UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~March 31, ~~2017~~

2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
to

Commission File Number:

001-36370

APPLIED GENETIC

TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Delaware		59-3553710
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

14193 NW 119^th
Terrace,

Suite 10,

Alachua, Florida 32615

(Address of Principal Executive ~~Offices, Including Zip~~Offices) (Zip Code)

(386)

462-2204

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.001 par value	AGTC	Nasdaq Global Market

Indicate by check mark whether the ~~registrant:~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of

Regulation S-T (§

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company,” and “emerging growth company” in

Rule 12b-2

of the Exchange Act.



Large accelerated filer	☐	Accelerated filer	☒☐

Non-accelerated filer	~~☐ (Do not check if a smaller reporting company)~~☒	Smaller reporting company	☐☒


		Emerging ~~Growth Company~~growth company	☒☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒

☐

Indicate by check mark whether the registrant is a shell company (as defined in

Rule 12b-2

of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of ~~February 3, 2018~~May 12, 2022 was ~~18,104,901.~~

50,731,903.

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

APPLIED GENETIC TECHNOLOGIES CORPORATION

CONDENSED BALANCE SHEETS

(Unaudited)

   December 31, June 30,
In thousands, except per share data
   2017 2017
ASSETS

Current assets:

Cash and cash equivalents
   $ 70,345 $ 30,706
Investments
   49,312 95,994
Grants receivable
   203 174
Prepaid and other current assets
   4,012 3,361


Total current assets
   123,872 130,235


Investments, net of current portion
   —   11,749
Property and equipment, net
   3,235 2,661
Investment in Bionic Sight
   2,000 2,000
Other assets
   2,226 1,278


Total assets
   $ 131,333 $ 147,923


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
   $ 1,036 $ 998
Accrued and other liabilities
   6,116 6,162
Deferred revenue
   11,945 20,996


Total current liabilities
   19,097 28,156


Deferred revenue, net of current portion
   —   4,438
Other liabilities
   653 —


Total liabilities
   19,750 32,594


Stockholders’ equity:

Common stock—par value $.001 per share; shares authorized: 150,000 at December 31, 2017 and June 30, 2017; shares issued and outstanding: 18,105 and 18,088 at December 31, 2017 and June 30, 2017, respectively.
   18 18
Additionalpaid-in capital
   207,778 204,937
Accumulated deficit
   (96,213 ) (89,626 )


Total stockholders’ equity
   111,583 115,329


Total liabilities and stockholders’ equity
   $ 131,333 $ 147,923


In thousands, except per share data	March 31, 2022			June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	67,849		$	105,052
Investments		—			2,000
Prepaid and other current assets		2,678			2,655

Total current assets		70,527			109,707
Property and equipment, net		4,244			4,658
Intangible assets, net		1,381			1,287
Investment in Bionic Sight, LLC		7,884			8,000
Right-of-use assets - operating leases		3,029			3,167
Right-of-use asset - financing lease		—			34
Other assets		126			113

Total assets	$	87,191		$	126,966

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,561		$	1,879
Accrued and other liabilities		11,946			14,500
Lease liabilities - operating		1,232			1,116
Lease liability - finance		—			38
Current portion of long-term debt		9,070			2,181

Total current liabilities		25,809			19,714
Lease liabilities - operating, net of current portion		2,900			3,418
Long-term debt, net of debt discounts and deferred financing fees		11,358			17,727
Other liabilities		97			299

Total liabilities		40,164			41,158

Stockholders’ equity:
Preferred stock, par value $0.001 per share, 5,000 shares authorized; 0shares issued and outstanding		0			0—
Common stock, par value $0.001 per share, 150,000 shares authorized; 50,786 and 42,835 shares issued; 50,732 and 42,794 shares outstanding at March 31, 2022 and June 30, 2021, respectively		51			43
Additional paid-in capital		337,058			325,245
Treasury stock at cost; 54 and 41 shares at March 31, 2022 and June 30, 2021, respectively		(256	)		(211	)
Accumulated deficit		(289,826	)		(239,269	)

Total stockholders’ equity		47,027			85,808

Total liabilities and stockholders’ equity	$	87,191		$	126,966

The accompanying notes are an integral part of ~~the financial statements.~~

these Unaudited Condensed Financial Statements.

APPLIED GENETIC TECHNOLOGIES CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

   For the Three
Months Ended
December 31,    For the Six
Months Ended
December 31,
   2017 2016    2017 2016
In thousands, except per share amounts


(as adjusted)

(as adjusted)
Revenue:

Collaboration revenue
   $ 4,831 $ 10,890    $ 15,139 $ 22,662
Grant and other revenue
   21 43    28 77




Total revenue
   4,852 10,933    15,167 22,739




Operating expenses:

Research and development
   7,726 6,041    16,002 11,612
General and administrative and other
   3,368 2,740    7,074 5,586




Total operating expenses
   11,094 8,781    23,076 17,198




Income (loss) from operations
   (6,242 ) 2,152    (7,909 ) 5,541
Other income:

Investment income, net
   271 227    541 463
Other expense
   (10 ) —      (10 ) —




Total other income, net
   261 227    531 463




Income (loss) before provision for income taxes
   (5,981 ) 2,379    (7,378 ) 6,004
Provision (benefit) for income taxes
   (791 ) 600    (791 ) 1,200




Net income (loss)
   $ (5,190 ) $ 1,779    $ (6,587 ) $ 4,804




Weighted Average Shares Outstanding

Weighted average shares outstanding—basic
   18,094 18,067    18,091 18,061
Weighted average shares outstanding—diluted
   18,094 18,393    18,091 18,430
Net income (loss) per common share

Net income (loss) per share, basic
   $ (0.29 ) $ 0.10    $ (0.36 ) $ 0.27
Net income (loss) per share, diluted
   $ (0.29 ) $ 0.10    $ (0.36 ) $ 0.26


	Three Months Ended March 31,						Nine Months Ended March 31,
In thousands, except per share data	2022			2021			2022			2021
Revenue	$	0		$	0		$	0		$	0


Operating expenses:
Research and development		9,162			10,960			35,941			34,397
General and administrative and other		4,421			3,528			12,510			10,268

Total operating expenses		13,583			14,488			48,451			44,665

Loss from operations		(13,583	)		(14,488	)		(48,451	)		(44,665	)

Other income (expense), net:
Investment income, net		9			13			21			106
Interest expense		(667	)		(330	)		(2,011	)		(997	)

Total other income (expense), net		(658	)		(317	)		(1,990	)		(891	)

Loss before provision for income taxes		(14,241	)		(14,805	)		(50,441	)		(45,556	)
Provision for income taxes		0			21			0			62

Loss before equity in net losses of an affiliate		(14,241	)		(14,826	)		(50,441	)		(45,618	)
Equity in net losses of an affiliate		(53	)		(25	)		(116	)		(75	)

Net loss	$	(14,294	)	$	(14,851	)	$	(50,557	)	$	(45,693	)

Weighted average shares outstanding:
Basic		43,639			36,751			43,112			29,431
Diluted		43,639			36,751			43,112			29,431
Net loss per common share:
Basic	$	(0.33	)	$	(0.40	)	$	(1.17	)	$	(1.55	)
Diluted	$	(0.33	)	$	(0.40	)	$	(1.17	)	$	(1.55	)

The accompanying notes are an integral part of ~~the financial statements.~~

these Unaudited Condensed Financial Statements.

APPLIED GENETIC TECHNOLOGIES CORPORATION

CONDENSED STATEMENTS OF ~~CASH FLOWS~~

STOCKHOLDERS’ EQUITY

THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

   For the Six
Months Ended
December 31,
In thousands
   2017 2016
   (as adjusted)
Cash flows from operating activities

Net income (loss)
   $ (6,587 ) $ 4,804
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:

Share-based compensation expense
   2,800 2,912
Depreciation and amortization
   544 434
Investment premium accretion
   143 216
Changes in operating assets and liabilities:

Grants receivable
   (29 ) 876
Prepaid and other assets
   (1,747 ) 556
Deferred revenues
   (13,489 ) (22,528 )
Accounts payable
   38 (614 )
Accrued and other liabilities
   (173 ) 556


Net cash (used in) operating activities
   (18,500 ) (12,788 )


Cash flows from investing activities

Purchase of property and equipment
   (134 ) (563 )
Purchase of and capitalized costs related to intangible assets
   —   (92 )
Maturity of investments
   58,288 64,269
Purchase of investments
   —   (37,219 )


Net cash provided by investing activities
   58,154 26,395


Cash flows from financing activities

Proceeds from exercise of common stock options
   3 24
Payments made toward capital lease obligations
   (18 ) —


Net cash (used in) provided by financing activities
   (15 ) 24


Net change in cash and cash equivalents
   39,639 13,631
Cash and cash equivalents, beginning of period
   30,706 28,868


Cash and cash equivalents, end of period
   $ 70,345 $ 42,499


Supplemental disclosure of non cash financing activities

Capital lease obligation related to the purchase of equipment
   209 —
Lease incentive obligation related to the purchase of leasehold improvements
   627 —
Issuance of restricted stock for no consideration
   38 —


	Common Stock				Treasury Stock
In thousands	Outstanding Shares		Amount		Shares		Amount			Additional Paid-in Capital		Accumulated Deficit			Totals

Balances at June 30, 2021		42,794	$	43		41	$	(211	)	$	325,245	$	(239,269	)	$	85,808
Share-based compensation expense		—		—		—		—			810		—			810
Shares issued under employee plans and related share repurchases		65		—		13		(45	)		71		—			26
Net loss		—		—		—		—			—		(17,119	)		(17,119	)

Balances at September 30, 2021		42,859		43		54		(256	)		326,126		(256,388	)		69,525
Issuance of common stock, net of issuance costs		56		—		—		—			143		—			143
Share-based compensation expense		—		—		—		—			946		—			946
Shares issued under employee plans and related share repurchases		6		—		—		—			20		—			20
Net loss		—		—		—		—			—		(19,144	)		(19,144	)

Balances at December 31, 2021		42,921		43		54		(256	)		327,235		(275,532	)		51,490
Issuance of common stock, net of issuance costs		7,690		8		—		—			8,938		—			8,946
Share-based compensation expense		—		—		—		—			843		—			843
Shares issued under employee plans and related share repurchases		121		—		—		—			42		—			42
Net loss		—		—		—		—			—		(14,294	)		(14,294	)

Balances at March 31, 2022		50,732	$	51		54	$	(256	)	$	337,058	$	(289,826	)	$	47,027


	Common Stock				Treasury Stock
In thousands	Outstanding Shares		Amount		Shares		Amount			Additional Paid-in Capital		Accumulated Deficit			Totals
Balances at June 30, 2020		25,793	$	25		20	$	(88	)	$	252,519	$	(181,440	)	$	71,016
Share-based compensation expense		—		—		—		—			646		—			646
Shares issued under employee plans and related share repurchases		67		—		21		(123	)		43		—			(80	)
Net loss		—		—		—		—			—		(15,380	)		(15,380	)

Balances at September 30, 2020		25,860		25		41		(211	)		253,208		(196,820	)		56,202
Share-based compensation expense		—		—		—		—			624		—			624
Shares issued under employee plans and related share repurchases		45		—		—		—			158		—			158
Net loss		—		—		—		—			—		(15,462	)		(15,462	)

Balances at December 31, 2020		25,905		25		41		(211	)		253,990		(212,282	)		41,522
Issuance of common stock and accompanying warrants, net of issuance costs		16,742		17		—		—			69,244		—			69,261
Share-based compensation expense		—		—		—		—			595		—			595
Shares issued under employee plans and related share repurchases		108		—		—		—			473		—			473
Net loss		—		—		—		—			—		(14,851	)		(14,851	)

Balances at March 31, 2021		42,755	$	42		41	$	(211	)	$	324,302	$	(227,133	)	$	97,000

The accompanying notes are an integral part of ~~the financial statements.~~

these Unaudited Condensed Financial Statements.

APPLIED GENETIC TECHNOLOGIES CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended March 31,

In thousands

      2022

      2021

Operating activities:

Net loss
   $ (50,557 ) $ (45,693 )
Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation expense
   2,599 1,865
Expense for shares of common stock issued to a vendor
   27 —
Depreciation and amortization
   1,130 1,123
Investment discount accretion, net
   —   (10 )
Amortization of debt discounts and deferred financing fees
   520 252
Reduction in the carrying amount of operating lease
right-of-use
assets
   381 264
Equity in net losses of an affiliate
   116 75
Changes in operating assets and liabilities:

Prepaid and other assets
   (36 ) 975
Accounts payable
   1,569 571
Operating lease liabilities
   (645 ) (516 )
Accrued and other liabilities
   (2,594 ) 3,356


Cash used in operating activities
   (47,490 ) (37,738 )


Investing activities:

Purchases of property and equipment
   (900 ) (987 )
Purchases of and capitalized costs related to intangible assets
   (254 ) (363 )
Maturities of investments
   2,000 41,500
Purchases of investments
   —   (20,992 )


Cash provided by investing activities
   846 19,158


Financing activities:

Proceeds from the issuance of common stock and accompanying warrants, net of issuance costs
   9,391 69,261
Proceeds from exercises of common stock options
   133 674
Payments for deferred financing fees
   —   (129 )
Taxes paid related to equity awards
   (45 ) (123 )
Principal payments on a finance lease
   (38 ) (35 )


Cash provided by financing activities
   9,441 69,648


Net increase (decrease) in cash and cash equivalents
   (37,203 ) 51,068
Cash and cash equivalents, beginning of the period
   105,052 38,463


Cash and cash equivalents, end of the period
   $ 67,849 $ 89,531


Supplemental
non-cash
information:

Costs for purchases of property and equipment included in accounts payable
   $ 82 $ —
Costs for intangible assets included in accrued and other liabilities
   14 27
Right-of-use
assets obtained in exchange for new operating lease liabilities
   243 —
The accompanying notes are an integral part of these Unaudited Condensed Financial Statements.
6

APPLIED GENETIC TECHNOLOGIES CORPORATION

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS ~~(UNAUDITED)~~

1.	Organization and ~~Operations:~~Operations

General

Applied Genetic Technologies Corporation (the “Company” or “AGTC”) was incorporated as a Florida corporation on January 19, 1999 and reincorporated as a Delaware corporation on October 24, 2003. The Company is a clinical-stage biotechnology company that uses a proprietary gene therapy platform to develop transformational genetic therapies for ~~patients~~people suffering from rare and debilitating ~~diseases.~~

In July 2015, the Company entered into a collaboration agreement (the “Collaboration Agreement”) with Biogen MA, Inc., a wholly owned subsidiary of Biogen Inc. (“Biogen”), pursuant to which the Companyophthalmic, otologic and ~~Biogen will collaborate to develop, seek regulatory approval for and commercialize gene therapy products to treatX-linked~~ ~~retinoschisis (“XLRS”),X-linked~~ retinitis pigmentosa (“XLRP”), and discovery programs targeting three indications based on the Company’s adeno-associated virus vector technologies. The Collaboration Agreement became effective in August 2015. The Collaboration Agreement and other transactions with Biogen are discussed further in Note 6 to these financial statements.

central nervous system diseases.

The Company has devoted substantially all of its efforts to research and development activities, including conducting clinical ~~trials. The Company~~trials for its product candidates, and has not completed the development of any products. The Company has generated revenue from collaboration agreements, licensing of its intellectual property, sponsored research ~~payments~~agreements and grants, but has not generated product revenue to date and is subject to a number of risks similar to those of other early stage companies in the biotechnology industry, including dependence on key individuals, the ~~difficulties inherent in the development of commercially viable products, the~~ need to obtain additional capital necessary to fund the development of its product candidates, the risk of failure of ongoing or future clinical studies, the difficulties inherent in the development of commercially viable products, the development by the Company or its competitors of technological innovations, ~~risks of failure of clinical studies,~~the protection of proprietary technology, compliance with government regulations and the ability to transition to large-scale production of products.

Liquidity and Financial Condition

As of ~~December~~March 31, ~~2017,~~2022, the Company had (i) an accumulated deficit of ~~$97.0~~$289.8 million and (ii) cash and cash equivalents of $67.8 million. Management believes that there is presently insufficient funding available to allow the Company to generate data from its ongoing and planned clinical programs and fund currently planned research and discovery programs for a period exceeding one year from the date of this filing with the Securities and Exchange Commission. While the Company expects to ~~continue to~~ generate some revenue from ~~partnering, including under the collaboration with Biogen,~~collaborations, sponsored research agreements, grants and licensing of its intellectual property, management believes that the Company ~~expects to~~will incur losses and generate negative operating cash flows for the foreseeable future. As such, these circumstances collectively raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying Unaudited Condensed Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. The Company has funded its operations to date primarily through public offerings of its common stock and warrants to purchase its common stock, private placements of its preferred stock, collateralized borrowing and collaborations. ~~At December 31, 2017,~~

The ability of an entity to continue as a going concern depends on, among other things, positive cash flows and the ~~Company had~~availability of suitable financing. The Company’s future liquidity needs will be primarily based on: (i) the success and progression of its product candidates; (ii) its repayment obligations under the long-term debt agreement that is described in Note 5 to these Notes to Unaudited Condensed Financial Statements; and (iii) its costs to operate the leased

build-to-suit

manufacturing and quality control facility that is described in Note 8 to these Notes to Unaudited Condensed Financial Statements. To provide the maximum degree of financial flexibility and mitigate the abovementioned going concern risk, management’s near-term plans consider various potential opportunities to fund the Company’s future operations and/or modulate its liquidity needs, such as: (i) raising new capital through equity or debt financings or other sources, including the

“at-the-market

offering” program that is described in Note 7 to these Notes to Unaudited Condensed Financial Statements; (ii) amending the Company’s long-term debt agreement;

(iii) out-licensing the

rights to certain product candidates; (iv) entering into one or more collaborations to offset the costs of the leased manufacturing and quality control facility through third-party cash milestone and ~~cash equivalents~~other payments; and ~~investments~~(v) reducing spending on research and development activities and/or restructuring the Company’s operations. However, management may be unable to successfully execute any of ~~$119.7 million.~~

the plans described above, or raise additional funds or enter into such other arrangements when needed on favorable terms, or at all.

2.	Summary of Significant Accounting ~~Policies:~~Policies

Basis of presentation

The accompanying ~~unaudited condensed financial statements~~Unaudited Condensed Financial Statements have been prepared assuming that the Company will continue as a going concern and in ~~conformity~~accordance with (i) U.S. generally accepted accounting principles ~~generally accepted in~~(“U.S. GAAP”) for interim financial information and (ii) the ~~United States~~instructions to Form

10-Q

and Article 8 of ~~America (“GAAP”)~~Regulation

S-X.

Accordingly, such financial statements do not include all the information and infootnotes required by U.S. GAAP for a complete set of financial statements. In the opinion of management, the Unaudited Condensed Financial Statements include all adjustments, consisting of normal recurring accruals and other adjustments, considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows as of and for ~~each~~the periods presented.

The adjustments referred to above are of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to U.S. Securities and Exchange Commission (“SEC”) rules and regulations for interim reporting.

Certain amounts reported previously have been reclassified to conform to the current period presentation, with no effect on stockholders’ equity or net income (loss) as previously presented. See Note 7 for a discussion on a revision of prior financial results presented related to the recording of our income tax provision for fiscal year 2017.

~~The~~accompanying Condensed Balance Sheet as of June 30, ~~2017~~2021 was derived from the Company’s audited financial statements at that date but does not include all of the footnote disclosures required by U.S. GAAP. ~~These~~

The Unaudited Condensed Financial Statements should be read in conjunction with the Company’s audited financial statements and related notes included in ~~the Company’s 2017~~its Annual Report on

Form 10-K ~~as amended, (“~~

for the year ended June 30, ~~2017~~2021 (the “2021

Form 10-K”). ~~Results~~

The Company’s significant accounting policies are described in Note 2 to the Notes to Financial Statements in the

2021 Form 10-K

and are updated, as necessary, in subsequent Form

10-Q

filings.

The Company’s fiscal year is the twelve-month period from July 1 to June 30. The results of operations for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 are not necessarily indicative of the Company’s operating results ~~to be expected~~ for the full year ending June 30, 2022 or any ~~other~~subsequent interim ~~period.~~

~~Segment reporting~~

~~Operating segments are identified as components of an enterprise about which separate discrete financia information is available for evaluation by~~period within that year.

Management views the ~~chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, we have viewed our~~Company’s operations and ~~managed our~~manages its business as ~~one segment.~~

1segment.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP and guidelines from the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported ~~amount~~amounts of ~~revenues~~revenue and expenses during ~~the~~ reporting ~~period.~~periods. Actual results could differ from those estimates.

~~Cash~~

Income Taxes

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions
meeting the more-likely-than-not threshold, the
amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Interest and ~~cash equivalents~~

~~Cash consists of funds held~~penalties related to uncertain tax positions are reflected in ~~bank accounts. Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at~~ the ~~time of purchase and generally include money market accounts.~~

~~Investments~~

provision for income taxes.

The Company’s ~~investments consist of certificates of deposit~~provision for income taxes was $21,000 and ~~debt securities classified asheld-to~~ ~~maturity. Management determines~~$62,000 for the ~~appropriate classification of debt securities at~~three and nine months ended March 31, 2021, respectively, which was entirely attributable to estimated interest and penalties on uncertain tax positions. There was 0provision for income taxes during the ~~time of purchase~~three and ~~reevaluates such designation as of each balance sheet date. Debt securities are classified asheld-to-maturity~~ ~~when~~nine months ended March 31, 2022 because, among other things, the Company ~~has~~had no uncertain tax positions in those reporting periods.

Net income or loss per share

Basic net income or loss per share is calculated by dividing net income or loss by the ~~positive intent~~weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income or loss per share is calculated by adjusting the weighted average shares outstanding for the dilutive effects of common stock equivalents outstanding during the period, determined using the treasury stock method. For purposes of diluted net income or loss per share calculations, warrants to purchase the Company’s common stock, stock options, restricted stock awards, restricted stock units and ~~ability to hold the securities to maturity.Held-to-maturity~~ securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income. Interest on securities classified as~~held-to-maturity~~ ~~is included in investment income.~~

~~The Company uses the specific identification method to determine the cost basis of securities sold.~~

~~Investments~~performance service awards are considered to be ~~impaired when~~common stock equivalents if they are dilutive. The dilutive impact of common stock equivalents for each of the (i) three and nine months ended March 31, 2022 was approximately 0.1 million shares and (ii) three and nine months ended March 31, 2021 was approximately 0.4 million shares. However, those common stock equivalents were excluded from the calculations of diluted net loss per share for all periods presented herein because their effects were anti-dilutive.

Common stock equivalents for the three and nine months ended March 31, 2022 and 2021 excluded certain warrants to purchase the Company’s common stock, which are described in Note 7 to these Notes to Unaudited Condensed Financial Statements, because the exercise price of such warrants was greater than the average market price of the Company’s common stock during the related periods.

New Accounting Pronouncements

Adopted during the nine months ended March 31, 2022

Financial Instruments—Credit Losses

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)

No. 2016-13,

Financial Instruments – Credit Losses (Topic

326): Measurement of Credit Losses on Financial Instruments

. The new standard requires that financial assets measured at amortized cost be presented at the net amount expected to be collected and separately measure an allowance for credit losses that is deducted from the amortized cost basis of those financial assets. The Company early adopted the new standard on July 1, 2021; however, it did not have a ~~decline~~significant impact on the Company’s financial statements.

Income Taxes

In December 2019, the FASB issued

ASU No. 2019-12,

Income Taxes (Topic

740): Simplifying the Accounting for Income Taxes

. The new standard includes several provisions that simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and increasing consistency and clarity for the users of financial statements. The Company adopted the new standard on July 1, 2021; however, it did not have a significant impact on the Company’s financial statements.

Investments – Equity Securities, Investments – Equity Method and Joint Ventures, and Derivatives and Hedging

In January 2020, the FASB issued

ASU No. 2020-01,

Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

. The new standard addresses interactions between the guidance to account for certain equity securities under Accounting Standards Codification (“ASC”) Topic 321, the guidance to account for investments under the equity method of accounting in ASC Topic 323 and the guidance in ASC Topic 815, which could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with ASC Topic 825,

Financial Instruments

. The Company adopted the new standard on July 1, 2021; however, it did not have a significant impact on the Company’s financial statements.

3.	Share-based Compensation Plans

The Company uses stock options, performance service awards, restricted stock awards and restricted stock units to provide long-term incentives to its employees, nonemployee directors and certain consultants. The Company has 2equity compensation plans under which awards are currently authorized for issuance: the 2013 Employee Stock Purchase Plan and the 2013 Equity and Incentive Plan. NaNawards have been issued to date under the 2013 Employee Stock Purchase Plan and, as such, all of the 128,571 shares previously authorized under that plan remain available for issuance.

Stock Options

Information about the Company’s stock options that do not have performance conditions is ~~judged~~ provided below.


	Nine Months Ended March 31,
	2022					2021
(In thousands, except per share amounts)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price

Outstanding at the beginning of the period		4,186		$	7.69		3,846		$	7.82
Granted		2,444			3.07		1,280			5.26
Exercised		(150	)		0.89		(165	)		4.10
Forfeited		(339	)		4.13		(539	)		4.38
Expired		(602	)		10.82		(87	)		10.29

Outstanding at the end of the period		5,539		$	5.71		4,335		$	7.58

Exercisable at the end of the period		2,680					2,757

Weighted average fair value of options granted during the period	$	2.17				$	3.79

The fair value of each stock option granted is estimated on the date of grant using a Black-Scholes stock option pricing model. Below are the assumptions that were used when estimating fair value for the periods indicated


	Nine Months Ended March 31,
Assumption	2022			2021
Dividend yield		0.00	%		0.00	%
Expected term		6.00 to 6.25 years			6.00 to 6.25 years
Risk-free interest rate		0.80% to 1.80	%		0.30% to 1.08	%
Expected volatility		82.51	%		82.60	%

Table of Contents

In addition to the stock option activity described above, the Company also granted 100,000 performance-based stock options to

officer

during July 2019 with an exercise price of $3.91. That award: (i) was issued under the 2013 Equity and Incentive Plan; (ii) has a term of ten years; and (iii) includes six separate tranches with performance criteria that will each vest 25% upon their achievement, with the remaining 75% of the tranche vesting on a monthly basis over a period of three years subsequent to achieving the underlying performance objective (assuming continued service by the awardee). Each tranche

represents one-sixth of

the total award. If any of the performance criteria are not satisfied, the related tranche will be forfeited. As of March 31, 2022,

only one of the six performance criteria had been met. In May 2022, the

officer

’s employment with the Company ended and, as a result, all unvested performance-based stock options will be forfeited. The Company used a Black-Scholes stock option pricing model to estimate the grant date fair value of each option

to be ~~other-than-temporary.~~$2.58; however,

determining the appropriate periodic share-based compensation expense for this award required management to estimate the likelihood of the achievement of the performance targets

Restricted Stock Units

During August 2019, 175,500 restricted stock units with a market-based vesting condition related to the trading price of the Company’s common stock were granted to certain employees under the 2013 Equity and Incentive Plan. Those awards had a weighted average grant date fair value of $2.56. Because the award’s market and service conditions were met, on August 15, 2021 and 2020, 54,500 and 76,500 restricted stock units, respectively, vested and the underlying shares were issued to the grantees. A total of 44,500 restricted stock units were forfeited through August 15, 2021 and, subsequent to that date, 0restricted stock units with market-based vesting conditions remain outstanding. The fair value of each restricted stock unit awarded was estimated on the grant date using a Monte Carlo simulation pricing model, which incorporated the probability of satisfying the related market-based vesting condition.

From May 2021 to July 2021, the Company granted 579,500 restricted stock units to certain employees under the 2013 Equity and Incentive Plan with a weighted average grant date fair value of $4.16. Those awards generally vest in equal amounts on each of the first and second anniversaries of the date of grant, assuming continuing service by the grantee. As of March 31, 2022, 137,250 restricted stock units have been forfeited. The fair value of each restricted stock unit awarded was determined based on the market value of the Company’s common stock on the date of grant and the related expense is being recognized using a graded vesting schedule that is aligned with the grantees’ vesting dates. No additional restricted stock unit awards are expected to be granted under this program.

General

Share-based compensation expense for the three and nine months ended March 31, 2022 was $0.8 million and $2.6 million, respectively, compared to $0.6 million and $1.9 million for the three and nine months ended March 31, 2021, respectively. The portion of such expense pertaining to stock options awarded to employees, nonemployee directors and consultants was $1.7 million and $1.8 million for the nine months ended March 31, 2022 and 2021, respectively. Share-based compensation expense pertaining to restricted stock awards and restricted stock units awarded to employees and consultants totaled $0.9 million and $0.1 million for the nine months ended March 31, 2022 and 2021, respectively.

4.	Investments and Fair Values of Financial Instruments

Cash in excess of immediate requirements is invested in accordance with the Company’s investment policy, which primarily seeks to maintain adequate liquidity and preserve capital. At June 30, 2021, the Company’s investments consisted of

a held-to-maturity debt

security that matured in July 2021 (the $2.0 million amortized cost of that investment approximated its fair value on such date). The Company evaluates an investment for impairment by considering the length of time and extent to which market value has been less than cost or amortized cost, the financial condition and near-term prospects of the issuer as well as specific events or circumstances that may influence the operations of the issuer and the Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery of the entire amortized cost. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to investment income (expense) and a new cost basis in the investment is established.

~~Fair value of financial instruments~~

held 0investments at March 31, 2022.

The Company is required to disclose information onregarding all assets and liabilities reported at fair value that enables an assessment of the inputs used inwhen determining the reported fair values. ~~The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”)~~ASC Topic 820,

Fair Value Measurements and Disclosures

, establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use inwhen pricing ~~the~~an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use inwhen pricing ~~the~~an asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used inwhen determining the reported fair value of financial instruments and is not a measure of ~~the investment~~an investment’s credit quality. The three levels of the fair value hierarchy are described ~~below:~~

below.

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that a valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company inwhen determining fair value is greatest for financial instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

~~Revenue recognition~~

The Company has primarily generated revenue through collaboration agreements, sponsored research arrangements with nonprofit organizations for the development and commercialization of product candidates and revenues from federal research and development grant programs. The Company recognizes revenue when amounts are realized or realizable and earned. Revenue is considered realizable and earned when the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the price is fixed or determinable; and (iv) collection of the amounts due are reasonably assured.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current liabilities. The Company recognizes revenue for reimbursements of research and development costs under collaboration agreements as the services are performed. The Company records these reimbursements as revenue and not as a reduction of research and development expenses, as the Company has the risks and rewards as the principal in the research and development activities.

The Company evaluates the terms of sponsored research agreement grants and federal grants to assess the Company’s obligations and if the Company’s obligations are satisfied by the passage of time, revenue is recognized on a straight-line basis. In situations where the performance of the Company’s obligations has been satisfied when the grant is received, revenue is recognized upon receipt of the grant. Certain grants contain refund provisions. The Company reviews those refund provisions to determine the likelihood of repayment. If the likelihood of repayment of the grant is determined to be remote, the grant is recognized as revenue. If the probability of repayment is determined to be more than remote, the Company records the grant as a deferred revenue liability, until such time that the grant requirements have been satisfied.

~~Collaboration revenue~~

On July 1, 2015, the Company entered into a Collaboration Agreement with Biogen. This collaboration is discussed further in Note 6 of notes to the financial statements. The terms of the Collaboration Agreement and other potential collaboration or commercialization agreements the Company may enter into generally contain multiple elements, or deliverables, which may include, among others, (i) licenses, or options to obtain licenses, to its technology, and (ii) research and development activities to be performed on behalf of the collaborative partner. Payments made under such arrangements typically include one or more of the following:~~non-refundable,up-front~~ ~~license fees; option exercise fees; funding of research and/or development efforts; milestone payments; and royalties on future product sales.~~

Multiple element arrangements are analyzed to determine whether the deliverables within the agreement can be separated or whether they must be accounted for as a single unit of accounting. Deliverables under an agreement are required to be accounted for as separate units of accounting provided that (i) a delivered item has value to the customer on a stand-alone basis; and (ii) if the agreement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the vendor. The allocation of consideration amongst the deliverables under the agreement is derived using a “best estimate of selling price” if vendor specific objective evidence and third-party evidence of fair value is not available. If the delivered element does not have stand-alone value or if the fair value of any of the undelivered elements cannot be determined, the arrangement is then accounted for as a single unit of accounting, and the Company recognizes the consideration received under the arrangement as revenue on a straight-line basis over the estimated period of performance.

The Company determines the estimated selling price for deliverables within each agreement using vendor-specific objective evidence, or VSOE, of selling price, if available, third-party evidence, or TPE, of selling price if VSOE is not available, or best estimate of selling price, or BESP, if neither VSOE nor TPE are available. Determining the best estimate of selling price for a deliverable requires significant judgment. The Company uses BESP to estimate the selling price related to licenses to its proprietary technology, since it often does not have VSOE or TPE of selling price for these deliverables. In those circumstances where it utilizes BESP to determine the estimated selling price of a license to our proprietary technology, the Company considers market conditions as well as entity-specific factors, including those factors contemplated in negotiating the agreements as well as internally developed models that include assumptions related to the market opportunity, estimated development costs, probability of success and the time needed to commercialize a product candidate pursuant to the license. In validating its best estimate of selling price, the Company evaluates whether changes in the key assumptions used to determine the best estimate of selling price will have a significant effect on the allocation of arrangement consideration among multiple deliverables.

If the delivered element does not have stand-alone value, the arrangement is then accounted for as a single unit of accounting and the Company recognizes the consideration received under the arrangement as revenue on a straight-line basis over its estimated period of performance. The Company’s anticipated periods of performance, typically the terms of its research and development obligations, are subject to estimates by management and may change over the course of the collaboration agreement. Such changes could have a material impact on the amount of revenue recorded in future periods.

~~Milestone revenue~~

The Company applies the milestone method of accounting to recognize revenue from milestone payments when earned, as evidenced by written acknowledgement from the collaborator or other persuasive evidence that the milestone has been achieved and the payment is~~non-refundable,~~ provided that the milestone event is substantive. A milestone event is defined as an event (i) that can only be achieved based in whole or in part on either the Company’s performance or on the occurrence of a specific outcome resulting from the Company’s performance; (ii) for which there is substantive uncertainty at the inception of the arrangement that the event will be achieved; and (iii) that would result in additional payments being due to the Company. Events for which the occurrence is either contingent solely upon the passage of time or the result of a counterparty’s performance are not considered to be milestone events. A milestone event is substantive if all of the following conditions are met: (i) the consideration is commensurate with either the Company’s performance to achieve the milestone, or the enhancement of the value to the delivered item(s) as a result of a specific outcome resulting from the Company’s performance to achieve the milestone; (ii) the consideration relates solely to past performance; and (iii) the consideration is reasonable relative to all the deliverables and payment terms (including other potential milestone consideration) within the arrangement.

~~The Company assesses whether a milestone is substantive at the inception of the arrangement. If a milestone is deemednon-substantive,~~ the Company accounts for that milestone payment in accordance with the multiple element arrangements guidance and recognizes revenue consistent with the related units of accounting for the arrangement over the related performance period.

~~No milestone revenues were recognized during the three and six month periods ended December 31, 2017 and December 31, 2016.~~

~~Income taxes~~

The Company uses the asset and liability method for accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Tax Cuts and Jobs Act of 2017 was signed into law on December 22, 2017. The law includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%. We have recorded an income tax benefit of $791,000 relating to our alternative minimum tax credit carryforward, which becomes refundable under the new law.

For the three and six months ended December 31, 2016, the Company recorded an income tax provision of $0.6 million and $1.2 million respectively, related to the Company’s federal alternative minimum taxable income (“AMTI”) and state income tax in multiple states where the Company is doing business. The Company calculates its AMTI using the alternative minimum tax (“AMT”) system. The Company’s federal income tax liability is the greater of the tax computed using the regular tax system or the tax under the AMT system. Corporations are exempt from AMT for all prior years in which their annual gross receipts for the~~3-year~~ period ending before the current tax year did not exceed $7.5 million. As of June 30, 2017, the Company no longer qualifies for the small company exclusion. The AMT system limits the use of net operating losses used by taxpayers to offset taxable income.

As required by U.S. GAAP, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the~~more-likely-than-not~~ threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Any interest and penalties related to uncertain tax positions will be reflected in income tax expense. The Company is subject to examination of its income tax returns in the federal and state income tax jurisdictions in which it operates.

The Company’s net deferred tax asset decreased by $7.5 million, primarily due to a remeasurement of deferred tax assets and liabilities to the revised statutory tax rate under the new law. The net deferred tax asset is completely offset by valuation allowances established because realization of the deferred tax benefits are not considered more likely than not as of December 31, 2017.

For the six months ended December 31, 2016, the Company’s $1.2 million of tax expense included an uncertain tax position liability of $0.4 million related to uncertainty in how states may tax income from the Biogen Collaboration Agreement. The full amount of the uncertain tax position reflected on the balance sheet within accrued expenses and other liabilities as of December 31, 2017 is approximately $1 million. This collaboration agreement is described in more detail in Note 6 of the notes to the financial statements.

~~Research and development~~

~~Research and development costs include costs incurred in identifying, developing and testing product candidates and generally comprise compensation and related benefits andnon-cash~~ ~~share-based compensation to research related employees; laboratory costs; animal and laboratory maintenance and supplies; rent; utilities; clinical andpre-clinical~~ ~~expenses; and payments for sponsored research, scientific and regulatory consulting fees and testing.~~

As part of the process of preparing its financial statements, the Company is required to estimate its accrued expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for services for which the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers invoice the Company monthly in arrears for services performed or when contractual milestones are met. The Company makes estimates of its accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known to it at that time. The significant estimates in the Company’s accrued research and development expenses are related to expenses incurred with respect to academic research centers, contract research organizations, and other vendors in connection with research and development activities for which it has not yet been invoiced.

There may be instances in which the Company’s service providers require advance payments at the inception of a contract or in which payments made to these vendors will exceed the level of services provided, resulting in a prepayment of the research and development expense. Such prepayments are charged to research and development expense as and when the service is provided or when a specific milestone outlined in the contract is reached.

Prepayments related to research and development activities were $1.6 million and $1.5 million at December 31, 2017 and June 30, 2017, respectively, and are included within the prepaid and other current assets line item on the unaudited condensed balance sheets.

~~Share-based compensation~~

~~The Company accounts for share-based awards issued to employees in accordance with ASC Topic 718,~~ ~~Compensation—Stock Compensation~~ and generally recognizes share-based compensation expense on a straight-line basis over the periods during which the employees are required to provide service in exchange for the award. In addition, the Company issues stock options and restricted shares of common stock to~~non-employees~~ ~~in exchange for consulting services and accounts for these in accordance with the provisions of ASCSubtopic 505-50,~~~~Equity-Based Payments toNon-employees~~~~(“ASC 505-50”).~~ ~~UnderASC 505-50,~~ ~~share-based awards tonon-employees~~ ~~are subject to periodic fair valuere-measurement~~ ~~over their vesting terms.~~

For purposes of calculating stock-based compensation, the Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the Company’s stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The expected volatility is primarily based on the historical volatility of peer company data while the expected life of the stock options is based on historical and other economic data trended into the future. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of the Company’s stock options. The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts. If factors change and the Company employs different assumptions, stock-based compensation expense may differ significantly from what has been recorded in the past. If there is a difference between the assumptions used in determining stock-based compensation expense and the actual factors which become known over time, specifically with respect to anticipated forfeitures, the Company may change the input factors used in determining stock-based compensation costs for future grants. These changes, if any, may materially impact the Company’s results of operations in the period such changes are made.

~~Net income (loss) per share~~

Basic net earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net earnings (loss) per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net earnings (loss) per share calculation, stock options and warrants are considered to be common stock equivalents. The dilutive impact of stock options and warrants for the three and six month periods ended December 31, 2017 totaled 0.2 million shares, compared to 0.3 million and 0.4 million shares for the three and six month periods ended December 31, 2016. The dilutive impact of stock options and warrants have been excluded from the calculation of diluted net loss per share for the for the three and six months ended December 31, 2017, as their effect would be anti-dilutive. Therefore, for the three and six months ended December 31, 2017, basic and diluted net loss per share are the same.

~~Comprehensive income or loss~~

~~Comprehensive income or loss consists of net income or loss and changes in equity during a period from transactions and other equity and circumstances generated fromnon-owner~~ ~~sources. The Company’s net income or loss equals comprehensive income or loss for all periods presented.~~

~~New accounting pronouncements~~

~~In May 2017, the FASB issued Accounting Standards Update (“ASU”)No. 2017-09,~~~~Scope of Modification Accounting~~~~, which amends ASC Topic 718,~~~~Compensation—Stock Compensation~~~~. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply~~

modification accounting in Topic 718. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this standard on its financial statements.

~~In March 2016, the FASB issued ASUNo. 2016-09,~~~~Improvements to Employee Share-Based Payment Accounting~~~~, which amends Accounting Standards Codification (“ASC”) Topic 718,~~ ~~Compensation—Stock Compensation~~. The amendments simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flows. The amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company has adopted this standard for its 2018 fiscal year and it did not have a material effect on its balance sheets, results of operations or cash flows.

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2016-02,~~~~Leases (Topic 842)~~in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases under GAAP. The standard requires, in most instances, a lessee to recognize on its balance sheet a liability to make lease payments (the lease liability) and also a~~right-of-use~~ asset representing its right to use the underlying asset for the lease term. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those periods, using a modified retrospective approach and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this standard on its financial statements.

~~In May 2014, the FASB issued ASUNo. 2014-09,~~~~Revenue from Contracts with Customers (Topic 606)~~, which replaces the existing accounting standards for revenue recognition with a single comprehensive five-step model. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. It also requires enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. The guidance applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Since its issuance, the FASB has amended several aspects of the new guidance, including provisions that address revenue recognition associated with the licensing of intellectual property. In July 2015, the FASB delayed the effective date of this guidance by one year. The guidance is now effective for public companies for annual periods beginning after December 15, 2017 as well as interim periods within those annual periods using either the full retrospective approach or modified retrospective approach. The Company is working through an adoption plan which will include a review of collaboration agreements, applying the five-step model of the new standard and comparing the results to the Company’s current accounting. As part of this, the Company is evaluating the method of adoption and assessing changes that might be necessary to its processes, internal controls and address changes in financial reporting. Effective July 1, 2018, the Company will be revising its revenue recognition accounting policy and expanding revenue disclosures to reflect the requirements of the amended revenue recognition guidance. Because of the nature of the work that remains, at this time the Company is unable to reasonably estimate the impact of adoption on its consolidated financial statements.

3. ~~Share-based Compensation Plans:~~

~~The Company uses stock options and awards of restricted stock to provide long-term incentives for its employees,non-employee~~ directors and certain consultants. The Company has two equity compensation plans under which awards are currently authorized for issuance, the 2013 Employee Stock Purchase Plan and the 2013 Equity and Incentive Plan. No awards have been issued to date under the 2013 Employee Stock Purchase Plan and all of the 128,571 shares previously authorized under this plan remain available for issuance. A summary of the stock option activity for the six months ended December 31, 2017 and 2016 is as follows:

   For the Six Months Ended December 31,
   2017    2016
(In thousands, except per share amounts)
   Shares    Weighted
Average
Exercise
Price    Shares    Weighted
Average
Exercise
Price
Outstanding at June 30,
   2,714    $ 12.96    2,037    $ 13.71
Granted
   746    4.83    658    11.85
Exercised
   (7 )    0.35    (21 )    1.16
Forfeited
   (309 )    9.76    (31 )    17.80
Expired
   (15 )    15.35    (3 )    22.64








Outstanding at December 31,
   3,129    $ 11.35    2,640    $ 13.28








Exercisable at December 31,
   1,694       1,267





Weighted average fair value of options granted during the period
   $ 3.49       $ 8.12

~~For the three and six months ended December 31, 2017, share-based compensation expense related to stock options awarded to employees,non-employee~~ directors and consultants amounted to approximately $1.3 million and $2.8 million, respectively, compared to $1.3 million and $2.9 million, respectively, for the three and six months ended December 31, 2016.

~~As of December 31, 2017, there was $9.1 million of unrecognized compensation expense related tonon-vested~~ ~~stock options. During the six months ended December 31, 2017, 746,468 stock options were granted to the Company’s employees andnon-employee~~ directors under the 2013 Equity and Incentive Plan. The fair value of each option granted is estimated on the grant date using the Black-Scholes stock option pricing model. The following assumptions were made in estimating fair value:


~~Assumption~~	~~Six months~~ ~~ended~~ ~~December 31,~~ ~~2017~~
~~Dividend yield~~		~~0.00~~	%
~~Expected term~~		~~6.25 years~~
~~Risk-free interest rate~~		~~1.83-2.21~~	%
~~Expected Volatility~~		~~83.53~~	%

4. ~~Investments:~~

~~Cash in excess of immediate requirements is invested in accordance with the Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital.~~

~~The following table summarizes the Company’s investments by category as of December 31, 2017 and June 30, 2017:~~

   December 31,    June 30,
In thousands
   2017    2017
Investments—Current:

Certificates of deposit
   $ 2,820    $ 3,500
Debtsecurities—held-to-maturity
   46,492    92,494




Total investments—current
   $ 49,312    $ 95,994




Investments—Noncurrent:

Certificates of deposit
   $ —      $ 2,111
Debtsecurities—held-to-maturity
   —      9,638




Totalinvestments—non-current
   $ —      $ 11,749

~~A summary of the Company’s debt securities classified asheld-to-maturity~~ ~~is as follows:~~

   At December 31, 2017
In thousands
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Fair
Value
Investments—Current:

U.S. government and agency obligations
   $ 44,448    $ —      $ (86 )    44,362
Corporate obligations
   2,044    —      (7 )    2,037








Total investments—current
   $ 46,492    $ —      $ (93 )    $ 46,399

   At June 30, 2017
In thousands
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Fair
Value
Investments—Current:

U.S. government and agency obligations
   $ 92,494    $ —      $ (147 )    $ 92,347
Corporate obligations
   —      —      —      —








   $ 92,494    $ —      $ (147 )    $ 92,347








Investments—Noncurrent:

U.S. government and agency obligations
   $ 7,552    $ —      $ (52 )    $ 7,500
Corporate obligations
   2,086    —      (12 )    2,074








   $ 9,638    $ —      $ (64 )    $ 9,574

~~The amortized cost and fair value ofheld-to-maturity~~ ~~debt securities as of December 31, 2017, by contractual maturity, were as follows:~~

In thousands
   Amortized
Cost    Fair
Value
Due in one year or less
   $ 46,492    $ 46,399




   $ 46,492    $ 46,399

The Company believes that the unrealized losses disclosed above were primarily driven by interest rate changes rather than by unfavorable changes in the credit ratings associated with these securities and as a result, the Company continues to expect to collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value. At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting neither a significant deterioration since purchase nor other factors leading to an other-than-temporary impairment. Therefore, the Company believes these losses to be temporary. As of December 31, 2017, the Company did not have the intent to sell any of the securities that were in an unrealized loss position at that date.

5. ~~Fair Value of Financial Instruments and Investments:~~

Certain assets and liabilities are measured at fair value in the Company’s financial statements or have fair values disclosed in ~~the notes~~these Notes to ~~the financial statements. These~~Unaudited Condensed Financial Statements. Such assets and liabilities are classified into one of the three levels of ~~a hierarchy defined by GAAP.~~the fair value hierarchy. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

The ~~following~~ methods and assumptions described below were used to estimate ~~the~~ fair ~~value~~values and determine the fair value hierarchy classification of each class of financial instrument ~~included in~~held by the ~~table below.~~

Company.

Cash and Cash Equivalents.

The carrying value of cash and cash equivalents approximates fair value asbecause the maturities thereof are less than three months.

~~Certificates of Deposit.~~ The Company’s certificates of deposit are placed through an account registry service. The fair value measurement of the Company’s certificates of deposit is considered Level 2 of the fair value hierarchy as the inputs are based on quoted prices for identical assets in markets that are not active. The carrying amounts of the Company’s certificates of deposit reported in the unaudited condensed balance sheets approximate fair value.

Debt

securities—held-to-maturity.

The Company’s investments in debt securities classified as

held-to-maturity ~~generally include~~

have historically consisted of U.S. Treasury ~~Securities, government agency obligations, and corporate obligations. U.S. Treasury Securities are~~securities that were valued using quoted market prices. Valuation adjustments ~~are~~were not applied. ~~Accordingly, U.S. Treasury Securities are considered Level 1 of the fair value hierarchy.~~

The fair values of U.S. government agency obligations and corporate obligations are generally determined using recently executed transactions, broker quotes, market price quotations where these are available or other observable market inputs for the same or similar securities. As such, the Company classifies its investments in U.S. government agency obligations and corporate obligations within Level 2 of the hierarchy.

~~The following~~ fair value hierarchy table ~~presents~~below provides information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring ~~basis:~~

In thousands
   Quoted
prices
in active
markets
(Level 1)    Significant
other
observable
inputs
(Level 2)    Significant
unobservable
inputs
(Level 3)    Total Fair
Value    Total
Carrying
Value
December 31, 2017

Cash and cash equivalents
   $ 70,345    $ —      $ —      $ 70,345    $ 70,345
Certificates of deposit
   —      2,820    —      2,820    2,820
Held-to-maturity investments:

Corporate obligations
   —      2,037    —      2,037    2,044
U.S. government and agency obligations
   37,470    6,892    —      44,362    44,448










Total assets
   $ 107,815    $ 11,749    $ —      $ 119,564    $ 119,657










June 30, 2017

Cash and cash equivalents
   $ 30,706    $ —      $ —      $ 30,706    $ 30,706
Certificates of deposit
   —      5,611    —      5,611    5,611
Held-to-maturity investments:

Corporate obligations
   —      2,074    —      2,074    2,086
U.S. government and agency obligations
   79,476    20,372    —      99,848    100,046










Total assets
   $ 110,182    $ 28,057    $ —      $ 138,239    $ 138,449

basis or disclosed at fair value in these Notes to Unaudited Condensed Financial Statements.


In thousands	Level 1		Level 2		Level 3		Total Fair Value

March 31, 2022
Cash and cash equivalents	$	67,849	$	—	$	—	$	67,849

June 30, 2021
Cash and cash equivalents	$	105,052	$	—	$	—	$	105,052
Held-to-maturity investment (U.S. Treasury security)		2,000		—		—		2,000

Total assets	$	107,052	$	—	$	—	$	107,052

The Company’s financial instruments also include its variable-rate borrowing under a debt agreement that is described in Note 5 to these Notes to Unaudited Condensed Financial Statements. Management believes that the carrying amount of such debt (i.e., $20.4 million and $19.9 million at March 31, 2022 and June 30, 2021, respectively) reasonably approximates its fair value on those dates because the rate of interest on such borrowing reflects current market rates of interest for similar instruments with comparable maturities and risk profiles. This assessment primarily uses Level 2 inputs under the fair value hierarchy.

~~Collaboration Agreements~~

Debt

~~Biogen~~

The following discussion of the Company’s debt should be read in conjunction with Note 8 to the Notes to Financial Statements in the

2021 Form 10-K.

On ~~July 1, 2015,~~June 30, 2020, the Company entered into a ~~Collaboration~~Loan and Security Agreement (as amended effective May 13, 2021, the “Amended Loan Agreement”) with ~~Biogen, pursuant~~several banks and other financial institutions or entities from time to ~~which~~time parties to the ~~Company~~Amended Loan Agreement (collectively, referred to as the “Lenders”) and ~~Biogen will collaborate to develop, seek regulatory approval~~Hercules Capital, Inc., in its capacity as administrative agent and collateral agent for itself and ~~commercialize gene therapy products to treat XLRS, XLRP, and discovery programs targeting three indications based on~~ the ~~Company’s adeno-associated virus vector technologies.~~ Lenders.

The ~~Collaboration Agreement became effective on August 14, 2015.~~

Under the Collaboration Agreement, the Company will conduct all development activities through regulatory approval in the United States for the XLRS program (with activities through Phase 1/2 completion being~~pre-funded~~ under the agreement and any further activities subject to incremental consideration), and all development activities through the completion of the first in human clinical trial for the XLRP program (with activities through filing the IND being~~pre-funded~~ ~~under the agreement and any further activities subject to incremental consideration). In addition, the Collaboration~~Amended Loan Agreement provides for ~~discovery programs targeting three indications whereby the Company will conduct discovery, research and development activities for those additional drug candidates through the stage~~a term loan in an aggregate principal amount of ~~clinical candidate designation, after which, Biogen may exercise an option~~up to ~~continue~~$

25.0

million to ~~develop, seek regulatory approval for and commercialize the designated clinical candidate.~~be delivered in multiple tranches (the “Term Loan”). In ~~February 2016, the Company announced Biogen’s selection of adrenoleukodystrophy as thenon-ophthalmic~~ indication of the discovery programs. Under the terms of the Collaboration Agreement, the Company, in part through its participation in joint committees with Biogen, will participate in overseeing the development and commercialization of these specific programs.

~~The Company has granted to Biogen with respect to the XLRS and XLRP programs, and upon exercise of the option for the applicable discovery program, an exclusive, royalty-bearing license,~~connection with the right to grant sublicenses, to use adeno-associated virus vector technology and other technology controlled by the Company for the licensed products or discovery programs developed under the Collaboration Agreement. Biogen and the Company have also granted each other worldwide licenses, with the right to grant sublicenses, of their respective interests in other intellectual property developed under the collaboration outside of the licensed products or discovery programs.

~~Activities under the Collaboration Agreement were evaluated under ASC605-25,~~~~Revenue Recognition—Multiple Element Arrangements~~~~, as amended byASU 2009-13,~~~~Revenue Recognition~~ ~~(“ASC605-25”),~~ ~~to determine if they represented a multiple element revenue arrangement. The Collaboration Agreement includes the following significant deliverables:~~

(1) for each of the XLRS and XLRP programs, exclusive, royalty-bearing licenses, with the right to grant sublicenses, to use adeno-associated virus vector technology and other technology controlled by the Company for the purpose of researching, developing, manufacturing and commercializing licensed products developed under the arrangement (the “License Deliverables”);

(2) for each of the discovery programs, exercisable options to obtain exclusive licenses to develop, seek regulatory approval for and commercialize any of the designated clinical candidates under such discovery programs (the “Option Deliverables”); and

(3) the performance obligations to conduct research and development activities through (a) regulatory approval in the United States, in the case of the XLRS program; (b) completion of the first in human clinical trial, in the case of the XLRP program; and (c) the stage of clinical candidate designation, in the case of each of the discovery programs (the “R&D Activity Deliverables”).

~~The R&D Activity Deliverables for each program are further segmented by those that are“Pre-Funded~~ ~~Activities” and those that are “Post-Funding Development Activities”.Pre-Funded~~ Activities are those R&D activities for which the Company has primary responsibility and the consideration to be received under the agreement was received at the inception of the arrangement. Post-Funding Development Activities (referred to as “development services” throughout these financial statements) are those activities that may occur after the~~Pre-Funded~~ Activities and for which the Company is entitled to additional compensation under the agreement from Biogen. Post Funding Development activities have commenced on the XLRP program and revenue is being generated. Biogen has final decision-making authority for all matters related to the conduct of the Post-Funding Development Activities. Because Biogen is not contractually obligated to continue the programs beyond the~~Pre-Funded~~ Activities, and due to the uncertain outcome of the discovery, research and development activities, the Post-Funding Development Activities are not considered deliverables at the inception of the arrangement and the associated fees and milestones are not included in the allocable arrangement consideration. The Company has determined that the additional fees it could receive under the arrangement for Post-Funding Development Activities are not priced at a significant and incremental discount.

The Company determined that both the License Deliverables and Option Deliverables do not have stand-alone value and do not meet the criteria to be accounted for as separate units of accounting under ASC~~605-25.~~ The factors considered by the Company in making this determination included, among other things, the unique and specialized nature of its proprietary technology and intellectual property, and the development stages of each of the XLRS, XLRP and the discovery programs targeting three indications. Accordingly, the License Deliverables under each of the XLRS and XLRP programs and the Option Deliverables under each of the discovery programs have been combined with the initial,~~Pre-Funded~~ Activities deliverables associated with each related program and as a result, the Company’s separate units of accounting under its collaboration with Biogen, comprise the XLRS program, the XLRP program, and each of the discovery programs.

~~Under the Collaboration~~Amended Loan Agreement, the Company received a~~non-refundable~~ ~~upfront payment~~term loan advances of ~~$94.0~~$

10.0

million ~~in August 2015 which it recorded as deferred revenue. This upfront payment~~on each of ~~$94.0 million was allocated among the separate units of accounting discussed above using the relative selling price method. In addition~~June 30, 2020 and May 13, 2021. Prior to ~~the Collaboration Agreement, on July~~April 1, ~~2015,~~2022, the Company ~~also entered into an equity agreement with Biogen. Under~~had the ~~terms of this equity agreement, Biogen purchased 1,453,957 shares of the Company’s common stock, at a purchase price equal~~right to ~~$20.63 per share, for~~request additional term loan advances in an aggregate cash purchase price of $30.0 million which the Company also received in August 2015. The shares issued to Biogen represented approximately 8.1% of the Company’s outstanding common stock on a post-issuance basis, calculated on the number of shares that were outstanding at June 30, 2015, and constitute restricted securities that may not be resold by Biogen other than in a transaction registered under, or pursuant to an exemption from the registration requirements of, the Securities Act of 1933, as amended.

Accounting standards for multiple element arrangements contain a presumption that separate contracts negotiated or entered into at or near to the same time with the same entity were likely negotiated as a package and should be evaluated as a single agreement. The Company determined that the price of $20.63 paid by Biogen included a premium of $7.45 per share over the fair value of the Company’s stock price, calculated based upon the stock price on the date of close of the agreement and adjusted for lack of marketability due to restrictions. Accordingly, the total premium of $10.8 million was also recorded as deferred revenue and, together with the $94.0 million, allocated to the separate units of accounting identified above using the relative selling price method as discussed in Note 2 to these financial statements. The Company will record revenue based on the revenue recognition criteria applicable to each separate unit of accounting. For amounts received~~up-front~~ and initially deferred, the Company will recognize the deferred revenue on a straight-line basis over the estimated service periods in which it is required to perform the research and development activities associated with each unit of accounting. At the inception of the Collaboration Agreement, the Company initially estimated the service periods to range between 2 and 3 years. However, due to certain delays which have extended our estimated period of performance, the estimated service periods are currently anticipated to be between 2 and 4 years from inception of the Collaboration Agreement.

The Company recognized collaboration revenue of $4.8 million and $10.9 million during the three months ended December 31, 2017 and 2016, respectively, and $15.1 million and $22.7 million during the six months ended December 31, 2017 and 2016, respectively, from its collaboration with Biogen. Below is a summary of the components of the collaboration revenue:

   For the Three
Months Ended
December 31,    For the Six
Months Ended
December 31,
   2017    2016    2017    2016
   (dollars in thousands)
Amortization ofnon-refundable upfront fees
   $ 3,735    $ 10,803    $ 13,489    $ 22,528
Development services
   1,096    87    1,650    134








Total collaboration revenue
   $ 4,831    $ 10,890    $ 15,167    $ 22,662

As a result of the upfront payment of $94.0 million made by Biogen and the achievement of a $5.0 million milestone in fiscal year 2016 upon dosing the first XLRS patient, the Company became liable to various research partner institutions for~~sub-license~~ and other payments under existing agreements with such institutions. These agreements obligate the Company to pay to each research partner institution a portion of certain proceeds received from collaboration and other arrangements, including any milestone payments received under such arrangements. Accordingly, the Company recorded total collaboration costs of approximately $12.0 million associated with such obligations, including $636,000 of expense that was settled during that period by the issuance of 40,000 shares of the Company’s common stock to a research partner institution, pursuant to the terms of the existing agreement with that institution. The remainder of these~~sub-license~~ ~~and milestone fees were fully paid in cash during the fiscal year ended June 30, 2016.~~

~~The Company is also eligible to receive payments~~principal amount of up to ~~$467.5 million based~~$

5.0

million; however, no such request was made by the Company.

As of March 31, 2022 and June 30, 2021, the per annum variable contractual interest rate on the ~~successful achievement~~Term Loan was 10.00% and 9.75%, respectively, and the effective interest rate on the Term Loan was approximately 13.5% and 13.3%, respectively. Prior to completing the loan amendment in May 2021, the effective interest rate on the Term Loan was approximately 13.5%.

Effective May 5, 2022, the per annum variable contractual interest rate on the Term Loan increased to 10.50%.

As of ~~future milestones under its XLRS and XLRP programs. For XLRS,~~March 31, 2022, the Company ~~is eligible to receive up to: (i) $40 million~~was in milestone payments based upon the successful achievement of clinical milestones (relating to dosing in specified trials), (ii) $155 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories and (iii) $65 million in milestone payments based upon the achievement of worldwide sales targets. For XLRP, the Company is eligible to receive up to: (i) $42.5 million in milestone payments based upon successful achievement of clinical milestones (relating to dosing in specified trials), (ii) $102.5 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories and (iii) $62.5 million in milestone payments based upon the achievement of worldwide sales targets. In addition, the Company is eligible to receive payments of up to $592.5 million based on the exercisefull compliance with all covenants of the ~~option for and the successful achievement~~Amended Loan Agreement.

6.	Collaboration Agreements and Contract Liabilities

Bionic Sight,

LLC

On February 2, 2017, the Company entered into a strategic research and development collaboration agreement with Bionic Sight, LLC (“Bionic Sight”), to develop ~~therapies~~product candidates for patients with visual deficits and blindness due to retinal disease. Through the AGTC-Bionic Sight collaboration, the companies seek to develop a new optogenetic therapy that leverages AGTC’s deep experience in gene therapy and ophthalmology and Bionic Sight’s innovative neuro-prosthetic device and algorithm for retinal coding.

Under the agreement, AGTC made an initial $2.0 million payment to Bionic Sight for an equity interest in that company. This initial investment represents an approximate 5% equity interest in Bionic Sight. In addition to the initial investment, AGTC will contribute to ongoing research and development support costs through additional payments or other~~in-kind~~ ~~contributions (AGTC Ongoing R&D Support). The AGTC Ongoing R&D Support payments andin-kind~~ contributions will be made over time, up to the date that Bionic Sight has received both IND clearance from the FDA and receipt of written approval from an internal review board to conduct clinical trials from at least one clinical site for that product (the “IND Trigger”.)

~~If the IND Trigger is attained, AGTC will receive additional equity, based on the valuation in place at the beginning of the agreement, for the AGTC Ongoing R&D Support payments andin-kind~~ ~~contributions, and will be obligated to~~

~~purchase additional equity in Bionic Sight for $4.0 million, at apre-determined~~ ~~valuation. Due to the uncertainty of achieving the IND Trigger, the Company is expensing the AGTC Ongoing R&D Support payments andin-kind~~ ~~contributions made under the collaboration agreement. Such amounts are included as a component of research and development expenses in the Company’s financial statements.~~

The Company recorded its initial $2.0 million investment in Bionic Sight using the equity method of accounting for investments, which is recorded as its own line item on the Company’s balance sheets. The ongoing research and development costs and contributions will be recorded as a periodic cost until such time when or if the IND Trigger is achieved.

The collaboration agreement grants to AGTC, subject to achievement by Bionic Sight of certain development milestones, an option to exclusively negotiate for a limited period of time to ~~acquire~~acquire: (i) a majority equity interest in Bionic ~~Sight,~~Sight; (ii) the Bionic Sight assets to which the collaboration agreement ~~relates,~~relates; or (iii) an exclusive license with respect to the product to which the collaboration agreement relates.

Under the agreement, AGTC made an initial $2.0 million payment for an equity interest of approximately 5% in Bionic Sight. During March 2020, the Company’s equity interest in Bionic Sight increased to approximately 15.5% in connection with (i) AGTC’s purchase of additional equity for $4.0 million and (ii) the conversion of certain AGTC-provided research and development support costs

and in-kind contributions,

which aggregated approximately $2.2 million, to an equity interest in Bionic Sight, in each case, consistent with the provisions of the collaboration agreement. AGTC is not obligated to purchase additional equity in Bionic Sight or make any

additional in-kind contributions

under the agreement. The Company recorded its initial investment in Bionic Sight using the equity method of accounting for investments. Upon receipt of additional equity in March 2020, management concluded that equity method accounting remained appropriate.

Otonomy, Inc.

During October 2019, the Company entered into a strategic collaboration agreement with Otonomy, Inc. (“Otonomy”)

to co-develop

and co-commercialize an

adeno-associated virus-based gene therapy product candidate designed to restore hearing in patients with sensorineural hearing loss caused by a mutation in the gap junction protein beta 2 gene (“GJB2”) – the most common cause of congenital hearing loss. Mutations in GJB2 account for approximately

30% of all genetic hearing loss cases. People with this mutation can

have severe-to-profound

deafness in both ears that is identified in screening tests routinely performed on newborns. Under the collaboration agreement, the parties began equally sharing the program costs and any proceeds from potential licensing transactions in January 2020 and can include additional genetic hearing loss targets in the future. Effective January 1, 2022, the Otonomy collaboration agreement was amended to increase Otonomy’s responsibility for the overall development and commercialization of the program, which resulted in (i) a reduction in the Company’s share of future product development costs and (ii) the Company’s potential receipt of future payments, and royalties on any product sales in lieu of equal sharing of any potential profits or proceeds related to the program.

The Company concluded that the Otonomy collaboration agreement is within the scope of ASC Topic 808,

Collaborative Arrangements

(“Topic 808”), which defines collaborative arrangements and addresses the presentation of transactions between the parties in an entity’s statement of operations and the related disclosures. However, Topic 808 does not provide guidance on the recognition of consideration exchanged or accounting for the obligations that may arise between the parties. The Company concluded that ASC Topic 730,

Research and Development,

should be applied by analogy to payments between the parties during the development activities. As such, payments made to or received from Otonomy for development activities are recorded as research and development expenses. For each of the nine months ended March 31, 2022 and 2021, settlement activity between the parties under the Otonomy agreement had an immaterial effect on the Company’s research and development expenses.

Contract Liabilities

As of March 31, 2022 and June 30, 2021, accrued and other liabilities on the Company’s balance sheets included $

449,000

and $

374,000

, respectively, of deferred revenue. In the account balance at June 30, 2021 was $

225,000

that was billed to a customer and collected by the Company in July 2021. Management expects that $

300,000

of the deferred revenue at March 31, 2022 will be recognized as revenue during the three months ending June 30, 2022; however, management is unable to estimate when the Company will satisfy the performance obligations pertaining to its residual deferred revenue at March 31, 2022.

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7.	~~Revision of Prior Period Financial Statements~~ Stockholders’ Equity

Public Offerings of AGTC Equity Securities

Nine months ended March 31, 2022

On March 24, 2022, the Company closed an underwritten public offering of 7.5 million shares of its common stock, with Cantor Fitzgerald & Co. (“Cantor”) acting as the sole underwriter for the offering.

The indicative public offering price of each share of common stock

was $

1.30

, generating gross proceeds of $

9.8

million, before deducting underwriting discounts, commissions and other offering expenses payable by the Company, which totaled $

1.2

million. Issuance costs totaling $

329,000

were unpaid on March 31, 2022 and have been included in accounts payable/accrued and other liabilities on the Company’s Unaudited Condensed Balance Sheet as of such date. Separately, the period for Cantor to exercise its option to purchase an additional

1.125

million shares of common stock to cover over-allotments has expired.

The Company intends to use the net proceeds from the offering, together with other available funds, to fund its ongoing

X-linked

retinitis pigmentosa clinical trials, ongoing Phase 1/2 clinical trials in its achromatopsia program and preclinical development programs, and for working capital and other general corporate purposes.

Nine months ended March 31, 2021

On February 1, 2021, the Company closed an underwritten public offering of 16,741,573 shares of its common stock, together with accompanying warrants to purchase 8,370,786 shares of its common stock. The combined offering price of each share of common stock and accompanying warrant was $4.45, generating gross proceeds of $74.5 million, before deducting underwriting discounts, commissions and other offering expenses payable by the Company, which totaled $5.2 million.

The warrants have an

initial

exercise price of $6.00 per share (subject to certain adjustments), are immediately exercisable and expire on February 1, 2026. The warrants are legally detachable from the common stock that was issued on February 1, 2021 and are separately exercisable by the warrant holders. While the warrants are outstanding (but unexercised), the warrant holders will participate in any dividend or other distribution of the Company’s assets to its common stockholders by way of return of capital or otherwise. As of March 31, 2022, NaN of the warrants have been exercised.

At-The-Market Offering Program

On April 2, 2021, the Company entered into a Controlled Equity Offering

Sales Agreement (the “Sales Agreement”) with Cantor as sales agent to sell shares of the Company’s common stock, from time to time,

through an “at-the-market offering” program

with an aggregate offering amount of up to $50.0 million. Cantor is entitled to aggregate compensation equal to 3.0% of the gross sales price of the shares sold through it pursuant to the Sales Agreement. During the nine months ended March 31, 2022, the Company received net proceeds of $519,000 from selling 230,478 shares of its common stock under the Sales Agreement. Neither Cantor nor the Company is obligated to sell additional shares under this program in the future.

Shares Issued to a Vendor

During the nine months ended March 31, 2022, the Company issued 15,000 shares of its unregistered common stock to a vendor for services rendered.

8.	Commitments and Contingencies

Lease Commitment

On May 13, 2021, the Company entered into

a non-cancelable long-term

lease (the “Lease”)

for

a to-be-constructed build-to-suit single

story facility of approximately 21,250 square feet in Alachua, Florida (the “Premises”) for office, research and development, laboratory, light pharmaceutical and medical systems manufacturing and fabrication and distribution use. The new facility will be adjacent to the Company’s corporate headquarters. The landlord is responsible for all permitting, site and infrastructure

preparation work, and construction of the shell and core of the building and the quality control laboratory portion of the building. The Company is responsible for completion of the remaining tenant fit out work. On May 3, 2022, the Company entered into a First Amendment to Lease (the “Amendment”). Pursuant to the Amendment, the Company and the landlord finalized the architectural plans and specifications for the development and construction of the Premises and agreed that the budget for the tenant fit out work is approximately $10.9 million. The Company and the landlord also agreed in the Amendment that the landlord’s contribution to the tenant fit out work is $8.0 million, and the Company’s contribution to the fit out work is approximately $2.9 million, which is to be paid by the Company into an escrow account. Because this real property lease agreement that has not yet commenced, it is not recorded on the Company’s balance sheets

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The lease will commence upon substantial completion of the Premises, including the tenant fit out work, estimated to be completed in the fourth quarter of ~~fiscal 2017, we became~~2022 (the “Commencement Date”), and the rent commencement date will occur simultaneous with the Commencement Date. The initial lease term has been extended by the Amendment from 20 years to 20 years and one month from the Commencement Date (the “Term”). As provided by the Amendment, the Company will pay annual base rent aggregating $30.4 million (assuming that the Company does not elect its early termination option) during the Term (beginning on the Commencement Date) as set forth below.


Lease Months	Annual Base Rent

1	$	0
2-7		743,750
8-19	$	1,336,625
Base rent shall increase 1.5% each lease year (12-month period) thereafter commencing in month 20 for the remainder of the Term.

The other substantive terms and conditions of the Lease, which is discussed in Note 3 to the Notes to Financial Statements in the 2021 Form

10-K

under the

heading “Build-To-Suit Manufacturing and

Quality Control Facility in Alachua, Florida,” were generally unchanged by the Amendment. In connection with the new leased facility, the Company had financial commitments for equipment and shared building fit out costs aggregating approximately

$4.2 million as of March 31, 2022.

COVID-19 Pandemic

On January 30, 2020, the World Health Organization (the “WHO”) announced a global health emergency because of a new strain of coronavirus originating in

Wuhan, China (“COVID-19”) and the

risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the

WHO classified the COVID-19 outbreak as a

pandemic based on the rapid increase in exposure globally. National, state and local governments in affected regions have implemented, and are likely to continue to implement, safety precautions, including quarantines, border closures, increased border controls, travel restrictions, shelter in place orders and shutdowns, business closures, cancellations of public gatherings and other measures. Organizations and individuals are taking additional steps to avoid or reduce infection, including limiting travel and staying home from work.

The worldwide

spread of COVID-19 led to

a global slowdown of economic activity and decreased demand for a broad variety of goods and services, while also disrupting sales channels and marketing activities and precipitating many corporate bankruptcy filings. As a result

of the COVID-19 outbreak, the

Company has experienced delays in enrollment of its clinical trials and may continue to see delays as the rise in

COVID-19

and/or related variants causes capacity constraints at various clinical trial sites. The Company could also experience delays resulting from critical

follow-up visits required

under clinical trial protocols, which could increase the cost of those trials and also impact their expected timelines. Management’s ability to fully interpret the trial outcomes and the ability of certain

lab-based employees to

perform their jobs

due to stay-at-home orders or

other restrictions

related to COVID-19 could also

result in delays and increase the Company’s operating expenses. Furthermore, third-party vendors, such as raw material suppliers and contract manufacturing, testing or research organizations, have also been impacted

by COVID-19

and could continue to be impacted, which could result in unavoidable delays and/or increases in the Company’s operating costs.

Notwithstanding the development and rollout of certain vaccines, it is unknown: (i) how

long the COVID-19 outbreak will

continue before the virus, including newly identified strains and variants, is adequately contained; (ii) the severity of the virus; and (iii) the effectiveness of actions to prevent transmission and treat those who have

contracted COVID-19. The

extent to which the

COVID-19 outbreak may impact

the Company’s financial condition, results of operations or cash flows is uncertain; however, as of the date of these financial statements, management is not aware of ~~an immaterial error regarding~~any specific event or circumstance that would require the ~~calculation~~Company to update its estimates or judgments, or adjust the carrying values of ~~our income tax provision for~~its assets or liabilities. Because future events are subject to change, management’s best estimates and judgments may require future modification. Therefore, actual results could differ materially from current estimates. Management is closely monitoring the ~~first quarter~~evolving impact of ~~fiscal 2017. An assessment concluded~~the pandemic on all aspects of the Company’s business and periodically evaluates its estimates, which are adjusted prospectively based on such evaluations.

General

From time to time, the Company may be involved in claims and legal actions that arise in the normal course of business. Management has no reason to believe that the ~~error was not material to~~outcome of any ~~prior period financial statements. As~~ such ~~in accordance with ASC 250 (SAB No. 108, Considering Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the prior period financial statements~~legal actions would have been revised (the “Revision”) in the applicable financial statements. Periods not presented herein will be revised, as applicable, in future filings. Although management has determined that the error was not material to prior periods, the financial statements for the six months ended December 31, 2016, included herein, have been revised to correct for the impact of this item. Unless otherwise indicated, the financial information as of and for the six months ended December 31, 2016 presented in this Quarterly Report on~~Form 10-Q~~ ~~reflects this revision.~~

~~The following table summarize the~~a significant adverse effect ~~of the Revision~~ on the ~~statements~~Company’s financial position, results of operations ~~for the six months ended December 31, 2016:~~

   For the six months ended
December 31, 2016
In thousands
   2016    Adjustment    2016
Income before provision for income taxes
   $ 6,004       6,004




Provision for Income Taxes
   298    902    1,200




Net income
   $ 5,706       4,804




Net earnings per share, basic
   $ 0.32       0.27




Net earnings per share, diluted
   $ 0.31       0.26

~~The following table summarize the effect~~or cash flows.

ITEM 2.

MANAGEMENT’S 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~~March 31, ~~2017,~~2022 and our results of operations for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021. This discussion should be read in conjunction with the ~~accompanying~~ Unaudited Condensed Financial Statements and ~~accompanying~~related notes included in this Quarterly Report

on Form 10-Q,

as well as our Annual Report on

Form 10-K

for the year ended June 30, ~~2017, as amended, (“June 2017~~2021 (the “2021

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 under the heading “Risk Factors” in Part II, Item 1A, and elsewhere in this report, as well as those set forth in Part I, Item 1A, “Risk ~~Factors”~~Factors,” of the ~~June 2017~~2021

Form 10-K.

Forward-looking statements include information concerning our possible or assumed future results of operations, including results and timing of our clinical trials and planned clinical trials, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities and the effects of ~~competition.~~competition, as well as assumptions relating to the foregoing. 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,” “hopes,” “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 management’s 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,” “AGTC” or the “Company” refer to Applied Genetic Technologies Corporation.

Overview

We are a clinical-stage biotechnology company that uses aour proprietary gene therapy platform technology to develop transformational genetic therapies for ~~patients~~people suffering from rare and debilitating diseases. Our initial focus is in the field of ophthalmology, where we have ~~active clinical~~ wholly owned clinical-stage

programs inX-linked ~~retinoschisis (XLRS), achromatopsia (ACHM) andX-linked~~ retinitis pigmentosa ~~(XLRP)~~

(“XLRP”) and achromatopsia (“ACHM”), and an optogenetics program through our collaboration with Bionic Sight, LLC (“Bionic Sight”). Our preclinical pipeline includes a program in dry

age-related macular degeneration

(“dAMD”), two programs targeting central nervous system (“CNS”) disorders, including frontotemporal dementia (“FTD”) and amyotrophic lateral sclerosis (“ALS”), and a ~~preclinical~~ program in ~~optogenetics. In addition to ophthalmology,~~otology through our collaboration with Otonomy, Inc. (“Otonomy”). With the interim, masked, clinical data we ~~have~~ recently ~~initiated preclinical programs~~released from the Skyline trial in ~~adrenoleukodystrophy (ALD)~~our XLRP program and ~~otology. With a number of~~additional important clinical milestones on the horizon, we believe that we are well positioned to advance multiple programs ~~towards~~toward pivotal studies. In addition to our product pipeline, we have also developed broad technological and manufacturing capabilities utilizing both our internal scientific resources and through ~~our~~ collaborations with 4D Molecular Therapeutics (4DMT), 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, our discovery program in ALD and two ophthalmology programs, validates our approach and technology.

others.

Since our inception, ~~in 1999,~~ we have devoted substantially all of our resources to the development ~~efforts relating to~~of our~~proof-of-concept~~ clinical and preclinical programs in ophthalmology, otology and~~alpha-1~~ ~~antitrypsin deficiency, or AAT deficiency, an inherited orphan lung disease,~~ CNS, including ~~activities to manufacture~~manufacturing product candidates 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. To date, we have funded our operations primarily through ~~the private placement~~public offerings of ~~preferred stock,~~our common stock ~~convertible notes~~ and warrants to purchase our common stock, private placements of our preferred stock, ~~through our public offerings consummated in April 2014~~collateralized borrowing and ~~July/August 2014, and through development services, upfront and milestone payments from our partners.~~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 theAlpha-1~~ ~~Foundation.~~

~~Although we recorded income from operations of $1.9 million for the year ended June 30, 2017 due in part to the amortization of revenue associated with our collaboration agreement with Biogen, we~~Blindness.

We have incurred losses from operations in each ~~other~~ year since ~~inception. Our~~inception, except for fiscal year 2017, wherein we reported net income ~~for the fiscal year ended June 30, 2017 was~~of $0.4 million ~~compared~~due, in part, to profits from a collaboration agreement that was ultimately terminated in March 2019. For the nine months ended March 31, 2022 and 2021, we reported net losses of ~~$1.4~~$50.6 million and ~~$24.3~~$45.7 million, ~~for each of the fiscal years ended June 30, 2016 and 2015,~~ respectively. Substantially all our net losses resulted from costs incurred in connection with our research and development programs and ~~from~~ general and administrative ~~costs~~and other expenses 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 ~~XLRS,~~XLRP and 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;~~

~~non-orphan~~ ~~ophthalmology indications including wet AMD and other inherited retinal diseases; and~~

~~other inherited diseases, such as otology and CNS indications.~~

manufacture clinical trial materials and develop larger-scale manufacturing ~~capabilities;~~capabilities, including the lease of our new

build-to-suit

manufacturing and quality control facility;

continue to develop our gene therapy platform and expand our pipeline by investing in our preclinical product candidates, including those for:

additional orphan and

non-orphan

ophthalmology indications, such as dAMD and other retinal diseases; and

other inherited diseases in CNS and otology;

seek regulatory approval for our product candidates;

~~further develop our gene therapy platform;~~

add personnel to support our scientific, collaboration, product development and commercialization efforts; and

continue to operate as a public company.

As of ~~December~~March 31, ~~2017,~~2022, we had cash and cash equivalents ~~and investments~~ totaling ~~$119.7~~$67.8 million.

We do not expect to generate revenue from product sales unless and until we successfully complete development of and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years and which we believe is subject to significant uncertainty. We believe that our ~~existing~~available cash and cash equivalents ~~and investments at December 31, 2017,~~ will be sufficient to allow us to generate data from our ongoing and planned clinical programs ~~to move ourpre-clinical~~ ~~optogenetic program in collaboration with Bionic Sight into the clinic~~ and to fund ~~our~~ currently planned research and discovery programs ~~for at least the next two years. In order~~into calendar year 2023. We will require substantial additional funding to complete ~~the process of obtaining~~our XLRP Phase 2/3 (“Vista”) trial, move our ACHMB3 product candidate forward, obtain regulatory approval for our lead product candidates, ~~and to~~ build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our lead product candidates, if approved, ~~we will require substantial additional funding. Also,~~and execute our plan to open and operate a leased current Good Manufacturing Practices (“cGMP”) manufacturing and quality control facility. However, our current operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements, acquisitions or other business development activities, or a combination of these approaches. ~~However, we~~We may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms, or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our ~~products.~~

product candidates and continue our research and development efforts.

Program Updates and Recent Developments

AGTC-501

for the Treatment of XLRP

AGTC-501,

our lead gene therapy development program for the treatment of XLRP, is designed to use an engineered adeno-associated virus (“AAV”) vector to insert a stabilized and functional copy of the Retinitis Pigmentosa GTSase Regulator (“RPGR”) gene into a patient’s photoreceptor cells.

AGTC-501

is comprised of a stabilized RPGR gene and a promoter that was specifically selected to drive efficient gene expression in primate rods and cones, maintain photoreceptor function and delay disease progression in preclinical models of disease. In addition, published

non-human

primate studies showed that AGTC’s proprietary AAV capsid had as much as twice the transfection efficiency in photoreceptors when compared to capsids used in competing programs.

We are currently conducting multiple clinical trials of

AGTC-501

that are intended to support the potential submission of a Biologics License Application (“BLA”) including a Phase 1/2 trial, which incorporates an expansion portion that we refer to as the Skyline trial. The Skyline trial is a 14 patient multi-site, Phase 2 trial in which patients are randomized to either a high dose of

AGTC-501

(the dose received by patients in Group 5 of the Phase 1/2 trial), or a low dose of

AGTC-501

(the dose received by patients in Group 2 of the Phase 1/2 trial). The primary endpoint in the Skyline trial is the proportion of treated eyes with an improvement of 7 decibels (“dB”) or greater in visual sensitivity from baseline in at least 5 loci at twelve months. Secondary endpoints include the proportion of treated eyes with improvements in best corrected visual acuity at twelve months, a patient’s ability to navigate a mobility navigation maze more successfully under varying light and challenge conditions at twelve months, and improvements in retinal structure at twelve months. The Skyline trial is masked in that we, the patients and the sites do not know which patient is in which dose group or which dose group received the high or low dose. Accordingly, we refer to the two groups as Dose Group A and Dose Group B. The primary endpoint in the Skyline trial is the proportion of treated eyes with improvement from baseline in visual sensitivity. Secondary endpoints include improvements in visual acuity, a patient’s ability to navigate a mobility maze more successfully under varying light and challenge conditions, and improvements in retinal structure. We completed enrollment in the Skyline trial in the first quarter of calendar year 2022 and recently reported

3-month

interim results for 13 of the 14 enrolled patients. Safety, visual sensitivity, visual acuity and the mobility maze were the only endpoints evaluated at 3 months. Retinal structure improvements, another important endpoint, was not evaluated as changes in retinal structure are not expected until between 9 and 12 months.

Similar to safety results reported for the first portion of the Phase 1/2 trial, safety results to date for the Skyline trial support that

AGTC-501

is generally well tolerated and there are no clinically significant safety concerns. There were

non-serious

ocular adverse events (grade 2) related to the study agent that were similar between the two dose groups and two ocular serious adverse events an increase in intraocular pressure determined to be related to corticosteroids which has resolved, and one of visual impairment deemed related to the surgical procedure which is resolving.

Demographic and baseline characteristics were well balanced between the two dose groups in the Skyline trial. Notably, compared to the Phase 1/2 trial, patients in the Skyline trial were younger, with better baseline visual sensitivity and visual acuity.

Improvements in visual sensitivity, the primary efficacy endpoint in the Skyline trial, were observed in both dose groups at three months. We define responders as patients who have at least 5 loci increase by at least 7 dB. The response rate in Dose Group A was 25% (1 of 4 patients, as one patient in this group was unevaluable) and in Dose Group B was 62.5% (5 of 8 patients), representing a clear difference between the two groups. Notably, while we did not observe an increase in visual sensitivity of at least 7 dB in 5

pre-specified

loci, we did observe an increase in visual sensitivity of at least 7 dB in 9 to 17 loci in the treated area. These responders also had improvements in visual sensitivity across the treated region above the repeatability coefficient for the test that resulted in improved functional vision in a larger area of the retina.

The 13 patients in the Skyline trial had better baseline best corrected visual acuity, a mean of 66.9 ETDRS letters on an eye chart, which correlates to a Snellen visual acuity equivalent of approximately 20/40. Because these patients started with better visual acuity, we believe there was less ability for them to improve relative to patients in the Phase 1/2 trial.

In addition, there was a correlation between visual sensitivity improvements and trends for patients able to complete the maze more rapidly and with fewer errors. We are working with the maze vendor on potential adjustments to account for the fact that only one eye was treated in this analysis, whereas previous use of the maze has been for patients treated in both eyes. It is possible that the better visual acuity of the patients in the Skyline trial at baseline affected the interpretation of the maze results.

The Skyline trial has a similar design and endpoints to the Vista clinical trial. We believe that if the Vista trial has similar outcomes as both the Phase 1/2 trial and the Skyline trial, the body of data will support a BLA submission for

AGTC-501.

The Vista trial is a multi-site, Phase 2/3 clinical trial expected to include approximately 60 patients randomized across three

arms: a low-dose group (the

1.2E+11 vg/mL dose from the ongoing Phase 1/2 and Skyline trials), a high-dose group (the 1.1E+12 vg/mL dose from the ongoing Phase 1/2 and Skyline trials) and an untreated control group. The primary endpoint will be improvement in visual sensitivity, defined as having at least a 7 dB increase in visual sensitivity in at

least 5 pre-specified loci at

Month 12. Together with a third-party vendor, we have developed a machine learning algorithm based on the available microperimetry data from our Phase 1/2 dose escalation trial that,

on a patient-by-patient basis, predicts

the loci most likely to improve through evaluation of baseline visual sensitivity. Based on the results of the Skyline trial we will be working with the vendor to fortify the algorithm with the data from those 14 patients. Secondary efficacy endpoints in the Vista trial include mean change in visual sensitivity, improvements in visual acuity and performance on the mobility maze as well as structural improvements in retinal health as measured by changes in the ellipsoid zone (the “EZ”), a defined region within the photoreceptor layer of the retina that degenerates over time and is eventually lost in patients with XLRP. We plan to complete a masked interim analysis, with the interim data expected to be released in the first half of calendar year 2023. We believe the interim analysis, together with data from the Phase 1/2 trial, including the Skyline expansion portion, may provide us with the opportunity to discuss with the United States Food and Drug Administration (the “FDA”) potential amendments to the Vista trial, if necessary, that may support an earlier BLA submission than we would otherwise anticipate, or optimize the design of the trial.

To date, we have released a significant amount of preclinical and clinical data including improvements in visual sensitivity and visual acuity, as well as improvements in retinal health that we believe support both the potential safety and biological activity of

AGTC-501.

These data include the recent release of the interim data from the ongoing Skyline trial and a presentation of data from the ongoing Phase 1/2 trial at the Association for Research in Vision and Ophthalmology (ARVO) 2022 Annual Meeting, by Dr. Paul Yang, Assistant Professor of Ophthalmology at the Casey Eye Institute, Oregon Health & Science University and one of our study investigators. The Phase 1/2 trial data that Dr. Yang presented showed that certain baseline characteristics of the EZ were highly associated with improved outcomes starting as early as nine months after treatment with AGTC-501 and lasting up to 18 months after treatment. Specifically, the data showed a statistically significant association between improvements in visual sensitivity as measured by Macular Integrity Assessment (“MAIA”) and improvements in retinal health as measured by improvement in the EZ in dose Groups 4 to 6. We are continuing to follow these patients and incorporated these findings into the inclusion/exclusion criteria for the Skyline and Vista clinical trials.

Given the efficacy and safety data generated to date, we believe that

AGTC-501

is a potential

best-in-class product

candidate that may provide significant benefits to patients with XLRP, if approved. We expect to achieve the following milestones in the XLRP development program, subject to any continuing impact of the

COVID-19

pandemic:

provide

24-month

data from patients in the ongoing Phase 1/2 clinical trial in the third quarter of calendar year 2022;

provide

12-month

data from the Skyline expansion portion of the Phase 1/2 clinical trial in the first quarter of calendar year 2023; and

provide interim Vista trial data in the first half of calendar year 2023.

AGTC-401

and

AGTC-402

for the Treatment of ACHM

We have been developing two gene therapy product candidates for the treatment of ACHM. The product candidates are designed to use the same engineered AAV vector to insert a stabilized and functional copy of the Cyclic Nucleotide Gated Channel Subunit Beta 3 (CNGB3) gene in the case of

AGTC-401

and a stabilized and functional copy of the Cyclic Nucleotide Gated Channel Subunit Alpha 3 (CNGA3) gene in the case of

AGTC-402.

The product candidates are designed to use the same proprietary cone-specific promoter that was designed to maximize gene expression into a patient’s photoreceptor cells. We chose the promoter based on data from preclinical studies that showed the promoter drove efficient gene expression in all three types of primate cone photoreceptors and restored cone photoreceptor function in dog, mouse and sheep models of ACHM.

We are currently conducting a Phase 1/2 clinical trial of

AGTC-401

in ACHM patients with mutations of the CNGB3 gene (ACHMB3) and a separate Phase 1/2 clinical trial of

AGTC-402

in ACHM patients with mutations of the CNGA3 gene (ACHMA3). Each Phase 1/2 clinical trial is being conducted at multiple clinical sites that specialize in inherited retinal diseases. The primary objective of these trials is to identify a well-tolerated dose that provides clinical benefit to patients. To date, we have enrolled a total of 31 adult and pediatric patients into the ACHMB3 trial of

AGTC-401

and 24 adult and pediatric patients in the ACHMA3 trial of

AGTC-402

and do not currently plan to enroll any additional patients in either trial. We have data from a portion of the patients in these trials up to 24 months after treatment, including our most recent release in February 2022 of

3-month

data for the two highest dose groups of ACHMB3 and ACHMA3 pediatric patients that also included updated adult safety data. These data are consistent with the data previously released in adult and pediatric ACHMB3 and ACHMA3 patients.

In the Phase 1/2 dose escalation study of

AGTC-401

in ACHMB3 patients, a total of 21 adults were treated over an approximately

80-fold

dose range in five groups and a total of 10 pediatric patients were treated at the three highest dose groups. Secondary outcome measures evaluating efficacy were assessed by standard visual function tests, such as perimetry. We defined two pediatric patients (17 and 7 years old) in the 1.1E+12 vg/mL dose group as responders based on improvements in visual sensitivity as measured by the Octopus static perimeter. Therefore, of the three adults and four children (total n=7) in the 1.1E+12 vg/mL dose group, four (>50%) were responders based on improvements in visual sensitivity. These patients also reported improvements in quality of life as measured by a patient reported outcome survey developed specifically for patients with ACHM.

The two other pediatric patients in the 1.1E+12 vg/mL dose group and three pediatric patients ages 7 years and younger in the 3.2E+12 vg/mL dose group (total n=5) could not sufficiently concentrate and consistently complete the visual sensitivity testing. Similar to other trials where endpoints are adapted for young children, we plan to work closely with clinicians and regulators to develop potential adaptations for younger patients for visual sensitivity testing. Despite their inability to complete the tests, we received anecdotal feedback from certain patients that indicate improvements in visual sensitivity. Based on the totality of data generated to date, we believe that the 1.1E+12 vg/mL dose has been well tolerated and has potential in both adult and pediatric patients.

We also reported updated interim

3-month

pediatric data and adult and pediatric safety data for the 24 patients enrolled in the Phase 1/2 study of

AGTC-402

targeting CNGA3 mutations in patients with ACHMA3. Data from the five pediatric patients in the two highest dose groups were consistent with previously reported results, indicating no evidence of clinical improvements, and do not support further clinical development. Most patients with CNGA3 mutations express a mutant protein that is not typically found in patients with CNGB3 mutations, which we believe may have impacted the results seen in patients that received

AGTC-402.

We will continue to follow the ACHMA3 patients for long-term safety observations.

As previously reported, in both the ACHMB3 and ACHMA3 trials, treatment with the highest dose (3.2 E+12vg/ml) of

AGTC-401

and

AGTC-402,

respectively, led to three cases of severe ocular inflammation in pediatric patients, which were reported as Suspected Unexpected Serious Adverse Reactions, or SUSARs. No new additional SUSARs in any adult or pediatric patients have been reported and the inflammation in all previously reported SUSARs improved with an adjusted steroid regimen. Two SUSARs (one in ACHMA3 and one in ACHMB3) have since fully resolved and one (ACHMA3) continues to improve, with all three patients’ best corrected visual acuity returning to baseline after initial declines in visual acuity were observed following the SUSARs. Importantly, we have not yet observed any comparable inflammation in any of our XLRP clinical trials.

We recently had a collaborative and productive End of Phase 2 (“EOP2”) meeting with the FDA to discuss the potential future development of

AGTC-401

and received constructive feedback from the FDA on our proposed primary and secondary endpoints for a Phase 2/3 clinical trial. With respect to the primary endpoint of improvement in visual sensitivity relative to baseline, the FDA reiterated that a 7 dB change in at least 5

pre-specified

loci is required. However, they indicated a willingness to review an alternative approach to perimetry from a model used in other trials, which would need to be adapted specifically for ACHMB3. They also indicated that improvements in light discomfort may be an acceptable secondary endpoint in a Phase 2/3 clinical trial of

AGTC-401

and we intend to provide additional data to support our position that a 1 loglux improvement from baseline is clinically meaningful. We are currently working through the details of the future development plan for

AGTC-401

including the proposed protocol for a potential Phase 2/3 clinical trial for submission to the FDA. Our anticipated future development plan will be based on the feedback we received from the FDA during the EOP2 meeting and subsequent comments to the full protocol.

Build-To-Suit Manufacturing

and Quality Control Facility in Alachua, Florida

In May 2021, we signed

a 20-year lease

for

a build-to-suit 21,250

square foot potential cGMP manufacturing and quality control facility adjacent to our existing Florida facility to prepare for late-stage development and potential commercialization of our XLRP and ACHMB3 programs. The facility is also intended to provide supply chain redundancy, reduce manufacturing risk and enhance quality controls. We anticipate that

the build-out of

the new manufacturing and quality control facility will be completed during the fourth quarter of calendar year 2022.

Additional information regarding our new cGMP manufacturing and quality control facility can be found in Note 8 to the Unaudited Condensed Financial Statements included in this Quarterly Report

on Form 10-Q

under the heading “Lease Commitment.”

Strategic Collaborations and Preclinical Pipeline

Bionic Sight

During February 2017, we entered into a strategic research and development collaboration agreement with Bionic Sight to develop product candidates for patients with visual deficits and blindness due to retinal disease. Through the AGTC-Bionic Sight collaboration, the companies seek to develop a new optogenetic therapy that leverages AGTC’s deep experience in gene therapy and ophthalmology and Bionic Sight’s innovative neuro-prosthetic device and algorithm for retinal coding. The collaboration agreement grants to us, subject to achievement by Bionic Sight of certain development milestones, an option to exclusively negotiate for a limited period of time to acquire: (i) a majority equity interest in Bionic Sight; (ii) the Bionic Sight assets to which the collaboration agreement relates; or (iii) an exclusive license with respect to the product to which the collaboration agreement relates.

In March 2021, Bionic Sight, which has responsibility for conducting the clinical trial, reported promising results in its first two cohorts of patients in the Phase 1/2 retinitis pigmentosa optogenetics study. Bionic Sight reported that these patients, all of whom have complete or near-complete blindness, can now see light and motion, and, in two cases, can detect the direction of motion. Bionic Sight also announced that the product candidate was well-tolerated and that it is continuing to enroll patients at higher doses.

Otonomy

During October 2019, we entered into a strategic collaboration agreement with Otonomy

to co-develop and co-commercialize an

AAV-based

gene therapy product candidate designed to restore hearing in patients with sensorineural hearing loss caused by a mutation in the gap junction protein beta 2 gene (“GJB2”) – the most common cause of congenital hearing loss. Mutations in GJB2 account for approximately 30% of all genetic hearing loss cases. Patients with this mutation

can have severe-to-profound deafness in

both ears that is identified in screening tests routinely performed in newborns. Under the collaboration agreement, the parties began equally sharing the program costs and any proceeds from potential licensing transactions in January 2020 and can include additional genetic hearing loss targets in the future. Effective January 1, 2022, we amended the Otonomy collaboration agreement to increase Otonomy’s responsibility for the overall development and commercialization of the program, which resulted in (i) a reduction in our share of future product development costs and (ii) our potential receipt of future payments, and royalties on any product sales in lieu of equal sharing of any potential profits or proceeds related to the program.

We and Otonomy announced promising preclinical data at the American Society of Gene and Cell Therapy meeting in May 2021, which showed that the product candidate was associated with rescue of hearing loss and cochlear morphology in two independent mouse models. Collectively, we are conducting investigational new drug (“IND”)-enabling activities based

on pre-IND meeting

feedback from the FDA, with an IND submission anticipated in the first half of calendar year 2023.

Additional information regarding the Bionic Sight and Otonomy collaborative agreements can be found in Note 6 to the Unaudited Condensed Financial Statements included in this Quarterly Report

on Form 10-Q.

Preclinical Pipeline

We also have three wholly-owned product candidates in preclinical testing, including

AGTC-701

for the treatment of dAMD,

AGTC-601

for the treatment of FTD and

AGTC-801

for the treatment of ALS.

Critical Accounting Policies

~~Our management’s discussion~~ and ~~analysis~~Estimates

Management’s Discussion and Analysis of ~~our financial condition~~Financial Condition and ~~results~~Results of ~~operations are~~ Operations included in this Quarterly Report on

Form 10-Q is

based on our financial statements, which have been prepared assuming that the Company will continue as a going concern and in accordance with (i) U.S. generally accepted accounting ~~principles.~~principles for interim financial information and (ii) the instructions to

Form 10-Q and

Article 8 of

Regulation S-X. The

preparation of ~~these~~those financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and ~~liabilities in our financial statements.~~liabilities. On an ongoing basis, we evaluate our estimates, judgments and ~~judgments,~~methodologies, including those related to accrued expenses and share-based compensation. We base our estimates on historical experience, current conditions, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from ~~these~~our estimates under different assumptions or conditions.

Moreover, we may need to change the assumptions underlying our estimates due to risks and uncertainties related to

the COVID-19 pandemic

or otherwise and those changes could have a material adverse effect on our statements of operations, financial condition and cash flows.

During the nine months ended March 31, 2022, there were no significant changes to our critical accounting policies and estimates. For a description of our accounting policies that, in our opinion, involve the most significant application of judgment or involve complex ~~estimation~~estimations and which could, if different judgments or estimates were made, materially affect our reported results of operations, financial position and cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in ~~our June 2017~~the

2021 Form ~~10-K,~~ ~~for the year ended June 30, 2017.~~

10-K.

New Accounting Pronouncements

Refer to Note 2 to the ~~condensed financial statements~~Unaudited Condensed Financial Statements included in this ~~quarterly report~~ Quarterly Report on Form

10-Q

for further information onabout recently issued accounting standards.

Financial ~~operations review~~

Operations Review

Revenue

We ~~primarily~~ generate revenue ~~through~~primarily through: (i) collaboration ~~agreements,~~agreements; (ii) sponsored research arrangements with nonprofit organizations for the development and commercialization of product ~~candidates and from~~candidates; (iii) federal research and development grant ~~programs.~~programs; and (iv) licensing arrangements. However, we did not recognize any revenue during the three and nine months ended March 31, 2022 or the same periods in the prior year. In the future, we may generate revenue from ~~a combination of:~~ product sales (if any products are approved), license fees, milestone payments, development services, research and development grants, ~~and~~or from collaboration and royalty payments for the sales of products developed under licenses of our intellectual property.

We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees, research and development programs, manufacturing efforts and reimbursements, collaboration milestone payments, and the sale of our products, to the extent that any are approved and successfully commercialized. We do not expect to generate revenue from product sales for the foreseeable future, if at all. If we or our collaborators fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue and our results of operations, ~~and~~ financial position and cash flows would be materially adversely affected.

~~We expect in fiscal year 2018 that revenues from our Biogen collaboration associated with amortization ofnon-refundable~~ upfront fees will decrease approximately $17 million compared to fiscal year 2017. This decrease is primarily due to reaching the end of the XLRP service period in the first quarter of fiscal year 2018, and to a lesser extent, due to changes in estimates associated with the period of performance under the XLRS and preclinical programs. In contrast, we expect that milestone revenue recognized under the Biogen collaboration will increase in the near term. Upon dosing of the first and fourth patient in the XLRP Phase 1/2 clinical trial, the Company expects to receive milestone payments and recognize revenue of $2.5 million and $10.0 million, respectively. Additionally, we expect development services revenues from our Biogen collaboration will increase by approximately $2.5 million in fiscal year 2018 due to the initiation of a Phase 1/2 clinical trial for XLRP.

Research and development expenses

Research and development expenses consist primarily of costs incurred for the development of our product candidates ~~which~~and include:

employee-related expenses, including salaries, benefits, travel and share-based compensation expense;

expenses incurred under agreements with academic research centers, contract research organizations ~~or CROs,~~ and investigative sites that conduct our clinical trials;

license and sublicense fees and collaboration expenses;

~~the cost~~

costs of acquiring, developing and manufacturing clinical trial materials; and

facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.

Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of the progress totoward completion of specific tasks, using information and data provided to us by our vendors and our clinical sites.

We cannot determine with certainty the duration and completion costs of the current or future clinical trials of our product candidates or if, when, or to what extent we will generate ~~revenues~~revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:

the scope, rate of progress and expense of our ongoing clinical trials, as well as any additional clinical trials that we are required to, or decide to, initiate and other research and development activities;

the timing and level of activity as determined by us or jointly with our partners;

the level of funding, if any, received from our partners;

whether or not we elect to cost share with our ~~partners;~~collaborators;

~~the countries in which trials are conducted;~~

future clinical trial results;

uncertainties in clinical trial enrollment rates or

drop-out

or discontinuation rates of patients;

~~potential additional safety monitoring or other studies requested by regulatory agencies or elected as best practice by us;~~

increased cost and delay associated with manufacturing or testing issues, including ongoing quality assurance, qualifying new vendors and developing

in-house ~~capabilities;~~

capabilities through, among other things, our lease of a new cGMP

build-to-suit

manufacturing and quality control facility;

the countries in which trials are conducted;

potential additional safety monitoring or other studies requested by regulatory agencies or elected as best practice by us;

significant and changing government regulation; ~~and~~

the timing and receipt of any regulatory ~~approvals.~~approvals; and

~~A change~~

broader market forces, such as inflation and wage/salary growth.

Changes in ~~the outcome of~~ any of these variables over time with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate or if we experience significant delays in enrollment in or execution of any of our clinical trials, which could be adversely impacted

by the COVID-19 pandemic, we

could be required to expend significant additional financial resources and time on the completion of clinical ~~development.~~

trial activities and development of our product candidates.

From our inception and through ~~December~~March 31, ~~2017,~~2022, we have incurred approximately ~~$153.0~~$318.6 million in research and development expenses. We expect our research and development expenses to increase for the foreseeable future as we continue the development of our product candidates, ~~recognize sublincensing fees on Biogen milestones and~~ explore potential applications of our gene therapy platform in other ~~indications.~~

indications and execute our plan to open and operate a leased cGMP manufacturing and quality control facility.

General and administrative and other expenses

General and administrative and other expenses primarily consist ~~primarily~~ of salaries and related costs for personnel, including share-based compensation and travel expenses for our employees in executive, operational, legal, business development, finance and human resource functions. Other general and administrative expenses include costs to support employee training and development, board of directors’ costs, depreciation, insurance, ~~expenses,~~ facility-related costs not otherwise included in research and development ~~expense,~~expenses, professional fees for legal services, ~~including~~ patent-related expenses, and accounting, investor relations, corporate communications and information technology services. We anticipate that our general and administrative and other expenses will continue to increase in the future as we hire additional employees to support our ~~continued~~ research and development efforts, collaboration arrangements, and the potential commercialization of our product ~~candidates.~~candidates, if approved. Inflation and wage/salary growth could also contribute to higher future costs. Additionally, if and when we believe athat regulatory approval of ~~the~~our first product candidate appears likely, we anticipate an increase in payroll and related expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of any such product candidate. Our general and administrative expenses are also expected to increase as we execute our ~~product candidates.~~

~~Other~~plan to open and operate a leased cGMP manufacturing and quality control facility.

Investment income, ~~(expense),~~ net

~~Other~~

Investment income, ~~and expense~~net consists ~~primarily~~ of interest earned on cash and cash

equivalents and held-to-maturity investments in

debt securities. During the three and nine months ended March 31, 2022, investment income, net declined by $4,000 and $85,000, respectively, when compared to the same periods in the prior year, primarily due to a smaller investment portfolio in the current periods.

Interest expense

Interest expense during the three and nine months ended March 31, 2022 increased by $0.3 million and $1.0 million, respectively, when compared to the same periods in the prior year. These increases were primarily due to higher average outstanding balances under our~~held-to-maturity~~ ~~investments.~~

collateralized term loan agreement during each of the three and nine months ended March 31, 2022. Additional information regarding our long-term loan agreement can be found in Note 5 to the Unaudited Condensed Financial Statements included in this Quarterly Report

on Form 10-Q.

On May 4, 2022, the Federal Reserve Board announced an increase of 0.50% in the federal funds rate and indicated that further rate increases will be announced in the short-term to combat rising inflation in the United States. When the prime rate reported in

The Wall Street Journal

increases, as was the case with the most recent federal funds rate increase and is expected to continue in response to projected hikes in the federal funds rate by the Federal Reserve Board, the Company’s cost of borrowing and related interest expense on its variable-rate debt also increases.

Provision for income taxes

The provision for income taxes was $21,000 and $62,000 during the three and nine months ended March 31, 2021, which was entirely attributable to estimated interest and penalties on uncertain tax positions. There was no provision for income taxes during the three and nine months ended March 31, 2022 because, among other things, the Company had no uncertain tax positions during those reporting periods.

Results of Operations

Comparison of the three months ended ~~December~~March 31, ~~2017 to the three months ended December 31, 2016~~

~~Revenue~~

   For the Three
Months Ended
December 31,    Increase
(Decrease)    % Increase
(Decrease)
   2017    2016
   (dollars in thousands)
Collaboration revenue

Amortization of up front fees
   $ 3,735    $ 10,803    $ (7,068 )    (65 )%
Development services
   1,096    87    1,009    1160 %








Total collaboration revenue
   4,831    10,890    (6,059 )    (56 )%
Grant revenue
   21    43    (22 )    (51 )%








Total revenue
   $ 4,852    $ 10,933    $ (6,081 )    (56 )%

~~Total collaboration revenue for the three months ended December 31, 2017 was $4.8 million compared to $10.9 million generated during the same period in 2016.Non-refundable~~ upfront fees received under our collaboration with Biogen are amortized to collaboration revenue on a straight-line basis over the estimated service period. Development services revenue primarily consists of reimbursement of Post-Funding Development Activities under the Biogen Collaboration. Amortization revenue decreased $7.1 million for the three months ended December 31, 2017 compared to the same period in 2016 primarily due to reaching the end of the XLRP service period in the first quarter of fiscal year 2018,2022 and to a much lesser extent, due to changes in estimates associated with the period of performance under the XLRS and preclinical programs. Development services revenue increased $1.0 million for the three months ended December 31, 2017 compared to the same period in 2016 primarily due to activities associated with preparing to conduct a Phase 1/2 clinical trial for XLRP. Grant revenue decreased $22,000 during the three months ended December 31, 2017 compared to the same period in 2016, largely attributable to reduced research and development activities on grant-funded projects.

2021

Research and development ~~expense~~

expenses

The ~~following~~ table below summarizes our research and development expenses by product candidate or program for the ~~three months ended December 31, 2017 and 2016:~~

   For the Three
Months Ended
December 31,    Increase
(Decrease)    % Increase
(Decrease)
   2017    2016
   (dollars in thousands)
External research and development expenses

ACHM
   $ 675    $ 477    $ 198    42 %
XLRS
   520    552    (32 )    (6 )%
XLRP
   547    495    52    11 %
Research and discovery programs
   1,969    782    1,187    152 %








Total external research and development expenses
   3,711    2,306    1,405    61 %








Internal research and development expenses

Employee-related costs
   2,092    1,916    176    9 %
Share-based compensation
   647    647    —      —
Other
   1,276    1,172    104    9 %








Total internal research and development expenses
   4,015    3,735    280    7 %








Total research and development expense
   $ 7,726    $ 6,041    $ 1,685    28 %

periods indicated.


	Three Months Ended March 31,				Increase			% Increase
In thousands	2022		2021		(Decrease)			(Decrease)
External research and development expenses:
XLRP	$	984	$	3,201	$	(2,217	)		(69	)%
ACHM		748		1,147		(399	)		(35	)%
Research and discovery programs and X-linked retinoschisis		189		1,358		(1,169	)		(86	)%

Total external research and development expenses		1,921		5,706		(3,785	)		(66	)%

Internal research and development expenses:
Employee-related costs		4,377		3,051		1,326			43	%
Share-based compensation		412		280		132			47	%
Other		2,452		1,923		529			28	%

Total internal research and development expenses		7,241		5,254		1,987			38	%

Total research and development expenses	$	9,162	$	10,960	$	(1,798	)		(16	)%

External research and development ~~costs~~expenses consist of collaboration, licensing, manufacturing, testing and other miscellaneous ~~expenses~~costs that are directly attributable to our most advanced product candidates and discovery programs. We do not allocate ~~personnel-related~~employee-related costs, including ~~stock-based~~share-based compensation, costs associated with broad technology platform improvements or other indirect costs, to specific programs, as they are deployed across multiple projects under development and, as such, are separately classified as internal research and development expenses in the table above.

As part of the process of preparing our financial statements, estimates of accrued expenses are necessary. The estimation process involves reviewing quotations and contracts, identifying services that have been performed on our behalf, and determining the level of services performed and associated costs incurred for services for which we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice monthly in arrears for services performed or when contractual milestones are

met. We estimate our accrued expenses at the end of each reporting period based on the facts and circumstances known at that time. As a result, estimates recorded in our financial statements and disclosed in the accompanying notes may change in the future and such changes in estimates, if any, will be recorded in our operating results in the period they are identified by us. The significant estimates in our accrued research and development expenses primarily relate to expenses incurred with respect to academic research centers, contract research organizations and other vendors in connection with research and development activities for which we have not yet been invoiced.

Research and development expenses for the three months ended ~~December~~March 31, ~~2017~~2022 and 2021 were ~~$7.7~~$9.2 million ~~compared~~and $11.0 million, respectively, a decrease of $1.8 million, or 16%. The year-over-year decline was due to ~~$6.0 million~~various factors, including: (i) planned temporary reductions in manufacturing activities relating to our XLRP and preclinical product candidates; (ii) lower external spending related to our Skyline trial for which we are not activating new sites and/or enrolling new patients; (iii) a decrease in ACHM expenses due to reduced site activity as our two clinical studies have progressed to a point where they are no longer activating new sites or enrolling new patients; and (iv) lower costs in connection with the wind-down

of our X-linked retinoschisis, or XLRS,

program. Additionally, research and development expenses for the three months ended ~~December~~March 31, ~~2016,~~2022 were favorably impacted by changes in estimates that reduced certain vendor accruals during such reporting period. These reductions in research and development expenses were partially offset by: (i) higher employee-related costs that were primarily attributable to new employees who were hired in connection with our strategic operating plans; (ii) an increase ~~of $1.7 million, or 28%. This increase was primarily attributable to:~~

~~$1.2 million of increased external spending on general~~in internal research and ~~discovery programs~~development costs for certain assay development that we are now conducting

in-house;

and (iii) higher share-based compensation costs that were primarily due to ~~increased spending on the optogenetics, otology, and adrenoleukodystrophy (ALD) preclinical programs and increased spending on general research activities in ophthalmology~~restricted stock units granted to ~~support ongoing clinical programs;~~

~~$0.2 million of increased external spending on the ACHM programs primarily due~~certain employees from May 2021 to ~~activities associated with ongoing Phase 1/2 clinical trials;~~July 2021 (the “2021 RSUs”).

~~$0.2 million of increased employee-related expenses associated with the hiring of additional employees to support clinical trial execution and research and development activities.~~

General and administrative ~~expense~~

   For the Three
Months Ended
December 31,    Increase
(Decrease)    % Increase
(Decrease)
   2017    2016
   (dollars in thousands)
Employee-related costs
   $ 1,388    $ 954    $ 434    45 %
Share-based compensation
   685    846    (161 )    (19 )%
Other
   1,295    940    355    38 %








Total general and administrative expense
   $ 3,368    $ 2,740    $ 628    23 %

and other expenses

The table below summarizes our general and administrative and other expenses for the periods indicated.


	Three Months Ended March 31,				Increase			% Increase
In thousands	2022		2021		(Decrease)			(Decrease)
Employee-related costs	$	1,961	$	1,241	$	720			58	%
Share-based compensation		431		315		116			37	%
Legal and professional fees		102		329		(227	)		(69	)%
Other		1,927		1,643		284			17	%

Total general and administrative and other expenses	$	4,421	$	3,528	$	893			25	%

General and administrative ~~expense~~and other expenses for the three months ended ~~December~~March 31, ~~2017 increased by $0.6~~2022 and 2021 were $4.4 million ~~to $3.3~~and $3.5 million, ~~compared to the same period in 2016. The~~respectively, an increase of $0.9 million, or 25%. Such increase was primarily ~~driven by higher employee-related~~due to: (i) compensation for new employees; (ii) recruiting costs ~~and other expenses which resulted from hiring additional employees to support our continued expansion. The increases were partially offset by lower~~for new employees; (iii) incremental share-based compensation ~~expenses~~costs for the 2021 RSUs; and ~~legal~~(iv) higher operating and ~~professional~~business development costs pertaining to our recurring operations as we execute our strategic plans. Lower legal fees during the three months ended ~~December~~March 31, ~~2017 compared~~2022 were due to reduced use of external legal counsel.

Comparison of the ~~three~~nine months ended ~~December~~March 31, ~~2016.~~

~~Comparison of six months ended December 31, 2017 to the six months ended December 31, 2016~~

~~Revenue~~

   For the Six
Months Ended
December 31,    Increase
(Decrease)    % Increase
(Decrease)
   2017    2016
   (dollars in thousands)
Collaboration revenue

Amortization of up front fees
   $ 13,489    $ 22,528    $ (9,038 )    $ (40 )%
Development services
   1,650    134    1,516    1131 %








Total collaboration revenue
   15,139    22,662    (7,522 )    (33 )%
Grant revenue
   28    77    (49 )    (64 )%








Total revenue
   $ 15,167    $ 22,739    $ (7,571 )    (33 )%

~~Total collaboration revenue for the six months ended December 31, 2017 was $15.1 million compared to $22.7 million generated during the same period in 2016.Non-refundable~~ ~~upfront fees received under~~2022 and 2021

Research and development expenses

The table below summarizes our collaboration with Biogen are amortized to collaboration revenue on a straight-line basis over the estimated service period. Development services revenue primarily consists of reimbursement of Post-Funding Development Activities under the Biogen Collaboration. Amortization revenue decreased $9.0 million for the six months ended December 31, 2017 compared to the same period in 2016 primarily due to due to reaching the end of the XLRP service period in the first quarter of fiscal year 2018, and to a much lesser extent, due to changes in estimates associated with the period of performance under the XLRS and preclinical programs. Development services revenue increased $1.5 million for the six months ended December 31, 2017 compared to the same period in 2016 primarily due to activities associated with preparing to conduct a Phase 1/2 clinical trial for XLRP. Grant revenue decreased $49,000 during the six months ended December 31, 2017 compared to the same period in 2016, largely attributable to reduced research and development ~~activities on grant-funded projects.~~

~~Research and development expense~~

   For the Six
Months Ended
December 31,    Increase
(Decrease)    % Increase
(Decrease)
   2017    2016
   (dollars in thousands)
External research and development expenses

ACHM
   $ 1,754    $ 1,381    $ 373    27 %
XLRS
   1,338    970    368    38 %
XLRP
   1,247    753    494    66 %
Research and discovery programs
   3,732    1,522    2,210    145 %








Total external research and development expenses
   8,071    4,626    3,445    74 %








Internal research and development expenses

Employee-related costs
   4,184    3,519    665    19 %
Share-based compensation
   1,189    1,281    (92 )    (7 )%
Other
   2,558    2,186    372    17 %








Total internal research and development expenses
   7,931    6,986    945    14 %








Total research and development expense
   $ 16,002    $ 11,612    $ 4,390    38 %

expenses by product candidate or program for the periods indicated.


	Nine Months Ended March 31,				Increase			% Increase
In thousands	2022		2021		(Decrease)			(Decrease)
External research and development expenses:
XLRP	$	10,085	$	11,930	$	(1,845	)		(15	)%
ACHM		2,639		3,997		(1,358	)		(34	)%
Research and discovery programs and X-linked retinoschisis		3,402		2,527		875			35	%

Total external research and development expenses		16,126		18,454		(2,328	)		(13	)%

Internal research and development expenses:
Employee-related costs		12,307		9,466		2,841			30	%
Share-based compensation		1,302		866		436			50	%
Other		6,206		5,611		595			11	%

Total internal research and development expenses		19,815		15,943		3,872			24	%

Total research and development expenses	$	35,941	$	34,397	$	1,544			4	%

Research and development expenses for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and 2021 were ~~$16.0~~$35.9 million ~~compared to $11.6~~and $34.4 million, ~~for the six months ended December 31, 2016,~~respectively, an increase of ~~$4.4~~$1.5 million, or ~~38%~~4%. ~~This~~The year-over-year increase was due to various factors, including: (i) higher employee-related costs that were primarily attributable ~~to:~~

~~$2.2 million of~~to new employees who were hired in connection with our strategic operating plans; (ii) increased external spending ~~on general~~for our research and discovery programs, which was primarily for planned material production costs in connection with our preclinical programs; (iii) higher share-based compensation costs that were primarily due to ~~increased spending on~~ the ~~optogenetics, otology,~~2021 RSUs; and ~~adrenoleukodystrophy (ALD) preclinical programs and increased spending on general research activities~~(iv) an increase in ~~ophthalmology to support ongoing clinical programs;~~

~~$0.7 million of increased employee-related expenses associated with the hiring of additional employees to support clinical trial execution and~~internal research and development ~~activities;~~costs for certain assay development that we are now conducting

in-house.

~~$0.5 million of increased external spending on the XLRP program primarily associated with filing an Investigational New Drug application~~These increases in research and development expenses were partially offset by: (i) a year-over-year reduction in manufacturing activities for Vista clinical trial materials; (ii) a decrease in ACHM expenses due to reduced site activity as our two clinical studies have progressed to a point where they are no activating new sites or enrolling new patients; and (iii) lower costs in connection with the ~~U.S. Food~~wind-down of our XLRS program. Additionally, research and ~~Drug Administration~~development expenses for the nine months ended March 31, 2022 were favorably impacted by changes in ~~August 2017 and activities associated with preparing to conduct a Phase 1/2 clinical trial;~~estimates that reduced certain vendor accruals during such reporting period.

~~$0.4 million of increased external spending on the ACHM programs primarily due to activities associated with the ongoing Phase 1/2 clinical trials;~~

~~$0.4 million of increased external spending on the XLRS program primarily related to increased patient enrollment in the ongoing Phase 1/2 clinical trial.~~

General and administrative ~~expense~~

   For the Six
Months Ended
December 31,    Increase
(Decrease)    % Increase
(Decrease)
   2017    2016
   (dollars in thousands)
Employee-related costs
   $ 2,770    $ 1,976    $ 794    40 %
Share-based compensation
   1,612    1,631    (20 )    (1 )%
Legal and professional fees
   337    485    (149 )    (31 )%
Other
   2,355    1,494    861    57 %








Total general and administrative expense
   $ 7,074    $ 5,586    $ 1,488    27 %

and other expenses

The table below summarizes our general and administrative and other expenses for the periods indicated.


	Nine Months Ended March 31,				Increase			% Increase
In thousands	2022		2021		(Decrease)			(Decrease)
Employee-related costs	$	4,549	$	3,675	$	874			24	%
Share-based compensation		1,297		999		298			30	%
Legal and professional fees		688		1,238		(550	)		(44	)%
Other		5,976		4,356		1,620			37	%

Total general and administrative and other expenses	$	12,510	$	10,268	$	2,242			22	%

General and administrative ~~expense~~and other expenses for the ~~six~~nine months ended ~~December~~March 31, ~~2017 increased by $1.5~~2022 and 2021 were $12.5 million ~~to $7.0~~and $10.3 million, ~~compared to the same period in 2016. The~~respectively, an increase of $2.2 million, or 22%. Such increase was primarily ~~driven by increased corporate infrastructure~~due to: (i) compensation for new employees; (ii) recruiting costs for new employees; (iii) incremental share-based compensation costs for the 2021 RSUs; and ~~employee-related~~(iv) higher operating and business development costs ~~which resulted from hiring additional employees~~pertaining to ~~support~~ our ~~continued expansion, partially offset by lower~~recurring operations as we execute our strategic plans. Lower legal ~~and professional fees.~~

fees during the nine months ended March 31, 2022 were due to reduced use of external legal counsel.

Liquidity and ~~capital resources~~

Capital Resources

We have incurred cumulative losses and negative cash flows from operations since our inception ~~in 1999,~~ and, as of ~~December~~March 31, ~~2017,~~2022, we had an accumulated deficit of ~~$96.2~~$289.8 million. It will be several years, if ever, before we have a product candidate ready for commercialization. We expect that our research and development expenses and general and administrative and other expenses will continue to increase and, as a result, we anticipate that we will require additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements.

Most recently, we received (i) net proceeds of ~~December~~$9.4 million and $69.3 million during the nine months ended March 31, ~~2017,~~2022 and 2021, respectively, from underwritten public offerings and selling our common stock through an “at-the-market offering” program, which are described in Note 7 to the Unaudited Condensed Financial Statements included in this Quarterly Report on Form 10-Q and (ii) $9.9 million of loan proceeds, net of debt discounts, in May 2021. Moreover, through a tenant improvement allowance and tiered rental rates, we ~~had~~have structured the third-party leasing costs for our build-to-suit manufacturing and quality control facility in Alachua, Florida in a way that will not significantly impact our cash runway until the fiscal year ending June 30, 2024. Notwithstanding the foregoing, we plan to use our available cash and cash equivalents to fund approximately $2.9 million of tenant fit out work at such facility, which represents our required contribution pursuant to a recent lease amendment whereby the funding must be completed within 30 days of May 3, 2022. Additional information regarding our long-term loan agreement and ~~investments totaling $119.7 million.~~ new manufacturing and quality control facility can be found in Notes 5 and 8, respectively, to the Unaudited Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

We ~~believe that~~are closely monitoring ongoing developments in connection with

the COVID-19 pandemic,

which may negatively impact our ~~existing~~projected cash position and access to capital. We will continue to assess our cash ~~equivalents,~~position and, ~~investments at December 31, 2017 will be sufficient~~if circumstances warrant, make appropriate adjustments to ~~enable us to advance planned preclinical studies and clinical trials for~~ our ~~lead product candidates and currently planned discovery programs for at least the next two years.~~

operating plan.

Cash in excess of immediate requirements is invested in accordance with our investment policy, which primarily seeks to maintain adequate liquidity and preserve capital by generally limiting investments to certificates of deposit and investment-grade debt securities that mature within 24twelve months. As of ~~December~~March 31, ~~2017,~~2022, our cash and cash equivalents were held in bank accounts and money market ~~funds, while our investments consisted~~funds.

Cash flows

The ~~following~~ table below sets forth the primary sources and uses of cash for ~~each of~~ the periods ~~set forth below:~~

   For the Six
Months Ended
December 31,    Increase
(Decrease)    % Increase
(Decrease)
   2017    2016
   (dollars in thousands)
Net cash provided by (used in):

Operating activities
   $ (18,500 )    $ (12,788 )    $ (5,712 )    45 %
Investing activities
   58,154    26,395    31,759    120 %
Financing activities
   (15 )    24    (39 )    (164 )%








Net increase in cash and cash equivalents:
   $ 39,639    $ 13,631    $ 26,008    191 %

indicated.

Nine Months

Ended March 31,

Increase

% Increase

In thousands

2022

2021

(Decrease)

(Decrease)

Cash provided by (used in):

Operating activities
   $ (47,490 )    $ (37,738 )    $ (9,752 )    (26)%
Investing activities
   846    19,158    (18,312 )    (96)%
Financing activities
   9,441    69,648    (60,207 )    (86)%







Net increase (decrease) in cash and cash equivalents
   $ (37,203 )    $ 51,068    $ (88,271 )    >(100)%

Operating activities.

For both the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016, net~~2021, cash used in operating activities was primarily the result of ~~cash payments made for~~research and development expenses and general and administrative and other expenses incurred in conducting normal business ~~operations~~operations. Specifically, the cash used in operating activities of $47.5 million during the nine months ended March 31, 2022 was due to a net loss of $50.6 million and ~~the impact of~~unfavorable changes in our ~~working capital accounts.~~

operating assets and liabilities of $1.7 million, partially offset

by non-cash items

in our statement of operations of $4.8 million. The cash used in operating activities of $37.7 million during the nine months ended March 31, 2021 was due to a net loss of $45.7 million, partially
offset by non-cash items in
our statement of operations of $3.6 million and favorable changes in our operating assets and liabilities of $4.4 million.

Investing activities.~~Net cash~~

Cash provided by investing activities ~~for~~of $0.8 million during the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 consisted ~~primarily~~ of cash proceeds of ~~$58.3~~$2.0 million from ~~the maturity~~maturities of ~~investments.~~

~~Financing activities.~~~~Net cash used in financing~~investments, partially offset by purchases of property and equipment of $0.9 million and intellectual property costs of $0.3 million. Cash provided by investing activities of $19.2 million during the ~~six~~nine months ended ~~December~~March 31, ~~2017 was primarily associated with payments toward capital lease obligations, with a minor~~2021 consisted of cash proceeds of $41.5 million from maturities of investments, net of investment purchases of $21.0 million, partially offset ~~resulting from the exercise~~by purchases of ~~common stock options. Net cash~~property and equipment of $1.0 million and intellectual property costs of $0.4 million.

Financing activities.

Cash provided by financing activities of $9.4 million during the ~~six~~nine months ended ~~December~~March 31, ~~2016 was associated with the exercise~~2022 consisted of proceeds of $9.4 million from issuances of our common stock, net of issuance costs, and proceeds from exercises of common stock ~~options.~~

options of $0.1 million, partially offset by (i) payments for taxes related to equity awards and (ii) principal payments on a finance lease. Cash provided by financing activities of $69.6 million during the nine months ended March 31, 2021 included (i) proceeds of $69.3 million from the issuance of common stock and accompanying warrants, net of issuance costs, and (ii) proceeds from exercises of common stock options of $0.7 million. These items were partially offset by (i) payments for deferred financing fees and taxes related to equity awards and (ii) principal payments on a finance lease.

Operating capital requirements

~~To date, we~~

We have not generated any revenue from product ~~sales. We~~sales and we do not know when, or if, we will generate ~~any revenue from product sales.~~such revenue. We do not expect to ~~generate~~have significant revenue from product sales unless and until we obtain regulatory approval of and commercialize one of our current or future product candidates. We anticipate that we will continue to generate losses for the foreseeable future as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. We are subject to all of the risks incident in the development of new gene therapy products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

We believe that our ~~existing~~available cash and cash equivalents, ~~and investments at December~~which totaled $67.8 million on March 31, ~~2017, will be~~2022, will be sufficient to allow us to generate data from our ongoing and planned clinical programs ~~to move ourpre-clinical~~ ~~optogenetic program in collaboration with Bionic Sight into the clinic~~ and to fund ~~our~~ currently planned research and discovery programs ~~for at least the next two years. In order to~~into calendar year 2023. However, we will require substantial additional funding to: (i) finish our Vista trial; (ii) move our ACHMB3 product candidate forward; (iii) complete the process ~~of obtaining~~necessary to seek regulatory approval for our lead product ~~candidates and to~~candidates; (iv) build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our lead product candidates, if ~~approved,~~approved; and (v) execute our plan to open and operate a leased cGMP manufacturing and quality control facility.

To provide the maximum degree of financial flexibility, we ~~will require substantial additional funding.~~

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~Refer~~may consider various potential opportunities to ~~Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in~~fund future operations and/or modulate liquidity needs including: (i) raising new capital through equity or debt financings or other sources, including our ~~Annual Report onForm 10-K~~ ~~for~~

“at-the-market

offering” program; (ii) amending our long-term debt agreement;

(iii) out-licensing

the ~~year ended June 30, 2017, which is incorporated by reference herein, for a description~~rights to certain of our ~~market risks.~~

product candidates; (iv) entering into one or more collaborations to offset the costs of our leased manufacturing and quality control facility; and (v) reducing our expenditures on research and development activities and/or restructuring our operations. However, we may be unable to successfully execute any of the plans described above, or raise additional funds or enter into such other arrangements when

Table of Contents~~ITEM 4. CONTROLS AND PROCEDURES~~

~~An evaluation was performed~~

needed on favorable terms, or at all. Additional information regarding our liquidity and related matters can be found in Note 1 to the Unaudited Condensed Financial Statements included in this Quarterly Report

on Form 10-Q

under the ~~supervision~~heading ”Liquidity and Financial Condition.”

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined by

Rule 12b-2 of

the Securities Exchange Act of 1934, as amended, and are not required to provide this information.

ITEM 4.

CONTROLS AND PROCEDURES

a)	Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our ~~management, including the Chief Executive Officer~~principal executive officer and ~~the Chief Financial Officer, of~~principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in

Rules ~~13a-15(e)~~13a-15e

and~~15d-15(c)~~

15d-15e

under the Securities ~~and~~ Exchange Act of 1934, as ~~amended (the “Exchange Act”)~~amended) as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC‘s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.quarterly report. Based on ~~and as of the time of such~~this evaluation, our ~~management, including the Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer,~~principal financial officer concluded that ~~our~~these disclosure controls and procedures were ~~not~~ effective as ~~a result~~ of ~~the material weakness identified by management as initially disclosed under “Item 9A—Controls and Procedures” in our Annual Report onForm 10-K~~ ~~for the year ended June 30, 2017.~~

~~As discussed in our Annual Report onForm 10-K~~ ~~for the year ended June 30, 2017, our management has determined that we have a material weakness~~March 31, 2022.

b)	Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting ~~which relates to~~ (as defined in

Rules 13a-15f and 15d-15f under

the ~~design and operation~~Securities Exchange Act of ~~our closing and financial reporting processes. Refer to Part II, Item 9A, “Controls and Procedures,” in our Annual Report onForm 10-K~~ ~~for the year ended June 30, 2017 for a discussion of the actions that we have previously undertaken to remediate this material weakness. During the period covered by this Quarterly Report onForm 10-Q,~~ we continued to: (a) provide functional and system training to employees and to prepare detailed documentation to clearly define key tasks and actions; (b) document and formalize our accounting policies and internal control processes and to help strengthen supervisory reviews by our management; (c) hire additional employees to provide further support to our finance and accounting team; and (d) design and implement monthly manual controls to manage our financial reporting close processes and to help ensure an adequate level of segregation of duties within our finance and accounting function. Although we had not fully remediated this material weakness1934, as ~~of December 31, 2017, we continue to actively engage in the implementation of these and other remediation efforts to address this material weakness.~~

As a result of these efforts, as of the date of this filing management believes we have made progress toward remediating the underlying causes of the material weakness. Although we believe our remediation efforts will be effective in remediating the material weakness, there can be no assurance as to when the remediation plan will be fully implemented, or that the plan, as currently designed, will adequately remediate the material weakness. The material weakness will not be considered fully addressed until the enhanced policies and procedures over documentation evidencing certain controls involving our Closing and Financial Report Process have been in operation for a sufficient period of time for our management to conclude that the material weakness has been fully remediated. We will continue to work on implementing and testing the enhanced documentation policies and procedures in order to make this final determination.

~~Changes in Internal Control over Financial Reporting~~

~~As described above,~~amended) during the ~~period covered by this Quarterly Report onForm 10-Q~~ ~~we took and are continuing to take remedial actions intended to correct material weaknesses in our system of internal controls over financial reporting, which remedial actions~~quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal ~~controls over financial reporting. Except for those remedial actions, there was no change in our internal control over financial reporting identified in connection with the evaluation required byRule 13a-15(d) and15d-15(d) of~~ ~~the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal~~ control over financial reporting.

PART II. OTHER INFORMATION

~~ITEM 1. LEGAL PROCEEDINGS~~

ITEM 1.

LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings. However, ~~because of~~due to the nature of our business, we may be subject ~~at any particular time~~ to lawsuits or other claims arising at any particular time in the ordinary course of ~~our~~ business, and we expect that this situation will continue to be the case in the future.

~~ITEM 1A. RISK FACTORS~~

ITEM 1A.

RISK FACTORS

Refer to Part I, Item 1A, “Risk Factors,” inof our Annual Report on

Form 10-K for

the year ended June 30, ~~2017~~ 2021 (the “2021 Form

10-K”)

for ~~a listing of~~information regarding our risk factors. ~~There has~~Except as noted below, there have been no material ~~change~~changes in ~~such~~the risk factors ~~since June~~included in the 2021 Form

10-K.

We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern.

We may be forced to amend, delay, limit, reduce or terminate the scope of our clinical and preclinical programs and/or limit or cease our operations if we are unable to obtain additional funding. As of March 31, 2022, we had cash and cash equivalents totaling $67.8 million. We believe that there is presently insufficient funding available to allow us to generate data from our ongoing and planned clinical programs and fund currently planned research and discovery programs for a period exceeding 12 months from the date of filing this Quarterly Report on Form

10-Q.

During such

12-month

period, our future liquidity needs will be primarily based on the: (i) success and progression of our product candidates; (ii) repayment obligations under our long-term debt agreement; and (iii) costs to operate our leased

build-to-suit

manufacturing and quality control facility. We will also require substantial additional funding to: (i) finish our Vista trial; (ii) move our ACHMB3 product candidate forward; (iii) complete the process necessary to seek regulatory approval for our lead product candidates; and (iv) build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our lead product candidates, if approved. To provide the maximum degree of financial flexibility, we may consider various potential opportunities to fund future operations and/or modulate liquidity needs, including: (i) raising new capital through equity or debt financings or other sources, including our

“at-the-market

offering” program; (ii) amending our long-term debt agreement;

(iii) out-licensing

the rights to certain of our product candidates; (iv) entering into one or more collaborations to offset the costs of our leased manufacturing and quality control facility; and (v) reducing our expenditures on research and development activities and/or restructuring our operations. However, we may be unable to successfully execute any of the plans described above, or raise additional funds or enter into such other arrangements when needed on favorable terms, or at all. On May 4, 2022, the Federal Reserve Board announced an increase of 0.50% in the federal funds rate and indicated that further rate increases will be announced in the short-term to combat rising inflation in the United States. Such rate increases may have an adverse impact on our ability to raise funds through the offering of our securities or through the issuance of debt due to higher debt capital costs, diminished credit

availability and less favorable equity markets. The failure to obtain sufficient funds on commercially acceptable terms when needed would have a material adverse effect on our business, results of operations and financial condition and would jeopardize our ability to continue our operations. These factors raise substantial doubt about our ability to continue as a going concern.

Additional information regarding our ability to continue as a going concern can be found in Note 1 to the Unaudited Condensed Financial Statements included in this Quarterly Report

on Form 10-Q

under the heading ”Liquidity and Financial Condition.”

Our stock price is currently trading below $1.00 per share and, if it continues to trade below $1.00 per share, our common stock may be subject to delisting from the Nasdaq Global Market.

If the bid price of our common stock were to close below the required minimum $1.00 per share for 30 ~~2017.~~

~~ITEM 6. EXHIBITS~~

consecutive business days, we may receive a deficiency notice from Nasdaq regarding our failure to comply with Nasdaq Marketplace Rule 5450(a)(1). If we receive such a notice, pursuant to Marketplace Rule 5810(c)(3)(A), we will be afforded a compliance period of 180 calendar days to regain compliance with Rule 5450(a)(1). If at any time during the

180-day

compliance period the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, we will regain compliance with Rule 5450(a)(1). In the event that we do not regain compliance with Rule 5450(a)(1) prior to the expiration of the initial

180-day

compliance period, we may be eligible for a

second 180-day compliance

period. To qualify for this additional compliance period, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq’s Global Market, other than the minimum bid price requirement. In addition, we would also be required to notify Nasdaq of our intent to cure the minimum bid price deficiency. However, if it appears to Nasdaq staff that we will not be able to cure the deficiency, we do not meet the other listing standards or we fail to regain compliance with the Nasdaq continued listing standards following the second

180-day

compliance period, Nasdaq could provide notice that our common stock will be subject to delisting. We would be entitled to appeal such a delisting determination to a Nasdaq hearing panel and the delisting may be stayed pending the panel’s determination. To the extent that we are unable to resolve a listing deficiency, there is a risk that our common stock may be delisted from Nasdaq, which would adversely impact the liquidity of our common stock and potentially result in even lower bid prices for our common stock.

ITEM 6.

EXHIBITS


Exhibit Number		Description

3.1		Fifth Amended and Restated Certificate of Incorporation of ~~Applied Genetic Technologies Corporation~~the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report onForm 8-K ~~event date March 26, 2014,~~ filed with the SEC on April 1, 2014)

3.2		Amended and Restated Bylaws of ~~Applied Genetic Technologies Corporation~~the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report onForm 8-K ~~event date March 26, 2014,~~ filed with the SEC on April 1, 2014)

31.1*		~~Rule 13a-14(a)/15d-14(a)~~Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)of ~~Applied Genetic Technologies Corporation~~the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		~~Rule 13a-14(a)/15d-14(a)~~Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)of ~~Applied Genetic Technologies Corporation~~the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		~~Section 1350~~ Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of ~~Applied Genetic Technologies Corporation~~the Sarbanes-Oxley Act of 2002

101101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data ~~Files pursuant to Rule 405 ofRegulation S-T~~ ~~(XBRL)~~File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101

*	Filed herewith.

**	Furnished herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


APPLIED GENETIC TECHNOLOGIES CORPORATION (Registrant)

By:		/s/ ~~William Sullivan~~Jonathan I. Lieber
		~~William Sullivan,~~Jonathan I. Lieber, Chief Financial Officer

		Date: ~~February 9, 2018~~May 16, 2022


		~~Pages~~ Page
	PART I. FINANCIAL INFORMATION		3

ITEM 1.	FINANCIAL STATEMENTS (Unaudited)

	~~Condensed Balance Sheets (Unaudited) as of December 31, 2017 and June 30, 2017~~		3

	Condensed Balance Sheets as of March 31, 2022 and June 30, 2021		3

	Condensed Statements of Operations ~~(Unaudited)~~ for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021		4

	Condensed Statements of ~~Cash Flows (Unaudited)~~Stockholders’ Equity for the ~~six~~three and nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021		5

	~~Notes to~~ Condensed ~~Financial~~ Statements ~~(Unaudited)~~of Cash Flows for the nine months ended March 31, 2022 and 2021		6

~~ITEM 2.~~	Notes to Condensed Financial Statements		7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		2015

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		2826

ITEM 4.	CONTROLS AND PROCEDURES		2826

	PART II. OTHER INFORMATION

~~ITEM 1.~~	~~LEGAL PROCEEDINGS~~		2926

ITEM ~~1A.~~1.	~~RISK FACTORS~~LEGAL PROCEEDINGS		2926

ITEM 6.1A.	~~EXHIBITS~~RISK FACTORS		2926

ITEM 6.	EXHIBITS		27

	~~SIGNATURES~~SIGNATURE		3028


	December 31,			June 30,
In thousands, except per share data	2017			2017
ASSETS
Current assets:
Cash and cash equivalents	$	70,345		$	30,706
Investments		49,312			95,994
Grants receivable		203			174
Prepaid and other current assets		4,012			3,361

Total current assets		123,872			130,235

Investments, net of current portion		—			11,749
Property and equipment, net		3,235			2,661
Investment in Bionic Sight		2,000			2,000
Other assets		2,226			1,278

Total assets	$	131,333		$	147,923

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,036		$	998
Accrued and other liabilities		6,116			6,162
Deferred revenue		11,945			20,996

Total current liabilities		19,097			28,156

Deferred revenue, net of current portion		—			4,438
Other liabilities		653			—

Total liabilities		19,750			32,594

Stockholders’ equity:
Common stock—par value $.001 per share; shares authorized: 150,000 at December 31, 2017 and June 30, 2017; shares issued and outstanding: 18,105 and 18,088 at December 31, 2017 and June 30, 2017, respectively.		18			18
Additionalpaid-in capital		207,778			204,937
Accumulated deficit		(96,213	)		(89,626	)

Total stockholders’ equity		111,583			115,329

Total liabilities and stockholders’ equity	$	131,333		$	147,923


	For the Six Months Ended December 31,
	2017					2016
(In thousands, except per share amounts)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at June 30,		2,714		$	12.96		2,037		$	13.71
Granted		746			4.83		658			11.85
Exercised		(7	)		0.35		(21	)		1.16
Forfeited		(309	)		9.76		(31	)		17.80
Expired		(15	)		15.35		(3	)		22.64

Outstanding at December 31,		3,129		$	11.35		2,640		$	13.28

Exercisable at December 31,		1,694					1,267

Weighted average fair value of options granted during the period	$	3.49				$	8.12


	At December 31, 2017
In thousands	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Investments—Current:
U.S. government and agency obligations	$	44,448	$	—	$	(86	)		44,362
Corporate obligations		2,044		—		(7	)		2,037

Total investments—current	$	46,492	$	—	$	(93	)	$	46,399


	At June 30, 2017
In thousands	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Investments—Current:
U.S. government and agency obligations	$	92,494	$	—	$	(147	)	$	92,347
Corporate obligations		—		—		—			—

	$	92,494	$	—	$	(147	)	$	92,347

Investments—Noncurrent:
U.S. government and agency obligations	$	7,552	$	—	$	(52	)	$	7,500
Corporate obligations		2,086		—		(12	)		2,074

	$	9,638	$	—	$	(64	)	$	9,574


In thousands	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total Fair Value		Total Carrying Value
December 31, 2017
Cash and cash equivalents	$	70,345	$	—	$	—	$	70,345	$	70,345
Certificates of deposit		—		2,820		—		2,820		2,820
Held-to-maturity investments:
Corporate obligations		—		2,037		—		2,037		2,044
U.S. government and agency obligations		37,470		6,892		—		44,362		44,448

Total assets	$	107,815	$	11,749	$	—	$	119,564	$	119,657

June 30, 2017
Cash and cash equivalents	$	30,706	$	—	$	—	$	30,706	$	30,706
Certificates of deposit		—		5,611		—		5,611		5,611
Held-to-maturity investments:
Corporate obligations		—		2,074		—		2,074		2,086
U.S. government and agency obligations		79,476		20,372		—		99,848		100,046

Total assets	$	110,182	$	28,057	$	—	$	138,239	$	138,449


	For the Three Months Ended December 31,				Increase (Decrease)			% Increase (Decrease)
	2017		2016		Increase (Decrease)			% Increase (Decrease)
	(dollars in thousands)
Collaboration revenue
Amortization of up front fees	$	3,735	$	10,803	$	(7,068	)		(65	)%
Development services		1,096		87		1,009			1160	%

Total collaboration revenue		4,831		10,890		(6,059	)		(56	)%
Grant revenue		21		43		(22	)		(51	)%

Total revenue	$	4,852	$	10,933	$	(6,081	)		(56	)%


	For the Three Months Ended December 31,				Increase (Decrease)			% Increase (Decrease)
	2017		2016		Increase (Decrease)			% Increase (Decrease)
	(dollars in thousands)
External research and development expenses
ACHM	$	675	$	477	$	198			42	%
XLRS		520		552		(32	)		(6	)%
XLRP		547		495		52			11	%
Research and discovery programs		1,969		782		1,187			152	%

Total external research and development expenses		3,711		2,306		1,405			61	%

Internal research and development expenses
Employee-related costs		2,092		1,916		176			9	%
Share-based compensation		647		647		—			—
Other		1,276		1,172		104			9	%

Total internal research and development expenses		4,015		3,735		280			7	%

Total research and development expense	$	7,726	$	6,041	$	1,685			28	%