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 December 31, 2019, and
results of operations for the three and six months ended December 31, 2019 and 2018. 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, 2019, as amended (June 2019 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 2019 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 retinitis pigmentosa (XLRP) and achromatopsia (ACHM) and
preclinical programs in optogenetics, Stargardt disease, and age-related macular degeneration (AMD). In addition to ophthalmology, we have initiated one preclinical program in otology and three preclinical
programs targeting central nervous system disorders (CNS), including adrenoleukodystrophy (ALD), frontotemporal dementia (FTD) and amyotrophic lateral sclerosis (ALS). Our optogenetics program is being developed in collaboration with Bionic Sight
and our otology program is being developed in collaboration with Otonomy. 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.
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 offering of our common stock,
private placement of 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, in which we reported net income of $0.4 million due in part
to the amortization associated with our collaboration agreement with Biogen. For the six months ended December 31, 2019 and 2018, we reported a net loss of $20.2 million and $3.0 million, respectively. Substantially all of 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:
continue to conduct preclinical studies and clinical trials for our XLRP and ACHM product candidates and
preclinical studies for our other ophthalmology, otology and CNS 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;
non-orphan ophthalmology indications including wet AMD and other
inherited retinal diseases; and