Design Therapeutics, Inc. (DSGN) Earnings Call Transcript & Summary

Hello, and welcome to the Jefferies 2025 Global Healthcare Conference. My name is Chase Bookin with the Jefferies Healthcare Banking team, and it is my great pleasure to introduce Sean Jeffries, COO of Design Therapeutics. Sean?

Thank you, Chase. It's great to be here. No relation, but it's always good to be at the Jefferies Healthcare Conference. During this presentation, I will be making forward-looking statements related to our current expectations and plans. Actual results may differ materially due to various important factors, including those described in the Risk Factors section of our most recently filed Form 10-Q, and these statements represent our views as of this discussion and should not be relied upon as representing our views in any date in the future. So what makes Design really compelling is that we are pioneering a novel class of small molecule genomic medicines that are designed to either dial up or dial down the transcription of an individual gene in the genome. We know that genetic disease have definitionally validated targets, and the opportunity to go after those targets with a small molecule is what really makes design exciting. We are working in 4 severe monogenic diseases. We are currently in the clinic for our Friedreich ataxia and Fuchs endothelial corneal dystrophy program. Each of our programs has a highly differentiated first or best-in-class profile and serves a significant market. Our genomic medicine platform has shown the promise to surpass competing modalities in the genomic medicine space like gene editing, gene therapy, protein replacement, oligonucleotide therapy for the treatment of these diseases. And in addition, we have an operating runway, which enables us to generate hopefully positive clinical proof-of-concept data in at least 1 of these 4 programs, any one of which has the potential to create enormous value for both patients and for shareholders. Friedreich ataxia or FA is a debilitating neuromuscular disorder with hypertrophic cardiomyopathy as the primary cause of death. It is caused by low levels of expression of endogenous frataxin, which is broadly expressed throughout the body. The goal of our genomic medicine is to increase the levels of endogenous frataxin in patients. And we believe the proof of activity for DT-216 has demonstrated increasing frataxin expression in the clinic with our prior drug product. And now we're running clinical studies with our new drug product, DT-216P2. We believe the new formulation has overcome the injection site thrombophlebitis and the short duration of exposure that we saw with the previous formulation. And our next major goal is to demonstrate that we can see that in human studies and then try to generate a frataxin protein response, and we're targeting frataxin data in 2026. In FECD, the Phase I trial in healthy volunteers for our DT-168 program has shown good tolerability in single and multiple dose studies. And we plan to start a Phase II proof-of-concept biomarker trial in the second half of this year with results targeted also next year. Similarly, we have designed compounds exhibiting allele-selective reduction of mutant DMPK for DM1, which we believe has best-in-class potential for foci reduction and splicing improvement, and we're anticipating declaring a DC later this year. And then finally, Huntington's has long sought a therapeutic that has a mutant Huntington-specific reduction that is allele-selective targets Exon 1 and is not an oligonucleotide. And we have designed small molecule candidates that exhibit allele-selective reduction of mutant huntingtin and both mRNA and protein, which is a potentially best-in-class profile. So let's dive into FA. So FA, the root cause of FA is a single mutation in the first intron of the frataxin gene. Healthy individuals have less than 34 GAA repeats in their frataxin gene and have normal expression of frataxin, whereas FA patients have hundreds and sometimes over 1,000 GAA repeats. And these repeats act like a series of speed bumps, that slow and reduce the normal expression of the frataxin gene, and you can measure this with a simple blood test. So you can see on the right in the gray, frataxin patients have low levels of frataxin RNA due to these GAA repeats. We've shown that with increasing concentrations of our FA GeneTAC molecules, you can increase the expression of the endogenous frataxin allele back to normal levels, whereas if you look below, the expression is unchanged in healthy cells. This is exactly what you would wish for in a therapy for FA, one that restores natural levels of natural frataxin, which is the single driver of disease. So how do these molecules work? So FA is a systemic disease. Frataxin is a mitochondrial protein. It's expressed broadly. And so if you go into any cell in the body, you can see we've represented the GAA repeats here in red. And the expression of frataxin in an FA patient is reduced due to these GAA repeats that result in low levels of frataxin mRNA, low levels of frataxin protein, which cause all of the downstream symptoms of FA. So our GeneTAC molecules are heterobifunctional small molecules where one end of the molecule targets double-stranded DNA by binding into the minor group of intact double-stranded DNA in a sequence-specific fashion. So we've designed this for either subcu or IV injection. And these molecules, they distribute broadly. They get into tissues, they get into cells, they get into the nucleus and then they localize very specifically at this GAA repeat stretch. Now the other end of the molecule binds and recruits the transcriptional elongation complex with interactions with BRD4. And now when the RNA polymerase comes along and encounters this long repeat stretch, it's covered with these transcriptional elongation complexes that escort the RNA polymerase through the locus, facilitating normal levels of frataxin expression. And the GAA repeat is located in an intron, and so it naturally gets spliced out. So the gene produces totally normal full-length mRNA, normal functional protein, all of the various isoforms of both mRNA and protein, and all under the native regulatory control of a patient's own natural frataxin. Now in other diseases, you actually want to dial down the expression of a gain-of-function toxic mutation. For example, noncoding mutations in Fuchs or in Huntington's in the coding region. In Fuchs, these mutations cause a toxic RNA where the Cs and Gs of the CTG repeat fold over in each other, trap MBNL1 and cause mis-splicing. In Huntington's, you see the expression of a repeat in the coding region that gets translated into mutant protein that form these toxic aggregates, which are toxic in particular to neurons and cause the downstream symptoms. For these diseases, we have designed allele-specific targeting of that repeat mutation in a cooperative fashion that reduces the expression of the toxic gain-of-function allele while leaving the expression of the wild type allele unchanged. And so we're able to design allele-specific small molecules that can go after the root cause of these genetic diseases. We learned from our previous clinical study with a prior drug product that the duration of exposure with the prior drug product was much shorter than we had expected. We knew the drug was short-lived in plasma, but we also found that the drug was short-lived in tissues when we looked at muscle biopsies. In fact, we saw 8 to 10 nanomolar of drug 2 days after dosing and the drug was effectively gone 7 days after dosing. So what had been designed as a multi-dose clinical trial ended up being basically 3 consecutive single-dose trials 1 week apart. Despite the low level of DT-216 in tissue, 8 to 10 nanomolar, we saw unmistakable pharmacology with increases in a dose-dependent fashion of frataxin mRNA at 2 days. And you can see on the right, we're starting to see FA patients get into the carrier range. But by day 7, the response was basically gone because the drug was gone. We also ran into some observations of injection site thrombophlebitis. And so we were unable to increase dose level or dose frequency at a concern of worsening of these injection site reactions that prevented us from extending the duration of exposure due to these injection site thrombophlebitis observations. So we have redesigned the drug product. We've taken the same API, DT-216, and identified a novel and proprietary excipient to develop what we call DT-216P2, which we believe has basically addressed these -- both of these concerns. Here, you can see the PK in nonhuman primates, and you can see the much longer duration of exposure where the alpha phase transitions to the beta phase at a much higher level. And you see basically the same beta phase, the same elimination half-life because this is the same API. In addition, in nonclinical studies, we have also not observed any of the injection site thrombophlebitis that we had seen previously, which we were able to identify in those nonclinical studies and attribute them to the formulation excipients of the prior drug product. So we are currently conducting a Phase I single-dose clinical trial in healthy volunteers via IV and subcu administration of DT-216P2 to assess the PK injection site tolerability. And we're excited to say that initial data from that ongoing Phase I in healthy volunteers showed that DT-216 was generally well tolerated with no cases of injection site thrombophlebitis to date. The initial PK analysis is supportive of DT-216 overall development profile. And today, we announced that the first FA patient has been dosed via IV infusion in our RESTORE-FA open-label Phase I/II multiple ascending dose clinical trial of DT-216P2. The RESTORE-FA trial is designed to evaluate safety, tolerability, PK and PD of IV and subcu administration of DT-216 in patients with FA. And the first patient that's been treated has so far experienced no adverse events to date, including no evidence of injection site thrombophlebitis. So now we've demonstrated that the DT-216P2 has addressed this injection site thrombophlebitis based on nonclinical studies and now the initial data from the single ascending dose study in healthy volunteers. Our RESTORE-FA clinical trial is currently open for enrollment in Australia. As part of a plan to expand the trial to the U.S., we submitted an IND with the FDA. We recently received an unexpected notice from the FDA that our IND application to begin dosing in the U.S. is on clinical hold for nonclinical deficiencies, and we will expect to receive more details in the 30-day formal letter, and we look forward to engaging with the FDA to resolve this hold. We are very excited to be back in the clinic and dosing FA patients, and we continue to anticipate reporting data from this RESTORE-FA Multiple-Ascending Dose Trial, including levels of frataxin expression based on 12 weeks of dosing in 2026. So moving on to FECD. So FECD or Fuchs endothelial corneal dystrophy is a progressive disease driven by cellular dysfunction and loss of cell density with no approved disease-modifying therapeutics. The IRIS registry estimates about 2 million diagnosed cases in the U.S. with the primary approach of watchful waiting. About 18,000 to 30,000 of these cases per year end up going on to corneal transplant or keratoplasty. A majority of these cases are driven by a CTG repeat expansion in the TCF4 gene called the CTG18.1 mutation in the literature. And this mutation causes cellular dysfunction because the mutant gene makes a toxic RNA, which you can see, which you can visualize. This toxic RNA captures and sequesters MBNL1, which is a splice factor and then causes mis-splicing on a host of downstream targets in these corneal endothelial cells. Here is what I mean by you can see these toxic RNA. So here are cells that we have received as donor cells from a corneal transplant surgeon who is taking diseased corneal tissue that is normally discarded, and we are receiving that tissue and then treating that tissue with DT-168. On the top, you can see these foci, these dots inside the nucleus that are basically images of that toxic RNA. And when you treat with DT-168, these foci go away. And you can see in the dose response curve, these molecules are achieving steady-state pharmacology after about 2 weeks and that they are very potent in the single-digit nanomolar range. The graph on the left shows increasing drug concentrations have no effect on the normal expression of wild-type TCF4 in either healthy or FECD cells. And then in the center, you can see the actual splicing, the downstream effect of this MBNL1 sequestration. What you see is a number of genes here have poor splicing without drug and that with increasing drug concentrations, the splicing of all of these genes go back to normal, showing that getting rid of these toxic foci can result in restored normal splicing and cellular health in these corneal endothelial cells taken from surgical samples from FECD patients. Remarkably, we've been able to formulate DT-168 as an eye drop, and we have completed the first-in-human studies. The schema shows the study design. About 24 healthy volunteers participated in this single and multiple ascending dose trial. And I'm pleased to report that the results show that the eye drops were well tolerated in all subjects. There were no SAEs, no clinically significant findings in any safety assessments. And as well, the PK demonstrated systemic exposure below the limit of quantitation, which is what we expected at all time points in all groups, showing a reduced risk of any sort of systemic tolerability issues. So what's next? We are interested in seeing if DT-168 does what it is designed to do in the corneal endothelium in actual Fuchs patients. And for a long time, we've been asked, is there a biomarker for FECD? And we have been at work trying to figure out if there is a possible biomarker. And this data is a reference range from tissue samples from approximately 2 dozen patients using corneal endothelial cells from FECD donors alongside healthy cells from donors that are unaffected. The splice events from the Fuchs cells are in red and the unaffected donors are in green. And you can see a measurable separation in this data. This type of assay has been used as a biomarker in other CTG repeat diseases like myotonic dystrophy, but we believe this is the first time this has been shown in the FECD field and has the potential to enable the conduct of a biomarker efficacy study. And the study that we're planning on is shown here. So TCF4 positive Fuchs patients who have already been scheduled for keratoplasty, we plan to enroll them in a Phase II proof-of-concept biomarker study, and they would receive eye drops for 4 weeks or more prior to their scheduled surgery. Since the cells are removed as a part of that surgery, we can take that tissue and actually measure the drug impact on improving the spliceopathy in the corneal endothelial cells and compare those to the reference range results we've generated in both the affected and the unaffected eyes. These are later-stage transplant recipients, so we don't expect to see any clinical effects. We are planning to start this Phase II study in the second half of this year with results expected in 2026. We believe that DT-168 could be an exciting new genetic medicine targeting that CTG18.1 disease-causing mutation delivered as a first-of-a-kind small molecule intervention as an eye drop to either stop or slow the progression of Fuchs. And in summary, Design's GeneTAC small molecule platform is designed to address blockbuster markets and is meaningfully differentiated from other genomic medicine modalities. We are in clinical development for 2 of our 4 pipeline programs with data readouts planned for next year. We ended the first quarter with approximately $229 million in cash, and that gives us a runway into 2029 with our current operating plan, and that would support generating clinical proof-of-concept data in up to 4 programs pending these R&D results. We believe that each of these programs has the potential to transform the treatment of debilitating conditions and the success in any one of these would create significant value. And thank you for your time and attention. And I'll open up to questions. Great. Thank you.