Design Therapeutics(DSGN) - 2025 Q3 - Quarterly Report

Financial Position - The company has an accumulated deficit of $281.0 million as of September 30, 2025, with cash, cash equivalents, and investment securities totaling $206.0 million[87]. - As of September 30, 2025, the company had $206.0 million in cash, cash equivalents, and investment securities, a decrease of $39.5 million from $245.5 million at December 31, 2024[107]. - The company believes its existing cash and investments will be sufficient to fund planned operating expenses for more than the next 12 months[113]. - The company anticipates continuing to incur net losses for the foreseeable future, funded primarily through the sale of common stock and convertible notes[106]. Research and Development - The company expects research and development expenses to increase substantially as it continues clinical trials for its product candidates, including FA, FECD, DM1, and HD programs[88]. - Research and development expenses for the three months ended September 30, 2025, increased to $14,589,000 from $11,876,000 in 2024, representing a change of $2,713,000[98]. - Research and development expenses for the FA program increased to $10,851,000 for the nine months ended September 30, 2025, from $5,601,000 in 2024, a rise of $5,250,000[105]. - The company is conducting preclinical studies on HD GeneTAC candidates, observing over 50% reduction in mutant huntingtin mRNA and protein in animal models[84]. - DT-168 eye drops were well-tolerated in a Phase 1 trial with no serious adverse events reported, supporting its potential for treating FECD[82]. - DT-818 demonstrated over 90% reduction in toxic RNA foci in DM1 patient cells in preclinical studies, with plans to initiate a Phase 1 trial in the first half of 2026[83]. - The Phase 1 clinical trial of DT-216P2 showed improved pharmacokinetics with higher AUC and sustained plasma levels compared to the prior DT-216 product candidate[77]. - The RESTORE-FA trial is designed to evaluate the safety and pharmacodynamics of DT-216P2, with updates expected in the second half of 2026[78]. - The company has achieved its enrollment goal for an observational study in FECD, recruiting approximately 250 patients to inform clinical development efforts[81]. Operating Expenses - Total operating expenses for the nine months ended September 30, 2025, were $61,298,000, up from $45,689,000 in 2024, reflecting an increase of $15,609,000[102]. - General and administrative expenses are anticipated to increase significantly as the company expands its infrastructure and prepares for potential commercialization activities[96]. - General and administrative expenses for the nine months ended September 30, 2025, increased to $15,594,000 from $13,496,000 in 2024, an increase of $2,098,000[102]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $(42,392,000), compared to $(33,245,000) in 2024, indicating a $9,147,000 increase in cash outflow[107]. Licensing and Regulatory Milestones - For the nine months ended September 30, 2025, no payments were made pursuant to the License Agreement, with a total potential milestone payment obligation of up to $17.5 million upon achieving certain regulatory and commercial milestones[121]. - The company paid $0.1 million to WARF in 2022 upon the acceptance of an IND in the United States, and a minimum royalty of $0.1 million per calendar year is required upon the first commercial product sale[121]. - The company entered into a license agreement in May 2024, paying $0.2 million in license fees, which was expensed to research and development due to lack of alternative future use[124]. - Aggregate regulatory milestone payments of up to $0.8 million may be required for each product incorporating licensed patent rights, with no additional payments or royalties recorded through September 30, 2025[125]. - Legal patent fees recognized under the License Agreement were immaterial for the nine months ended September 30, 2025, and 2024[122]. - The company has not recorded any additional payments or royalties through September 30, 2025, indicating a lack of recent financial activity related to the License Agreement[125]. - The company may terminate the License Agreement with 90 days written notice if the first commercial sale does not occur before December 31, 2031[123]. Future Outlook - The company expects future material cash requirements related to planned clinical trials, discovery and nonclinical programs, personnel, and facilities-related expenses[128]. - The 2025 Shelf Registration Statement allows the company to offer up to $300.0 million in securities, including $100.0 million under an "at-the-market" sales agreement[111]. - The company is classified as an emerging growth company and may remain so until December 31, 2026, allowing it to rely on certain exemptions from public company reporting requirements[132]. - The company has irrevocably elected not to avail itself of the exemption from new or revised accounting standards under the JOBS Act, thus subjecting itself to the same standards as other public companies[134].