Design Therapeutics, Inc. ($DSGN)

Good day, and welcome to the Design Therapeutics Conference Call. [Operator Instructions] Please note this call is being recorded. I would now like to turn the call over to Sean Jeffries, COO. Please go ahead.

I'm Sean Jeffries, COO, of Design Therapeutics. This presentation will contain forward-looking statements, including statements related to our development plans and other information that is not historical fact. Such statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied by such forward-looking statements. For more information regarding these risks and uncertainties, please refer to the press release we issued today and the risk factors in our most recent quarterly report on Form 10-Q. It is my pleasure now to turn the call over to Design Therapeutics CEO, Pratik Shah.

Thank you, on behalf of Design Therapeutics, I'm delighted to announce an earlier than anticipated read-out on our RESTORE-FA study, a multiple ascending dose study in patients with Friedreich Ataxia. The results we will share are based on 4 weeks of dosing from IV once weekly, conducted at 4 dose levels with a total of 16 patients in the study. DT-216 P2, also known as DT216 for injection, was generally well tolerated. All adverse events were mild to moderate. There were no serious adverse events and no study discontinuations. We are very pleased to report that we are seeing significant increases in production of endogenous natural frataxin in both mRNA and protein and activity in both blood and muscle. The frataxin increases are at levels that are potentially already providing therapeutic effects as measured by well-accepted clinical endpoints such as mFARS and upright stability score and also supported by patient-reported measures of fatigue. These data lead us to believe that DT216 for injection could represent a potentially best-in-disease profile in the treatment of FA. To our knowledge, this is the first time, it has been possible to evaluate the clinical impact of increasing natural endogenous frataxin as a result of a therapeutic intervention, and it is gratifying to see what the potential of a small molecule genomic medicine can be. In the context of these data, we are now beginning to develop a plan for a potential registration path. We expect to have further clarity on these plans in the fourth quarter of this year. FA is a debilitating condition that is caused entirely by a mutation in a single gene frataxin. This is a disease driven by low quantity of normal endogenous frataxin in production, starting with low levels of normal mRNA and therefore, low levels of protein resulting in downstream effects on the mitochondria and cellular function, and ultimately leading to dysfunction in a number of organ systems. The approved drug called Skyclarys or omaveloxolone, target -- as the mitochondria, but does not impact frataxin. There are other companies pursuing approaches involving exogenous delivery of either frataxin infusion protein or by exogenous gene delivery by viral vectors. The mutation is a long GAA nucleotide repeat expansion tension in the first intron. This causes low levels of mRNA production that can be readily measured as shown on the bar graph on the right. as compared to mRNA levels from a wild-type allele with very few GAA repeats. DT-216 is a heterobifunctional gene taxol molecule, that is designed to recognize these long GAA repeats, and crude epigenetic proteins to dial up the transcription of endogenous frataxin mRNA. As a result, treatment of cells from FA patients resulted in a dose dependent increase in frataxin expression that does not exceed normal levels as shown in the blue bars. The pathogenic cascade is shown on this slide. As a reminder, the cause of the disease is in the DNA in the nucleus. And this is a disease of partexin quantity, not quality since the splice for taxinmRNA is identical between in patients and unaffected individuals. The assay employed in the clinical trial is specific for endogenous -- mRNA, as shown in step 3 and frataxin protein as shown in step 4. We have previously demonstrated in pre-clinical studies that treatment with an FA gene tech molecule increased mRNA, which translated to protein and that the protein increase resulted in downstream effects, like increases in cis-aconitase activity as well as increases in cellular respiration and oxygen consumption, thereby restoring cellular function to levels comparable to unaffected cells. To assess clinical impact on the Restore study, we have used multiple clinical measures. Today's update is based on the 4-week IV dosing cohorts of the RESTORE EF study looking at both biomarker and standard clinical endpoints like MAR or the modified Friedreich Ataxia rating scale, which was used by the approved drug as a primary endpoint in their pivotal study, upright stability score USS, a component of MRs which the approved drug is now using as a primary endpoint for the ongoing pediatric brave study. Since fatigue is an important complaint for patients living with FA, we have used a well-established disease-agnostic fatigue scale called PROMISE that has been used in many other drugs. As a reminder, these are some of the salient observations reported by others on MRs in the FAA therapeutic landscape. The approved drug in the MOXY study demonstrated a 1.56 improvement in mFARS change from baseline over 48 weeks, and there was a 1.6 point improvement seen at 4 weeks. Placebo group improved by 1 point at 4 weeks and worsened by 0.85 points by week 48, resulting in a group difference of 2.4 points. Lexio and Lamar have reported data from their open-label studies. Lexia observed an improvement of 2 points with an F16 and Larimar reported an MFR change of 2.25 points with an INNOVATE. Our 2-point changes thought to represent approximately 1 year of progression. On frataxin levels, the natural history data demonstrate that endogenous frataxin blood protein is a surrogate marker for predicting clinical benefit and that any significant increase would likely be therapeutic. We had wanted to understand how DT216 would fare while key biomarker criteria. First, whether DT216 would increase mRNA, Second, whether there was evidence that this induced mRNA would result in protein increases; and third, whether DT216 had evidence of activity in both blood and muscle. We are delighted that the results show that we have met all 3 biomarker success criteria and further that the measured increased levels of frataxin in this study already show clinical impact at a level that would potentially place DT216 as a best-in-disease profile. Here are the patient demographics. This was an all-comer study. the functional staging of ataxia or FA core4 indicates that the patient would require the use of a walking device like a cane or walker and an FA C score 5 indicates we'll chair dependence. Ten of the 16 patients were on background omaveloxolone therapy for an average of over 5 years. Now for the salient clinical and biomarker observations. We are extremely pleased to have observed a 6.4 point improvement in mFARS at the 1 MPK IV dose. On Upright Stability Score, we observed a 2.7 point improvement. Placebo effect on MRs in the MAX study at 4 weeks was a 1 point improvement Amir effects in previous FA studies have not exceeded 3 points and on a USS, a 1 point improvement would be beyond the 95th percentile confidence interval of any placebo study seen previously in FA. Although no head-to-head study was conducted, the results are striking and a comparison between the MFRS and USS changes to the placebo groups in the MAX study is shown in the footnote show comparative significance in an exploratory ad hoc cross-study comparison. The observed effects are add-on methods in patients already on standard of care. These graphs show the data from all of the doubles. MFRS is a composite score and contains a number of subdomains and therefore, tends to be more variable. The upright stability score component of MRs is less placebo responsive and less variable. USS on the right evaluates balance, stance and gate. It is the least variable component of MFRS and the dose response relationship is particularly striking. On fatigue, an important complaint for patients had 1 MPK a greater than 6-point improvement in the promised fatigue scale. You can see that the 0.1 MPK dose group is acting like a placebo. We see a magnitude of improvement that far exceeds the 3-point change, which is considered a minimal important change. The responder table on the very right column, shows a dose-dependent increase in the number of responders with greater than 5-point improvement in the promised scale. We also observed that the impact appears to be somewhat persistent at 2 weeks post fourth dose. Now let's look at the biomarker response. Dose-dependent increases in endogenous frataxin were observed following treatment with DT216 P2 across Rituxan mRNA and protein assays in whole blood as well as frataxin in mRNA measurements in affected muscle tissue, demonstrating activity in both blood and muscle. Following 4 weeks of treatment at 1 MPK Whole blood for tax in mRNA levels increased by 65% from baseline. Whole blood frataxin-M and frataxin-E-protein levels increased by 22% to 27% from baseline 2 weeks following the last dose. Muscle for tax in mRNA levels increased by 42% from baseline. Together, these findings provide comprehensive biomarker activity with meaningful increases in frataxin mRNA and protein as well as activity in both blood and muscle caused by DT216 P2 treatment. The dose-dependent biomarker data provide mechanistic support for the observed dose-dependent clinical improvements in FA patients. The observed increases in both isoforms off frataxin protein, measured by different assays provide conclusive evidence that the increases in mRNA from DT216 treatment resulted in increases in frataxin protein. Protection M is predominantly membrane bound inside the mitochondria matrix. And Protexin E is largely found in mature red blood cells. Further, the protein has been described in the literature to have a half-life of over a week, and the persistence of protein levels 2 weeks after the last dose. This is consistent with the expected behavior of endogenous natural for tax in protein. The mRNA has a shorter half-life and it also makes sense that it would go back to baseline 2 weeks after the last dose. Mature red blood cells have no nucleus and therefore, no target sequences for DT-216 and have an average lifespan of approximately 4 months. Therefore, the observed frataxin E increases can only come from erithrosic precursors in the bone marrow that were exposed to drug in the few weeks since the beginning of dosing. And we estimate that Protexin protein increases are coming from the quarter to 1/3 of newly produced mature red blood cells that have been produced since the beginning of dosing. It further confirms that DT216 is widely distributed. The individual responses in clinical measures by USS were best correlated to blood frataxin protein levels. DT 216 is generally well tolerated with serious adverse events or treatment discontinuations reported. All adverse events were mild or moderate. Adverse events considered possibly or probably related to DT216 occurring in more than 1 patient or mild-to-moderate transient ALT elevations observed in 3 patients, all of whom were asymptomatic with no associated increases in bilirubin. All 3 were on background omaveloxolone. As indicated, for example, in the KOL note from an analyst report, and I quote LFT increases with Sky Claris appeared to correlate with response in the clinical trial and may reflect an on-target metabolic effect rather than liver toxicity. The broader implication is that AST/ALT elevations could potentially appear with other agents that restore fitaxin in the liver. Based on these data, we believe we have identified a suitable dose and route of administration had 1 MPK IV weekly to advance toward a registration path. The timing and venue of future data updates is TBD because of the shift in focus to registrational planning. We anticipate providing an update on registration plans in the fourth quarter of this year. We want to sincerely thank the patients, the FA community and all of the people that have supported design for your part in pioneering these efforts to advance small molecule genomic medicines. Thank you very much.

[Operator Instructions] Our first question comes from Leonid Timashev with RBC.

Congratulations on the data. Just wanted to clarify something on the biomarker slide, it says that the statistical significance was against untreated individuals. Does that mean that this was the patient baseline? Or was there another cohort being compared to? And then maybe just a follow-up on that. Can you just help contextualize for us some of the benefits that you saw across these functional endpoints, maybe but the variability on a normal MFAR might be in the significance of that 6 points.

Yes, in relation to the biomarker, as is typical when a value of frataxin, all of these values are normalized to patients baseline, and so you're observing kind of increase over baseline or percent of baseline. The comparison was done to values measured in untreated individuals over time to understand the typical longitudinal variability in the FA patient population.

And on the second question, your second question about MFAR variability. The variability is shown in the data in the graph. It's a striking effect. These levels of changes that are far beyond anything ever observed in FA studies. And if you look at the applicability score component of the fires that is known and acknowledged to be the least variable component of mFARs. And in the upright stability score, there are published papers showing that across all previous studies in FA, the placebo groups don't really move very much and that a 1-point improvement in U.S. would be beyond 95 percentile confidence interval of any previous study seen. And so that gives us a sense of how these data map, and that's actually 1 reason why we conducted some of these post Hawk statistical evaluations to confirm that these changes are striking as we can see.

Next question comes from Costas Valaris with Oppenheimer.

Congrats on the strong data. Maybe a couple of questions from us. The first 1 is, given these impressive clinical effect you observe -- would you say that some of this effect comes from drug penetration and effect in other tissues beyond the blood and the muscles that you measure? And the second question is although you touched on a little bit on that, can you talk a little bit about the individual level correlations between biomarkers and clinical endpoints. Thank you and congrats again.

Thank you so much, Costas. I think on your first question, yes, we have observed in preclinical studies the DT 26 is widely distributed across all affected organs and throughout the body. And we think it is quite plausible and very reasonable infer that based on these clinical effects observed that these may well be coming from the wide distribution properties of DT 216 beyond the specifically measured organ systems where we can generate direct evidence of target engagement. And we know that from preclinical studies, the DT216 is CNS penetrant. On your other question, it's interesting. This is probably the first time that 1 can actually go back and see if the predictive surrogate markers from the natural history studies, how they actually fared in regard to having a relationship with observed clinical effects. And we have done an analysis on individual responders in the clinical measures or responses in clinical measures by U.S. and they were best correlated to blood frataxin protein levels, which is exactly what has been at the center of the natural history studies that concluded or demonstrated that blood protein would be a good surrogate. And as long as it's endogenous blood protein.

Our next question comes from Adam Vogel with Craig Hallum.

Congratulations team on the solid data. So given FA is typically a slowly progressive disease, what's the biological rationale here for seeing this degree of improvement after only 4 weeks of dosing, and then just maybe quickly on durability and long-time longer-term dosing. Should investors expect continued improvement with longer treatment or stabilization after initial dosing or maybe even some attenuation over time?

Thank you so much. I mean the biological rationale has always been that in a monogenic disease, where we know exactly what the root cause is and its low quantities for tax in we've taken the approach of having a molecule that engages the GA repeat expansion, increasing frataxin expression, that's endogenous, and the prediction had been that this type of biomarker activity would translate to clinical benefit. So this mechanistic chain where you have the target, the biomarker and the clinic that's exactly the thesis that we've been building towards. And we have seen in medicine that when one can provide a therapy that directly replaces something that might have been missing naturally or can cause the body to produce the natural missing quantities of protein that it is actually precedented in a sense that those types of interventions can have significant therapeutic effects. I think on your question about duration, of course, it remains to be determined. It is a progressive disease, you know, mitochondria are expected to rapidly respond, but our goal remains to try and provide a best-in-disease profile therapy as we continue to develop this program, and it remains to be seen exactly how that plays out. But in the case of the approved drug, the response is also seen early at 4 weeks and essentially sustained through the duration of the pivotal study period at week 48. So we consider that to be encouraging.

Our next question comes from Joe Schwartz with Leerink Partners.

And congrats on the exciting results I was just wondering how uniform are the clinical benefits that you've seen in the 1 mg per kg cohort. Were all patients clear responders? Or was the mean 6.4 point benefit driven by any outliers? And then given upright stability score is part of mFARS, I'm just wondering how much of the total 6.4-point benefit was explained by the 2.7 point improvement and how much might have come from the other components like ballbar upper limb and lower limb components?

Yes, Joe, the -- on the mFARs, all of the patients in the 1 mg per kg cohort showed improvement. So this was, I think, broadly observed. You can see from the numbers that the USS is 2.7 versus the 6.4 million points improvement, so that's slightly less than half of the improvement in mFARs, but we also saw improvements on the other scales. Additionally, in the promise actually, again, all 4 of those patients saw improvements on promise and 3 of those 4 saw improvement above 5-point improvements, which is certainly well above the 3 points typically thought of for minimal important change using this measure.

And then if I could just squeeze 1 more in. Will you report any more data from RESTORE FA in the second half, such as more patients getting the IV or results from subcu or even response exposure analysis showing how to correlate the concentrations that patients are achieving and blood or muscle compares to what you thought you needed to achieve to get this kind of effect and maybe even correlations between for frataxin and functional changes?

Yes. The RESTORE FA study will continue to stay ongoing. -- for -- to support dosing for more extended periods than we've shared data from the timing, we will anticipate -- we do plan to share more data in the future, but the timing and the venue of future data updates is still to be determined. We believe we have an active dose and route of administration that we would like to advance toward registration. And of course, during the ordinary course of development, it would be natural for us to plan to explore other parameters to understand the various variables, for example, maybe potential future regimens, potentially less frequent dosing intervals, subcu administration, we view all of those topics as not on the critical path.

Our next question comes from Ionnis Souroutzidis with Cantor Fitzgerald.

Folks, appreciate the time today, and congrats getting on the stellar data here. Two quick ones, I guess. One, could you maybe walk through a little bit more carefully how the baselines were, I guess, calculated with regards to the biomarker changes, as you mentioned, have been versus natural history. And was that same methodology applied for the functional endpoints as well? And then I have 1 quick follow-up.

I think I understand your question is just what were the baselines and the baselines of these patients, it is an all-comer study. So certainly a broad range but within expected values of the natural history study. And all of these values are normalized to baseline. This is typical for both the clinical and the biomarker endpoints in Friedreich Ataxia and really the best way to analyze this data is to look at change from a patient's own baseline. Does that answer your question, Ioannis?

I think so, but just to confirm, the changes we are seeing here are then directly tied back to the patient's own baseline or to a kind of cohort analysis of natural history and how those SP1 End points change over time?

No, this is all correlated with the patient's own baseline measured prior to the start of dosing.

Understood. Okay. And the follow-up was just between the M&E isoform, obviously, much more kind of time to blood cell turnover I guess, is there a particular reason you guys see such a congruence between the 2 versus maybe having larger increases in FX?

Well, they are both made from the same gene. And so that would explain the congruence because once you dial up the gene it would be natural for the RNAs to be made in all of the natural isoforms to be made. And so to us, this is all consistent with what the literature says.

And again, congrats, truly outstanding here.

Our next question comes from Faisal Khurshid with Jefferies.

I just want to ask a few quick questions on regulatory progress. So one, what does the time line look like for engaging with the FDA? Do you plan to seek breakthrough designation? And then lastly, is there any longer-term follow-up data from either the Phase I or from preclinical work that would be gating to a pivotal study?

Thank you. Well, with this recent data, this is the type of data we've been waiting for in order to develop a plan for advancing various things forward. Of course, as we think about the plans toward registration, it will involve all kinds of factors, including potential discussions with regulators. At this stage, given that we just got this information, we need time to kind of put all that together and put some thought into it. And so that's why we're planning to provide an update on these plans in the fourth quarter of this year. And I think yes, and all the things you mentioned are now on the table.

Our next question comes from Yasmeen Rahimi with Piper Sandler.

Congrats on the outstanding data. A few questions. One is were you able to within the cohort of patients to see that the patients who had an improvement in the most greatest for taxi levels across RNA protein model also exhibited sort of the greatest response in mFARS, sort of the correlation between these biomarkers as well as clinical end point Second question is I would appreciate, I don't know, 2 people have been paying us asking, what are the absolute free tax and protein levels at baseline and end of treatment. And then the third one, is this validation is not only important for the FA program, but sort of big picture validation of the Gene Tap opportunity. Would love to hear your thoughts, how you're thinking about with this data set, what it means for building out the pipeline?

Okay. Thank you for the question. On your first question, yes, we did look at correlations across various clinical and various measurement approaches to the increases in endogenous for taxi. And interestingly, the individual responses in clinical measures really show up most clearly in U.S. That's because that's the least responsive to placebo. And of all the different ways of measuring frataxin perhaps as predicted by the natural history study, it's the blood of frataxin protein that best correlates the clinical responses at an individual level to the blood frataxin protein responses. So I think that's a learning from that type of analysis. I think on your other question about the platform. Certainly, for the first time, seeing validation of the platform clinically is very exciting. And it certainly strengthens our conviction in the GeneTAC molecule approach. We have other programs, as you know, in various other monogenic conditions. On the other hand, of course, every program's molecule is unique. And so each program has its own considerations, but certainly, a very exciting day for design to have this type of clinical validation. Sorry, I think you may have 1 more question that I missed, you want to...

Absolutely. Just a question around absolute changes in the...

So on that point, the we've described in the past and as most thoroughly in the last quarter's update, that because there are no agreed normalization quantitative standards in the FA protein measurement field. It is not possible to provide a cross-company comparator common Y axis, okay? So that's just not -- that's work that's just not been done and not possible. However, One thing that we've done a lot of work on is we ran studies in untreated patients and healthy individuals to understand the performance of these various assay systems to not only look at the assay variability, but also the relative levels in different settings. And one of the conclusions we shared from those studies is that it's the whole blood mRNA assays that are the tightest and have the least overlap between patient levels or frataxin and healthy carriers. And so maybe to just -- you've seen, I think, in this biomarker data, a 65% increase in that parameter in whole blood frataxin mRNA. And just to share some benchmarks from the reference studies we ran, the 90th percentile increase in FA patient population untreated was about a 24% higher level than average, that's within the patient population and that the healthy carrier range in that assay system began at about a 46% increase relative to the patient population. So I think that gives you a sense as a matter of context, and those numbers are different across different assays and different levels of variability, but we believe that the whole blood frataxin mRNA assay is best suited to understand the 216 induced frataxin in the context of the broader population.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Pratik Shah, CEO, for closing remarks.

Thank you very much. Well, we are Again, very appreciative of everyone joining us this morning and for your questions. Before we close, I just want to thank the patients, the families and the investigators in RESTORE FA. You made this morning possible, and the FA community is the reason that this work matters. We look forward to updating you in the months ahead. Have a good day. Thank you for your participation. You may now disconnect.