Design Therapeutics (DSGN) risk factors, FY2024 10-K

Risks Related to Our Limited Operating History, Financial Position and Capital Requirements

1. 01We 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
2. 02If we are unable to raise additional capital when needed, we may be forced to delay, reduce or eliminate our product development programs or other operations
3. 03the cost associated with commercialization activities for any of our product candidates, if approved
4. 04Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates
5. 05Our financial condition could be adversely affected if the financial institutions in which we hold our cash fail

Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates

1. 06We 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
2. 07maintaining and growing an organization of scientists and business personnel who can develop our products and technology
3. 08manufacturing sufficient quantities of product candidate for use in clinical trials
4. 09Our 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
5. 10If we encounter difficulties or delays enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected
6. 11the risk that patients enrolled in clinical trials will drop out of the trials before completion
7. 12We plan to conduct clinical trials for our product candidates outside the United States and the FDA may not accept data from such trials
8. 13Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions
9. 14Interim, 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
10. 15drug-drug interaction studies or safety or efficacy studies or trials, or it may object to elements of our clinical development program such as the number of subjects in our clinical trials from the United States
11. 16the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering our clinical data insufficient for approval
12. 17A 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
13. 18We may seek orphan drug designation for our product candidates from the FDA and/or from the EMA in the future. However, we may be unsuccessful in obtaining or may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity
14. 19A Fast Track designation by the FDA may not actually lead to a faster development or regulatory review or approval process
15. 20Any Breakthrough Therapy designation that we may receive from the FDA for our product candidates may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that our product candidates will receive marketing approval
16. 21We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do
17. 22We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success
18. 23We may not be successful in our efforts to identify or discover additional product candidates in the future
19. 24potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance

Risks Related to Manufacturing, Commercialization and Reliance on Third Parties

1. 25We 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
2. 26Changes in methods of product candidate manufacturing may result in additional costs or delays
3. 27Any 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
4. 28We may not be able to successfully commercialize our product candidates, if approved, due to unfavorable pricing regulations or third-party coverage and reimbursement policies, which could make it difficult for us to sell our product candidates profitably
5. 29neither experimental nor investigational
6. 30used. Further, from time to time, the Centers for Medicare & Medicaid Services (CMS) revises the reimbursement systems used to reimburse health care providers, including the Medicare Physician Fee Schedule and Hospital Outpatient Prospective Payment System, which may result in reduced Medicare payments
7. 31If 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
8. 32Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed
9. 33unforeseen costs and expenses associated with creating an independent sales and marketing organization
10. 34Even if we obtain FDA approval of any of our product candidates, we may never obtain approval or commercialize such products outside of the United States, which would limit our ability to realize their full market potential

Risks Related to Our In-Licenses and Other Strategic Agreements

1. 35We may not realize the benefits of any acquisitions, in-license or strategic alliances that we enter into
2. 36We 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

Risks Related to Our Business Operations, Employee Matters and Managing Growth

1. 37Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading
2. 38decreased demand for our product candidates, if approved for commercial sale
3. 39We 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
4. 40We expect to expand our development, regulatory and operational capabilities and, as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
5. 41improve our operational, financial and management controls, reporting systems and procedures
6. 42Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited

Risks Related to Government Regulation

1. 43European and other foreign law equivalents of each of the laws, including reporting requirements detailing interactions with and payments to healthcare providers
2. 44Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may charge for such product candidates

Risks Related to Our Intellectual Property

1. 45We rely upon a combination of patents, know-how, trade secrets, and confidentiality agreements to protect the intellectual property related to our products and technologies and to prevent third parties from copying and surpassing our achievements, thus eroding our competitive position in our market
2. 46We cannot ensure that patent rights relating to inventions described and claimed in our pending patent applications will issue or that patents based on our patent applications will not be challenged and rendered invalid and/or unenforceable
3. 47whether we may experience patent office interruption or delays to our ability to timely secure patent coverage to our product candidates as a result of factors outside our control
4. 48We may not be able to protect our intellectual property rights throughout the world
5. 49Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates
6. 50Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
7. 51Intellectual property rights do not necessarily address all potential threats to our competitive advantage
8. 52we may fail to adequately protect and police our trademarks, copyrights, and trade secrets; and
9. 53Our technology licensed from various third parties may be subject to retained rights
10. 54We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses
11. 55the priority of invention of patented technology
12. 56inability to obtain any third-party license required to develop or commercialize any of our product candidates could cause us to abandon any related efforts, which could seriously harm our business and operations
13. 57We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products
14. 58If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates
15. 59be exposed to litigation by a third party alleging that the patent may be infringed by our product candidates or proprietary technologies
16. 60We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful
17. 61Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties
18. 62We may be subject to claims that we have wrongfully hired an employee from a competitor or that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties
19. 63We 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
20. 64We may become subject to claims challenging the inventorship or ownership of our patents and other intellectual property
21. 65Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time
22. 66If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected

Risks Related to the Securities Market and Ownership of Our Common Stock

1. 67An active trading market for our common stock may not be sustained, which may make it difficult for you to sell your shares
2. 68The price of our common stock could be subject to volatility related or unrelated to our operations
3. 69any other factors discussed in this report
4. 70Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval
5. 71Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall
6. 72We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock
7. 73We are an “emerging growth company”, and we intend to take advantage of reduced reporting requirements
8. 74not being required to hold a non-binding advisory vote on executive compensation or obtain stockholder approval of any golden parachute payments not previously approved
9. 75We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to public company reporting and compliance initiatives
10. 76If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
11. 77Future changes in financial accounting standards or practices may cause adverse and unexpected revenue fluctuations and adversely affect our reported results of operations
12. 78Changes in tax laws or regulations that are applied adversely to us may have a material adverse effect on our business, cash flow, financial condition or results of operations
13. 79We or the third parties upon whom we depend may be adversely affected by earthquakes, fires or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
14. 80If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business
15. 81Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock
16. 82The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction
17. 83We could be subject to securities class action litigation
18. 84Unstable market, economic and geo-political conditions may have serious adverse consequences on our business, financial condition and stock price
19. 85If there are substantial sales of shares of our common stock, the market price of our common stock could decline
20. 86Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
21. 87If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline