Design Therapeutics (DSGN) added ~15% on Thursday after RBC Capital Markets upgraded the stock to Outperform from Sector Perform, citing a catalyst-rich period for the small molecule drug developer in the near-term. The upgrade comes after the Carlsbad, California-based Design ( ...

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-40288 Design Therapeutics, Inc. (Exact Name of Registrant as Specified in its Charter) 6005 Hidden Valley Road, Suite 110 Car ...

Exhibit 99.1 Design Therapeutics Announces Plans to Initiate Patient Dosing of DT-818 in Myotonic Dystrophy Type-1 (DM1) in the First Half of 2026 and Reports Third Quarter 2025 Financial Results Obtained ex-US Regulatory Clearance for DT-818, a Potentially Best-in-Disease Treatment for Myotonic Dystrophy Type-1 (DM1) Trials of DT-216P2 in Friedreich Ataxia (FA) and DT-168 in Fuchs Endothelial Corneal Dystrophy (FECD) Ongoing Cash and Securities of $206.0 Million as of Third Quarter 2025 Support Continued P ...

Core Insights - Design Therapeutics has announced the nomination of DT-818 as a development candidate for the treatment of Myotonic Dystrophy Type-1 (DM1), highlighting its potential as a best-in-disease treatment due to its ability to selectively reduce transcription of the mutant DMPK gene [2][5] - The company has obtained ex-US regulatory clearance to initiate clinical development of DT-818, with plans to begin a Phase 1 multiple-ascending dose trial in Australia in the first half of 2026 [5] - Ongoing trials for DT-216P2 in Friedreich Ataxia (FA) and DT-168 in Fuchs Endothelial Corneal Dystrophy (FECD) are progressing, with data readouts anticipated in the second half of 2026 [2][5] Corporate Highlights - The appointment of Justin Gover to the Board of Directors, who has over 25 years of experience in the biotechnology industry, including leadership at GW Pharmaceuticals [5] - The company reported a net loss of $17.0 million for the third quarter of 2025, with research and development expenses of $14.6 million and general and administrative expenses of $4.7 million [5][11] Financial Overview - As of September 30, 2025, Design Therapeutics had cash, cash equivalents, and investment securities totaling $206.0 million, supporting continued pipeline advancement [6][12] - The total operating expenses for the third quarter of 2025 were $19.3 million, compared to $16.2 million in the same quarter of the previous year [11] Pipeline Development - DT-818 has shown a greater than 90% reduction in toxic RNA foci in DM1 patient cells during preclinical studies, indicating its potential effectiveness [5] - The ongoing RESTORE-FA Phase 1/2 trial for DT-216P2 is expected to report data on frataxin expression levels in the second half of 2026 [5] - A Phase 2 biomarker trial for DT-168 is also ongoing, with data anticipated in the second half of 2026 [5]

Core Insights - Design Therapeutics, Inc. has appointed Justin Gover to its Board of Directors, effective immediately, bringing over 25 years of biotechnology leadership experience [1][2] - Gover's previous role as founding CEO of GW Pharmaceuticals included guiding the company through a $7 billion acquisition by Jazz Pharmaceuticals and the successful commercialization of Epidiolex® [2] - Dr. Arsani William has stepped down from the Board, having provided strategic counsel since 2021, including support for the company's IPO and clinical pipeline advancement [3] Company Overview - Design Therapeutics is a clinical-stage biotechnology company focused on developing GeneTAC gene-targeted therapies aimed at addressing serious degenerative genetic diseases [5] - The company's GeneTAC molecules are designed to modulate the expression of disease-causing genes, with ongoing clinical programs for Friedreich ataxia (DT-216P2), Fuchs endothelial corneal dystrophy (DT-168), myotonic dystrophy type-1, and Huntington's disease [5] - Discovery efforts are also underway for multiple genomic medicines, indicating a broad pipeline potential [5] Leadership Insights - Justin Gover's expertise in translating innovative science into medicines is expected to be invaluable for advancing Design's clinical pipeline [4] - Dr. William expressed pride in the progress made during his tenure, particularly in advancing the GeneTAC platform and establishing a transformative pipeline for genetic diseases [4] - Gover's involvement with other biotech boards and nonprofit organizations highlights his commitment to the industry and patient advocacy [4]

Core Insights - Design Therapeutics has developed a novel class of small molecules that can modulate the expression of specific genes in the genome, functioning similarly to transcription factors [1] - The company is focusing on several monogenic disorders, including Friedreich's ataxia, Fuchs endothelial corneal dystrophy, myotonic dystrophy, and Huntington's disease [2] Group 1 - The unique mechanism of Design Therapeutics' molecules involves recognizing DNA sequences through minor groove interactions and recruiting transcriptional machinery to adjust gene expression levels [1] - Friedreich's ataxia is characterized by low expression levels of the frataxin gene, which is the root cause of the disease [3]

Summary of Design Therapeutics Conference Call Company Overview - **Company**: Design Therapeutics (DSGN) - **Focus**: Development of a new class of small molecules called GeneTACs that modulate gene expression for treating monogenic disorders [2][3] Key Points on GeneTAC Platform - **Mechanism**: GeneTACs can increase or decrease the expression of specific genes by recognizing DNA sequences and recruiting transcriptional machinery [2] - **Targeted Diseases**: - Friedreich's ataxia (FA) - Fuchs' endothelial corneal dystrophy - Myotonic dystrophy - Huntington's disease [2][3] Friedreich's Ataxia (FA) Insights - **Gene Target**: The frataxin gene, where low expression leads to FA [3] - **Current Expression Levels**: - Carriers have about 50% frataxin expression; patients have 20-25% of wild-type levels [9] - **Clinical Benefit**: Potential to increase frataxin expression could provide significant clinical benefits [3][10] - **Clinical Trials**: Two programs are currently in clinical investigation [4] Clinical Development of DT216 - **Clinical Trials**: DT216 was taken into the clinic in 2022-2023, showing the ability to upregulate frataxin expression [16] - **Challenges**: Previous formulation faced issues like injection site thrombophlebitis and short duration of exposure [17] - **New Formulation**: DT216P2 has shown improved pharmacokinetics and resolved previous issues [19][20] - **Next Steps**: Currently in Phase II studies (RESTORE FA trial) with multiple ascending doses [24] Fuchs' Endothelial Corneal Dystrophy Program - **Prevalence**: Approximately 2 million diagnosed cases in the U.S. [34] - **Mechanism**: Caused by a mutation in the TCF4 gene leading to toxic RNA production [35] - **Treatment Approach**: DT168 aims to reduce toxic RNA levels through eye drops, potentially modifying disease progression [36] - **Phase I Study**: Confirmed tolerability and safety of DT168 in healthy volunteers [37] Biomarker Development - **Splice Markers**: Identified splice defects as potential biomarkers for assessing treatment efficacy [38] - **Study Design**: Patients scheduled for corneal transplants will be treated with DT168 to evaluate splicing effects [39] Regulatory Considerations - **Endpoints for Registration Trials**: Evaluating visual quality measures, corneal edema, and imaging endpoints for future trials [44] - **Unmet Need**: Any treatment that slows or stops disease progression would be highly valuable [46] Other Programs - **DM1 Program**: Expected to select a development candidate this year [48] - **Competitive Positioning**: GeneTACs may offer advantages over existing therapies due to their mechanism and administration routes [49] Financial Position - **Capital**: Company ended the quarter with $216 million, sufficient to advance clinical programs [51] Market Potential - **Market Validation**: Skyclaris from Biogen is annualizing around $500 million, indicating a significant market opportunity for therapies targeting the root cause of FA [31]

Core Insights - Design Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing treatments for serious degenerative genetic diseases [3] Company Overview - The company utilizes a platform of GeneTAC gene targeted chimera small molecules to create a new class of therapies aimed at modifying the expression of disease-causing genes [3] - Current clinical-stage programs include DT-216P2 for Friedreich ataxia and DT-168 for Fuchs endothelial corneal dystrophy, with additional programs in myotonic dystrophy type-1 and Huntington's disease [3] - Design Therapeutics is also engaged in discovery efforts for multiple genomic medicines [3] Upcoming Events - Management will participate in a fireside chat at the 2025 Cantor Global Healthcare Conference on September 4, 2025, at 10:55 a.m. ET in New York [1] - A live webcast of the event will be available on the company's website and archived for at least 30 days [2]

Form 10-Q Details [Registrant Information](index=1&type=section&id=Registrant%20Information) This section details Design Therapeutics, Inc.'s identification, incorporation, trading symbol, filer status, and outstanding common stock as of August 1, 2025 - Design Therapeutics, Inc. is incorporated in Delaware with its principal executive offices in Carlsbad, California[2](index=2&type=chunk)[3](index=3&type=chunk) Condensed Balance Sheet Data (in thousands) | Detail | Value | | :--- | :--- | | Commission File Number | 001-40288 | | Trading Symbol | DSGN | | Exchange | The Nasdaq Global Select Market | | Filer Status | Non-accelerated filer, Smaller reporting company, Emerging growth company | | Outstanding Common Stock (as of Aug 1, 2025) | 56,948,126 shares | [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This cautionary statement addresses forward-looking information, emphasizing that actual results may differ due to inherent risks and uncertainties - The report contains forward-looking statements regarding research, development, and commercialization plans for product candidates, including expectations for clinical development in Friedreich ataxia and data announcements[6](index=6&type=chunk) - Key forward-looking statements include the therapeutic potential of product candidates, ability to advance into clinical trials, manufacturing capabilities, funding, market size, intellectual property rights, and recruitment of key personnel[6](index=6&type=chunk) - Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially due to risks and uncertainties, particularly those detailed in the 'Risk Factors' section[7](index=7&type=chunk)[8](index=8&type=chunk) [Trademarks and Service Marks](index=4&type=section&id=Trademarks%20and%20Service%20Marks) This section identifies 'Design Therapeutics,' 'Design,' 'GeneTAC,' and the Design logo as proprietary trademarks - The trademarks 'Design Therapeutics,' 'Design,' 'GeneTAC,' and the Design logo are the property of Design Therapeutics, Inc[9](index=9&type=chunk) - All other trademarks, trade names, and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners[9](index=9&type=chunk) [Summary of Risks Associated with Our Business](index=4&type=section&id=SUMMARY%20OF%20RISKS%20ASSOCIATED%20WITH%20OUR%20BUSINESS) This section outlines significant risks including limited operating history, anticipated losses, early-stage development, novel technologies, and regulatory uncertainties - The company has a limited operating history, has incurred net losses since inception, and expects significant losses for the foreseeable future, with no guarantee of profitability[11](index=11&type=chunk) - Development efforts are early-stage, with only two product candidates in clinical development (DT-216P2 for FA, DT-168 for FECD) and others in nonclinical or discovery stages, making timelines and outcomes uncertain[11](index=11&type=chunk) - Product candidates are based on novel technologies, which complicates predicting development timing, costs, and regulatory approval likelihood, and may cause undesirable side effects[11](index=11&type=chunk) - The company faces substantial competition and relies on third parties for clinical trials and manufacturing, which could lead to delays or increased costs[12](index=12&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents unaudited condensed financial statements, reflecting ongoing net losses, R&D investment, and a decrease in cash and investments [Condensed Balance Sheets](index=8&type=section&id=Condensed%20Balance%20Sheets) Condensed Balance Sheet Data (in thousands) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $19,703 | $22,563 | | Investment securities | $196,573 | $222,914 | | Total current assets | $219,794 | $248,040 | | Total assets | $222,886 | $252,093 | | Total current liabilities | $8,747 | $8,462 | | Total liabilities | $9,849 | $9,996 | | Additional paid-in capital | $476,738 | $468,830 | | Accumulated deficit | $(264,012) | $(227,214) | | Total stockholders' equity | $213,037 | $242,097 | - Total assets decreased by **$29.2 million** from December 31, 2024, to June 30, 2025, primarily due to a reduction in investment securities and cash[18](index=18&type=chunk) - Accumulated deficit increased by **$36.8 million**, reflecting ongoing net losses[18](index=18&type=chunk) [Condensed Statements of Operations](index=9&type=section&id=Condensed%20Statements%20of%20Operations) Condensed Statements of Operations Data (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $15,738 | $10,516 | $31,115 | $20,317 | | General and administrative | $5,831 | $4,527 | $10,872 | $9,126 | | Total operating expenses | $21,569 | $15,043 | $41,987 | $29,443 | | Loss from operations | $(21,569) | $(15,043) | $(41,987) | $(29,443) | | Interest income | $2,486 | $3,250 | $5,189 | $6,545 | | Net loss | $(19,083) | $(11,793) | $(36,798) | $(22,898) | | Net loss per share, basic and diluted | $(0.34) | $(0.21) | $(0.65) | $(0.41) | - Net loss increased by **61.8%** for the three months ended June 30, 2025, compared to the same period in 2024, and by **60.7%** for the six months ended June 30, 2025, driven by higher operating expenses[21](index=21&type=chunk) - Research and development expenses increased by **$5,222 thousand (49.6%)** for the three months and **$10,798 thousand (53.1%)** for the six months ended June 30, 2025, compared to the prior year periods[21](index=21&type=chunk) [Condensed Statements of Comprehensive Loss](index=10&type=section&id=Condensed%20Statements%20of%20Comprehensive%20Loss) Condensed Statements of Comprehensive Loss Data (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(19,083) | $(11,793) | $(36,798) | $(22,898) | | Unrealized loss on available-for-sale securities | $(145) | $(50) | $(170) | $(279) | | Comprehensive loss | $(19,228) | $(11,843) | $(36,968) | $(23,177) | - Comprehensive loss increased by **$7,385 thousand** for the three months and **$13,791 thousand** for the six months ended June 30, 2025, compared to the prior year periods, primarily due to the increased net loss[24](index=24&type=chunk) [Condensed Statements of Stockholders' Equity](index=11&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) Changes in Stockholders' Equity (in thousands, except share data) | Metric | Balance at Dec 31, 2024 | Issuance of common stock (ESPP) | Stock-based compensation | Unrealized loss on investments | Net loss | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock Shares | 56,754,341 | 179,448 | — | — | — | 56,948,126 | | Common Stock Amount | $6 | $0 | $0 | $0 | $0 | $6 | | Additional Paid-in Capital | $468,830 | $361 | $7,524 | $0 | $0 | $476,738 | | Accumulated Other Comprehensive Income | $475 | $0 | $0 | $(170) | $0 | $305 | | Accumulated Deficit | $(227,214) | $0 | $0 | $0 | $(36,798) | $(264,012) | | Total Stockholders' Equity | $242,097 | $361 | $7,524 | $(170) | $(36,798) | $213,037 | - Total stockholders' equity decreased from **$242,097 thousand** at December 31, 2024, to **$213,037 thousand** at June 30, 2025, primarily due to the net loss of **$36,798 thousand**[27](index=27&type=chunk) - Additional paid-in capital increased by **$7,908 thousand**, driven by stock-based compensation of **$7,524 thousand** and common stock issuance under the employee stock purchase plan[27](index=27&type=chunk) [Condensed Statements of Cash Flows](index=12&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Condensed Statements of Cash Flows Data (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(31,230) | $(23,699) | | Net cash provided by investing activities | $27,986 | $47,949 | | Net cash provided by financing activities | $384 | $249 | | Net (decrease) increase in cash and cash equivalents | $(2,860) | $24,499 | | Cash and cash equivalents at end of period | $19,703 | $45,699 | - Net cash used in operating activities increased by **$7,531 thousand** for the six months ended June 30, 2025, compared to the same period in 2024[30](index=30&type=chunk) - Net cash provided by investing activities decreased by **$19,963 thousand**, primarily due to a net decrease in cash from maturities and purchases of investment securities[30](index=30&type=chunk) [Notes to Condensed Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) [1. Organization](index=13&type=section&id=1.%20Organization) - Design Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on GeneTAC® molecules for inherited nucleotide repeat expansion mutations, with lead candidates in Friedreich ataxia (FA) and Fuchs endothelial corneal dystrophy (FECD)[33](index=33&type=chunk) - The company has incurred net operating losses since inception, with an accumulated deficit of **$264.0 million** as of June 30, 2025[34](index=34&type=chunk) - Management expects current cash, cash equivalents, and investment securities (**$216.3 million** as of June 30, 2025) to be sufficient for more than 12 months, but significant additional financing will be required for product development and commercialization[34](index=34&type=chunk)[35](index=35&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) - The unaudited interim condensed financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting requirements, including normal recurring adjustments[36](index=36&type=chunk) - The company operates in one operating and reportable segment, focused on its proprietary GeneTAC® platform for inherited diseases driven by nucleotide repeat expansion[38](index=38&type=chunk)[39](index=39&type=chunk) [Recent Accounting Pronouncements](index=15&type=section&id=Recent%20Accounting%20Pronouncements) - The company adopted ASU 2023-07 (Segment Reporting) for the year ended December 31, 2024, with no material impact on financial position or results of operations[40](index=40&type=chunk) - ASU 2023-09 (Income Taxes) is being evaluated and is not expected to have a material effect on financial statement disclosures[41](index=41&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for fiscal years beginning after December 15, 2026, and the company is evaluating its impact[42](index=42&type=chunk) [3. Net Loss Per Share](index=15&type=section&id=3.%20Net%20Loss%20Per%20Share) - Basic and diluted net loss per share are computed by dividing net loss by the weighted-average common shares outstanding; there is no difference due to the company's net loss position[43](index=43&type=chunk) Potentially Dilutive Securities Excluded from Diluted EPS Calculation | Security Type | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Stock options | 13,777,127 | 10,679,388 | | Employee stock purchase plan | 87,731 | 60,727 | | Total | 13,864,858 | 10,740,115 | [4. Fair Value Measurements](index=15&type=section&id=4.%20Fair%20Value%20Measurements) - Fair value is defined as an exit price, measured using a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[45](index=45&type=chunk)[48](index=48&type=chunk) Financial Instruments Measured at Fair Value (in thousands) | Asset Type | Total (June 30, 2025) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | | :--- | :--- | :--- | :--- | | Money market funds | $17,545 | $17,545 | $0 | | Certificates of deposit | $1,662 | $1,662 | $0 | | U.S. Treasury securities | $167,429 | $167,429 | $0 | | U.S. Government agency securities | $27,482 | $0 | $27,482 | | **Total** | **$214,118** | **$186,636** | **$27,482** | | Asset Type | Total (Dec 31, 2024) | Level 1 (Dec 31, 2024) | Level 2 (Dec 31, 2024) | | :--- | :--- | :--- | :--- | | Money market funds | $20,800 | $20,800 | $0 | | Certificates of deposit | $2,898 | $2,898 | $0 | | U.S. Treasury securities | $197,528 | $197,528 | $0 | | U.S. Government agency securities | $22,488 | $0 | $22,488 | | **Total** | **$243,714** | **$221,226** | **$22,488** | - The company's investment securities are measured at fair value, with U.S. Government agency securities valued using Level 2 inputs (quoted market prices for similar instruments)[47](index=47&type=chunk) [5. Investment Securities](index=18&type=section&id=5.%20Investment%20Securities) Investment Securities at Fair Value (in thousands) | Security Type | Maturity | Amortized Cost (June 30, 2025) | Unrealized Gains (June 30, 2025) | Unrealized Losses (June 30, 2025) | Fair Market Value (June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | Certificates of deposits | Within 1 year | $1,659 | $3 | $0 | $1,662 | | U.S. Treasury securities | Within 1 year | $129,678 | $146 | $(9) | $129,815 | | U.S. Treasury securities | Greater than 1 year | $37,431 | $183 | $0 | $37,614 | | U.S. Government agency securities | Greater than 1 year | $27,500 | $0 | $(18) | $27,482 | | **Total** | | **$196,268** | **$332** | **$(27)** | **$196,573** | | Security Type | Maturity | Amortized Cost (Dec 31, 2024) | Unrealized Gains (Dec 31, 2024) | Unrealized Losses (Dec 31, 2024) | Fair Market Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | :--- | | Certificates of deposits | Within 1 year | $2,884 | $14 | $0 | $2,898 | | U.S. Treasury securities | Within 1 year | $172,178 | $391 | $0 | $172,569 | | U.S. Government agency securities | Within 1 year | $7,500 | $0 | $(7) | $7,493 | | U.S. Treasury securities | Greater than 1 year | $24,878 | $83 | $(2) | $24,959 | | U.S. Government agency securities | Greater than 1 year | $14,999 | $1 | $(5) | $14,995 | | **Total** | | **$222,439** | **$489** | **$(14)** | **$222,914** | - As of June 30, 2025, the company held **$196.6 million** in investment securities, down from **$222.9 million** at December 31, 2024[49](index=49&type=chunk) - Unrealized losses on available-for-sale securities were primarily due to changes in interest rates, not credit-related factors, and no allowance for credit losses was recognized[50](index=50&type=chunk) [6. Balance Sheet Details](index=19&type=section&id=6.%20Balance%20Sheet%20Details) Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid expenses | $2,170 | $1,300 | | Interest receivable | $1,348 | $1,263 | | **Total** | **$3,518** | **$2,563** | Property and Equipment, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Laboratory equipment | $2,388 | $2,291 | | Computer equipment and software | $102 | $102 | | Furniture and fixtures | $521 | $521 | | Leasehold improvements | $151 | $151 | | Construction in progress | $51 | $0 | | Less accumulated depreciation | $(1,955) | $(1,655) | | **Total** | **$1,258** | **$1,410** | Accrued Expenses and Current Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued personnel costs | $2,505 | $3,576 | | Accrued research and development costs | $4,035 | $1,220 | | Current portion of operating lease liability, net, related party | $844 | $800 | | Accrued other | $350 | $680 | | **Total** | **$7,734** | **$6,276** | [7. Leases](index=20&type=section&id=7.%20Leases) - The company leases laboratory and office space from Crossing Holdings, LLC, a related party, with a weighted-average remaining lease term of **2.2 years** and a discount rate of **7.37%** as of June 30, 2025[54](index=54&type=chunk) Maturities of Operating Lease Liabilities (in thousands) | Year | Amount | | :--- | :--- | | 2025 (remaining six months) | $477 | | 2026 | $973 | | 2027 | $663 | | **Total future minimum lease payments** | **$2,113** | | Less: Present value adjustment | $(167) | | **Operating lease liabilities** | **$1,946** | - Rent expense was **$0.2 million** for each of the three months ended June 30, 2025 and 2024, and **$0.5 million** for each of the six months ended June 30, 2025 and 2024[55](index=55&type=chunk) [8. Commitments and Contingencies](index=20&type=section&id=8.%20Commitments%20and%20Contingencies) - The company accrues liabilities for claims when probable and estimable, but had no such contingent liabilities as of June 30, 2025, or December 31, 2024[56](index=56&type=chunk) [9. License Agreements](index=22&type=section&id=9.%20License%20Agreements) - In May 2024, the company entered a license agreement for exclusive, worldwide, royalty-bearing rights, with potential aggregate regulatory milestone payments of up to **$0.8 million** per product[57](index=57&type=chunk)[58](index=58&type=chunk) - In February 2019, the company licensed exclusive rights from Wisconsin Alumni Research Foundation (WARF), with potential aggregate milestone payments of up to **$17.5 million** and low single-digit royalties on net product sales[60](index=60&type=chunk)[61](index=61&type=chunk) - No additional payments or royalties were recorded under either license agreement through June 30, 2025[58](index=58&type=chunk)[61](index=61&type=chunk) [10. Stockholders' Deficit](index=22&type=section&id=10.%20Stockholders'%20Deficit) - In May 2025, the company filed a new shelf registration statement (2025 Shelf Registration Statement) permitting the offering of up to **$300.0 million** in securities, including a **$100.0 million** 'at-the-market' (ATM) program[64](index=64&type=chunk) - As of June 30, 2025, no shares have been sold under the ATM Program[65](index=65&type=chunk) - A one-time non-cash charge of approximately **$0.4 million** was recorded to general and administrative expenses during the three and six months ended June 30, 2025, related to deferred financing costs for the prior 2022 Registration Statement[66](index=66&type=chunk) [11. Stock-Based Compensation](index=24&type=section&id=11.%20Stock-Based%20Compensation) Stock Option Activity (Six Months Ended June 30, 2025) | Activity | Options | Weighted-Average Exercise Price | | :--- | :--- | :--- | | Outstanding at December 31, 2024 | 10,328,177 | $6.96 | | Granted | 3,767,693 | $5.80 | | Exercised | (14,337) | $1.62 | | Forfeited | (304,406) | $11.61 | | **Balance at June 30, 2025** | **13,777,127** | **$6.54** | Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $1,689 | $1,588 | $3,336 | $3,155 | | General and administrative | $2,296 | $1,711 | $4,188 | $3,328 | | **Total** | **$3,985** | **$3,299** | **$7,524** | **$6,483** | - Stock-based compensation expense increased by **$686 thousand** for the three months and **$1,041 thousand** for the six months ended June 30, 2025, compared to the prior year periods[68](index=68&type=chunk) [12. Related Party Transactions](index=25&type=section&id=12.%20Related%20Party%20Transactions) - The company has lease agreements for laboratory and office space with Crossing Holdings, LLC, an entity controlled by Dr. Pratik Shah, the company's President, CEO, and Chairperson[70](index=70&type=chunk) Related Party Rent and Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $220 | $212 | $437 | $425 | | General and administrative | $71 | $76 | $145 | $151 | | **Total expenses** | **$291** | **$288** | **$582** | **$576** | - Consulting agreements with Marlinspike Group (where the CEO is an executive officer) and Dr. Aseem Z. Ansari (co-founder) resulted in general and administrative expenses of **$60 thousand** and research and development expenses of **$10 thousand**, respectively, for each of the three months ended June 30, 2025 and 2024[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [13. Segment Information](index=27&type=section&id=13.%20Segment%20Information) - The company operates in one operating and reportable segment, with its Chief Executive Officer managing operations and assessing performance at a consolidated level[76](index=76&type=chunk) - As of June 30, 2025, the company has no revenue, and all long-lived assets are located within the United States[76](index=76&type=chunk) Significant Segment Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Interest income | $2,486 | $3,250 | $5,189 | $6,545 | | Direct program expense | $10,445 | $5,875 | $20,406 | $10,628 | | Personnel expense | $4,400 | $3,663 | $8,777 | $7,932 | | Stock-based compensation expense | $3,985 | $3,299 | $7,524 | $6,483 | | Other segment items | $2,739 | $2,206 | $5,280 | $4,400 | | **Segment net loss** | **$(19,083)** | **$(11,793)** | **$(36,798)** | **$(22,898)** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, highlighting clinical-stage biopharmaceutical progress, increasing losses, R&D investments, and future capital needs [Overview](index=28&type=section&id=Overview) - Design Therapeutics is a clinical-stage biopharmaceutical company developing GeneTAC® molecules to address inherited nucleotide repeat expansion mutations, with programs in Friedreich ataxia (FA), Fuchs endothelial corneal dystrophy (FECD), myotonic dystrophy type-1 (DM1), and Huntington's disease (HD)[78](index=78&type=chunk) - The lead product candidate, DT-216P2 for FA, is in a Phase 1/2 MAD clinical trial, but received a clinical hold notice from the FDA regarding the starting dose in the United States[81](index=81&type=chunk)[83](index=83&type=chunk) - DT-168, an eye drop for FECD, has completed a Phase 1 clinical trial and initiated a Phase 2 biomarker trial, with data anticipated in 2026[84](index=84&type=chunk)[85](index=85&type=chunk) - The company has incurred net losses and negative cash flows since inception, with an accumulated deficit of **$264.0 million** and **$216.3 million** in cash, cash equivalents, and investment securities as of June 30, 2025[90](index=90&type=chunk) [Components of Our Results of Operations](index=32&type=section&id=Components%20of%20Our%20Results%20of%20Operations) - Research and development (R&D) expenses primarily consist of direct costs (CROs, manufacturing, supplies, license fees) and indirect costs (personnel, facilities, stock-based compensation)[93](index=93&type=chunk)[96](index=96&type=chunk) - General and administrative (G&A) expenses include personnel-related costs, insurance, legal fees, and professional services[99](index=99&type=chunk) - Both R&D and G&A expenses are expected to increase significantly as product candidates advance through clinical development and the company expands its operations as a public company[95](index=95&type=chunk)[100](index=100&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Operating Expenses (Three Months Ended June 30, in thousands) | Operating Expense | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $15,738 | $10,516 | $5,222 | | General and administrative | $5,831 | $4,527 | $1,304 | | **Total operating expenses** | **$21,569** | **$15,043** | **$6,526** | - Research and development expenses increased by **$5.2 million**, primarily due to increased costs for the FA program (DT-216 clinical activities) and other early-stage research programs, partially offset by a decrease in FECD nonclinical activities[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - General and administrative expenses increased by **$1.3 million**, driven by a **$0.8 million** increase in employee compensation (including **$0.6 million** in stock-based compensation) and a **$0.5 million** increase in professional services, which includes a **$0.4 million** one-time charge for deferred financing costs[105](index=105&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Operating Expenses (Six Months Ended June 30, in thousands) | Operating Expense | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $31,115 | $20,317 | $10,798 | | General and administrative | $10,872 | $9,126 | $1,746 | | **Total operating expenses** | **$41,987** | **$29,443** | **$12,544** | - Research and development expenses increased by **$10.8 million**, primarily due to higher costs for the FA program (**$5.0 million** increase), FECD program (**$0.4 million** increase), and other direct early-stage research programs (**$4.3 million** increase)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - General and administrative expenses increased by **$1.7 million**, driven by a **$1.1 million** increase in employee compensation (including **$0.9 million** in stock-based compensation) and a **$0.5 million** increase in professional services, which includes a **$0.4 million** one-time charge for deferred financing costs[109](index=109&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$216.3 million** in combined cash, cash equivalents, and investment securities, a decrease of **$29.2 million** from December 31, 2024[111](index=111&type=chunk) Net Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating activities | $(31,230) | $(23,699) | | Investing activities | $27,986 | $47,949 | | Financing activities | $384 | $249 | | **Net (decrease) increase in cash and cash equivalents** | **$(2,860)** | **$24,499** | - Net cash used in operating activities increased by **$7.5 million**, while net cash provided by investing activities decreased by **$20.0 million**, primarily due to changes in investment securities[111](index=111&type=chunk)[112](index=112&type=chunk) - The company believes existing funds are sufficient for more than the next 12 months but will require substantial additional capital for full product development and commercialization, potentially through equity offerings, debt financings, or collaborations[117](index=117&type=chunk)[119](index=119&type=chunk) [Contractual Obligations, Commitments and Material Cash Requirements](index=41&type=section&id=Contractual%20Obligations%2C%20Commitments%20and%20Material%20Cash%20Requirements) - The company has lease agreements for lab and office space with a related party, with annual rent payments of approximately **$0.8 million** (plus 3% annual increases) for the initial space and **$0.1 million** (plus 3% annual increases) for additional space[122](index=122&type=chunk)[123](index=123&type=chunk) - License agreements include potential aggregate milestone payments of up to **$17.5 million** to WARF and up to **$0.8 million** per product to another licensor, plus royalties on net sales[125](index=125&type=chunk)[129](index=129&type=chunk) - Future material cash requirements are expected for planned clinical trials, discovery and nonclinical programs, personnel, facilities, and external R&D[133](index=133&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management's discussion is based on financial statements prepared in accordance with U.S. GAAP, requiring estimates and judgments, particularly for research and development expenses[134](index=134&type=chunk) - No material changes to critical accounting policies have occurred since December 31, 2024[135](index=135&type=chunk) [Recent Accounting Pronouncements](index=43&type=section&id=Recent%20Accounting%20Pronouncements) - Refers to Note 2 of the Condensed Financial Statements for a discussion of recent accounting pronouncements[136](index=136&type=chunk) [Other Information](index=43&type=section&id=Other%20Information) [Emerging Growth Company Status](index=43&type=section&id=Emerging%20Growth%20Company%20Status) - The company is an 'emerging growth company' under the JOBS Act and intends to take advantage of reduced reporting requirements[137](index=137&type=chunk) - The company has irrevocably elected not to use the extended transition period for complying with new or revised financial accounting standards[138](index=138&type=chunk) - The emerging growth company status will continue until the earliest of December 31, 2026, or when certain revenue or market capitalization thresholds are met[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a 'smaller reporting company,' Design Therapeutics, Inc. is exempt from market risk disclosures in this report - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a 'smaller reporting company'[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed disclosure controls and procedures as effective, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[142](index=142&type=chunk) - No material changes in internal control over financial reporting occurred during the latest fiscal quarter[143](index=143&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in material legal proceedings, but acknowledges litigation risks including costs and resource diversion - The company is not currently a party to any litigation or legal proceedings that are likely to have a material adverse effect on its business[146](index=146&type=chunk) - Litigation can adversely impact the company due to defense and settlement costs, and diversion of management resources[146](index=146&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section details material risks including limited operating history, financial needs, drug development complexities, competition, third-party reliance, and intellectual property challenges [Risks Related to Our Limited Operating History, Financial Position and Capital Requirements](index=47&type=section&id=Risks%20Related%20to%20Our%20Limited%20Operating%20History%2C%20Financial%20Position%20and%20Capital%20Requirements) - The company has a limited operating history and has incurred net losses since inception, with an accumulated deficit of **$264.0 million** as of June 30, 2025, and anticipates continued significant losses[148](index=148&type=chunk) - Substantial additional capital will be needed to fund operations, clinical trials, and potential commercialization, as existing cash and investments are not sufficient to fund product candidates through regulatory approval[150](index=150&type=chunk)[151](index=151&type=chunk) - Raising additional capital may dilute stockholders' ownership, restrict operations, or require relinquishing rights to technologies or product candidates[154](index=154&type=chunk) - The company's financial condition could be adversely affected if financial institutions holding its cash fail, as balances may exceed FDIC insurance limits[156](index=156&type=chunk) [Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates](index=50&type=section&id=Risks%20Related%20to%20the%20Discovery%2C%20Development%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates) - The company is in early development stages with only two product candidates (DT-216P2 for FA, DT-168 for FECD) in clinical development, and limited experience in conducting clinical trials[157](index=157&type=chunk) - Nonclinical and clinical development is lengthy, expensive, and uncertain; success in early stages does not guarantee success in later trials, and results may not be predictive[160](index=160&type=chunk)[161](index=161&type=chunk) - Delays or failures in development programs could prevent regulatory approvals and timely commercialization, impacting the ability to generate revenue[160](index=160&type=chunk) [Risks Related to Novel Technologies and Clinical Trials](index=56&type=section&id=Risks%20Related%20to%20Novel%20Technologies%20and%20Clinical%20Trials) - Product candidates are based on novel GeneTAC® platform technologies, making it difficult to predict development timing, results, costs, and regulatory approval likelihood[171](index=171&type=chunk) - Adverse developments in one GeneTAC® program could significantly impact the perceived success and value of other programs[171](index=171&type=chunk) - The regulatory approval process for novel product candidates is more expensive and time-consuming, and biomarker-driven strategies carry increased risks of non-acceptance by regulatory bodies[172](index=172&type=chunk)[173](index=173&type=chunk) [Risks Related to Patient Enrollment and International Trials](index=56&type=section&id=Risks%20Related%20to%20Patient%20Enrollment%20and%20International%20Trials) - Difficulties or delays in enrolling and retaining patients in clinical trials can adversely affect development activities, due to factors like patient population size, eligibility criteria, and competition from other trials or approved therapies (e.g., omaveloxolone for FA)[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - Conducting clinical trials outside the United States (e.g., Australia for DT-216P2) presents additional risks, including potential non-acceptance of data by the FDA, adherence to foreign regulatory requirements, and administrative burdens[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - Obtaining regulatory approval in one jurisdiction does not guarantee approval in others, and delays in one country can negatively affect the approval process elsewhere[183](index=183&type=chunk)[184](index=184&type=chunk) [Risks Related to Product Safety and Regulatory Approval](index=60&type=section&id=Risks%20Related%20to%20Product%20Safety%20and%20Regulatory%20Approval) - Undesirable side effects, such as injection site thrombophlebitis observed with the prior DT-216 product candidate, could delay or prevent regulatory approval, lead to more restrictive labeling, or result in significant negative consequences post-approval[185](index=185&type=chunk)[186](index=186&type=chunk) - Early, interim, topline, and preliminary data from nonclinical studies or clinical trials are subject to change and may differ from final results, potentially harming business prospects[190](index=190&type=chunk)[191](index=191&type=chunk) - The regulatory approval process is lengthy, expensive, and uncertain, with no guarantee of approval. The FDA or foreign regulatory bodies may delay, limit, or deny approval for various reasons, including disagreement with trial design or insufficient safety/efficacy data[195](index=195&type=chunk)[196](index=196&type=chunk)[198](index=198&type=chunk) [Risks Related to International Trade Policies and Health Epidemics](index=66&type=section&id=Risks%20Related%20to%20International%20Trade%20Policies%20and%20Health%20Epidemics) - International trade policies, including tariffs, sanctions, and trade barriers, may adversely affect the business, financial condition, and supply chain, particularly as materials for product candidates are manufactured in foreign countries like China[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - A health epidemic or pandemic could significantly disrupt business operations, clinical trials (e.g., patient enrollment, site initiation, supply chain), and the operations of third-party manufacturers and CROs[206](index=206&type=chunk) - Such disruptions could lead to delays in clinical development, increased costs, and negative impacts on the company's financial condition and prospects[203](index=203&type=chunk)[207](index=207&type=chunk) [Risks Related to Orphan Drug and Expedited Designations](index=68&type=section&id=Risks%20Related%20to%20Orphan%20Drug%20and%20Expedited%20Designations) - Seeking orphan drug designation for product candidates does not guarantee success or the maintenance of associated benefits, such as market exclusivity, which can be lost under certain conditions[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - Orphan drug exclusivity does not prevent approval of different products for the same condition or clinically superior drugs, potentially leading to increased competition[211](index=211&type=chunk)[212](index=212&type=chunk) - Fast Track or Breakthrough Therapy designations from the FDA may not lead to a faster development, review, or approval process, nor do they increase the likelihood of marketing approval[213](index=213&type=chunk)[215](index=215&type=chunk) [Risks Related to Competition and Resource Allocation](index=70&type=section&id=Risks%20Related%20to%20Competition%20and%20Resource%20Allocation) - The biotechnology and biopharmaceutical industries are highly competitive, with larger and better-funded companies developing products for repeat expansion driven diseases like FA, HD, FECD, and DM1[216](index=216&type=chunk) - Specific competitors include Reata Pharmaceuticals (now Biogen) with omaveloxolone for FA, and numerous other companies with clinical-stage programs for FA, FECD, DM1, and HD[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - The company's limited resources require prioritization of research programs, risking the failure to capitalize on potentially more profitable or successful product candidates or indications[223](index=223&type=chunk) [Risks Related to Manufacturing, Commercialization and Reliance on Third Parties](index=72&type=section&id=Risks%20Related%20to%20Manufacturing%2C%20Commercialization%20and%20Reliance%20on%20Third%20Parties) [Reliance on Third Parties for Clinical Trials and Manufacturing](index=72&type=section&id=Reliance%20on%20Third%20Parties%20for%20Clinical%20Trials%20and%20Manufacturing) - The company relies heavily on third parties (CROs, consultants) to conduct nonclinical studies and clinical trials, increasing risks of delays, inadequate resources, and non-compliance with regulatory requirements (GLP, GCP, cGMP)[225](index=225&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - Reliance on single-source third-party manufacturers for product candidates for nonclinical and clinical testing, and potentially for commercial supply, poses risks of limited or interrupted supply, unsatisfactory quality, and increased costs[230](index=230&type=chunk) - Potential trade restrictions or sanctions on Chinese biotechnology companies could impact the availability of services and materials for research and development[234](index=234&type=chunk) [Manufacturing Changes and Market Acceptance](index=77&type=section&id=Manufacturing%20Changes%20and%20Market%20Acceptance) - Changes in product candidate manufacturing methods (e.g., formulation improvements for DT-216P2) can result in additional costs, delays, or affect clinical trial results[236](index=236&type=chunk) - Approved products may fail to achieve sufficient market acceptance by physicians, patients, hospitals, and healthcare payors, impacting revenue and profitability[237](index=237&type=chunk) - Market acceptance depends on factors such as efficacy, safety, convenience, competitive pricing, and the willingness of patients and physicians to adopt new therapies[238](index=238&type=chunk) [Pricing, Reimbursement, and Market Opportunity](index=78&type=section&id=Pricing%2C%20Reimbursement%2C%20and%20Market%20Opportunity) - Obtaining coverage and adequate reimbursement for products from government and third-party payors is a costly, time-consuming, and uncertain process, which could make it difficult to sell products profitably[239](index=239&type=chunk)[241](index=241&type=chunk) - Reimbursement rates may be inadequate, and patients may be unwilling to pay high co-payments, impacting product acceptance and demand[242](index=242&type=chunk) - If market opportunities for product candidates are smaller than anticipated, revenue may be adversely affected, and the business could suffer[249](index=249&type=chunk) [Trade Secrets and Commercialization Capabilities](index=80&type=section&id=Trade%20Secrets%20and%20Commercialization%20Capabilities) - Reliance on third parties requires sharing trade secrets, increasing the risk of discovery by competitors or misappropriation, which could harm the company's competitive position[250](index=250&type=chunk)[251](index=251&type=chunk) - The company lacks internal sales, marketing, and distribution capabilities and must either develop them (expensive and time-consuming) or outsource these functions, which may result in lower profitability[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - Failure to obtain regulatory approval or commercialize products outside the United States would limit market potential, as foreign regulatory requirements are complex and varied[255](index=255&type=chunk) [Risks Related to Our In-Licenses and Other Strategic Agreements](index=82&type=section&id=Risks%20Related%20to%20Our%20In-Licenses%20and%20Other%20Strategic%20Agreements) [Acquisitions, In-Licenses, and Strategic Alliances](index=82&type=section&id=Acquisitions%2C%20In-Licenses%2C%20and%20Strategic%20Alliances) - Acquisitions, in-licenses, or strategic alliances carry numerous operational and financial risks, including exposure to unknown liabilities, business disruption, and diversion of management's attention[257](index=257&type=chunk) - There is no guarantee that the company will realize the anticipated benefits or achieve the expected revenue/net income from such transactions[259](index=259&type=chunk) [Future Collaborations and Licensing](index=84&type=section&id=Future%20Collaborations%20and%20Licensing) - Future collaborations for product candidates may be difficult to form or may not realize potential benefits, potentially altering or delaying development and commercialization plans[260](index=260&type=chunk) - The company may face significant competition in seeking collaborators and may be forced to relinquish control or rights over product candidates[260](index=260&type=chunk) - Inability to obtain necessary licenses for third-party technologies on reasonable terms could harm the business, potentially requiring redesign or abandonment of product candidates[262](index=262&type=chunk) [Risks Related to Our Business Operations, Employee Matters and Managing Growth](index=84&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations%2C%20Employee%20Matters%20and%20Managing%20Growth) [Employee Misconduct and Product Liability](index=84&type=section&id=Employee%20Misconduct%20and%20Product%20Liability) - The company is exposed to risks of fraud or misconduct by employees, principal investigators, consultants, and commercial partners, including non-compliance with regulatory standards and healthcare fraud and abuse laws[263](index=263&type=chunk) - The use of product candidates in clinical trials and commercial sales exposes the company to product liability claims, which could result in substantial liability, costs, and reputational harm[265](index=265&type=chunk)[267](index=267&type=chunk) - Inadequate insurance coverage for product liability claims could adversely affect results of operations and business[266](index=266&type=chunk) [Key Personnel and Growth Management](index=86&type=section&id=Key%20Personnel%20and%20Growth%20Management) - The company is highly dependent on its key managerial, scientific, and medical personnel, and the inability to attract and retain highly qualified individuals could harm business strategy and product development[268](index=268&type=chunk)[269](index=269&type=chunk) - Expected expansion of development, regulatory, and operational capabilities may lead to difficulties in managing growth, requiring effective recruitment, development management, and improved controls[273](index=273&type=chunk) - Failure to effectively expand the organization could hinder the successful development and commercialization of product candidates[274](index=274&type=chunk) [Risks Related to Government Regulation](index=88&type=section&id=Risks%20Related%20to%20Government%20Regulation) [Tax Attributes and Healthcare Laws](index=88&type=section&id=Tax%20Attributes%20and%20Healthcare%20Laws) - The company's ability to use net operating loss (NOL) carryforwards and R&D credits may be limited due to past and potential future 'ownership changes' under Sections 382 and 383 of the Internal Revenue Code[275](index=275&type=chunk)[276](index=276&type=chunk) - Operations are subject to federal and state healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA) and transparency laws, with potential for substantial penalties for non-compliance[278](index=278&type=chunk)[279](index=279&type=chunk) [Healthcare Reform and Drug Pricing](index=91&type=section&id=Healthcare%20Reform%20and%20Drug%20Pricing) - Enacted and future legislation, such as the Affordable Care Act, Inflation Reduction Act, and the 'One Big Beautiful Bill Act' (OBBBA), may increase the difficulty and cost of obtaining marketing approval and commercializing product candidates[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - The Inflation Reduction Act introduces Medicare Drug Price Negotiation Program and inflation rebates, potentially reducing drug prices and affecting future revenues[284](index=284&type=chunk) - State-level legislation and regional bidding procedures also contribute to pricing pressures and cost containment measures, which could harm future revenues and profitability[286](index=286&type=chunk)[287](index=287&type=chunk) [Data Privacy and Security](index=92&type=section&id=Data%20Privacy%20and%20Security) - The company and its third parties are subject to stringent and changing U.S. (HIPAA, CCPA) and foreign (GDPR, PIPEDA) data privacy and security laws, regulations, and contractual obligations[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) - Actual or perceived failure to comply with these obligations could lead to regulatory investigations, litigation, fines, business disruptions, and reputational harm[298](index=298&type=chunk) - Cyberattacks, security incidents, data breaches, and the use of generative AI technologies pose significant risks to information technology systems and sensitive data, potentially causing operational interruptions and financial losses[384](index=384&type=chunk)[385](index=385&type=chunk)[389](index=389&type=chunk)[392](index=392&type=chunk) [Risks Related to Regulatory and Operational Disruptions](index=96&type=section&id=Risks%20Related%20to%20Regulatory%20and%20Operational%20Disruptions) - Disruptions to the operations of the FDA, SEC, or other U.S. governmental agencies due to funding shortages, leadership changes, or staffing cuts could materially and adversely affect the company's business[299](index=299&type=chunk)[300](index=300&type=chunk) - Uncertainty regarding new initiatives, laws, regulations, policies, and guidance affecting product candidates or business aspects could present new challenges and delays in regulatory approvals[299](index=299&type=chunk)[301](index=301&type=chunk) [Risks Related to Our Intellectual Property](index=98&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) [Patent Protection and Enforcement](index=98&type=section&id=Patent%20Protection%20and%20Enforcement) - Inability to obtain and maintain sufficient intellectual property protection for platform technologies and product candidates, or if the scope is not broad enough, could allow competitors to commercialize similar products[303](index=303&type=chunk)[304](index=304&type=chunk) - The patent application process is expensive, time-consuming, and uncertain; pending applications may not result in issued patents, or issued patents may be challenged, invalidated, or circumvented[305](index=305&type=chunk)[309](index=309&type=chunk) - Reliance on trade secret protection for non-patentable know-how carries risks of disclosure or independent development by competitors, harming competitive position[310](index=310&type=chunk) [Global Intellectual Property Protection](index=101&type=section&id=Global%20Intellectual%20Property%20Protection) - Protecting intellectual property rights globally is expensive and challenging, as patent laws vary by country, and enforcement may be less extensive outside the United States[313](index=313&type=chunk) - Geopolitical actions (e.g., tariffs, sanctions, conflicts) can increase uncertainties and costs for patent prosecution and maintenance in foreign countries, potentially leading to loss of patent rights[316](index=316&type=chunk) - The new Unified Patent Court (UPC) in Europe introduces uncertainty, as a single court system can invalidate European patents[314](index=314&type=chunk) [Changes in Patent Law](index=103&type=section&id=Changes%20in%20Patent%20Law) - Changes in patent law in the United States (e.g., Leahy-Smith America Invents Act) and other jurisdictions can diminish the value of patents, increasing uncertainties and costs for protection and enforcement[318](index=318&type=chunk)[319](index=319&type=chunk) - Recent Supreme Court decisions and legislative actions (e.g., Inflation Reduction Act) have increased uncertainties regarding patent enforceability and the scope of patent protection for pharmaceuticals[320](index=320&type=chunk) [Patent Maintenance and Competitive Advantage](index=105&type=section&id=Patent%20Maintenance%20and%20Competitive%20Advantage) - Failure to comply with procedural, document submission, and fee payment requirements imposed by governmental patent agencies can lead to abandonment or lapse of patent rights[321](index=321&type=chunk) - Intellectual property rights have limitations and may not adequately protect the business or maintain competitive advantage against similar products, independent development, or challenges to patent validity[322](index=322&type=chunk) [Licensed Technology and Third-Party Rights](index=107&type=section&id=Licensed%20Technology%20and%20Third-Party%20Rights) - Technology licensed from third parties (e.g., WARF) may be subject to retained rights by licensors or government (e.g., Bayh-Dole Act), potentially limiting the company's exclusive use or enforcement capabilities[324](index=324&type=chunk)[325](index=325&type=chunk) - The company may not be successful in obtaining or maintaining necessary rights to product candidates through acquisitions and in-licenses, facing competition and potentially unfavorable terms[326](index=326&type=chunk) - Disputes with licensors regarding intellectual property rights, scope of licenses, or diligence obligations could adversely affect business, financial condition, and prospects[333](index=333&type=chunk) [Risks Related to Intellectual Property Infringement and Litigation](index=111&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20Infringement%20and%20Litigation) [Third-Party Patent Infringement Claims](index=111&type=section&id=Third-Party%20Patent%20Infringement%20Claims) - The company may be sued for infringing third parties' intellectual property rights, leading to costly and time-consuming litigation that could prevent or delay product development and commercialization[344](index=344&type=chunk) - Identification of relevant third-party patents is difficult, and the company may incorrectly interpret their relevance, scope, or expiration, potentially impacting its ability to develop and market products[338](index=338&type=chunk)[342](index=342&type=chunk) - If found to infringe, the company could be forced to cease development, manufacturing, or commercialization, or be required to obtain expensive licenses, potentially with non-exclusive terms[345](index=345&type=chunk)[349](index=349&type=chunk) [Enforcement of Our Intellectual Property](index=115&type=section&id=Enforcement%20of%20Our%20Intellectual%20Property) - Competitors may infringe the company's patents or other intellectual property, requiring expensive and time-consuming infringement claims that divert management attention[350](index=350&type=chunk) - Patent litigation outcomes are unpredictable; courts may invalidate the company's patents, construe claims narrowly, or decide against granting injunctions, limiting the ability to stop infringers[350](index=350&type=chunk)[352](index=352&type=chunk) - Due to the expense and uncertainty of litigation, the company may choose not to enforce its intellectual property rights against third parties, potentially allowing competitors to operate freely[353](index=353&type=chunk) [Risks Related to Trade Secrets and Inventorship](index=117&type=section&id=Risks%20Related%20to%20Trade%20Secrets%20and%20Inventorship) - Reliance on trade secrets and proprietary know-how is difficult to trace and enforce; unauthorized disclosure or misappropriation by employees, consultants, or third parties could harm the company's competitive position[356](index=356&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk) - The company may be subject to claims challenging the inventorship or ownership of its patents and other intellectual property, potentially leading to litigation, loss of valuable rights, or increased costs[359](index=359&type=chunk)[361](index=361&type=chunk) - If licensors are not the sole owners of in-licensed patents, other third parties could license such patents to competitors, adversely affecting the company's competitive position[360](index=360&type=chunk) [Risks Related to Patent Term and Trademarks](index=121&type=section&id=Risks%20Related%20to%20Patent%20Term%20and%20Trademarks) - Patent terms may be inadequate to protect the company's competitive position for a sufficient amount of time, as patents might expire before or shortly after product commercialization, leading to competition from biosimilar or generic products[362](index=362&type=chunk)[363](index=363&type=chunk) - Inability to obtain patent term extensions or restorations, or if the extension is less than requested, would shorten the period of exclusive market rights and reduce revenue[363](index=363&type=chunk) - If trademarks and trade names are not adequately protected, the company may be unable to build name recognition, face challenges from competitors, or be forced to cease using certain names, adversely affecting the business[364](index=364&type=chunk)[365](index=365&type=chunk) [Risks Related to the Securities Market and Ownership of Our Common Stock](index=123&type=section&id=Risks%20Related%20to%20the%20Securities%20Market%20and%20Ownership%20of%20Our%20Common%20Stock) [Stock Market Volatility and Control](index=123&type=section&id=Stock%20Market%20Volatility%20and%20Control) - The price of the company's common stock is subject to volatility, influenced by factors such as operating performance, clinical trial results, regulatory developments, and macroeconomic conditions[367](index=367&type=chunk) - Principal stockholders and management own a significant percentage of the stock, enabling them to exert significant control over matters requiring stockholder approval, potentially preventing unsolicited acquisition proposals[369](index=369&type=chunk)[371](index=371&type=chunk) [Future Stock Sales and Dividends](index=125&type=section&id=Future%20Stock%20Sales%20and%20Dividends) - Future sales and issuances of common stock or rights to purchase common stock, including through equity incentive plans, could result in additional dilution of existing stockholders' ownership and cause the stock price to fall[372](index=372&type=chunk)[373](index=373&type=chunk) - The company does not intend to pay dividends on its common stock, meaning any returns to stockholders will be limited to stock appreciation[374](index=374&type=chunk) [Emerging Growth Company Status](index=125&type=section&id=Emerging%20Growth%20Company%20Status) - As an 'emerging growth company,' the company benefits from reduced reporting requirements, but this status is temporary and will expire upon meeting certain financial or time-based thresholds[375](index=375&type=chunk) [General Risk Factors](index=126&type=section&id=General%20Risk%20Factors) [Public Company Costs and Controls](index=126&type=section&id=Public%20Company%20Costs%20and%20Controls) - Operating as a public company incurs significant costs for compliance with regulations like the Sarbanes-Oxley Act and SEC rules, requiring substantial management time and resources[377](index=377&type=chunk) - Failure to maintain effective disclosure controls and internal control over financial reporting could impair the ability to produce timely and accurate financial statements, leading to investor loss of confidence and potential sanctions[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk) [Accounting and Tax Law Changes](index=128&type=section&id=Accounting%20and%20Tax%20Law%20Changes) - Future changes in financial accounting standards or practices may cause adverse and unexpected revenue fluctuations and affect reported results of operations[381](index=381&type=chunk)[382](index=382&type=chunk) - New or altered tax laws or regulations, such as the 'One Big Beautiful Bill Act,' could adversely affect business operations, cash flow, financial condition, or results of operations[383](index=383&type=chunk) [Information Technology and Data Security Risks](index=128&type=section&id=Information%20Technology%20and%20Data%20Security%20Risks) - High dependence on information technology systems and sensitive data exposes the company to cyberattacks, security incidents, and data breaches from various sources, including nation-state actors and personnel error[384](index=384&type=chunk)[385](index=385&type=chunk) - Remote work, reliance on third-party contractors, and the use of generative AI technologies increase cybersecurity risks and vulnerabilities[386](index=386&type=chunk)[388](index=388&type=chunk)[392](index=392&type=chunk) - Security incidents could lead to regulatory investigations, litigation, fines, business disruptions, reputational harm, and financial losses, impacting the ability to conduct clinical trials or commercialize products[390](index=390&type=chunk) [Natural Disasters and Compliance Risks](index=131&type=section&id=Natural%20Disasters%20and%20Compliance%20Risks) - The company's operations are vulnerable to natural disasters (e.g., earthquakes, fires) and other unforeseen events, which could disrupt business continuity and supply chain, especially with single-site suppliers[393](index=393&type=chunk) - Failure to comply with environmental, health, and safety laws and regulations could result in fines, penalties, or substantial costs, impairing research and development[395](index=395&type=chunk)[397](index=397&type=chunk) - The company is subject to U.S. and foreign anti-corruption, anti-money laundering, export control, and sanctions laws, with potential for serious consequences for violations[394](index=394&type=chunk) [Anti-Takeover Provisions and Litigation](index=131&type=section&id=Anti-Takeover%20Provisions%20and%20Litigation) - Delaware law and provisions in the company's certificate of incorporation and bylaws (e.g., classified board, prohibition on written consent) could make mergers, tender offers, or proxy contests difficult, potentially depressing the stock price[398](index=398&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk)[401](index=401&type=chunk) - Exclusive forum provisions in the certificate of incorporation designate Delaware courts and federal district courts as exclusive forums for certain disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[406](index=406&type=chunk) - The company could be subject to securities class action litigation, which is costly and diverts management resources, especially given the stock price volatility in the pharmaceutical industry[407](index=407&type=chunk) [Market Conditions and Stock Price Volatility](index=135&type=section&id=Market%20Conditions%20and%20Stock%20Price%20Volatility) - Unstable market, economic, and geopolitical conditions (e.g., inflation, conflicts) may have serious adverse consequences on the business, financial condition, and stock price, making debt or equity financing more difficult and costly[408](index=408&type=chunk)[409](index=409&type=chunk) - Substantial sales of common stock, particularly by directors, executive officers, and significant stockholders, could cause the market price of the common stock to decline[410](index=410&type=chunk) - Inaccurate or unfavorable research by securities or industry analysts could negatively affect the stock price and trading volume[414](index=414&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=138&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of **$254.3 million** net proceeds from the March 2021 IPO, with **$133.4 million** used for operations by June 2025 - The initial public offering in March 2021 generated **$254.3 million** in net proceeds[416](index=416&type=chunk) - Proceeds are held in cash, cash equivalents, and investment securities, primarily U.S. government agency and Treasury securities[417](index=417&type=chunk) - As of June 30, 2025, approximately **$133.4 million** of the net proceeds had been used to support operations, with no material change in the use of proceeds[417](index=417&type=chunk) [Item 3. Defaults Upon Senior Securities](index=138&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults upon senior securities for Design Therapeutics, Inc - There are no defaults upon senior securities[418](index=418&type=chunk) [Item 4. Mine Safety Disclosures](index=138&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosure requirements are not applicable to Design Therapeutics, Inc - Mine safety disclosures are not applicable to the company[419](index=419&type=chunk) [Item 5. Other Information](index=138&type=section&id=I