Design Therapeutics' Modified DT-216 May Have Potential, But Analyst Awaits Further Developments

RBC Capital Market downgraded Design Therapeutics Inc DSGN from Outperform to Sector Perform with a price target of $7, down from $23.

The company reported initial results from the company's Phase 1 multiple-ascending dose clinical trial of DT-216 in patients with Friedrich ataxia. 

The company also announced plans to reformulate its Friedreich ataxia drug following injection site reactions in a Phase 1 study.

Analysts Leonid Timashev and Brian Abrahams see signs of activity from DT-216 that confirm that the geneTAC platform has the potential to modulate gene expression in humans, But DT-216's ~30% mRNA changes fall short of the 50% bar the investors were looking for.

The analysts recognize the promise in the modified versions of DT-216 that might enhance its therapeutic range and acknowledge the overall platform's initial validation. 

However, due to extended development timelines and the inherent risks in the early stages of the remaining programs, RBC analysts are adopting a wait-and-see approach until more uncertainties are addressed.

The analysts expect the potential launch of DT-216 in FA in 2029 versus 2026 expected earlier, and reducing our PoS from 25% to 10% given risks with new formulation development and now see a $370 million opportunity in 2032.

Price Action: DSGN shares are down 70.90% at $2.14 on the last check Tuesday.