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

Summary of Design Therapeutics (DSGN) Conference Call Company Overview - **Company**: Design Therapeutics (DSGN) - **Industry**: Biotechnology, focusing on genomic medicines for severe monogenic diseases Key Points and Arguments 1. **Innovative Approach**: Design Therapeutics is pioneering a novel class of small molecule genomic medicines aimed at modulating gene transcription, targeting genetic diseases with validated targets [2][3] 2. **Pipeline Overview**: The company is currently developing treatments for four severe monogenic diseases, including Friedreich ataxia (FA) and Fuchs endothelial corneal dystrophy (FECD) [2][3] 3. **Clinical Development**: - **Friedreich Ataxia (FA)**: The company is conducting clinical studies with DT216P2, aiming to increase endogenous frataxin levels in patients. Initial data shows promise in increasing frataxin expression [4][5][16] - **Fuchs Endothelial Corneal Dystrophy (FECD)**: The DT168 program has shown good tolerability in Phase I trials, with plans for a Phase II proof of concept biomarker trial [5][19][24] 4. **Market Potential**: The genomic medicine platform is positioned to surpass existing modalities like gene editing and therapy, with significant market opportunities in the targeted diseases [3][25] 5. **Financial Position**: As of the first quarter, the company reported approximately $229 million in cash, providing a runway into 2029 to support clinical development across its pipeline [26] Additional Important Content 1. **Regulatory Challenges**: The company faced a clinical hold from the FDA regarding its IND application for US trials, which is under review [18] 2. **Patient Enrollment**: The RESTORE FA trial is currently open for enrollment in Australia, with plans to expand to the US pending resolution of the FDA hold [17][18] 3. **Biomarker Development**: The company is exploring potential biomarkers for FECD, which could facilitate future efficacy studies [24][25] 4. **Therapeutic Mechanism**: The GeneTAC molecules are designed to specifically target and modulate gene expression, addressing the root causes of genetic diseases [12][13][25] This summary encapsulates the core aspects of Design Therapeutics' conference call, highlighting the company's innovative approach, clinical pipeline, market potential, and financial health while also noting regulatory challenges and ongoing research efforts.

Core Insights - Design Therapeutics, Inc. has initiated the RESTORE-FA trial for DT-216P2, targeting Friedreich ataxia (FA) with the first patient dosed via intravenous infusion [1][2] - The trial aims to assess the safety, tolerability, pharmacokinetics, and pharmacodynamics of DT-216P2, with initial results showing no adverse events [2][4] - The company submitted an IND application to the FDA to expand the trial to U.S. sites but received a clinical hold notice due to nonclinical deficiencies [3][5] Group 1: Trial Details - The RESTORE-FA trial is designed to evaluate both intravenous and subcutaneous administration of DT-216P2 in FA patients [2] - Initial data from the ongoing Phase 1 single-ascending dose trial in healthy volunteers indicated that DT-216P2 was well-tolerated, with no cases of injection site thrombophlebitis reported [4] - The company expects to report data from the multiple-ascending dose trial, including frataxin expression levels, in 2026 [2] Group 2: Regulatory and Development Updates - The FDA's clinical hold on the IND application is expected to be addressed by the company once further details are received [3][5] - The company plans to work closely with the FDA to expedite the development process in the U.S. [5] - DT-216P2 is an improved formulation designed to target the GAA repeat expansion mutation causing FA and aims to restore endogenous frataxin production [6] Group 3: Company Overview - Design Therapeutics is focused on developing a new class of therapies using GeneTAC technology, which targets disease-causing genes [7] - The company is advancing multiple programs, including DT-216P2 for FA and DT-168 for Fuchs endothelial corneal dystrophy, along with research in myotonic dystrophy type-1 and Huntington's disease [7]

Company Overview - Design Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing treatments for serious degenerative genetic diseases [3] - The company utilizes a platform of GeneTAC gene targeted chimera small molecules to modulate the expression of disease-causing genes [3] Upcoming Presentation - Management will present at the 2025 Jefferies Global Healthcare Conference on June 4, 2025, at 2:35 p.m. ET in New York [1] - A live webcast of the presentation will be available on the company's website and archived for at least 30 days [2] Product Development - The company is advancing clinical-stage programs including DT-216P2 for Friedreich ataxia and DT-168 for Fuchs endothelial corneal dystrophy [3] - Additional programs are in development for myotonic dystrophy type-1 and Huntington's disease, with ongoing discovery efforts for multiple genomic medicines [3]

Summary of Design Therapeutics (DSGN) Conference Call Company Overview - **Company**: Design Therapeutics (DSGN) - **Event**: RBC's Global Healthcare Conference - **Date**: May 20, 2025 Key Points on Gene Tag Technology - **Gene Tag Molecules**: Represent a new class of small molecules called gene targeted chimeras, which can modulate the expression of individual genes without gene editing or therapy [5][6] - **Therapeutic Potential**: Aims to address the root causes of monogenic diseases, offering a method to distribute treatment widely across all cells in the body [5][6] Lead Program: DT216 for Friedreich's Ataxia (FA) - **Clinical Studies**: DT216 was taken into clinical studies in 2022 and 2023, showing promising results in upregulating endogenous frataxin expression [8][9] - **Optimization**: The molecule has been optimized to DT216P2, addressing previous limitations such as short duration of exposure and injection site thrombophlebitis [9][10] - **Phase I Study**: A single ascending dose study in healthy volunteers is underway, with plans to advance to patient studies if results are encouraging [12][14] - **Administration Routes**: Evaluating multiple administration routes (IV and subcutaneous) to maximize drug exposure and therapeutic effect [15][16] - **Market Opportunity**: The FA market is seen as commercially promising, especially with recent approvals and acquisitions in the space [20][21] Biomarker and Efficacy Measurement - **Biomarker Strategy**: Plans to measure mRNA and protein levels in blood and muscle to assess treatment efficacy [23][24] - **Clinical Benchmark**: A significant increase in endogenous frataxin is expected to be therapeutically beneficial, with a benchmark set against normal frataxin levels [21] Second Program: DT168 for Fuchs Corneal Dystrophy - **Disease Overview**: Fuchs corneal dystrophy affects approximately 2 million diagnosed cases in the U.S., with limited treatment options until severe progression [25][26] - **Mechanism**: DT168 targets a specific mutation (CpG18.1) responsible for the disease, aiming to turn off toxic RNA production [27][28] - **Phase I Results**: Completed Phase I studies showed good tolerance and no significant adverse events, supporting progression to Phase II [28][29] - **Natural History Study**: Ongoing observational study to understand patient characteristics and refine future development plans [30][31] Future Development and Additional Programs - **Exploratory Study**: Phase II study planned with DT168 in patients scheduled for corneal transplant, allowing for tissue analysis post-treatment [33][34] - **Huntington's Disease Program**: A molecule selectively downregulates mutant huntingtin, with enhanced efficacy in cells with longer repeat expansions [36] - **Other Programs**: Additional focus on myotonic dystrophy (DM1) with promising pharmacological profiles [36][37] Conclusion - **Pipeline Potential**: The success of any of the four monogenic programs could create significant value for investors and the company [37]

Core Insights - Design Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing treatments for serious degenerative genetic diseases [3] - The company will participate in a fireside chat at the 2025 RBC Capital Markets Healthcare Conference on May 20, 2025 [1] - A live webcast of the event will be available and archived for at least 30 days [2] Company Overview - Design Therapeutics is developing a new class of therapies using its GeneTAC platform, which targets specific disease-causing genes [3] - Current clinical-stage programs include DT-216P2 for Friedreich ataxia and DT-168 for Fuchs endothelial corneal dystrophy, along with programs for myotonic dystrophy type-1 and Huntington's disease [3] - The company is also engaged in discovery efforts for multiple genomic medicines [3]

[PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited financial statements and management's discussion and analysis of Design Therapeutics, Inc.'s financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed financial statements for Design Therapeutics, Inc., including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items for the periods ended March 31, 2025, and December 31, 2024 [Condensed Balance Sheets](index=8&type=section&id=Condensed%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Balance Sheets (in thousands) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Cash and cash equivalents | $13,667 | $22,563 | | Investment securities | $216,007 | $222,914 | | Total current assets | $233,644 | $248,040 | | Total assets | $237,475 | $252,093 | | Total current liabilities | $8,236 | $8,462 | | Total liabilities | $9,556 | $9,996 | | Total stockholders' equity | $227,919 | $242,097 | [Condensed Statements of Operations](index=9&type=section&id=Condensed%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net loss over specific reporting periods Condensed Statements of Operations (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $15,377 | $9,801 | | General and administrative | $5,041 | $4,599 | | Total operating expenses | $20,418 | $14,400 | | Loss from operations | $(20,418) | $(14,400) | | Interest income | $2,703 | $3,295 | | Net loss | $(17,715) | $(11,105) | | Net loss per share, basic and diluted | $(0.31) | $(0.20) | | Weighted-average shares outstanding | 56,757,827 | 56,488,527 | [Condensed Statements of Comprehensive Loss](index=10&type=section&id=Condensed%20Statements%20of%20Comprehensive%20Loss) This section details the company's net loss and other comprehensive income/loss components for the reporting periods Condensed Statements of Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(17,715) | $(11,105) | | Unrealized loss on AFS securities | $(25) | $(229) | | Comprehensive loss | $(17,740) | $(11,334) | [Condensed Statements of Stockholders' Equity](index=11&type=section&id=Condensed%20Statements%20of%20Stockholders%27%20Equity) This section illustrates changes in the company's equity accounts, including common stock and accumulated deficit, over time Condensed Statements of Stockholders' Equity (in thousands, except share data) | Metric (in thousands, except share data) | Balance at Dec 31, 2024 | Balance at Mar 31, 2025 | | :--------------------------------------- | :---------------------- | :---------------------- | | Common Stock Shares | 56,754,341 | 56,768,678 | | Common Stock Amount | $6 | $6 | | Additional Paid-in Capital | $468,830 | $472,392 | | Accumulated Other Comprehensive Income | $475 | $450 | | Accumulated Deficit | $(227,214) | $(244,929) | | Total Stockholders' Equity | $242,097 | $227,919 | - The company's accumulated deficit increased to **$244.9 million** as of March 31, 2025, from **$227.2 million** at December 31, 2024, reflecting ongoing net losses[28](index=28&type=chunk)[35](index=35&type=chunk) [Condensed Statements of Cash Flows](index=12&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section categorizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating | $(16,789) | $(12,439) | | Net cash provided by investing | $7,870 | $20,616 | | Net cash provided by financing | $23 | $20 | | Net (decrease) increase in cash | $(8,896) | $8,197 | | Cash and cash equivalents at end | $13,667 | $29,397 | [Notes to Condensed Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed financial statements, including accounting policies and specific line item breakdowns - The company is a clinical-stage biopharmaceutical company focused on GeneTAC® molecules for inherited nucleotide repeat expansion mutations, with lead candidates for Friedreich ataxia (FA) and Fuchs endothelial corneal dystrophy (FECD)[34](index=34&type=chunk) - The company has incurred net operating losses since inception, with an accumulated deficit of **$244.9 million** as of March 31, 2025, and expects to continue incurring losses for the foreseeable future[35](index=35&type=chunk)[36](index=36&type=chunk) - As of March 31, 2025, cash, cash equivalents, and investment securities totaled **$229.7 million**, which management believes is sufficient to meet anticipated cash requirements for more than 12 months[35](index=35&type=chunk)[36](index=36&type=chunk) Fair Value Measurement of Financial Instruments (in thousands) | Asset Type | March 31, 2025 Total (in thousands) | Dec 31, 2024 Total (in thousands) | | :----------------------------- | :---------------------------------- | :-------------------------------- | | Money market funds | $12,426 | $20,800 | | Certificates of deposit | $2,402 | $2,898 | | U.S. Treasury securities | $191,112 | $197,528 | | U.S. Government agency securities | $22,493 | $22,488 | | **Total** | **$228,433** | **$243,714** | Investment Securities by Maturity (in thousands) | Security Type | Maturity | Amortized Cost (Mar 31, 2025, in thousands) | Fair Value (Mar 31, 2025, in thousands) | Amortized Cost (Dec 31, 2024, in thousands) | Fair Value (Dec 31, 2024, in thousands) | | :----------------------------- | :--------- | :------------------------------------------ | :-------------------------------------- | :------------------------------------------ | :-------------------------------------- | | Certificates of deposits | Within 1 yr | $2,394 | $2,402 | $2,884 | $2,898 | | U.S. Treasury securities | Within 1 yr | $148,399 | $148,664 | $172,178 | $172,569 | | U.S. Treasury securities | > 1 yr | $42,264 | $42,448 | $24,878 | $24,959 | | U.S. Government agency securities | > 1 yr | $22,500 | $22,493 | $14,999 | $14,995 | | U.S. Government agency securities | Within 1 yr | - | - | $7,500 | $7,493 | | **Total** | | **$215,557** | **$216,007** | **$222,439** | **$222,914** | Prepaid Expenses and Other Current Assets (in thousands) | Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------- | :---------------------------- | :------------------------------- | | Prepaid expenses | $2,565 | $1,300 | | Interest receivable | $1,405 | $1,263 | | **Total** | **$3,970** | **$2,563** | Accrued Expenses and Current Liabilities (in thousands) | Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------------------------- | :---------------------------- | :------------------------------- | | Accrued personnel costs | $1,896 | $3,576 | | Accrued research and development costs | $1,874 | $1,220 | | Current portion of operating lease liability | $821 | $800 | | Accrued other | $465 | $680 | | **Total** | **$5,056** | **$6,276** | - The company has a lease agreement for laboratory and office space with a related party (Crossing Holdings, LLC), with a weighted-average remaining lease term of **2.4 years** as of March 31, 2025[55](index=55&type=chunk) - The company entered into a license agreement in May 2024, incurring **$0.2 million** in upfront fees expensed to R&D, with potential future regulatory milestone payments up to **$0.8 million** per product and royalties on net sales[58](index=58&type=chunk)[59](index=59&type=chunk) - Under the WARF License Agreement, the company may owe up to **$17.5 million** in milestone payments and low single-digit royalties on net product sales, plus mid-single-digit sublicense fees[62](index=62&type=chunk) - As of March 31, 2025, **5,815,295 shares** were available for future issuance under the 2021 Equity Incentive Plan, and **2,472,142 shares** were available under the 2021 Employee Stock Purchase Plan (ESPP)[67](index=67&type=chunk)[69](index=69&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Research and development | $1,647 | $1,567 | | General and administrative | $1,892 | $1,617 | | **Total** | **$3,539** | **$3,184** | Related Party Expenses (in thousands) | Expense Category | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Lease Agreement (R&D) | $217 | $213 | | Lease Agreement (G&A) | $74 | $75 | | Consulting Agreement (G&A) | $60 | $60 | | Research Consulting (R&D) | $11 | $11 | | **Total** | **$362** | **$359** | - The company operates in one segment, Design Therapeutics, Inc., focused on its GeneTAC® platform, with all long-lived assets located in the United States and no revenue generated as of March 31, 2025[39](index=39&type=chunk)[40](index=40&type=chunk)[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the company's business, a detailed analysis of its financial condition and results of operations for the three months ended March 31, 2025, compared to the same period in 2024, and discusses liquidity, capital resources, contractual obligations, critical accounting policies, and its status as an emerging growth company [Overview](index=26&type=section&id=Overview) This section provides a strategic overview of Design Therapeutics' clinical-stage biopharmaceutical focus and lead product candidates - Design Therapeutics is a clinical-stage biopharmaceutical company developing GeneTAC® molecules to address inherited nucleotide repeat expansion diseases[80](index=80&type=chunk) - The lead product candidate, DT-216P2 for Friedreich ataxia (FA), is undergoing a Phase 1 SAD clinical trial in Australia, with results to inform a clinical trial in FA patients anticipated in mid-2025 and an update on FXN levels expected in 2026[81](index=81&type=chunk) - The second product candidate, DT-168 for Fuchs endothelial corneal dystrophy (FECD), completed a Phase 1 clinical trial with good tolerability and no systemic exposure, with a Phase 2 biomarker trial planned for H2 2025 and data anticipated in 2026[82](index=82&type=chunk)[83](index=83&type=chunk) - Other GeneTAC® programs are in preclinical stages, including DM1 (targeting CUG repeat hairpin structures) and Huntington's disease (HD, showing reduced mutant huntingtin mRNA/protein and preserved wild type huntingtin in preclinical studies)[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 **$244.9 million** as of March 31, 2025, and expects increased expenses and operating losses as product candidates advance[88](index=88&type=chunk)[89](index=89&type=chunk) [Components of Our Results of Operations](index=29&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section details the primary drivers and expected trends for the company's research and development and general and administrative expenses - Research and development expenses primarily consist of direct costs (CROs, consultants, manufacturing, supplies, license fees) and indirect costs (personnel, facilities, overhead)[90](index=90&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - R&D expenses are expected to increase significantly as programs advance into and through clinical development, with timing and costs being uncertain due to the unpredictable nature of drug development[92](index=92&type=chunk) - General and administrative expenses are expected to increase due to expanded R&D activities, infrastructure, potential commercialization efforts, and costs associated with operating as a public company[97](index=97&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, comparing operating expenses and net loss across reporting periods Operating Expenses Comparison (in thousands) | Operating Expenses | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :------------------------ | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | | Research and development | $15,377 | $9,801 | $5,576 | | General and administrative | $5,041 | $4,599 | $442 | | **Total operating expenses** | **$20,418** | **$14,400** | **$6,018** | Research and Development Expenses by Program (in thousands) | R&D Program | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :---------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | | FA | $3,937 | $1,042 | $2,895 | | FECD | $1,919 | $1,210 | $709 | | Other direct | $4,105 | $2,501 | $1,604 | | Indirect | $5,416 | $5,048 | $368 | | **Total R&D expense** | **$15,377** | **$9,801** | **$5,576** | - The increase in R&D expenses was primarily driven by costs for the FA Phase 1 SAD clinical trial and preparation for future FA trials, chemistry, manufacturing and controls for FECD, and additional early-stage research activities[99](index=99&type=chunk) - General and administrative expenses increased mainly due to a **$0.3 million** rise in stock-based compensation and a **$0.1 million** increase in professional services[100](index=100&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, investment holdings, and future capital requirements to fund operations and product development - As of March 31, 2025, the company had **$229.7 million** in combined cash, cash equivalents, and investment securities, a decrease of **$15.8 million** from December 31, 2024[102](index=102&type=chunk) Net Cash Flow Activities (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net cash used in operating | $(16,789) | $(12,439) | | Net cash provided by investing | $7,870 | $20,616 | | Net cash provided by financing | $23 | $20 | | Net (decrease) increase in cash | $(8,896) | $8,197 | - The increase in net cash used in operating activities was primarily due to a **$6.6 million** increase in net loss[102](index=102&type=chunk) - The decrease in net cash provided by investing activities was mainly due to a net decrease in cash from maturities and purchases of investment securities[103](index=103&type=chunk) - The company believes existing cash, cash equivalents, and investments are sufficient for over 12 months but will require substantial additional capital to fund product candidates through regulatory approval and commercialization[106](index=106&type=chunk)[140](index=140&type=chunk) - Future capital requirements depend on factors like the scope and cost of drug discovery, nonclinical and clinical development, manufacturing, regulatory approvals, and commercialization activities[108](index=108&type=chunk)[141](index=141&type=chunk) - The company has a shelf registration statement on Form S-3, effective May 2022, permitting the sale of up to **$300.0 million** in securities, including **$100.0 million** under an 'at-the-market' program, none of which has been utilized as of March 31, 2025[105](index=105&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) [Contractual Obligations, Commitments and Material Cash Requirements](index=36&type=section&id=Contractual%20Obligations%2C%20Commitments%20and%20Material%20Cash%20Requirements) This section outlines the company's future financial commitments, including lease payments and potential milestone obligations - 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 primary lease and **$0.1 million** (plus 3% annual increases) for additional space[110](index=110&type=chunk)[111](index=111&type=chunk) - Future minimum operating lease payments as of March 31, 2025, are **$711 thousand** for the remaining nine months of 2025, **$973 thousand** for 2026, and **$663 thousand** for 2027, totaling **$2,347 thousand** before present value adjustment[56](index=56&type=chunk) - The company has potential future milestone payments of up to **$17.5 million** under the WARF License Agreement and up to **$0.8 million** per product under another license agreement, plus royalties on net sales[113](index=113&type=chunk)[117](index=117&type=chunk) - The company expects future material cash requirements for planned clinical trials, discovery and nonclinical programs, personnel, facilities, and external R&D[120](index=120&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the company's key accounting policies that involve significant management judgment and estimation - The company's critical accounting policies involve subjective estimates and judgments, particularly for research and development expenses, which are based on current facts, historical experience, and other reasonable factors[121](index=121&type=chunk)[122](index=122&type=chunk) [Recent Accounting Pronouncements](index=38&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the adoption and evaluation of new accounting standards and their potential impact on the company's financial reporting - The company adopted ASU 2023-07 (Segment Reporting) for the year ended December 31, 2024, with no material impact on financial position or results[41](index=41&type=chunk) - The company is evaluating ASU 2023-09 (Income Tax Disclosures), effective for fiscal years beginning after December 15, 2024, and does not expect a material effect[42](index=42&type=chunk) - The company is evaluating ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for fiscal years beginning after December 15, 2026, for its impact on financial statement disclosures[43](index=43&type=chunk) [Other Information](index=38&type=section&id=Other%20Information) This section addresses the company's status as an emerging growth company and related reporting considerations - The company is an 'emerging growth company' and intends to leverage reduced reporting requirements until December 31, 2026, or until it meets certain revenue or market capitalization thresholds[124](index=124&type=chunk)[127](index=127&type=chunk)[357](index=357&type=chunk) - The company has irrevocably elected not to use the extended transition period for complying with new or revised financial accounting standards available to emerging growth companies[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Design Therapeutics is not required to provide quantitative and qualitative disclosures about market risk [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management, including the CEO, evaluated the effectiveness of its disclosure controls and procedures as of March 31, 2025, concluding they were effective at a reasonable assurance level, with no material changes to internal control over financial reporting identified during the quarter - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of March 31, 2025[131](index=131&type=chunk) - No material changes in internal control over financial reporting occurred during the last fiscal quarter[132](index=132&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information beyond the financial statements, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any litigation or legal proceedings that management believes would have a material adverse effect on its business, though litigation can still impact operations - No current litigation or legal proceedings are deemed to have a material adverse effect on the business[135](index=135&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could materially and adversely affect the company's business, financial condition, and results of operations, including those related to its limited operating history, product development, regulatory approvals, manufacturing, intellectual property, and market conditions [Risks Related to Our Limited Operating History, Financial Position and Capital Requirements](index=42&type=section&id=Risks%20Related%20to%20Our%20Limited%20Operating%20History%2C%20Financial%20Position%20and%20Capital%20Requirements) This section details risks associated with the company's early stage, ongoing losses, and substantial future funding needs - The company has a limited operating history, has incurred net losses since inception (**$17.7 million** for Q1 2025), and expects significant losses for the foreseeable future, with no guarantee of profitability[137](index=137&type=chunk) - Substantial additional funding will be required to complete product development and commercialization, as existing capital (**$229.7 million** as of March 31, 2025) is not sufficient to fund product candidates through regulatory approval[139](index=139&type=chunk)[140](index=140&type=chunk) - Raising additional capital may dilute stockholders, restrict operations, or require relinquishing rights to technologies or product candidates[143](index=143&type=chunk)[144](index=144&type=chunk) - The company's financial condition could be adversely affected by the failure of financial institutions where cash deposits are held, as balances may exceed FDIC insurance limits[145](index=145&type=chunk) [Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates](index=45&type=section&id=Risks%20Related%20to%20the%20Discovery%2C%20Development%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates) This section outlines risks inherent in the lengthy, expensive, and uncertain process of drug discovery, clinical development, and regulatory approval - The company is in early development with only two product candidates in clinical development (DT-216P2 for FA, DT-168 for FECD), and limited experience in conducting clinical trials, making future success uncertain[146](index=146&type=chunk) - Clinical development is lengthy, expensive, and uncertain; nonclinical and early clinical results may not predict future trial success, and product candidates may cause undesirable side effects (e.g., injection site thrombophlebitis with prior DT-216 formulation)[149](index=149&type=chunk)[151](index=151&type=chunk)[173](index=173&type=chunk) - Delays in clinical trials can occur due to regulatory disagreements, patient enrollment difficulties, clinical site issues, or unforeseen safety concerns, increasing costs and delaying commercialization[153](index=153&type=chunk)[158](index=158&type=chunk) - Product candidates are based on novel GeneTAC® technologies, making development timing, results, and regulatory approval difficult to predict, and adverse developments in one program could impact others[159](index=159&type=chunk) - The availability of approved therapies, such as omaveloxolone for FA, may impact patient enrollment in the company's clinical trials[165](index=165&type=chunk) - Conducting clinical trials outside the U.S. introduces risks, and the FDA may not accept foreign data, potentially requiring additional costly and time-consuming trials[166](index=166&type=chunk)[168](index=168&type=chunk) - Interim, topline, and preliminary data from studies are subject to change upon comprehensive review and audit, and may differ from final results, potentially harming business prospects[176](index=176&type=chunk)[177](index=177&type=chunk) - The regulatory approval process is lengthy, expensive, and uncertain, with no guarantee of approval, and denial or delay would significantly impact revenue generation[178](index=178&type=chunk)[183](index=183&type=chunk) - International trade policies, including tariffs and sanctions, may increase R&D expenses, disrupt supply chains, and adversely affect business, particularly given reliance on foreign third-party suppliers[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) - Health epidemics or pandemics could disrupt business operations, clinical trials (e.g., patient enrollment, site initiation, supply chain), and the operations of third-party partners[191](index=191&type=chunk)[192](index=192&type=chunk) - Obtaining and maintaining orphan drug designation for product candidates is uncertain, and even if granted, exclusivity may not fully protect against competition[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - Fast Track or Breakthrough Therapy designations from the FDA may not accelerate development or approval, nor guarantee marketing approval[200](index=200&type=chunk)[201](index=201&type=chunk) - The company faces substantial competition from larger, better-funded pharmaceutical and biotechnology companies, as well as academic institutions, for product development, personnel, and market share[202](index=202&type=chunk)[208](index=208&type=chunk) - Limited resources necessitate prioritizing product candidates, potentially leading to missed opportunities for more profitable or successful programs[210](index=210&type=chunk) - Efforts to identify or discover additional product candidates may not be successful due to design difficulties, harmful side effects, or other characteristics[211](index=211&type=chunk) [Risks Related to Manufacturing, Commercialization and Reliance on Third Parties](index=68&type=section&id=Risks%20Related%20to%20Manufacturing%2C%20Commercialization%20and%20Reliance%20on%20Third%20Parties) This section addresses risks associated with manufacturing, market acceptance, pricing, and dependence on external partners for development and commercialization - Reliance on third parties for clinical trials, research, and nonclinical studies poses risks of delays, increased costs, and non-compliance with regulatory requirements (GLP, GCP, cGMP)[212](index=212&type=chunk)[213](index=213&type=chunk) - The company relies on single-source third-party manufacturers for product candidates, increasing the risk of supply limitations, interruptions, or quality issues, which could delay or impair development and commercialization[217](index=217&type=chunk)[219](index=219&type=chunk) - Changes in manufacturing methods as product candidates advance may lead to additional costs, delays, or require repeat clinical trials, as seen with the DT-216P2 formulation change[222](index=222&type=chunk) - Approved products may fail to achieve market acceptance by physicians, patients, and payors, especially for novel mechanisms, impacting revenue and profitability[223](index=223&type=chunk)[225](index=225&type=chunk) - Unfavorable pricing regulations or third-party coverage and reimbursement policies could make it difficult to sell product candidates profitably, with significant delays and uncertainty in obtaining adequate reimbursement[226](index=226&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - If market opportunities for product candidates are smaller than estimated, revenue could be adversely affected[236](index=236&type=chunk) - 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[237](index=237&type=chunk)[238](index=238&type=chunk) - The company lacks sales, marketing, and distribution capabilities and must either develop them (expensive, time-consuming) or outsource them, with risks associated with both approaches[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Obtaining regulatory approval and commercializing products outside the U.S. is complex, costly, and uncertain, limiting full market potential if unsuccessful[242](index=242&type=chunk) [Risks Related to Our In-Licenses and Other Strategic Agreements](index=79&type=section&id=Risks%20Related%20to%20Our%20In-Licenses%20and%20Other%20Strategic%20Agreements) This section outlines risks associated with the company's intellectual property licenses, acquisitions, and collaborative agreements - Acquisitions, in-licenses, or strategic alliances may not realize anticipated benefits and entail operational and financial risks, including unknown liabilities, business disruption, and integration challenges[244](index=244&type=chunk)[246](index=246&type=chunk) - Future collaborations for product candidates may be difficult to form or may not yield expected benefits, potentially altering or delaying development and commercialization plans[247](index=247&type=chunk)[248](index=248&type=chunk) - The company may be unable to in-license necessary third-party intellectual property rights on reasonable terms, or at all, which could harm the business[249](index=249&type=chunk) [Risks Related to Our Business Operations, Employee Matters and Managing Growth](index=81&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations%2C%20Employee%20Matters%20and%20Managing%20Growth) This section details risks concerning employee conduct, product liability, key personnel, operational expansion, and tax implications - Misconduct by employees, principal investigators, consultants, or commercial partners (e.g., non-compliance with regulations, fraud, insider trading) could lead to regulatory sanctions, litigation, and reputational harm[250](index=250&type=chunk)[251](index=251&type=chunk) - The use of product candidates in clinical trials and commercial sale exposes the company to product liability claims, which could result in substantial liability, costs, and negative consequences, including regulatory actions[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - High dependence on key personnel and intense competition for skilled talent in the biopharmaceutical industry pose risks to attracting and retaining qualified managerial, scientific, and medical staff[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk)[259](index=259&type=chunk) - Expected expansion of development, regulatory, and operational capabilities may lead to difficulties in managing growth, potentially disrupting operations and diverting management resources[260](index=260&type=chunk)[261](index=261&type=chunk) - The ability to use net operating loss (NOL) carryforwards and R&D tax credits may be limited due to past or future ownership changes under Section 382 of the Internal Revenue Code, potentially increasing future tax liability[262](index=262&type=chunk)[263](index=263&type=chunk) [Risks Related to Government Regulation](index=86&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section covers risks from healthcare fraud laws, evolving legislation, data privacy regulations, and the use of generative AI - Business operations are subject to federal and state healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act), and non-compliance could lead to substantial penalties[265](index=265&type=chunk)[266](index=266&type=chunk) - Enacted and future healthcare legislation, such as the Affordable Care Act and Inflation Reduction Act (including Medicare Drug Price Negotiation Program), may increase the difficulty and cost of obtaining marketing approval and affect product pricing[267](index=267&type=chunk)[268](index=268&type=chunk)[270](index=270&type=chunk)[273](index=273&type=chunk) - The company is subject to stringent and changing U.S. and foreign data privacy and security laws (e.g., HIPAA, CCPA, GDPR), and non-compliance or security incidents could lead to regulatory actions, litigation, fines, and business disruptions[274](index=274&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk)[282](index=282&type=chunk) - The use of generative AI technologies by employees and vendors introduces additional privacy and security risks, compliance costs, and potential competitive disadvantages if usage is restricted[279](index=279&type=chunk)[375](index=375&type=chunk) [Risks Related to Our Intellectual Property](index=93&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses risks related to obtaining, maintaining, and enforcing intellectual property rights, including patents and trade secrets - Inability to obtain and maintain sufficient intellectual property protection (patents, trade secrets) for platform technologies and product candidates could allow competitors to develop similar products, adversely affecting commercialization[283](index=283&type=chunk)[285](index=285&type=chunk) - The patent application process is uncertain; pending applications may not issue, issued patents may be challenged or invalidated, and the scope of protection may be limited, impacting exclusivity[290](index=290&type=chunk)[293](index=293&type=chunk) - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less protection, and geopolitical actions could further impact patent prosecution and enforcement[294](index=294&type=chunk)[297](index=297&type=chunk) - Changes in patent law (e.g., Leahy-Smith Act, Supreme Court decisions) could diminish the value of patents, increase costs, and weaken the ability to protect inventions[300](index=300&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk) - Failure to comply with procedural requirements for patents (fees, document submission) can lead to abandonment or lapse of patent rights[304](index=304&type=chunk) - Intellectual property rights have limitations and may not address all threats to competitive advantage, such as competitors developing similar but non-infringing products or independent development of trade secrets[305](index=305&type=chunk) - Technology licensed from third parties may be subject to retained rights (e.g., noncommercial use by licensors, government march-in rights), potentially affecting exclusivity and enforcement[307](index=307&type=chunk)[308](index=308&type=chunk) - Inability to obtain or maintain necessary in-licenses for third-party proprietary rights on reasonable terms could force abandonment of development programs[309](index=309&type=chunk)[315](index=315&type=chunk) - Disputes with licensors regarding intellectual property scope, diligence obligations, or ownership could adversely affect business and prospects[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) - Failure to identify relevant third-party patents or incorrect interpretation of their scope/expiration could lead to infringement claims, costly litigation, and delays in product development[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - Lawsuits for infringing third-party intellectual property rights are costly, time-consuming, and could prevent or delay commercialization, potentially leading to injunctions or monetary damages[326](index=326&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk)[331](index=331&type=chunk) - Lawsuits to protect or enforce the company's patents or other intellectual property are expensive, time-consuming, and may be unsuccessful, potentially leading to invalidation of patents or limited enforcement ability[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - Claims of wrongful hiring or use/disclosure of confidential information from competitors could result in litigation, substantial costs, and distraction to management[335](index=335&type=chunk)[337](index=337&type=chunk) - Reliance on trade secrets and proprietary know-how is vulnerable to disclosure or misappropriation, which is difficult to trace and enforce, harming competitive position[338](index=338&type=chunk)[339](index=339&type=chunk) - Claims challenging inventorship or ownership of patents and other intellectual property could lead to litigation, loss of valuable rights, and adverse effects on the business[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - Patent terms may be inadequate to protect competitive position for a sufficient time, leading to competition from biosimilar or generic products upon expiration[344](index=344&type=chunk) - Inadequate protection of trademarks and trade names could hinder brand recognition and adversely affect the business, with risks of challenges, infringement, or forced cessation of use[346](index=346&type=chunk)[347](index=347&type=chunk) [Risks Related to the Securities Market and Ownership of Our Common Stock](index=116&type=section&id=Risks%20Related%20to%20the%20Securities%20Market%20and%20Ownership%20of%20Our%20Common%20Stock) This section discusses risks concerning stock price volatility, dilution, corporate governance, and public company compliance costs - An active trading market for common stock may not be sustained, making it difficult for stockholders to sell shares[348](index=348&type=chunk) - The price of common stock is subject to volatility, influenced by market performance, company operating results, clinical trial outcomes, regulatory developments, and macroeconomic conditions[349](index=349&type=chunk)[350](index=350&type=chunk) - Principal stockholders and management own a significant percentage of stock, allowing them to exert significant control over matters requiring stockholder approval, potentially discouraging acquisition proposals[351](index=351&type=chunk) - Future sales and issuances of common stock or rights to purchase common stock, including under equity incentive plans, could result in additional dilution for existing stockholders and cause the stock price to fall[352](index=352&type=chunk)[353](index=353&type=chunk)[355](index=355&type=chunk) - The company does not intend to pay dividends, so returns to stockholders will be limited to stock appreciation[356](index=356&type=chunk) - Operating as a public company incurs significant costs, and management must devote substantial time to reporting and compliance initiatives, which can be expensive and time-consuming[358](index=358&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, lead to investor loss of confidence, and potential sanctions[360](index=360&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk) - Future changes in financial accounting standards or practices may cause unexpected revenue fluctuations and adversely affect reported results of operations[363](index=363&type=chunk) - Changes in tax laws or regulations, or adverse application thereof, could materially affect business, cash flow, financial condition, or results of operations[364](index=364&type=chunk)[365](index=365&type=chunk) [General Risk Factors](index=129&type=section&id=General%20Risk%20Factors) This section covers broad risks including market instability, insider sales, control limitations, cybersecurity, natural disasters, and legal compliance - Unstable market, economic, and geopolitical conditions (e.g., high inflation, rising interest rates, bank failures, international conflicts) may seriously impact business, financial condition, and stock price, making financing more difficult and costly[391](index=391&type=chunk)[392](index=392&type=chunk)[393](index=393&type=chunk) - Substantial sales of common stock, particularly by insiders, could cause the market price to decline[394](index=394&type=chunk) - Disclosure controls and procedures may not prevent or detect all errors or acts of fraud due to inherent limitations, potentially leading to misstatements[395](index=395&type=chunk)[396](index=396&type=chunk) - Inaccurate or unfavorable research by securities or industry analysts could negatively affect the stock price and trading volume[397](index=397&type=chunk) - Information technology systems or sensitive data, or those of third parties, may suffer security incidents, data loss, or disruptions, potentially exposing the company to liability and adversely affecting development programs[366](index=366&type=chunk)[367](index=367&type=chunk)[371](index=371&type=chunk)[373](index=373&type=chunk) - The company's corporate headquarters and research facility are vulnerable to natural disasters (e.g., earthquakes, fires), and inadequate business continuity plans could severely disrupt operations[376](index=376&type=chunk) - The company is subject to U.S. and foreign anti-corruption, anti-money laundering, export control, and sanctions laws, with serious consequences for violations[377](index=377&type=chunk)[378](index=378&type=chunk) - Failure to comply with environmental, health, and safety laws and regulations could result in fines, penalties, or significant costs, impairing research and development[379](index=379&type=chunk)[381](index=381&type=chunk) - Delaware law and provisions in the company's organizational documents could make mergers, tender offers, or proxy contests difficult, potentially depressing the stock price[382](index=382&type=chunk)[383](index=383&type=chunk)[385](index=385&type=chunk)[386](index=386&type=chunk) - Exclusive forum provisions in the certificate of incorporation for Delaware and federal district courts could limit stockholders' ability to choose a favorable judicial forum for disputes[387](index=387&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) - The company could be subject to securities class action litigation, which is costly and diverts management attention[390](index=390&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=132&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of proceeds from the company's initial public offering (IPO) in March 2021, with net proceeds of **$254.3 million** held in cash, cash equivalents, and investment securities, and approximately **$141.7 million** used to support operations as of March 31, 2025 - The company's IPO in March 2021 generated net proceeds of **$254.3 million**[398](index=398&type=chunk) - As of March 31, 2025, approximately **$141.7 million** of the IPO net proceeds had been used to support operations[399](index=399&type=chunk) - The remaining net proceeds are held in cash, cash equivalents, and investment securities, primarily U.S. government agency and Treasury securities[399](index=399&type=chunk) [Item 3. Defaults Upon Senior Securities](index=132&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities [Item 4. Mine Safety Disclosures](index=132&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=132&type=section&id=Item%205.%20Other%20Information) The company reported no other information [Item 6. Exhibits](index=133&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including organizational documents, certifications, and XBRL-related documents [Signatures](index=134&type=section&id=Signatures) The report is signed by Pratik Shah, Ph.D., President, Chief Executive Officer, and Chairperson, who also serves as the Principal Executive and Financial Officer, on May 7, 2025 - The report was signed by Pratik Shah, Ph.D., President, CEO, and Chairperson, on May 7, 2025[407](index=407&type=chunk)

Financial Performance - Design Therapeutics reported a net loss of $17.7 million for the first quarter of 2025, compared to a net loss of $11.1 million in the same period of 2024, representing a 59% increase in losses year-over-year[9] - Total operating expenses for the first quarter of 2025 were $20.4 million, compared to $14.4 million in the same quarter of 2024, reflecting a 42% increase[13] - Research and development (R&D) expenses for the quarter were $15.4 million, up from $9.8 million in the first quarter of 2024, indicating a 57% increase[9] Cash Position - The company has cash, cash equivalents, and investment securities totaling $229.7 million as of March 31, 2025, which is expected to fund operations into 2029[9] Clinical Trials and Development - Design Therapeutics is conducting a Phase 1 single ascending dose trial of DT-216P2 for Friedreich Ataxia (FA), with plans to initiate a Phase 1/2 multiple ascending dose trial in mid-2025[4] - Favorable results from the Phase 1 trial of DT-168 for Fuchs Endothelial Corneal Dystrophy (FECD) were reported, with no treatment-emergent adverse events observed[4] - The company plans to initiate a Phase 2 biomarker trial of DT-168 in the second half of 2025, targeting patients with the TCF4 mutation scheduled for corneal transplant surgery[4] - Design Therapeutics continues to progress preclinical activities for its myotonic dystrophy type-1 (DM1) program, with a development candidate expected to be selected later in 2025[4] Leadership Changes - The company appointed Chris Storgard, M.D., as Chief Medical Officer in April 2025, bringing over two decades of drug development experience[5] Strategic Goals - Design Therapeutics aims to deliver multiple clinical proof-of-concept readouts over the next few years from its differentiated GeneTAC® pipeline[3]