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 GeneTAC®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 GeneTAC®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 GeneTAC® 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, 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 GeneTAC® molecules. At doses that were observed to be well tolerated in rodents and non-human primates (NHPs), FA GeneTAC® 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 GeneTAC® molecules. In February 2022, the Investigational New Drug Application (IND) for our lead FA GeneTAC® 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 Phase 1 single-ascending dose (SAD) clinical trial and in August 2023, we reported data from the Phase 1 multiple-ascending dose (MAD) clinical trial of the prior DT-216 product candidate. Both studies showed that DT-216 was generally well-tolerated and exhibited the ability to overcome the FXN transcription impairment that causes FA. Data from the Phase 1 MAD clinical trial suggests more sustained exposure is likely needed to achieve a more durable increase in FXN expression, and we observed five cases of injection site thrombophlebitis in the Phase 1 MAD clinical trial. We then shifted focus to developing DT-216 with a potentially 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 after administration of DT-216P2 than was seen in studies with the prior DT-216 product candidate. Additionally, we observed favorable injection site tolerability following multiple intravenous (IV) administrations of DT-216P2. We have initiated a Phase 1 SAD clinical trial of DT-216P2 in normal healthy volunteers in Australia to evaluate single doses using multiple routes of administration, specifically IV infusion and subcutaneous (SC) injection and infusion routes. Results from this Phase 1 SAD clinical trial will inform the design of a clinical trial in FA patients, anticipated to begin in mid-2025. We anticipate providing an update in 2026 on the effect of DT-216P2 on endogenous FXN levels following 12 weeks of dosing.

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 GeneTAC® small molecule, DT-168, an eye drop for the treatment of FECD. When testedin vitro in FECD patient-derived corneal endothelial cells, our FECD GeneTAC® 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 GeneTAC® small molecules to correct the most common underlying genetic cause of FECD. We have completed dosing in a Phase 1 clinical trial in normal healthy volunteers to evaluate the safety of DT-168 and plan to provide results in the first half of 2025. In addition, DT-168 has been evaluated in chronic toxicity studies of up to nine months in duration. We are currently conducting an observational study in FECD to confirm disease characteristics and evaluate deterioration in the context of running a trial and to identify characteristics of FECD patients at risk of more rapid disease progression. We have achieved our enrollment goal for the observational study by recruiting and completing baseline assessments on approximately 250 FECD patients. Based on the baseline characteristics data, we have chosen approximately 100 patients for future follow-up visits. This will inform our clinical development efforts and we believe it could potentially increase the probability of DT-168 programmatic success.

Previous wording

Our third program based on the GeneTACTM platform is focused on HD. We are currently conducting preclinical studies on two promising HD GeneTACTM candidate molecules, candidate molecule 1 and candidate molecule 2. We have observed reduced mutant HTT (mtHTT) mRNA and protein and preservation of wild type HTT (wtHTT) in HD patient cells after treatment with our HD GeneTACTM candidate molecules. Inin vivo studies in zQ175DN mice, an animal model of HD, we observed a reduction of over 50% in mtHTT RNA and protein in the brain striatum after eight weeks of systemic administration of our HD GeneTACTM candidate molecules. In the same study, wtHTT mRNA and protein levels were shown to be preserved after treatment with our HD GeneTACTM candidate molecules. Our HD GeneTACTM candidate molecules were shown to be well tolerated in rodents and NHPs at all doses tested. We believe these data support the potential for our HD GeneTACTM candidate molecules to correct the underlying cause of HD. We plan to continue to evaluate these HD candidate molecules in nonclinical studies and expect to nominate one of them as a development candidate.

Current wording

Our fourth program based on the GeneTAC® platform is focused on HD. We are currently conducting preclinical studies on promising HD GeneTAC® candidate molecules. We have observed reduced mutant huntingtin (mtHTT) mRNA and protein and preservation of wild type huntingtin (wtHTT) in HD patient cells after treatment with our HD GeneTAC® candidate molecules. Inin vivo studies in zQ175DN mice, an animal model of HD, we observed a reduction of over 50% in mtHTT mRNA and protein in the brain striatum after eight weeks of systemic administration of our HD GeneTAC® candidate molecules. In the same study, wtHTT mRNA and protein levels were shown to be preserved after treatment with our HD GeneTAC® candidate molecules. We plan to continue to evaluate these HD candidate molecules in nonclinical studies. The final development candidate will be based on the molecules that perform favorably in relevant studies.

Previous wording

We have continued to make significant progress in advancing our GeneTACTM portfolio in preclinical studies to address other diseases and intend to declare additional product candidates as they progress towards the clinic.

Current wording

We have continued to make significant progress in advancing our GeneTAC® portfolio in preclinical studies to address other diseases and intend to declare additional product candidates as they progress towards the clinic.

Previous wording

We believe the structure and mechanism of action of our GeneTACTM molecules may offer the disease-modifying potential of genomic therapeutics, while also offering broad tissue biodistribution, resolution of aberrant gene expression preserving endogenous regulatory control elements, and leveraging established manufacturing, regulatory, and distribution frameworks for small molecules.

Current wording

We believe the structure and mechanism of action of our GeneTAC®molecules may offer the disease-modifying potential of genomic therapeutics, while also offering broad tissue biodistribution, resolution of aberrant gene expression preserving endogenous regulatory control elements, and leveraging established manufacturing, regulatory, and distribution frameworks for small molecules.

Previous wording

To date, we have incurred net losses and negative cash flows from operations since our inception and as of December 31, 2023, had an accumulated deficit of $177.6 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 December 31, 2024, had an accumulated deficit of $227.2 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 have funded our operations primarily through the sale of our common stock, convertible preferred stock, grant revenue and the issuance of convertible notes and debt. In March 2021, we completed our initial public offering in which we sold 13,800,000 shares of our common stock at $20.00 per share and received net proceeds, after underwriting discount and offering costs, of $254.3 million. In January 2021, we issued 19,083,979 shares of Series B convertible preferred stock at $6.55 per share for net proceeds of approximately $124.7 million. Our cash, cash equivalents and investment securities balance as of December 31, 2023, was $281.8 million.

Current wording

We have funded our operations primarily through the sale of our common stock, convertible preferred stock, grant revenue and the issuance of convertible notes and debt. In March 2021, we completed our initial public offering in which we sold 13,800,000 shares of our common stock at $20.00 per share and received net proceeds, after underwriting discount and offering costs, of $254.3 million. In January 2021, we issued 19,083,979 shares of Series B convertible preferred stock at $6.55 per share for net proceeds of approximately $124.7 million. Our cash, cash equivalents and investment securities balance as of December 31, 2024, was $245.5 million.

Previous wording

To date, our research and development expenses have consisted primarily of direct and indirect costs incurred in connection with the clinical development, nonclinical development and manufacturing of our product candidates and our discovery efforts. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Current wording

To date, our research and development expenses have consisted primarily of direct and indirect costs incurred in connection with the clinical development, nonclinical development and manufacturing of our product candidates and our discovery efforts. Research and development expenses are recognized as incurred.

Previous wording

facilities expenses which include allocated expenses for amortization of right-of-use (ROU) assets, depreciation and other overhead expenses, costs for general laboratory consumables and other indirect expenses.

Current wording

facilities expenses which include allocated expenses for rent, depreciation and other overhead expenses, costs for general laboratory consumables and other indirect expenses.

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 Annual 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, DM1 and HD 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 Annual Report on Form 10-K, we cannot reasonably determine with certainty the timing of initiation of future clinical trials, or the duration or completion costs of our current or future nonclinical studies and clinical programs, for 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

the number and scope, rate of progress, expense and results of our discovery and nonclinical development activities;

Current wording

the number and scope, rate of progress, expense and results of our discovery, nonclinical and clinical development activities;

Previous wording

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. Since our inception, we have funded our operations primarily through the sale of our common stock, convertible preferred stock, grant income and the issuance of convertible notes and notes payable. As of December 31, 2023, we had $281.8 million of combined cash and cash equivalents and investment securities, a decrease of $48.6 million from the $330.4 million of cash and cash equivalents and investment securities at December 31, 2022. The following table summarizes our cash flow activities (in thousands):

Current wording

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. Since our inception, we have funded our operations primarily through the sale of our common stock, convertible preferred stock, grant income and the issuance of convertible notes and notes payable. As of December 31, 2024, we had $245.5 million of combined cash and cash equivalents and investment securities, a decrease of $36.3 million from the $281.8 million of cash and cash equivalents and investment securities at December 31, 2023. The following table summarizes our cash flow activities (in thousands):

Previous wording

Operating Activities. The increase in our use of cash was primarily due to the $6.0 million increase in net loss net of non-cash reconciling items and a $1.3 million decrease in net working capital for the year ended December 31, 2023 compared to the same period of the prior year. The higher net loss incurred during the 2023 period was due primarily to increased expenses related to our early-stage programs and higher personnel-related costs to support our programs.

Current wording

Operating Activities. The decrease in our net cash used in operating activities was primarily due to the $17.3 million decrease in net loss, partially offset by an increase in net working capital for the year ended December 31, 2024 compared to the same period of the prior year. The lower net loss incurred during the 2024 period was primarily due to decreased expenses related to our FA program and lower personnel-related costs.

Previous wording

Investing Activities. The increase in net cash provided by investing activities was due to increased proceeds from the maturities of investment securities and a decrease in purchases of investment securities during the year ended December 31, 2023 compared to the year ended December 31, 2022. 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 year ended December 31, 2024 compared to the year ended December 31, 2023. We have classified our investment securities as available-for-sale and all investments are made in accordance with our investment policy.

Previous wording

the cost, timing and outcome of seeking FDA, EMA and any other regulatory approvals for any product candidates;

Current wording

the cost, timing and outcome of seeking FDA, European Medicines Agency (EMA) and any other regulatory approvals for any product candidates;

Previous wording

the timing of any milestone and royalty payments to Wisconsin Alumni Research Foundation (WARF), or other future licensors;

Current wording

the timing of any milestone and royalty payments to our current and future licensors;

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 geopolitical tensions between the U.S. and China, the ongoing Russia/Ukraine conflict and the Israel-Hamas war), inflation, tariffs, 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 year ended December 31, 2022, pursuant to the License Agreement, we paid $0.1 million to WARF upon the acceptance of an IND in the U.S. and 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 $100,000 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 year ended December 31, 2022, pursuant to the License Agreement, we paid $0.1 million to WARF upon the acceptance of an IND in the U.S. and 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 $100,000 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. The Company will recognize these milestone payments and royalties when paid or payable. There were no additional payments or royalties recorded through December 31, 2024.

Previous wording

See Item 8 of Part II, “Notes to Financial Statements —Note 2 — Basis of Presentation and Summary of Significant Accounting Policies” for a discussion of recent accounting pronouncements.

Current wording

See Part II, Item 8, “Notes to Financial Statements —Note 2 — Basis of Presentation and Summary of Significant Accounting Policies” for a discussion of recent accounting pronouncements.