ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis provides an overview of our financial condition as of September 30, 2018, and
results of operations for the three months ended September 30, 2018 and 2017. This discussion should be read in conjunction with the accompanying Unaudited Condensed Financial Statements and accompanying notes, as well as our Annual Report on
Form 10-K for the year ended June 30, 2018 (June 2018 Form 10-K). In addition to historical financial information, the following discussion contains
forward-looking statements that reflect our plans, estimates, assumptions and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences
include those discussed below and elsewhere in this report as well as those set forth in Part I, Item 1A, Risk Factors of the June 2018 Form 10-K. Forward-looking statements include information
concerning our possible or assumed future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements include
all statements that are not historical facts and can be identified by terms such as anticipates, believes, could, seeks, estimates, expects, intends,
may, plans, potential, predicts, projects, should, will, would or similar expressions and the negatives of those terms. Given these uncertainties, you
should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our managements plans, estimates, assumptions and beliefs only as of the date of this report. Except as required by law, we assume
no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
As used herein, except as otherwise indicated by context, references to we, us, our, or the Company refer
to Applied Genetic Technologies Corporation.
We are a clinical-stage biotechnology company that uses a proprietary gene therapy platform to develop transformational genetic therapies for patients
suffering from rare and debilitating diseases. Our initial focus is in the field of ophthalmology, where we have active clinical programs in X-linked retinoschisis (XLRS), achromatopsia (ACHM) and X-linked retinitis pigmentosa (XLRP), and a preclinical program in optogenetics. In addition to ophthalmology, we have initiated preclinical programs in adrenoleukodystrophy (ALD) and otology. With a number of
important clinical milestones on the horizon, we believe we are well positioned to advance multiple programs towards pivotal studies. In addition to our product pipeline, we have also developed broad technological capabilities through our
collaborations with Synpromics Limited (Synpromics) and the University of Florida, which provide us with expertise in vector design and manufacturing as well as synthetic promoter development and optimization. Finally, our partnership with Biogen,
which includes our clinical XLRS and XLRP programs, a discovery program in ALD and two ophthalmology programs, validates our approach and technology.
Since our inception in 1999, we have devoted substantially all of our resources to development efforts relating to our proof-of-concept programs in ophthalmology and alpha-1 antitrypsin deficiency, or AAT deficiency, an inherited orphan lung disease, including activities to manufacture
product in compliance with good manufacturing practices, preparing to conduct and conducting clinical trials of our product candidates, providing general and administrative support for these operations and protecting our intellectual property. We do
not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations to date primarily through public offerings of our common stock, private placements of our preferred stock, and
collaborations. We have also been the recipient, either independently or with our collaborators, of grant funding administered through federal, state, and local governments and agencies, including the United States Food and Drug Administration, or
FDA, and by patient advocacy groups such as The Foundation Fighting Blindness, or FFB, and the Alpha-1 Foundation.
We have incurred losses from operations in each year since inception except for fiscal 2017. Our net income for the three-month period ended
September 30, 2018 was $1.2 million while the net loss for the fiscal year ended June 30, 2018 was $21.3 million, compared to net income of $0.4 million and net loss of $1.4 million for each of the fiscal years ended
June 30, 2017 and 2016, respectively. Substantially all our net losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to
continue to incur significant operating expenses for at least the next several years and anticipate that such expenses will increase substantially in connection with our ongoing activities, as we:
conduct preclinical studies and clinical trials for our XLRS, ACHM and XLRP product candidates;
continue our research and development efforts, including exploration through early preclinical studies of
potential applications of our gene therapy platform in:
orphan ophthalmology indications;