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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40288

Design Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware		82-3929248
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
6005 Hidden Valley Road, Suite 110 Carlsbad, California		92011
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (858) 293-4900

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, $0.0001 par value per share

     DSGN

     The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock, $0.0001 par value per share, as of August 1, 2025, was 56,948,126.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our plans to research, develop and commercialize our product candidates;

•

our expectations for clinical development of our program in Friedrich ataxia and announcing data therefrom and the timing thereof;

•

the side effect profile observed in nonclinical testing and additional clinical testing of DT-216P2 being indicative of the side effect profile that may be expected in additional clinical trials, and in general the ability of DT-216P2 to prevent injection site thrombophlebitis or other limiting side effects;

•

the initiation, progress, success, cost and timing of our nonclinical studies, clinical trials and product development activities;

•

the therapeutic potential of our product candidates, and the disease indications for which we intend to develop our product candidates;

•

our ability and timing to advance our product candidates into, and to successfully initiate, conduct, enroll and complete, clinical trials;

•

our ability to manufacture our product candidates for clinical development and, if approved, for commercialization, and the timing and costs of such manufacture;

•

the performance of third parties in connection with the development and manufacture of our product candidates, including third parties conducting our nonclinical studies and clinical trials as well as third-party suppliers and manufacturers;

•

our ability to obtain funding for our operations, including funding necessary to initiate and complete clinical trials of our product candidates;

•

the size and growth of the potential markets for our product candidates and our ability to serve those markets;

•

the potential scope, duration and value of our intellectual property rights;

•

our ability, and the ability of our licensors, to obtain, maintain, defend and enforce intellectual property rights protecting our platform technologies and product candidates, and our ability to develop and commercialize our product candidates without infringing the proprietary rights of third parties;

•

our ability to recruit and retain key personnel;

•

the effects of macroeconomic factors on our operations;

•

our expected use of the net proceeds from our initial public offering; and

•

other risks and uncertainties, including those described under Part II, Item 1A, “Risk Factors” of this Quarterly Report.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, “Risk Factors” of this Quarterly Report. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Unless the context otherwise indicates, references in this Quarterly Report to the terms “Design”, “the Company”, “we”, “our”, and “us” refer to Design Therapeutics, Inc.

Trademarks and Service Marks

“Design Therapeutics,” “Design,” “GeneTAC,” the Design logo and other trademarks, trade names or service marks of Design Therapeutics, Inc. appearing in this Quarterly Report on Form 10-Q are the property of Design Therapeutics, Inc. All other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS

An investment in shares of our common stock involves a high degree of risk. Below is a list of the more significant risks associated with our business. This summary does not address all of the risks that we face. Additional discussion of the risks listed in this summary, as well as other risks that we face, are set forth under Part II, Item 1A, “Risk Factors” in this Quarterly Report. Some of the material risks associated with our business include the following:

•

We have a limited operating history, have incurred net losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future. We may never generate any revenue or become profitable or, if we achieve profitability, may not be able to sustain it.

•

We are early in our development efforts, and we have only two product candidates in clinical development, with all of our other research programs currently in the nonclinical or discovery stage. We have a limited history of conducting clinical trials to test our product candidates in humans.

•

Nonclinical and clinical development involves a lengthy and expensive process with uncertain timelines and outcomes, and results of nonclinical studies and clinical trials may not be predictive of future trial results. If development of our programs is unsuccessful or delayed, we may be unable to obtain required regulatory approvals and be unable to commercialize our product candidates on a timely basis, if at all.

•

Our product candidates are based on novel technologies, which make it difficult to predict the timing, results and cost of product candidate development and likelihood of obtaining regulatory approval.

•

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, cause us to suspend or discontinue clinical trials, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

•

Early, interim, topline and preliminary data from our nonclinical studies or clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•

The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain regulatory approval for our product candidates under applicable regulatory requirements. The denial or delay of any such approval would delay commercialization of our product candidates and adversely impact our ability to generate revenue, our business and our results of operations.

•

International trade policies, including tariffs, sanctions and trade barriers, may adversely affect our business, financial condition, results of operations and growth prospects.

•

A health epidemic or pandemic could adversely impact our business and affect our operations, as well as the business or operations of our manufacturers or other third parties with whom we conduct business.

•

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

•

We may rely on third parties to conduct, supervise, and monitor our clinical trials and perform some of our research and nonclinical studies. If these third parties do not satisfactorily carry out their contractual duties or fail to meet expected deadlines, our development programs may be delayed or subject to increased costs, each of which may have an adverse effect on our business and prospects.

•

We contract with third parties for the manufacturing and supply of our product candidates for use in nonclinical testing and clinical trials, which supply may become limited or interrupted or may not be of satisfactory quality and quantity.

•

Any approved products may fail to achieve the degree of market acceptance by physicians, patients, hospitals, healthcare payors and others in the medical community necessary for commercial success.

•

If the market opportunities for any of our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.

•

If any of our product candidates are approved for marketing and commercialization and we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we will be unable to successfully commercialize our product candidates if and when they are approved.

•

We may not realize the benefits of any acquisitions, in-license or strategic alliances that we enter into.

•

We may wish to form collaborations in the future with respect to our product candidates, but may not be able to do so or to realize the potential benefits of such transactions, which may cause us to alter or delay our development and commercialization plans.

•

We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

•

Our business operations and current and future relationships with investigators, health care professionals, consultants, third-party payors and customers are subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

•

Disruptions to the operations of the FDA, the SEC, other U.S. governmental agencies or comparable foreign regulatory authorities caused by funding shortages, leadership changes, staffing cuts or other staffing shortages, along with uncertainty regarding the potential for new initiatives, laws, regulations, policies and guidance affecting our product candidates or other aspects of our business, could materially and adversely affect our business.

•

If we are unable to obtain and maintain sufficient intellectual property protection for our platform technologies and product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be adversely affected.

•

We may not be able to protect our intellectual property rights throughout the world.

•

We may rely on trade secrets and proprietary know-how which can be difficult to trace and enforce and, if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

•

The price of our common stock could be subject to volatility related or unrelated to our operations.

iii

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations	2
	Condensed Statements of Comprehensive Loss	3
	Condensed Statements of Stockholders’ Equity	4
	Condensed Statements of Cash Flows	5
	Notes to Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78
Item 3.	Defaults Upon Senior Securities	78
Item 4.	Mine Safety Disclosures	78
Item 5.	Other Information	78
Item 6.	Exhibits	79
Signatures		80

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DESIGN THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and par value data)


	June 30,			December 31,
	2025			2024
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	19,703		$	22,563
Investment securities		196,573			222,914
Prepaid expenses and other current assets		3,518			2,563
Total current assets		219,794			248,040
Property and equipment, net		1,258			1,410
Right-of-use asset, related party		1,834			2,216
Other assets		—			427
Total assets	$	222,886		$	252,093
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,013		$	2,186
Accrued expenses and other current liabilities (including related party amounts of $844 and $800 respectively)		7,734			6,276
Total current liabilities		8,747			8,462
Operating lease liability, net, related party		1,102			1,534
Total liabilities		9,849			9,996
Commitments and contingencies (See Note 8)
Stockholders’ equity:
Common stock, $0.0001 par value; 200,000,000 shares authorized at June 30, 2025 and December 31, 2024; 56,948,126 and 56,754,341 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively		6			6
Additional paid-in capital		476,738			468,830
Accumulated deficit		(264,012	)		(227,214	)
Accumulated other comprehensive income		305			475
Total stockholders’ equity		213,037			242,097
Total liabilities and stockholders’ equity	$	222,886		$	252,093

The accompanying notes are an integral part of these financial statements.

DESIGN THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Operating expenses:
Research and development (including related party amounts of $230, $222, $458 and $446, respectively)	$	15,738		$	10,516		$	31,115		$	20,317
General and administrative (including related party amounts of $131, $136, $265 and $271, respectively)		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	)
Weighted-average shares of common stock outstanding, basic and diluted		56,859,388			56,555,960			56,808,888			56,522,244

The accompanying notes are an integral part of these financial statements.

DESIGN THERAPEUTICS, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Net loss	$	(19,083	)	$	(11,793	)	$	(36,798	)	$	(22,898	)
Other comprehensive loss:
Unrealized loss on available-for-sale securities		(145	)		(50	)		(170	)		(279	)
Comprehensive loss	$	(19,228	)	$	(11,843	)	$	(36,968	)	$	(23,177	)

The accompanying notes are an integral part of these financial statements.

DESIGN THERAPEUTICS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance at March 31, 2025		56,768,678	$	6	$	472,392	$	450		$	(244,929	)	$	227,919
Issuance of common stock under employee stock purchase plan		179,448		—		361		—			—			361
Stock-based compensation		—		—		3,985		—			—			3,985
Unrealized loss on investments		—		—		—		(145	)		—			(145	)
Net loss		—		—		—		—			(19,083	)		(19,083	)
Balance at June 30, 2025		56,948,126	$	6	$	476,738	$	305		$	(264,012	)	$	213,037

Balance at December 31, 2024		56,754,341	$	6	$	468,830	$	475		$	(227,214	)	$	242,097
Exercises of stock options		14,337		—		23		—			—			23
Issuance of common stock under employee stock purchase plan		179,448		—		361		—			—			361
Stock-based compensation		—		—		7,524		—			—			7,524
Unrealized loss on investments		—		—		—		(170	)		—			(170	)
Net loss		—		—		—		—			(36,798	)		(36,798	)
Balance at June 30, 2025		56,948,126	$	6	$	476,738	$	305		$	(264,012	)	$	213,037

Balance at March 31, 2024		56,494,271	$	6	$	458,449	$	(167	)	$	(188,731	)	$	269,557
Exercises of stock options		6,392		—		6		—			—			6
Issuance of common stock under employee stock purchase plan		119,351		—		223		—			—			223
Stock-based compensation		—		—		3,299		—			—			3,299
Unrealized loss on investments		—		—		—		(50	)		—			(50	)
Net loss		—		—		—		—			(11,793	)		(11,793	)
Balance at June 30, 2024		56,620,014	$	6	$	461,977	$	(217	)	$	(200,524	)	$	261,242

Balance at December 31, 2023		56,473,598	$	6	$	455,245	$	62		$	(177,626	)	$	277,687
Exercises of stock options		27,065		—		26		—			—			26
Issuance of common stock under employee stock purchase plan		119,351		—		223		—			—			223
Stock-based compensation		—		—		6,483		—			—			6,483
Unrealized loss on investments		—		—		—		(279	)		—			(279	)
Net loss		—		—		—		—			(22,898	)		(22,898	)
Balance at June 30, 2024		56,620,014	$	6	$	461,977	$	(217	)	$	(200,524	)	$	261,242

The accompanying notes are an integral part of these financial statements.

DESIGN THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2025			2024
Cash flows from operating activities
Net loss	$	(36,798	)	$	(22,898	)
Reconciliation of net loss to net cash used in operating activities:
Depreciation		311			294
Stock-based compensation		7,524			6,483
Amortization of premiums on investment securities, net		(1,974	)		(3,304	)
Non-cash lease expense		(6	)		8
Deferred financing costs		427			—
Change in operating assets and liabilities:
Prepaid expense and other assets		(955	)		(1,039	)
Accounts payable and other liabilities		241			(3,243	)
Net cash used in operating activities		(31,230	)		(23,699	)
Cash flows from investing activities
Purchases of investment securities		(126,080	)		(99,290	)
Proceeds from maturities of investment securities		154,225			147,595
Purchases of property and equipment		(159	)		(356	)
Net cash provided by investing activities		27,986			47,949
Cash flows from financing activities
Issuance of common stock through employee stock purchase plan		361			223
Proceeds from the exercise of stock options		23			26
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 beginning of period		22,563			21,200
Cash and cash equivalents at end of period	$	19,703		$	45,699

The accompanying notes are an integral part of these financial statements.

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

1. Organization

Design Therapeutics, Inc. (the “Company”) was incorporated in Delaware in December 2017 and is based in Carlsbad, California. The Company is a clinical-stage biopharmaceutical company pioneering the research and development of GeneTAC® molecules, which are a novel class of small-molecule gene targeted chimera therapeutic candidates designed to be disease-modifying by addressing the underlying cause of diseases caused by inherited nucleotide repeat expansion mutations. The Company’s lead product candidate is in Friedreich ataxia (“FA”), its second product candidate is in Fuchs endothelial corneal dystrophy (“FECD”), and it is also advancing GeneTAC® programs to address other diseases.

Liquidity and Capital Resources

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net operating losses since inception and had an accumulated deficit of $264.0 million as of June 30, 2025. The Company had cash, cash equivalents and investment securities of $216.3 million as of June 30, 2025, and has not generated positive cash flow from operations.

Management expects to incur net losses for the foreseeable future. There can be no assurance that the Company will ever earn revenues or achieve profitability, or if achieved, that they will be sustained on a continuing basis. In addition, the research, product development and clinical development activities as well as the commercialization of the Company's products, if approved, will require significant additional financing. The Company may be unable to secure such financing when needed, or if available, such financings may be under terms that are unfavorable to the Company or the current stockholders. If the Company is unable to raise additional funds when needed, it may be required to delay, reduce the scope of, or eliminate development programs, which may adversely affect its business and operations. The Company's currently available cash, cash equivalents and investment securities as of June 30, 2025 are sufficient to meet its anticipated cash requirements for more than 12 months following the date the financial statements are issued.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles and following the requirements of the United States Securities and Exchange Commission (“SEC”) for interim reporting. The Company's financial statements include all adjustments, consisting of only normal recurring adjustments, which in the opinion of management are necessary to present fairly the Company’s financial position as of the reporting date and results of operations and cash flows for the periods presented.

The preparation of the Company’s financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to accruals for research and development expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company operates in one operating and reportable segment, Design Therapeutics, Inc., which is focused on utilizing the Company’s proprietary GeneTAC® platform to design and develop therapeutic candidates for inherited diseases driven by nucleotide repeat expansion.

The Company’s CODM is its Chief Executive Officer. The CODM manages the Company's operations as one segment for the purposes of assessing performance and making operating decisions. The Company’s management of segment profit or loss and assets are evaluated at the consolidated level, and it manages its research activities on a consolidated basis.

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting: Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The ASU also requires public entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new disclosures under the ASU. Annual disclosures are required for fiscal years beginning after December 15, 2023 and for interim disclosures within fiscal years beginning after December 15, 2024. Retrospective application is required. The Company adopted the standard for the year ended December 31, 2024. The impact of the adoption of the amendments in this update was not material to the Company’s financial position and results of operations, as the requirements impact only segment reporting disclosures in the Company's notes to financial statements.

In December 2023, the FASB issued ASU 2023-09, ASC Topic 740, Income Taxes: Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating ASU 2023-09 and does not expect it to have a material effect on its financial statement disclosures.

In November 2024, the FASB issued Accounting Standard Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to enhance transparency into the nature and function of expenses. The amendments require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific expense categories. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating the impact that the updated standard will have on its financial statement disclosures.

3. Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised of stock options outstanding under the Company’s equity incentive plans and employee stock purchase rights under the Company’s 2021 Employee Stock Purchase Plan (“ESPP”), as applicable. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company's net loss position.

The following table sets forth the outstanding, potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:


	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

Accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis at June 30, 2025 and December 31, 2024 (in thousands):


	Fair Value Measurement at End of Period Using:
			Quoted Prices
			In Active
			Markets		Significant
			For		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
As of June 30, 2025:
Assets:
Money market funds(1)	$	17,545	$	17,545	$	—	$	—
Certificates of deposit		1,662		1,662		—		—
U.S. Treasury securities		167,429		167,429		—		—
U.S. Government agency securities		27,482		—		27,482		—
Total	$	214,118	$	186,636	$	27,482	$	—
As of December 31, 2024:
Assets:
Money market funds(1)	$	20,800	$	20,800	$	—	$	—
Certificates of deposit		2,898		2,898		—		—
U.S. Treasury securities		197,528		197,528		—		—
U.S. Government agency securities		22,488		—		22,488		—
Total	$	243,714	$	221,226	$	22,488	$	—

(1)

Included in cash and cash equivalents on the accompanying balance sheets.

Interest bearing money market accounts and certificates of deposit are valued at amortized cost, which approximates fair value. The carrying value of the Company’s cash, accounts payable and accrued liabilities are considered to be representative of their respective fair values due to the short-term nature of those instruments. The Company’s investment securities, which may include money market accounts, money market funds, certificates of deposits, U.S. Treasury securities, and high quality, marketable debt instruments of corporations and government sponsored enterprises, are measured at fair value in accordance with the fair value hierarchy. The Company obtains the fair value of its available-for-sale debt securities from a professional pricing service. Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data and include our investments in marketable debt instruments of government sponsored enterprises. None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis and no transfers between levels have occurred during the periods presented.

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

5. Investment Securities

The Company’s investment policy defines allowable investment securities and establishes guidelines relating to credit quality, diversification, and maturities of its investments to preserve principal and maintain liquidity. The Company’s investment securities consisted of the following at June 30, 2025 and December 31, 2024 (in thousands):


		As of June 30, 2025
											Estimated
									Allowance		Fair
		Amortized		Unrealized		Unrealized			for Credit		Market
	Maturity	Cost		Gains		Losses			Losses		Value
Certificates of deposits	Within 1 year	$	1,659	$	3	$	—		$	—	$	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		—			—		37,614
U.S. Government agency securities	Greater than 1 year		27,500		—		(18	)		—		27,482
Total		$	196,268	$	332	$	(27	)	$	—	$	196,573

		As of December 31, 2024
											Estimated
									Allowance		Fair
		Amortized		Unrealized		Unrealized			for Credit		Market
	Maturity	Cost		Gains		Losses			Losses		Value
Certificates of deposits	Within 1 year	$	2,884	$	14	$	—		$	—	$	2,898
U.S. Treasury securities	Within 1 year		172,178		391		—			—		172,569
U.S. Government agency securities	Within 1 year		7,500		—		(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

The Company reviews its investments at each reporting date to identify and evaluate whether a decline in fair value below the amortized cost basis of available-for-sale securities is due to credit-related factors and determines if such unrealized losses are the result of credit losses that require impairment. Factors considered in determining whether an unrealized loss is the result of a credit loss or other factors include the extent to which the fair value is less than the cost basis, any changes to the rating of the security by a rating agency, the financial condition and near-term prospects of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic condition and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

There were 30 and 12 securities in an unrealized loss position at June 30, 2025 and December 31, 2024, respectively. The Company determined that unrealized losses on its available-for-sale investment securities were primarily attributable to changes in interest rates. Each security remained at a high credit quality rating. Further, there had been no adverse conditions noted for any of the issuers and the Company does not intend to sell any of the securities prior to maturity. As such, an allowance for credit losses has not been recognized as of June 30, 2025 or December 31, 2024.

The following tables present available-for-sale investments that were in an unrealized loss position as of June 30, 2025 and December 31, 2024, aggregated by security type and length of time in a continuous unrealized loss position (in thousands):


	As of June 30, 2025
	Less than 12 Months					12 Months or Greater		Total
	Estimated					Estimated		Estimated
	Fair					Fair		Fair
	Market		Unrealized			Market		Market		Unrealized
	Value		Losses			Value		Value		Losses
U.S. Treasury securities	$	54,567	$	(9	)	$	—	$	54,567	$	(9	)
U.S. Government agency securities		19,982		(18	)		—		19,982		(18	)
Total	$	74,549	$	(27	)	$	—	$	74,549	$	(27	)

	As of December 31, 2024
	Less than 12 Months					12 Months or Greater		Total
	Estimated					Estimated		Estimated
	Fair					Fair		Fair
	Market		Unrealized			Market		Market		Unrealized
	Value		Losses			Value		Value		Losses
Certificates of deposits	$	—	$	—		$	490	$	490	$	—
U.S. Treasury securities		7,514		(2	)		—		7,514		(2	)
U.S. Government agency securities		19,987		(12	)		—		19,987		(12	)
Total	$	27,501	$	(14	)	$	490	$	27,991	$	(14	)

As of June 30, 2025, the Company held 7 domestic certificates of deposit with amortized costs below the Federal Deposit Insurance Corporation insured limit. Accrued interest receivable on available-for-sale investment securities, included in prepaid expenses and other current assets on the Company’s balance sheets, was $1.3 million as of both June 30, 2025 and December 31, 2024.

6. Balance Sheet Details

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Prepaid expenses	$	2,170	$	1,300
Interest receivable		1,348		1,263
Total	$	3,518	$	2,563

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

Property and equipment consisted of the following (in thousands):


	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			—
		3,213			3,065
Less accumulated depreciation		(1,955	)		(1,655	)
Total	$	1,258		$	1,410

Accrued expenses and current liabilities consisted of the following (in thousands):


	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

In February 2021, the Company entered into a lease agreement with Crossing Holdings, LLC to rent laboratory and office space (the “Lease”). Dr. Pratik Shah and entities that he controls are the sole members of Crossing Holdings, LLC. The Lease commenced in September 2021 with a term of 72 months and an option to extend the lease term for a period of three years. Lease payments are subject to annual increases of 3% and the Company is responsible for its share of operating expenses and taxes, which are expensed as incurred. In March 2022, the Company entered into an amendment (the “Lease Amendment”) to its Lease with Crossing Holdings, LLC to rent additional office space in the same building. The Lease Amendment commenced in June 2022 and the term of the additional premises under the Lease Amendment coincides with the term of the Lease and ends in 2027. As of June 30, 2025, the weighted-average remaining lease term for the Company's leases was 2.2 years and the weighted-average discount rate used to determine the right-of-use asset and corresponding operating lease liability was 7.37%.

Maturities of operating lease liabilities as of June 30, 2025 are as follows (in thousands):


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 for each of the three months ended June 30, 2025 and 2024 was $0.2 million. Rent expense for each of the six months ended June 30, 2025 and 2024 was $0.5 million.

8. Commitments and Contingencies

Contingencies

From time to time, the Company may become subject to claims or suits arising in the ordinary course of business. The Company accrues a liability for such matters when it is probable that the future expenditures will be made and such expenditures can be reasonably estimated. The Company had no such contingent liabilities as of June 30, 2025 or December 31, 2024.

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

9. License Agreements

In May 2024, the Company entered into a license agreement pursuant to which it received exclusive, worldwide, royalty-bearing, sublicensable rights to certain patents and technology to be used in the development and commercialization of certain products. The Company paid $0.2 million in upfront license fees during the year ended December 31, 2024, which was expensed to research and development as there is no alternative future use for the license.

The Company may be obligated to make aggregate regulatory milestone payments of up to $0.8 million for each product incorporating licensed patent rights and pay a royalty on worldwide net sales on a product-by-product basis. The Company will recognize these milestone payments and royalties when paid or payable. There were no additional payments or royalties recorded through June 30, 2025.

The Company may terminate the license agreement with 60 days’ written notice and each party may terminate the license agreement upon 30 days’ written notice for certain breaches of the agreement that remain uncured following 60 days’ notice to the other party of such breach. Unless terminated earlier by the parties, the term of the license agreement will continue until the last valid patent claim expires.

Wisconsin Alumni Research Foundation

In February 2019, the Company entered into a Human Therapeutics Exclusive License Agreement (the “License Agreement”) with the Wisconsin Alumni Research Foundation (“WARF”). Under the License Agreement, the Company licensed the exclusive, worldwide, royalty-bearing, sublicensable rights to certain WARF patents and the nonexclusive worldwide rights to certain know-how to develop and commercialize products for the prevention, diagnosis and treatment of disease. As consideration for the license, the Company agreed to pay an upfront fee of $0.3 million, which the Company immediately expensed as research and development expense in its statements of operations as there was no alternative future use for the license.

In 2022, pursuant to the License Agreement, the Company paid $0.1 million upon the acceptance of an Investigational New Drug Application in the U.S. The Company will be required to make further aggregate milestone payments of up to $17.5 million upon achievement of certain other regulatory and commercial milestones. The Company may also be required to pay royalties based on annual net product sales in the low single digits on its or its sublicensees’ net product sales on a country-by-country and product-by-product basis, and is subject to a minimum royalty of $0.1 million per calendar year upon first commercial product sale. Further, the Company may be required to pay sublicense fees in the mid-single digits percentage for fees, royalties or other payments earned from the granting of sublicenses to the WARF patents and know-how. The Company will recognize these milestone payments and royalties when paid or payable. There were no additional payments or royalties recorded through June 30, 2025.

The Company is responsible for reimbursing WARF for costs incurred in connection with prosecuting and maintaining patent rights that are specific to the License Agreement. Expenses recognized in connection with legal patent fees under this License Agreement were immaterial for the three and six months ended June 30, 2025 and 2024, respectively.

The Company may terminate the License Agreement with 90 days written notice or for certain breaches of the agreement. WARF may terminate the License Agreement with 90 days written notice if first commercial sale does not occur before December 31, 2031. Unless terminated earlier by the parties, the term of the License Agreement will continue until the last licensed patent expires in all countries.

10. Stockholders’ Deficit

Shelf Registration Statement

In April 2022, the Company filed a shelf registration statement on Form S-3 (the “2022 Shelf Registration Statement”), which became effective in May 2022. In May 2025, the Company filed a new shelf registration statement on Form S-3, which became effective in May 2025, to replace the 2022 Shelf Registration Statement (the “2025 Shelf Registration Statement”). The 2025 Shelf Registration Statement permits: (i) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination; and (ii) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $100.0 million of our common stock that may be issued and sold under an “at-the-market” sales agreement (the “ATM Program”). The $100.0 million of common stock that may be issued and sold under the ATM Program is included in the $300.0 million of securities that may be issued and sold

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

under the 2025 Shelf Registration Statement. As of June 30, 2025, the Company has not sold any shares of its common stock under the ATM Program.

The Company recorded a one-time non-cash charge to general and administrative expenses of approximately $0.4 million during the three and six months ended June 30, 2025. The one-time charge was previously capitalized in other assets on the Company's balance sheets and related to deferred financing costs for the 2022 Registration Statement.

11. Stock-Based Compensation

Equity Incentive Award Plans

The number of shares of common stock available for issuance under the Company's 2021 Equity Incentive Plan automatically increases on January 1 of each calendar year through January 1, 2031, in an amount equal to 5% of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors. As of June 30, 2025, the total number of shares available for future issuance was 5,497,284.

The following table summarizes stock option activity for the six months ended June 30, 2025:


	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 has been reported in the Company's condensed statements of operations as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		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

In August 2023, the Company granted two stock options, each to purchase up to 525,000 shares of the Company's common stock, which contained both time-based and performance-based conditions. Stock-based compensation expense for awards with performance conditions is recognized ratably for each vesting tranche when the achievement of such performance conditions is determined to be probable. The Company assessed the probability of achieving the performance-based conditions and recorded $0.5 million and $0.1 million in related general and administrative stock-based compensation expense during the three months ended June 30, 2025 and 2024, respectively. The Company recorded $0.5 million and $0.1 million in related general and administrative stock-based compensation expense during the six months ended June 30, 2025 and 2024, respectively.

2021 Employee Stock Purchase Plan

The number of shares of common stock available for issuance under the Company's ESPP automatically increases on January 1 of each calendar year through January 1, 2031, in an amount equal to the lesser of (i) 1% of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase and (ii) 1,200,000 shares; or a lesser number of shares determined by the Company’s board of directors. As of June 30, 2025, the Company had issued 555,834 shares of the Company's common stock under the ESPP and had 2,292,694 shares available for future issuance.

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

12. Related Party Transactions

Lease Agreement

In February 2021, the Company entered into the Lease with Crossing Holdings, LLC to rent laboratory and office space. In March 2022, the Company entered into the Lease Amendment with Crossing Holdings, LLC amending the Lease for additional office space in the same building. Dr. Pratik Shah and entities that he controls are the sole members of Crossing Holdings, LLC.

Rent, and related operating expenses recognized by the Company under the Lease and Lease Amendment during the periods presented were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Research and development	$	220	$	212	$	437	$	425
General and administrative		71		76		145		151
Total expenses	$	291	$	288	$	582	$	576

Consulting Agreements

In January 2019, the Company entered into an agreement with the Marlinspike Group, LLC (“Marlinspike Group”) for research support, management, and business consulting services (the “2019 Consulting Agreement”). Further, Marlinspike Group provides the use of approximately 2,120 square feet of its office space in Carlsbad, California to the Company on an as-available basis from time to time pursuant to the agreement. The Company’s Chief Executive Officer and Chairperson of its board of directors is an executive officer of Marlinspike Group.

In March 2020, the 2019 Consulting Agreement was terminated and replaced with an amended consulting agreement (the “2020 Consulting Agreement”), which provides for similar services and use of office space for a monthly fee of $20,000. Pursuant to the terms of the 2020 Consulting Agreement, it shall remain in effect until otherwise terminated. Termination may occur at any time upon mutual agreement or unilaterally upon 30 days’ written notice. If the Company unilaterally terminates the 2020 Consulting Agreement for any reason other than cause, it would be subject to a $240,000 termination fee. The Company cannot determine when, or if, such a termination will occur and hence has not recorded a liability for the fee.

Expenses recognized by the Company under the 2020 Consulting Agreement during the periods presented were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
General and administrative	$	60	$	60	$	120	$	120
Total expenses	$	60	$	60	$	120	$	120

In December 2017, the Company entered into a consulting agreement with Aseem Z. Ansari, Ph.D., a co-founder, to provide consulting services and advise on certain research and development activities (the “Research Consulting Agreement”). The Research Consulting Agreement, as amended in November 2023, provides for an option grant to Dr. Ansari to purchase 100,000 shares of the Company's common stock. The option has a grant date fair value of $1.72 per share and is being expensed to research and development over a four-year vesting period. The Company recorded approximately $10,000 in related stock-based compensation expense during each of the three months ended June 30, 2025 and 2024 and approximately $21,000 during each of the six months ended June 30, 2025 and 2024.

Expenses recognized by the Company under the Research Consulting Agreement during the periods presented were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Research and development	$	10	$	10	$	21	$	21
Total expenses	$	10	$	10	$	21	$	21

DESIGN THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

(continued)

13. Segment Information

The Company manages the business activities at the consolidated level and operates in one operating and reportable segment. The Company’s CODM is its chief executive officer. The CODM primarily utilizes long-range financial projections and cash runway in order to allocate resources and to assess performance. As of June 30, 2025, the Company has no revenue and all the Company’s long-lived assets were located within the United States. The CODM is regularly provided with the following significant segment expenses:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Interest income	$	2,486		$	3,250		$	5,189		$	6,545
Less:
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(1)		2,739			2,206			5,280			4,400
Segment net loss	$	(19,083	)	$	(11,793	)	$	(36,798	)	$	(22,898	)
Adjustments for reconciling items
Net loss	$	(19,083	)	$	(11,793	)	$	(36,798	)	$	(22,898	)

(1)

Other segment items included in Segment net loss includes professional services, consulting and other outside services expenses, depreciation expense, insurance, facilities and other overhead items.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial statements and notes thereto included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q and our other public filings with the Securities and Exchange Commission (SEC). In addition to historical information, this Quarterly Report contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under the captions “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in this Quarterly Report, as updated by our subsequent filings under the Securities Exchange Act of 1934, as amended (the Exchange Act). Furthermore, past operating results are not necessarily indicative of results that may occur in future periods.

Overview

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

In preclinical studies for our lead program in FA, we have observed restoration of frataxin (FXN) levels in multiple cell types from FA patients and an in vivo murine model of FA using our FA GeneTAC® molecules. At doses that were observed to be well-tolerated in rodents and non-human primates (NHPs), FA GeneTAC® molecules achieved biodistribution to brain and heart, key organs affected by FA, at concentrations that exceeded those observed to restore FXN levels in FA patient cells. Further, and consistent with this favorable target-organ biodistribution, we observed increased endogenous FXN expression in the brain and heart in an animal model of FA after treatment with our FA GeneTAC® molecules. In February 2022, the Investigational New Drug Application (IND) for our lead FA GeneTAC® small molecule, DT-216, formulated as the prior DT-216 product candidate, was cleared by the U.S. Food and Drug Administration (FDA) to commence Phase 1 clinical trials. In December 2022, we reported positive initial data from the Phase 1 single-ascending dose (SAD) clinical trial and in August 2023, we reported data from the Phase 1 multiple-ascending dose (MAD) clinical trial of the prior DT-216 product candidate. Both studies showed that DT-216 was generally well-tolerated and exhibited the ability to overcome the FXN transcription impairment that causes FA in FA patients. Data from the Phase 1 MAD clinical trial suggests more sustained exposure is likely needed to achieve a more durable increase in FXN expression, and we observed five cases of injection site thrombophlebitis in the Phase 1 MAD clinical trial. We then shifted focus to developing DT-216 with a potentially improved formulation to enable higher exposure and chronic administration for treatment of FA. These efforts resulted in a new product candidate, DT-216P2, which uses the same drug substance, DT-216. In nonclinical studies, we observed higher and more sustained DT-216 plasma levels after administration of DT-216P2 than was seen in studies with the prior DT-216 product candidate. Additionally, we observed favorable injection site tolerability following multiple intravenous (IV) administrations of DT-216P2.

A Phase 1 SAD clinical trial of DT-216P2 in normal healthy volunteers in Australia to evaluate single doses using multiple routes of administration, specifically IV infusion and subcutaneous (SC) injection and infusion routes, has shown that human plasma pharmacokinetics (PK) profiles of DT-216P2 were consistent with NHP data following both IV and SC single-dose administration. Early human PK data has demonstrated that DT-216P2 exhibited improved exposure and PK parameters compared to the prior DT-216 product candidate, including higher AUC and sustained plasma levels at comparable doses.

We are conducting our RESTORE-FA (Reactivating Expression Suppressed Through Overcoming Repeat Expansion for FA) Phase 1/2 MAD clinical trial of DT-216P2. The RESTORE-FA trial is designed to evaluate the safety, tolerability, PK and pharmacodynamics (PD) of IV and SC of DT-216P2 in patients with FA. We anticipate providing an update from the RESTORE-FA trial on the effect of DT-216P2 on endogenous FXN levels following 12 weeks of dosing in 2026.

DT-216P2 has been generally well-tolerated in these clinical trials. Based on the data from these clinical trials and non-clinical studies of DT-216P2, we believe the injection site thrombophlebitis seen with the prior DT-216 product candidate is no longer an issue limiting continued development of DT-216.

In June 2025, we received a clinical hold notice from the FDA regarding our IND application for DT-216P2. The FDA’s request pertains to the starting dose in the United States, which we plan to address with clinical data and, if needed, nonclinical data, in order to initiate studies for DT-216P2 in the United States.

In December 2022, we nominated our second GeneTAC® small molecule, DT-168, an eye drop for the treatment of FECD. When tested in vitro in FECD patient-derived corneal endothelial cells, our FECD GeneTAC® molecules led to robust reductions in the pathogenic nuclear RNA foci and corrected key mis-spliced transcripts to levels observed in control corneal endothelial cells from unaffected donors. DT-168 was well-tolerated and distribution of DT-168 was observed in and through the cornea in animal models after administration via eye drop. In addition, DT-168 has been evaluated in chronic toxicity studies of up to nine months in duration. We believe these preclinical data support the potential of our novel GeneTAC® small molecules to correct the most common underlying genetic cause of FECD. We are currently conducting an observational study in FECD to confirm disease characteristics and evaluate deterioration in the context of running a trial and to identify characteristics of FECD patients at risk of more rapid disease progression. We have achieved our enrollment goal for the observational study by recruiting and completing baseline assessments on approximately 250 FECD patients. Based on the baseline characteristics data, we have chosen approximately 100 patients for future follow-up visits. This will inform our clinical development efforts and we believe it could potentially increase the probability of DT-168 programmatic success.

In May 2025, we reported results from a completed Phase 1, double-masked, placebo-controlled, randomized, SAD/MAD clinical trial evaluating the safety, tolerability and systemic PK of DT-168 ophthalmic solution in normal healthy volunteers. Twenty-four normal healthy volunteers received either placebo or single- and multiple-ascending doses of DT-168 eye drops twice daily for seven days (up to a maximum dose of two 0.5% drops twice-daily). DT-168 eye drops were well-tolerated in all participants. There were no serious adverse events, no ocular adverse events (AEs) and no treatment discontinuations due to AEs in the trial. All observed AEs were deemed not related to DT-168 by the trial investigator. PK analysis demonstrated systemic exposure below the limit of quantitation for all participants across all timepoints and all dose groups. In parallel with the Phase 1 trial, we conducted reference range studies which showed consistently different splicing in the corneal endothelium between unaffected eye donors and surgical samples from mutant TCF4 FECD patients, supporting the potential for corneal endothelium biomarkers as a clinical proof-of-concept measure of drug activity. We have initiated a Phase 2 biomarker trial of DT-168 to evaluate safety, tolerability, and corneal endothelium biomarkers in patients with FECD. FECD Patients will receive 0.5% DT-168 eye drops twice-daily for approximately four weeks or more before corneal transplant surgery. Following surgery, tissues from the treated eyes of FECD patients will undergo testing to assess corneal endothelium biomarkers including the abnormal splicing of genes known as spliceopathy. We anticipate reporting data from the Phase 2 biomarker trial in 2026.

Our third program based on the GeneTAC® platform is focused on DM1. Our DM1 GeneTAC® molecules are specifically designed to reduce the formation of CUG repeat hairpin structures that trap splicing factors and form pathogenic nuclear foci that cause DM1. Blocking the formation of CUG foci has demonstrated phenotypic benefit in DM1 patients. We plan to continue evaluating the properties of our DM1 GeneTAC® molecules in preclinical studies in order to nominate a development candidate in 2025.

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

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

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

To date, we have incurred net losses and negative cash flows from operations since our inception and as of June 30, 2025 had an accumulated deficit of $264.0 million. Our cash, cash equivalents and investment securities balance as of June 30, 2025 was $216.3 million. Our net losses have resulted primarily from costs incurred in connection with organizing and staffing our company, business planning, raising capital, developing and optimizing our technology platform, identifying potential product candidates, undertaking research and nonclinical studies, clinical development activities, engaging in manufacturing for our development programs, and

providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales.

We expect our expenses and operating losses will increase substantially for the foreseeable future as we continue to conduct nonclinical studies and clinical trials for our product candidates, nominate additional product candidates from our discovery programs, and as we expand our clinical, regulatory, quality and manufacturing capabilities, incur significant commercialization expenses for marketing, sales, manufacturing and distribution, if we obtain marketing approval for any of our product candidates, and incur additional costs associated with operating as a public company.

Components of Our Results of Operations

Research and Development Expenses

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

Direct costs include:

•

external research and development expenses incurred under agreements with contract research organizations, consultants and other vendors that conduct our clinical, nonclinical and discovery activities;

•

expenses related to manufacturing our product candidates for clinical and nonclinical studies;

•

laboratory supplies; and

•

license fees.

Indirect costs include:

•

personnel-related expenses, consisting of employee salaries, payroll taxes, bonuses, benefits and stock-based compensation charges for those individuals involved in research and development efforts; and

•

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

A significant portion of our research and development expenses have been direct costs, which we track by stage of development, nonclinical or clinical. However, we do not track our internal research and development expenses on a program specific basis, because these costs are deployed across multiple projects and, as such, are not separately classified.

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

Our future research and development expenses may vary significantly based on a wide variety of factors such as:

•

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

•

the number of trials required for approval;

•

the number of sites included in the trials;

•

the countries in which the trials are conducted;

•

the length of time required to enroll eligible patients;

•

the number of patients that participate in the trials;

•

the number of doses that patients receive;

•

the drop-out or discontinuation rates of patients;

•

potential additional safety monitoring requested by regulatory agencies;

•

the scope and costs of designing and implementing drug product improvements (including alternate formulations) and manufacturing our product candidates;

•

the duration of patient participation in the trials and follow-up;

•

the phase of development of the product candidate;

•

the efficacy and safety profile of the product candidate;

•

the timing, receipt, and terms of any approvals from applicable regulatory authorities including FDA and non-U.S. regulators;

•

maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates;

•

establishing clinical or commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully;

•

significant and changing government regulation and regulatory guidance;

•

the impact of any business interruptions to our operations or to those of the third parties with whom we work; and

•

the extent to which we establish additional strategic collaborations or other arrangements.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.

The process of conducting the necessary nonclinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates or any future candidates may be affected by a variety of factors. We may never succeed in achieving regulatory approval for any of our product candidates or any future candidates. Further, a number of factors, including those outside of our control, could adversely impact the timing and duration of our product candidates’ or any future candidates’ development, which could increase our research and development expenses.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses, including employee salaries, bonuses, benefits, and stock-based compensation charges, for personnel in executive and administrative functions. Other significant general and administrative expenses include insurance costs, legal fees relating to intellectual property and corporate matters and professional fees for accounting, tax and consulting services.

We anticipate that our general and administrative expenses will substantially increase in the foreseeable future as we add general and administrative personnel to support our expanded research and development activities and infrastructure and, if any of our product candidates or any future candidates receive marketing approval, commercialization activities, as well as to support our operations generally, including facility-related expenses and patent-related costs. We also expect to incur increased expenses related to accounting, audit, legal, regulatory and tax-related services, director and officer insurance premiums, board of director fees, investor and public relations, and other costs associated with operating as a public company.

Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table summarizes our operating expenses for the three months ended June 30, 2025 and 2024 (in thousands):


	Three Months Ended June 30,
	2025		2024		Change
Operating expenses:
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. Research and development expenses for our FA program increased during the three months ended June 30, 2025 compared to the same period of the prior year primarily due to costs attributable to DT-216 clinical activities and costs for additional development activities.

Expenses for our FECD program decreased compared to the same period of the prior year primarily due to nonclinical activities that took place in 2024. These decreases were partially offset by costs associated with DT-168 clinical activities and costs for additional development activities.

Other direct expenses increased compared to the same period of the prior year primarily due to additional activities related to our early stage research programs. The increase in indirect expenses compared to the same period of the prior year was primarily due to employee related expenses including compensation, stock-based compensation and other support for our ongoing development programs.

The following table summarizes our research and development expenses by program, direct and indirect costs for the three months ended June 30, 2025 and 2024 (in thousands):

      
     Three Months Ended June 30,

FA

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Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Design Therapeutics, Inc. 10-Q