may include strategic collaborations, licensing arrangements or other arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Equity and debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through strategic collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide as a result of macroeconomic factors, including geopolitical conflicts (such as the ongoing military conflict in Ukraine and actions taken by the United States and other governments in response), high inflation, bank failures, global supply chain and labor shortage challenges, and the effects of a health epidemic or pandemic. Because of the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Current wording

Until such time, if ever, as we can generate substantial revenues from product sales to support our cost structure, we expect to finance our cash needs through public or private equity offerings, debt financings, or other capital sources which may include strategic collaborations, licensing arrangements or other arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Equity and debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through strategic collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide as a result of macroeconomic factors, including geopolitical conflicts (such as the ongoing military conflict in Ukraine and actions taken by the United States and other governments in response), inflation, bank failures, global supply chain and labor shortage challenges, and the effects of a health epidemic or pandemic. Because of the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Previous wording

For the six months ended June 30, 2024, no payments were made pursuant to the License Agreement. In 2022, pursuant to the License Agreement, we paid $0.1 million to WARF upon the acceptance of an Investigational New Drug Application (IND) in the U.S. We will be required to make further aggregate milestone payments of up to $17.5 million upon achievement of certain other regulatory and commercial milestones. We may also be required to pay royalties based on annual net product sales in the low single digits on our or our sublicensees’ net product sales on a country-by-country and product-by-product basis, and are subject to a minimum royalty of $0.1 million per calendar year upon first commercial product sale. Further, we may be required to pay sublicense fees in the mid-single digits percentage for fees, royalties or other payments earned from the granting of sublicenses to the WARF patents and know-how.

Current wording

For the nine months ended September 30, 2024, no payments were made pursuant to the License Agreement. In 2022, pursuant to the License Agreement, we paid $0.1 million to WARF upon the acceptance of an Investigational New Drug Application (IND) in the U.S. We will be required to make further aggregate milestone payments of up to $17.5 million upon achievement of certain other regulatory and commercial milestones. We may also be required to pay royalties based on annual net product sales in the low single digits on our or our sublicensees’ net product sales on a country-by-country and product-by-product basis, and are subject to a minimum royalty of $0.1 million per calendar year upon first commercial product sale. Further, we may be required to pay sublicense fees in the mid-single digits percentage for fees, royalties or other payments earned from the granting of sublicenses to the WARF patents and know-how.

Previous wording

We are responsible for reimbursing WARF for costs incurred in connection with prosecuting and maintaining patent rights that are specific to the License Agreement. Expenses recognized in connection with legal patent fees under this License Agreement were immaterial for each of the six months ended June 30, 2024 and 2023.

Current wording

We are responsible for reimbursing WARF for costs incurred in connection with prosecuting and maintaining patent rights that are specific to the License Agreement. Expenses recognized in connection with legal patent fees under this License Agreement were immaterial for each of the nine months ended September 30, 2024 and 2023.

Previous wording

In May 2024, we entered into a license agreement pursuant to which we received exclusive, worldwide, royalty-bearing, sublicensable rights to certain patents and technology to be used in the development and commercialization of certain products. As consideration for the license, we paid an upfront fee of $0.2 million which was expensed to research and development during the six months ended June 30, 2024, as there is no alternative future use for the license.

Current wording

In May 2024, we entered into a license agreement pursuant to which we received exclusive, worldwide, royalty-bearing, sublicensable rights to certain patents and technology to be used in the development and commercialization of certain products. We paid $0.2 million in upfront license fees during the nine months ended September 30, 2024 and zero license fees during the three months ended September 30, 2024. The upfront license fee was expensed to research and development as there is no alternative future use for the license.