Full Press Release Details
Investing in Dianthus Therapeutics, Inc., or Dianthus, securities involves a high degree of risk. You should carefully consider the risk
factors set forth below and under Risk Factors in Dianthus Annual Report on Form 10-K for the year ended December 31, 2022 as updated by subsequent filings under the U.S. Securities Exchange Act of 1934, as amended, or the
Exchange Act, before deciding whether to purchase Dianthus securities. The risks and uncertainties described below and in the documents mentioned above are not the only ones Dianthus faces. Additional risks and uncertainties not presently known to
Dianthus could adversely affect its business, operating results and financial condition, as well as adversely affect the value of an investment in Dianthus securities, and the occurrence of any of these risks might cause you to lose all or part of
your investment. Terms not defined herein shall have the meanings ascribed to them in Dianthus definitive proxy statement/prospectus filed with by the U.S. Securities and Exchange Commission on August 1, 2023 (the Definitive Proxy
Statement/Prospectus ).
Summary of Risk Factors
Risks Related to Dianthus Limited Operating History, Financial Position and
Capital Requirements
Dianthus has a limited operating history, has not completed any clinical trials and has no products approved for
commercial sale, which may make it difficult for you to evaluate its current business and likelihood of success and viability.
Dianthus is a clinical-stage biotechnology company with limited operating history that has incurred significant operating losses and has
utilized substantially all of its resources to conduct research and development activities (including with respect to its DNTH103 program) and undertake preclinical studies of product candidates, conducting a clinical trial of Dianthus most
advanced product candidate and the manufacturing of the product candidates, business planning, developing and maintaining its intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for
these activities. Dianthus has limited experience as a company in initiating, conducting or completing clinical trials. In part because of this lack of experience, Dianthus cannot be certain that its current and planned clinical trials will begin or
be completed on time, if at all. In addition, while Dianthus is evaluating DNTH103 in an ongoing Phase 1 clinical trial, Dianthus has not completed a clinical trial for any product candidate, has no products approved for commercial sale and has not
yet demonstrated its ability to successfully complete clinical trials (including Phase 3 or other pivotal clinical trials), obtain regulatory or marketing approvals, manufacture a commercial-scale product or arrange for a third party to do so
on its behalf, or conduct sales, marketing and distribution activities necessary for successful product commercialization. Additionally, Dianthus expects its financial condition and operating results to continue to fluctuate significantly from
period to period due to a variety of factors, many of which are beyond its control. Consequently, any predictions made about Dianthus future success or viability may not be as accurate as they could be if Dianthus had a longer operating
In addition, as its business grows, Dianthus may encounter unforeseen expenses,
restrictions, difficulties, complications, delays and other known and unknown factors. Dianthus will need to transition at some point from a company with an early research and development focus to a company capable of supporting larger scale
clinical trials and eventually commercial activities. Dianthus may not be successful in such a transition.
Dianthus will require substantial
additional capital to finance its operations in the future. If Dianthus is unable to raise such capital when needed, or on acceptable terms, Dianthus may be forced to delay, reduce or eliminate clinical trials, product development programs or future
commercialization efforts.
Developing biotechnology products is a very long, time-consuming, expensive and uncertain process that
takes years to complete. Since its inception, OpCo has funded its operations primarily through private financings and has incurred significant recurring losses, including net losses of $18.2 million for the six months ended June 30, 2023 and
$28.5 million and $13.1 million for the years ended December 31, 2022 and 2021, respectively. Dianthus expects its expenses to increase in connection with its ongoing activities, particularly as Dianthus conducts its ongoing Phase 1 clinical
trial of DNTH103, prepares for an investigational new drug application ( IND ) and other regulatory filings, initiates additional clinical trials, and continues to research, develop and conduct preclinical studies of its other potential
product candidates. In addition, if Dianthus obtains regulatory approval for any product candidate for commercial sale, including DNTH103, Dianthus anticipates incurring significant commercialization expenses related to product manufacturing,
marketing, sales and distribution activities to launch any such product. Dianthus expenses could increase beyond expectations if Dianthus is required by the FDA or other regulatory agencies to perform preclinical studies or clinical trials in
addition to those that Dianthus currently anticipates. Because the design and outcome of its current, planned and anticipated clinical trials are highly uncertain, Dianthus cannot reasonably estimate the actual amount of funding that will be
necessary to successfully complete the development and commercialization of any product candidate Dianthus develops. Dianthus future capital requirements depend on many factors, including factors that are not within its control.
Dianthus will also incur additional costs associated with operating as a public company that OpCo did not incur as a private company.
Accordingly, Dianthus will require substantial additional funding to continue its operations. Based on its current operating plan, Dianthus believes that its existing cash, cash equivalents and short-term investments should be sufficient to fund its
operations into the second quarter of 2026. This estimate is based on assumptions that may prove to be materially wrong, and Dianthus could use its available capital resources sooner than it currently expects. Dianthus future capital
requirements will depend on many factors, including:
Dianthus does not have any committed external sources of funds and adequate additional financing may not be available
to it on acceptable terms, or at all. Dianthus may be required to seek additional funds sooner than planned through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources. Such financing may
dilute its stockholders or the failure to obtain such financing may restrict its operating activities. Any additional fundraising efforts may divert Dianthus management from their day-to-day activities, which may adversely affect its business.
To the extent that Dianthus raises additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences and anti-dilution protections that
adversely affect your rights as a stockholder. Debt financing may result in imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect Dianthus business. If Dianthus raises additional funds through
upfront payments or milestone payments pursuant to future collaborations with third parties, Dianthus may have to relinquish valuable rights to product development programs, or grant licenses on terms that are not favorable to it. Dianthus
ability to raise additional capital may be adversely impacted by global macroeconomic conditions and volatility in the credit and financial markets in the United States and worldwide, over which Dianthus may have no or little control. Dianthus
failure to raise capital as and when needed or on acceptable terms would have a negative impact on its financial condition and its ability to pursue its business strategy, and Dianthus may have to delay, reduce the scope of, suspend or eliminate
clinical trials, product development programs or future commercialization efforts.
OpCo has incurred significant losses since inception, and
Dianthus expects to incur significant losses for the foreseeable future and may not be able to achieve or sustain profitability in the future. Dianthus has no products for sale, has not generated any product revenue and may never generate product
revenue or become profitable.
Investment in biotechnology product development is a highly speculative undertaking and entails
substantial upfront expenditures and significant risks that any program will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval and become commercially viable. Dianthus has no products approved for
commercial sale, Dianthus has not generated any revenue from product sales to date, and Dianthus continues to incur significant research and development and other expenses related to its ongoing operations. Dianthus does not expect to generate
product revenue unless or until Dianthus successfully completes clinical development and obtains regulatory approval of, and then successfully commercializes, at least one product candidate. Dianthus may never succeed in these activities and, even
if Dianthus does, may never generate product revenue or revenues that are significant or large enough to achieve profitability. If Dianthus is unable to generate sufficient revenue through the sale of any approved products, Dianthus may be unable to
continue operations without additional funding.
OpCo has incurred significant net losses in each period since it commenced operations in
2019. Dianthus net loss was $18.2 million for the six months ended June 30, 2023 and $28.5 million for the year ended December 31, 2022. Dianthus expects to continue to incur significant losses for the foreseeable future.
Dianthus operating expenses and net losses may fluctuate significantly from quarter to quarter and year to year. Dianthus anticipates that its expenses will increase substantially if and as Dianthus:
In addition, Dianthus expenses will increase if, among other
things, it is required by the U.S. Food and Drug Administration (the FDA ) or other regulatory authorities to perform trials or studies in addition to, or different than, those that Dianthus currently anticipates, there are any delays in
completing its clinical trials or the development of any product candidates, or there are any third-party challenges to its intellectual property or Dianthus needs to defend against any intellectual property-related claim.
Even if Dianthus obtains marketing approval for, and is successful in commercializing, one or more product candidates, Dianthus expects to
incur substantial additional research and development and other expenditures to develop and market additional programs and/or to expand the approved indications of any marketed product. Dianthus may encounter unforeseen expenses, difficulties,
complications, delays and other unknown factors that may adversely affect its business. The size of its future net losses will depend, in part, on the rate of future growth of its expenses and its ability to generate revenue.
Dianthus failure to become profitable would decrease the value of the company and could impair its ability to raise capital, maintain
its research and development efforts, expand its business and/or continue its operations. A decline in the value of the company could also cause you to lose all or part of your investment.
In addition, management of OpCo have previously evaluated adverse conditions and events that raised substantial doubt about OpCo s
ability to continue as a going concern, and its independent registered public accounting firm included an explanatory paragraph in its report on its financial statements as of and for the year ended December 31, 2022 included elsewhere herein
with respect to this uncertainty. This substantial doubt about OpCo s ability to continue as a going concern could materially limit Dianthus ability to raise additional funds through the issuance of new debt or equity securities or
otherwise. Future reports on its financial statements may include an explanatory paragraph with respect to its ability to continue as a going concern.
There is no assurance that adequate additional financing needed to allow Dianthus to continue as a going concern will be available to Dianthus on acceptable terms, or at all. The perception that
Dianthus may not be able to continue as a going concern may cause others to choose not to do business with Dianthus due to concerns about its ability to meet its contractual obligations.
Risks Related to Discovery, Development and Commercialization
Dianthus faces competition from entities that have developed or may develop programs for the diseases it plans to address with DNTH103 or other product
The development and commercialization of drugs is highly competitive. If approved, DNTH103 or other product candidates
will face significant competition and Dianthus failure to effectively compete may prevent it from achieving significant market penetration. Dianthus competes with a variety of multinational biopharmaceutical companies, specialized
biotechnology companies and emerging biotechnology companies, as well as academic institutions, governmental agencies, and public and private research institutions, among others. Many of the companies with which Dianthus is currently competing or
will compete against in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved
products than Dianthus does. Mergers and acquisitions in the pharmaceutical and biotechnology industry may result in even more resources being concentrated among a smaller number of its competitors. Smaller or early-stage companies may also prove to
be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with Dianthus in recruiting and retaining qualified scientific and management personnel, establishing
clinical trial sites, patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, DNTH103 or other product candidates.
Dianthus competitors have developed, are developing or may develop programs and processes competitive with DNTH103 or other product
candidates and processes. Competitive therapeutic treatments include those that have already been approved and accepted by the medical community and any new treatments. Dianthus success will depend partially on its ability to develop and
commercialize products that have a competitive safety, efficacy, dosing and/or presentation profile. Dianthus commercial opportunity and success will be reduced or eliminated if competing products are safer, more effective, have a more
attractive dosing profile or presentation or are less expensive than any products Dianthus may develop, if any, or if competitors develop competing products or if biosimilars enter the market more quickly than Dianthus is able to, if at all, and are
able to gain market acceptance.
DNTH103 and Dianthus other programs are in early stages of development and may fail in development or suffer
delays that materially and adversely affect their commercial viability. If Dianthus or its current or future collaborators are unable to complete development of, or commercialize, Dianthus product candidates, or experience significant delays
in doing so, its business will be materially harmed.
Dianthus has no products on the market and DNTH103 and Dianthus other
programs are in early stages of development. As a result, Dianthus expects it will be many years before it commercializes any product candidate, if any. Dianthus ability to achieve and sustain profitability depends on obtaining regulatory
approvals for, and successfully commercializing, DNTH103 or other product candidates either alone or with third parties, and Dianthus cannot guarantee that it will ever obtain regulatory approval for any product candidates. Dianthus has limited
experience as a company in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA or comparable foreign regulatory authorities. Dianthus has also not yet demonstrated its ability to obtain
regulatory approvals, manufacture a commercial scale product or arrange for a third party to do so on its behalf, or conduct sales and marketing activities necessary for successful product commercialization. Before obtaining regulatory approval for
the commercial distribution of product candidates, Dianthus or an existing or future collaborator must conduct extensive preclinical tests and clinical trials to demonstrate the safety and efficacy in humans of such product candidates.
Dianthus or its collaborators may experience delays in initiating or completing clinical trials.
Dianthus or its collaborators also may experience numerous unforeseen events during, or as a result of, any current or future clinical trials that Dianthus could conduct that could delay or
prevent its ability to receive marketing approval or commercialize DNTH103 or any other product candidates, including:
clinical trials in the United States is subject to acceptance by the FDA of an IND or similar application and finalizing the trial design. In the event that the FDA requires Dianthus to complete additional preclinical studies or Dianthus is required
to satisfy other FDA requests prior to commencing clinical trials, the start of its clinical trials may be delayed. Even after Dianthus receives and incorporates guidance from these regulatory authorities, the FDA or other regulatory authorities