| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2022
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Symbol(s)Offices, Including ZipOffices) (Zip Code)
Securities registered pursuant to Section 12(g) of the Act: None
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☐ | |||||
2022
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ITEM 1A. | 26 | |||||
ITEM 6. | 27 | |||||
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ITEM 1. | FINANCIAL STATEMENTS |
In thousands, except per share data ASSETS Current assets: Cash and cash equivalents Investments Prepaid and other current assets Total current assets Property and equipment, net Intangible assets, net Investment in Bionic Sight, LLC Right-of-use assets – operating leases Right-of-use asset – finance lease Other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued and other liabilities Lease liabilities – operating Lease liability – finance Total current liabilities Lease liabilities – operating, net of current portion Lease liability – finance, net of current portion Long-term debt, net of debt discounts and deferred financing fees Other liabilities Total liabilities Stockholders’ equity: Preferred stock, par value $0.001 per share, 5,000 shares authorized; no shares issued and outstanding Common stock, par value $0.001 per share, 150,000 shares authorized; 42,796 and 25,813 shares issued; 42,755 and 25,793 shares outstanding at March 31, 2021 and June 30, 2020, respectively Additional paid-in capital Treasury stock at cost; 41 and 20 shares at March 31, 2021 and June 30, 2020, respectively Accumulated deficit Total stockholders’ equity Total liabilities and stockholders’ equity March 31, 2021 June 30, 2020 $ 89,531 $ 38,463 21,496 41,995 1,997 2,506 113,024 82,964 4,019 4,311 1,291 1,098 8,021 8,096 3,158 3,422 46 80 107 348 $ 129,666 $ 100,319 $ 1,926 $ 1,355 13,504 10,502 1,072 1,058 51 48 16,553 12,963 3,540 4,070 — 38 9,929 9,677 2,644 2,555 32,666 29,303 — — 42 25 324,302 252,519 (211 ) (88 ) (227,133 ) (181,440 ) 97,000 71,016 $ 129,666 $ 100,319 $ 67,849 $ 105,052 — 2,000 2,678 2,655 70,527 109,707 4,244 4,658 1,381 1,287 7,884 8,000 3,029 3,167 — 34 126 113 $ 87,191 $ 126,966 $ 3,561 $ 1,879 11,946 14,500 Lease liabilities - operating 1,232 1,116 Lease liability - finance — 38 9,070 2,181 25,809 19,714 Lease liabilities - operating, net of current portion 2,900 3,418 11,358 17,727 97 299 40,164 41,158 0 0— 51 43 337,058 325,245 (256 ) (211 ) (289,826 ) (239,269 ) 47,027 85,808 $ 87,191 $ 126,966
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
In thousands, except per share data | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenue: | ||||||||||||||||
Collaboration and milestone revenue | $ | — | $ | — | $ | — | $ | 2,297 | ||||||||
Grant revenue | — | — | — | 156 | ||||||||||||
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Total revenue | — | — | — | 2,453 | ||||||||||||
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Operating expenses: | ||||||||||||||||
Research and development | 10,960 | 8,308 | 34,397 | 25,325 | ||||||||||||
General and administrative and other | 3,528 | 3,134 | 10,268 | 9,490 | ||||||||||||
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Total operating expenses | 14,488 | 11,442 | 44,665 | 34,815 | ||||||||||||
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Loss from operations | (14,488 | ) | (11,442 | ) | (44,665 | ) | (32,362 | ) | ||||||||
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Other income (expense), net: | ||||||||||||||||
Investment income, net | 13 | 281 | 106 | 1,063 | ||||||||||||
Interest expense | (330 | ) | (2 | ) | (997 | ) | (6 | ) | ||||||||
Other income | — | 6 | — | 6 | ||||||||||||
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Total other income (expense), net | (317 | ) | 285 | (891 | ) | 1,063 | ||||||||||
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Loss before provision for income taxes | (14,805 | ) | (11,157 | ) | (45,556 | ) | (31,299 | ) | ||||||||
Provision for income taxes | 21 | 21 | 62 | 63 | ||||||||||||
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Loss before equity in net losses of an affiliate | (14,826 | ) | (11,178 | ) | (45,618 | ) | (31,362 | ) | ||||||||
Equity in net losses of an affiliate | (25 | ) | (11 | ) | (75 | ) | (27 | ) | ||||||||
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Net loss | $ | (14,851 | ) | $ | (11,189 | ) | $ | (45,693 | ) | $ | (31,389 | ) | ||||
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Weighted average shares outstanding: | ||||||||||||||||
Basic | 36,751 | 22,272 | 29,431 | 19,558 | ||||||||||||
Diluted | 36,751 | 22,272 | 29,431 | 19,558 | ||||||||||||
Net loss per common share: | ||||||||||||||||
Basic | $ | (0.40 | ) | $ | (0.50 | ) | $ | (1.55 | ) | $ | (1.60 | ) | ||||
Diluted | $ | (0.40 | ) | $ | (0.50 | ) | $ | (1.55 | ) | $ | (1.60 | ) | ||||
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 | ) | ||||
2021
| 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 | ) | |||||||||||||||||||
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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 | ) | |||||||||||||||||||
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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 | ) | |||||||||||||||||||
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Balances at March 31, 2021 | 42,755 | $ | 42 | 41 | $ | (211 | ) | $ | 324,302 | $ | (227,133 | ) | $ | 97,000 | ||||||||||||||
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| Common Stock | Treasury Stock | |||||||||||||||||||||||||||
In thousands | Outstanding Shares | Amount | Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Totals | |||||||||||||||||||||
Balances at June 30, 2019 | 18,207 | $ | 18 | 19 | $ | (85 | ) | $ | 214,324 | $ | (135,548 | ) | $ | 78,709 | ||||||||||||||
Share-based compensation expense | — | — | — | — | 810 | — | 810 | |||||||||||||||||||||
Shares issued under employee plans and related share repurchases | 11 | — | 1 | (3 | ) | 34 | — | 31 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (11,577 | ) | (11,577 | ) | |||||||||||||||||||
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Balances at September 30, 2019 | 18,218 | 18 | 20 | (88 | ) | 215,168 | (147,125 | ) | 67,973 | |||||||||||||||||||
Share-based compensation expense | — | — | — | — | 689 | — | 689 | |||||||||||||||||||||
Shares issued under employee plans and related share repurchases | 1 | — | — | — | — | — | — | |||||||||||||||||||||
Net loss | — | — | — | — | — | (8,623 | ) | (8,623 | ) | |||||||||||||||||||
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Balances at December 31, 2019 | 18,219 | 18 | 20 | (88 | ) | 215,857 | (155,748 | ) | 60,039 | |||||||||||||||||||
Issuance of common stock, net of issuance costs | 7,475 | 7 | — | — | 34,804 | — | 34,811 | |||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 874 | — | 874 | |||||||||||||||||||||
Shares issued under employee plans and related share repurchases | 70 | — | — | — | 284 | — | 284 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (11,189 | ) | (11,189 | ) | |||||||||||||||||||
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Balances at March 31, 2020 | 25,764 | $ | 25 | 20 | $ | (88 | ) | $ | 251,819 | $ | (166,937 | ) | $ | 84,819 | ||||||||||||||
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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 | ||||||||||||||
| Nine Months Ended March 31, | ||||||||
In thousands | 2021 | 2020 | ||||||
Operating activities: | ||||||||
Net loss | $ | (45,693 | ) | $ | (31,389 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Share-based compensation expense | 1,865 | 2,373 | ||||||
Depreciation and amortization | 1,123 | 919 | ||||||
Investment discount accretion, net | (10 | ) | (306 | ) | ||||
Amortization of debt discounts and deferred financing fees | 252 | — | ||||||
Reduction in the carrying amount of operating lease right-of-use assets | 264 | 222 | ||||||
Collaboration revenue from Bionic Sight, LLC | — | (2,197 | ) | |||||
Equity in net losses of an affiliate | 75 | 27 | ||||||
Changes in operating assets and liabilities: | ||||||||
Grants receivable | — | 13 | ||||||
Prepaid and other assets | 975 | (660 | ) | |||||
Deferred revenue | — | 149 | ||||||
Accounts payable | 571 | 1,603 | ||||||
Operating lease liabilities | (516 | ) | (459 | ) | ||||
Accrued and other liabilities | 3,356 | 1,851 | ||||||
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Cash used in operating activities | (37,738 | ) | (27,854 | ) | ||||
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Investing activities: | ||||||||
Purchases of property and equipment | (987 | ) | (812 | ) | ||||
Purchases of and capitalized costs related to intangible assets | (363 | ) | (349 | ) | ||||
Investment in Bionic Sight, LLC | — | (4,000 | ) | |||||
Maturities of investments | 41,500 | 63,500 | ||||||
Purchases of investments | (20,992 | ) | (33,928 | ) | ||||
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Cash provided by investing activities | 19,158 | 24,411 | ||||||
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Financing activities: | ||||||||
Proceeds from the issuance of common stock and accompanying warrants, net of issuance costs | 69,261 | 34,949 | ||||||
Proceeds from exercises of common stock options | 674 | 318 | ||||||
Payments for deferred financing fees | (129 | ) | — | |||||
Taxes paid related to equity awards | (123 | ) | (3 | ) | ||||
Principal payments on finance lease | (35 | ) | (33 | ) | ||||
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Cash provided by financing activities | 69,648 | 35,231 | ||||||
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Net increase in cash and cash equivalents | 51,068 | 31,788 | ||||||
Cash and cash equivalents, beginning of the period | 38,463 | 26,703 | ||||||
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Cash and cash equivalents, end of the period | $ | 89,531 | $ | 58,491 | ||||
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Supplemental information: | ||||||||
Costs for intangible assets included in accrued and other liabilities | $ | 27 | $ | — | ||||
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 | 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 | 243 | — | ||||||
1. | Organization and Operations |
2. | Summary of Significant Accounting Policies |
statementpresentation of the Company’s financial position, results of operations stockholders’ equity and cash flows as of and for the periods presented. The accompanying Condensed Balance Sheet as of June 30, 20202021 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.
period within that year.
1segment.
The abovementioned dilutive impact of common
Fair Value Measurement
2022
Collaborative Arrangements
In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The new standard clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”), when the counterparty is a customer. The new standard also precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The guidance amends ASC Topic 808, Collaborative Arrangements (“Topic 808”), to refer to the unit-of-account guidance in Topic 606 and requires it to be used only when assessing whether a transaction is in the scope of Topic 606. The Company adopted the new standard on July 1, 2020; however, it did not have a significant impact on the Company’s financial statements.
To be adopted in future periods
Financial Instruments—Credit Losses
In June 2016, the FASB issued ASU ThisThe Company early adopted the new standard will be effective for the Company on July 1, 2023. Early adoption is permitted. Management continues to evaluate the provisions of this new standard and its potential impact;2021; however, the adoption thereof isit did not expected to have a significant impact on the Company’s financial statements.
principles in Topic 740 and increasing consistency and clarity for the users of financial statements. ThisThe Company adopted the new standard will be effective for the Company on July 1, 2021. Early adoption is permitted. The adoption of this guidance is2021; however, it did not expected to have a significant impact on the Company’s financial statements.
3. | Share-based Compensation Plans |
| Nine Months Ended March 31, | ||||||||||||||||
| 2021 | 2020 | |||||||||||||||
(In thousands, except per share amounts) | Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||||
Outstanding at the beginning of the period | 3,846 | $ | 7.82 | 3,585 | $ | 9.19 | ||||||||||
Granted | 1,280 | 5.26 | 1,108 | 3.18 | ||||||||||||
Exercised | (165 | ) | 4.10 | (81 | ) | 3.91 | ||||||||||
Forfeited | (539 | ) | 4.38 | (339 | ) | 3.97 | ||||||||||
Expired | (87 | ) | 10.29 | (324 | ) | 11.78 | ||||||||||
|
|
|
| |||||||||||||
Outstanding at the end of the period | 4,335 | $ | 7.58 | 3,949 | $ | 7.84 | ||||||||||
|
|
|
| |||||||||||||
Exercisable at the end of the period | 2,757 | 2,347 | ||||||||||||||
|
|
|
| |||||||||||||
Weighted average fair value of options granted during the period | $ | 3.79 | $ | 2.04 | ||||||||||||
|
|
|
| |||||||||||||
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 | ||||||||||||
| Nine Months Ended March 31, | ||||||||
Assumption | 2021 | 2020 | ||||||
Dividend yield | 0.00 | % | 0.00 | % | ||||
Expected term | 6.00 to 6.25 years | 6.00 to 6.25 years | ||||||
Risk-free interest rate | 0.30% to 1.08 | % | 0.47% to 1.90 | % | ||||
Expected volatility | 82.60 | % | 71.20 | % | ||||
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 | % | ||||
award. If any of the performance criteria are not satisfied, that correspondingthe related tranche will be forfeited. As of March 31, 2021,2022,
targets
4. | Investments and Fair Values of Financial Instruments |
The Company’s debt securitiesJuly 2021 (the $2.0 million amortized cost of that are classified as held-to-maturity are summarized below.
In thousands | March 31, 2021 | June 30, 2020 | ||||||
U.S. Treasury securities: | ||||||||
Amortized cost | $ | 21,496 | $ | 41,995 | ||||
Gross unrealized gains | 3 | 54 | ||||||
Gross unrealized losses | — | (3 | ) | |||||
|
|
|
| |||||
Fair value of investments | $ | 21,499 | $ | 42,046 | ||||
|
|
|
| |||||
investment approximated its fair value on such date). The Company expects to collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value. At the end of each reporting period, the Company evaluates its securities for impairment, if and when, the fair value of an investment is less than its amortized cost. In the event that the fair value of an investment is less than its amortized cost, the Company will evaluate the underlying credit quality and credit ratings of the issuer. Specifically, the Company believes that the unrealized lossesheld 0investments at June 30, 2020 that are disclosed in the above table were primarily driven by interest rate changes rather than by unfavorable changes in the credit ratings associated with those securities. The Company does not intend to sell any of its investments before recovering its amortized cost, which may be at maturity.
|
March 31, 2022.
In thousands | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
March 31, 2021 | ||||||||||||||||
Cash and cash equivalents | $ | 89,531 | $ | — | $ | — | $ | 89,531 | ||||||||
Held-to-maturity investments (U.S. Treasury securities) | 21,499 | — | — | 21,499 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 111,030 | $ | — | $ | — | $ | 111,030 | ||||||||
|
|
|
|
|
|
|
| |||||||||
June 30, 2020 | ||||||||||||||||
Cash and cash equivalents | $ | 38,463 | $ | — | $ | — | $ | 38,463 | ||||||||
Held-to-maturity investments (U.S. Treasury securities) | 42,046 | — | — | 42,046 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 80,509 | $ | — | $ | — | $ | 80,509 | ||||||||
|
|
|
|
|
|
|
| |||||||||
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 | 2,000 | — | — | 2,000 | ||||||||||||
Total assets | $ | 107,052 | $ | — | $ | — | $ | 107,052 | ||||||||
5. | Debt |
Effective May 13, 2021, the Loan Agreement$
The Amendment also extended (i) the period that the Company will make interest-only payments on outstanding borrowings from December 31, 2021 to March 31, 2022, with the possibility to extend the interest-only period to December 31, 2022 upon the Company’s achievement of certain performance milestones, and (ii) the maturity date of the Term Loan from December 1, 2023 to April 1, 2024; provided that, in the event that the Company meets certain conditions, including achievement of performance milestones, then the Term Loan maturity date will be July 1, 2024. There were no other material changes to the Loan Agreement as a result of the Amendment.
Pursuant to the Amendment, no principal payments are due on the Term Loan until April 1, 2022. Accordingly, as of March 31, 2021, the Company classified the outstanding balance under the Loan Agreement as a long-term liability.
As of both March 31, 20212022 and June 30, 2020,2021, the per annum variable contractual interest rate on the Term Loan was 10.00% and 9.75% per annum, respectively, and the effective interest rate on the Term Loan was 13.53%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%.
6. | Collaboration Agreements and Contract Liabilities |
LLCtherapiesproduct 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 AGTC, 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.to Bionic Sight for an equity interest in that company. This initial investment represented an equity interest of approximately 5% in Bionic Sight. In addition to the initial investment, AGTC contributed ongoing research and development support costs through additional payments and other in-kind contributions (the “AGTC Ongoing R&D Support”). The AGTC Ongoing R&D Support payments and in-kind contributions were made over time and continued until December 2019, the month that Bionic Sight received both Investigational New Drug (“IND”) clearance from the United States Food and Drug Administration (the “FDA”) and receipt of written approval from an internal review board to conduct clinical trials at one clinical site for that product candidate (the “IND Trigger”). Prior to the achievement of the IND Trigger, the Company had incurred approximately $2.2 million of research and development support costs and in-kind contributions, which were reported as research and development expenses in the Company’s financial statements.Upon achievement of the IND Trigger, AGTC was (i) entitled to receive additional equity in Bionic Sight, based on a valuation that was in place at the beginning of the agreement, for the AGTC Ongoing R&D Support payments and in-kind contributions, and (ii) obligated to purchase additional equity in Bionic Sight for $4.0 million based on certain pre-determined valuation criteria. The Company made the $4.0 million payment to Bionic Sight in January 2020 and received the incremental shares duringDuring March 2020, upon the execution of a subscription agreement between the parties. The Company’s equity interest in Bionic Sight increased to approximately 15.5% uponin connection with (i) AGTC’s purchase of additional equity for $4.0 million and (ii) the issuanceconversion of certain AGTC-provided research and development support costsadditional shares.collaboration agreement. AGTC is not obligated to purchase additional equity in Bionic Sight or make anyThe Company concluded that the AGTC Ongoing R&D Support was within the scope of Topic 606 because the services rendered represented a distinct service delivered to a counterparty that meets the definition of a customer. The Company further concluded that those services represented one combined performance obligation. Because the consideration that the Company was entitled to was contingent upon achievement of the IND Trigger, that consideration was determined to be variable and the amount was fully constrained until achievement of the IND Trigger. As a result of achieving the IND Trigger, the Company recognized $2.2 million of collaboration revenue during December 2019. With regard to the obligation to purchase additional equity in Bionic Sight, the Company concluded at contract inception that such option represented a forward contract to be accounted for within the scope of ASC 321, Investments—Equity Securities. The Company assessed the fair value of this forward contract at the inception of the Bionic Sight
agreement and determined the value to be de minimis. As the forward contract did not have a readily determinable fair value, the Company elected to use a measurement alternative for all subsequent measurements of the financial instrument. Under such measurement alternative, the forward contract was remeasured at fair value when observable transactions involving the underlying equity securities or impairment of those securities occurred. As noted above, the Company made a supplemental investment of $4.0 million in Bionic Sight and the underlying equity interests were delivered in March 2020, resulting in the settlement of the forward contract at that time. From the inception of the Bionic Sight arrangement and through the settlement date in March 2020, no observable transactions or impairment involving the underlying equity securities had occurred.
The Company recorded its initial investment in Bionic Sight using the equity method of accounting for investments. Upon receipt of additional sharesequity in March 2020, the Companymanagement concluded that equity method accounting was stillremained appropriate. Because the conversion price used to calculate the number of additional shares that the Company was to receive was based on contractually fixed valuation amounts, the Company assessed whether there was a difference between the cost of the investment and the underlying equity in the net assets of Bionic Sight. The Company concluded that any such difference was not material to the Company’s financial statements and, therefore, recorded its additional investment in Bionic Sight at $6.2 million during March 2020.
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.
7. |
Stockholders’ Equity |
As required by U.S. GAAP, the Company recognizes the financial statement benefit
Income tax expense for the three and nineAGTC Equity Securities
Subsequent to March 31, 2021, the statutes of limitations pertaining to the state tax matters that gave rise to the aforementioned uncertain tax positions expired with no payments being required by the Company and no action taken by any tax authority. As such, the Company’s entire uncertain tax position liability, including accrued interest and penalties, will be reversed. This accounting treatment will favorably affect the Company’s income tax expense or benefit and its annual effective tax rate for the three months and year ending June 30, 2021.
|
February 2021 Public Offering of AGTC Equity Securities
The As of March 31, 2022, NaN of the warrants have been evaluatedexercised.
February 2020 Public Offeringgross sales price of AGTC Common Stock
On February 11, 2020,the shares sold through it pursuant to the Sales Agreement. During the nine months ended March 31, 2022, the Company closed an underwritten public offeringreceived net proceeds of 6.5 million$519,000 from selling 230,478 shares of its common stock at $5.00 per share, generating gross proceedsunder the Sales Agreement. Neither Cantor nor the Company is obligated to sell additional shares under this program in the future.
8. | Commitments and Contingencies |
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. | ||||
|
2022.
Notwithstanding the rapid development and rollout of certain vaccines, it is unknownunknown: (i) how
|
At-The-Market Offering Program
On April 2, 2021, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) as sales agent to sell shares
During the Term, the Company will also pay its share of operating expenses, taxes and any other expenses payable under the lease. The lease includes three extension options of five years each at an annual base rent rate of the greater of a 1.5% increase from the previous year or pursuant to the increase in the Consumer Price Index for the applicable prior year.
In addition, the lease provides the Company with a one-time option to terminate the lease after year 16.5 by providing notice of such termination prior to the end of the 15th lease year and paying a termination fee of $3.3 million. The Company has the further option to expand the facility to double the initial square footage during the first five years of the Term.
The lease also includes customary representations, warranties and covenants on behalf of the parties and provides for certain customary mutual indemnities. No security deposit is required upon lease execution, provided that the landlord reserves the right to instate a security deposit if the Company defaults in its lease obligations.
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
others.
Blindness.
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 AMD and other retinal diseases; and
other inherited diseases, such as otology and CNS indications;
manufacture clinical trial materials and develop larger-scale manufacturing capabilities;
further develop our gene therapy platform;
In November 2020,the design of the trial.
In May 2021, we provided 12-month18 months after treatment. Specifically, the data from our XLRP Phase 1/2 trial from sevenshowed 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 in Group 5 and four patients in Group 6. One patient in Group 5 and two patients in Group 6 would not meetincorporated these findings into the inclusioninclusion/exclusion criteria for the Skyline and Vista trials, resulting inclinical trials.
Consistent with previously reported 6-month data from Groups 2, 4, 5 and 6, assessment of Best Corrected Visual Acuity (“BCVA”) in these groups at 12 months continues to provide supportive evidence of improved visual acuity in these patients; the difference between treated and untreated eyes is statistically significant. We believe that these data, together with the favorable safety profile, have the potential to differentiate our XLRP candidate from competitors.
Data from three of the seven Group 4 patients were available for analysis at Month 24, including two who were responders at Month 12 (one by the 7 decibel change in at least 5 loci response criteria and the other based on improved retinal sensitivity in the treated eye compared with the untreated eye). These two patients are still responders at Month 24 according to the same criteria; the third patient who has reached Month 24 was not a responder at Month 12 or Month 24. To the best of our knowledge, this is the first XLRP gene therapy clinical trial to demonstrate continued durability of response at this time point.
Data from all 28 patients across six dose groups in the Phase 1/2 trial continue to demonstrate a favorable safety profile with no dose-limiting inflammatory responses observed. This safety profile, which has shown no clinically significant inflammation not manageable with steroids, continues to be observed out to 24 months.
We believe that we have a best-in-class XLRP product
present 12-month trial resultsCOVID-19
provide Skyline trial results from the 3-month masked interim analysis in the fourth quarter of calendar year 2021;
provide Skyline trial results from the 12-month data in the third quarter of calendar year 2022; and
As part
ACHM
In January 2020, we provided 3-month ACHM data indicating evidence of biologic activity in the dose escalation portions in both our ACHMB3 and ACHMA3 trials,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 January 2021, we reported results based on a patient-by-patient analysis of data from both ACHMB3 and ACHMA3 trials. For ACHMB3, this consisted of 12-month data from 15 patients, 9-month data from five patients, 6-month data from three patients and 3-month data from three patients for a total of 26 patients across all dose groups. These results reflect a further analysis of certain data discussed in November 2020 together with new data that became available in January 2021. Seven of the 16 patientsenrolled in the three highest dose groupsPhase 1/2 study of
For ACHMA3, the new data analysis consisted of 12-month data from 10 patients, 9-month data from four patients, 6-month data from one patient and 2- or 3-month data from three patients for a total of 18 patients across five dose groups. One additional patient did not have evaluable data. In the 16 patients in the four highest dose groups, three patients showed improvements in visual sensitivity in the treated area, as measured by static perimetry. No consistent results were seen in other dose groups. None of these three patients with improvements in visual sensitivity had evaluable ERGs.
We currently plan to focus on completion of enrollment of 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 ourpatients with CNGB3 mutations, which we believe may have impacted the results seen in patients that received
patients as young as 4 years of age and to include both functional magnetic resonance imaging (“fMRI”) and improved color brightness tests. We are hopeful that these changes, combined with longer follow-up times, will adda potential Phase 2/3 clinical trial for submission to the developing body of evidence and supportFDA. Our anticipated future development plan will be based on the anecdotal patient-reported outcomes. We expect to report 12-month datafeedback we received from the adult patients in both trials inFDA during the second quarterEOP2 meeting and subsequent comments to the full protocol.
Underwritten Public Offering
On February 1, 2021, we closed an underwritten public offering of 16,741,573 shares of our common stock, together with accompanying warrants to purchase 8,370,786 shares of our 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 us, which totaled $5.2 million. The warrants have an exercise price of $6.00 per share (subject to certain adjustments), are immediately exercisable and expire on February 1, 2026.
We intend to use the net proceeds from the offering, together with other available funds, to fund our ongoing Skyline trial and XLRP Vista trial and our ongoing Phase 1/2 clinical trials in our ACHMB3 and ACHMA3 programs, and for working capital and other general corporate purposes.
At-The-Market Offering Program
On April 2, 2021, we entered into a Controlled Equity OfferingSM Sales Agreement with Cantor Fitzgerald & Co. as sales agent to sell shares of our common stock, from time to time, through an “at-the-market offering” program having an aggregate offering price of up to $50.0 million. However, we are not obligated to sell any shares 10-Q
Long-Term Debt Agreement
Effective May 13, 2021, our long-term loan agreement was amended (the “Amendment”) whereby, among other things: (i) a term loan advance of $10.0 million was authorized by the lendersheading “Lease Commitment.”
Additional information regarding our long-term loan agreement and the Amendment can be found in Note 6 to the Unaudited Condensed Financial Statements included in this Quarterly Report on Form 10-Q.
Strategic Collaborations
Preclinical Pipeline
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.
the cost
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;
A change
trial activities and development of our product candidates.
plan to open and operate a leased cGMP manufacturing and quality control facility.
Interestfederal 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
Interest expense on its variable-rate debt also increases.
Provisionuncertain tax positions. There was no provision for income taxes
Income tax expense for during the three and nine months ended March 31, 2021 was $21,000 and $62,000, respectively, compared to $21,000 and $63,000 for2022 because, among other things, the three and nine months ended March 31, 2020, respectively. During those periods, income tax expense was primarily due to estimated interest and penalties on our uncertain tax positions. See Note 8 to the Unaudited Condensed Financial Statements included in this Quarterly Report on Form 10-Q for information regarding significant changes to ourCompany had no uncertain tax positions subsequent to March 31, 2021 and the corresponding favorable effect on our future income tax expense or benefit.
during those reporting periods.
2021
| Three Months Ended March 31, | Increase | % Increase | ||||||||||||||
In thousands | 2021 | 2020 | (Decrease) | (Decrease) | ||||||||||||
External research and development expenses: | ||||||||||||||||
XLRP | $ | 3,201 | $ | 1,075 | $ | 2,126 | >100 | % | ||||||||
ACHM | 1,147 | 1,622 | (475 | ) | (29 | )% | ||||||||||
XLRS | 147 | 224 | (77 | ) | (34 | )% | ||||||||||
Research and discovery programs | 1,211 | 438 | 773 | 176 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total external research and development expenses | 5,706 | 3,359 | 2,347 | 70 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Internal research and development expenses: | ||||||||||||||||
Employee-related costs | 3,051 | 3,007 | 44 | 1 | % | |||||||||||
Share-based compensation | 280 | 508 | (228 | ) | (45 | )% | ||||||||||
Other | 1,923 | 1,434 | 489 | 34 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total internal research and development expenses | 5,254 | 4,949 | 305 | 6 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total research and development expenses | $ | 10,960 | $ | 8,308 | $ | 2,652 | 32 | % | ||||||||
|
|
|
|
|
| |||||||||||
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 | )% | |||||||
costs, including 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.
$2.1 million of increaseddue to various factors, including: (i) planned temporary reductions in manufacturing activities relating to our XLRP and preclinical product candidates; (ii) lower external spending for our XLRP trials due to our planned manufacturing, clinical site preparation and other activities related to our Skyline trial and XLRP Vista trial;
$0.8 million of increased external spending for our research and discovery programs, which was primarilywe are not activating new sites and/or enrolling new patients; (iii) a decrease in ACHM expenses due to planned material productionreduced 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
$0.5 million of increased other internalprogram. Additionally, research and development expenses for temporary staffing and consultants while we recruit new employees, partially offset by a reduction in laboratory supply costs due to the timing of our needs.
Such increases were partially offset by a $0.5 million decrease in external spending for our ACHM trials and a $0.2 million decrease in our share-based compensation expense. The decrease in ACHM expenses was primarily due to reduced patient enrollment, patient visits and new site activations during the three months ended March 31, 2021 when compared to the prior year, all of which reduce our overall clinical programs costs,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 incremental expensesby: (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 in internal research and development costs for our mobile vision center. The decline incertain assay development that we are now conducting
certain employees from May 2021 to July 2021 (the “2021 RSUs”).
| Three Months Ended March 31, | Increase | % Increase | ||||||||||||||
In thousands | 2021 | 2020 | (Decrease) | (Decrease) | ||||||||||||
Employee-related costs | $ | 1,241 | $ | 1,405 | $ | (164 | ) | (12 | )% | |||||||
Share-based compensation | 315 | 367 | (52 | ) | (14 | )% | ||||||||||
Legal and professional fees | 329 | 97 | 232 | >100 | % | |||||||||||
Other | 1,643 | 1,265 | 378 | 30 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total general and administrative and other expenses | $ | 3,528 | $ | 3,134 | $ | 394 | 13 | % | ||||||||
|
|
|
|
|
| |||||||||||
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 | % | ||||||||
external legal counsel.
Revenue
During the nine months ended March 31, 2020, we recognized total revenue of $2.5 million. We did not recognize any revenue during the nine months ended March 31, 2021.
During December 2019, Bionic Sight met a milestone related to clearance of filing of an Investigational New Drug application under its collaboration agreement with us and, as a result, we recognized $2.2 million of non-cash collaboration revenue during the nine months ended March 31, 2020 in connection with in-kind contributions made since inception of the Bionic Sight collaboration agreement. Additional information regarding the Bionic Sight collaborative agreement can be found in Note 7 to the Unaudited Condensed Financial Statements included in this Quarterly Report on Form 10-Q. During the nine months ended March 31, 2020, we also recorded $0.2 million and $0.1 million of grant revenue and other milestone revenue, respectively.
| Nine Months Ended March 31, | Increase | % Increase | ||||||||||||||
In thousands | 2021 | 2020 | (Decrease) | (Decrease) | ||||||||||||
External research and development expenses: | ||||||||||||||||
XLRP | $ | 11,930 | $ | 2,646 | $ | 9,284 | >100 | % | ||||||||
ACHM | 3,997 | 5,028 | (1,031 | ) | (21 | )% | ||||||||||
XLRS | 299 | 664 | (365 | ) | (55 | )% | ||||||||||
Research and discovery programs | 2,228 | 1,552 | 676 | 44 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total external research and development expenses | 18,454 | 9,890 | 8,564 | 87 | % | |||||||||||
|
|
|
|
|
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Internal research and development expenses: | ||||||||||||||||
Employee-related costs | 9,466 | 9,301 | 165 | 2 | % | |||||||||||
Share-based compensation | 866 | 1,183 | (317 | ) | (27 | )% | ||||||||||
Other | 5,611 | 4,951 | 660 | 13 | % | |||||||||||
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Total internal research and development expenses | 15,943 | 15,435 | 508 | 3 | % | |||||||||||
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Total research and development expenses | $ | 34,397 | $ | 25,325 | $ | 9,072 | 36 | % | ||||||||
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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 | % | ||||||||
$9.3 million of increased external spending forto new employees who were hired in connection with our XLRP trials due to our planned manufacturing, clinical site preparation and other activities related to our Skyline trial and XLRP Vista trial;
$0.7 million ofstrategic operating plans; (ii) increased external spending for our research and discovery programs, which was primarily due tofor planned material production costs in connection with our CNS preclinical program targeting FTD;programs; (iii) higher share-based compensation costs that were primarily due to the 2021 RSUs; and
$0.7 million of increased other (iv) an increase in internal research and development expensescosts for temporary staffingcertain assay development that we are now conducting
Such increasesdevelopment expenses were partially offset by: (i) a $1.0 millionyear-over-year reduction in manufacturing activities for Vista clinical trial materials; (ii) a decrease in external spending forACHM expenses due to reduced site activity as our ACHM trials; (ii)two clinical studies have progressed to a $0.4 million decrease in expensespoint where they are no activating new sites or enrolling new patients; and (iii) lower costs in connection with the wind-down of our X-linked retinoschisis, or XLRS program;program. Additionally, research and (iii) a $0.3 million decrease in our share-based compensation expense. The decrease in ACHMdevelopment expenses was primarily due to reduced patient enrollment, patient visits and new site activations duringfor the nine months ended March 31, 2021 when compared to the prior year, all of which reduce our overall clinical programs costs, partially offset2022 were favorably impacted by incremental expenses for our mobile vision center. The declinechanges in share-based compensation expense was due to, among other things, the cost attributable to a performance-based stock option awardestimates that achieved a milestonereduced certain vendor accruals during the nine months ended March 31, 2020 with no corresponding current year activity.
such reporting period.
| Nine Months Ended March 31, | Increase | % Increase | ||||||||||||||
In thousands | 2021 | 2020 | (Decrease) | (Decrease) | ||||||||||||
Employee-related costs | $ | 3,675 | $ | 4,142 | $ | (467 | ) | (11 | )% | |||||||
Share-based compensation | 999 | 1,191 | (192 | ) | (16 | )% | ||||||||||
Legal and professional fees | 1,238 | 330 | 908 | >100 | % | |||||||||||
Other | 4,356 | 3,827 | 529 | 14 | % | |||||||||||
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Total general and administrative and other expenses | $ | 10,268 | $ | 9,490 | $ | 778 | 8 | % | ||||||||
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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 | % | ||||||||
10-Q.
| Nine Months Ended March 31, | Increase | % Increase | ||||||||||||||
In thousands | 2021 | 2020 | (Decrease) | (Decrease) | ||||||||||||
Net cash provided by (used in): | ||||||||||||||||
Operating activities | $ | (37,738 | ) | $ | (27,854 | ) | $ | (9,884 | ) | (35 | )% | |||||
Investing activities | 19,158 | 24,411 | (5,253 | ) | (22 | )% | ||||||||||
Financing activities | 69,648 | 35,231 | 34,417 | 98 | % | |||||||||||
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Net increase in cash and cash equivalents | $ | 51,068 | $ | 31,788 | $ | 19,280 | 61 | % | ||||||||
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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)% | |||||||
Investing activities. Cash provided by investing activities of $19.2 million during the nine months ended March 31, 2021 consisted primarily of cash proceeds of $41.5 million from maturities of investments, net of investment purchases of $21.0 million, partially offset by purchases of property and equipment of $1.0 million and intellectual property costs of $0.4 million.
Financing activities. (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. Cash provided by financing activities of $35.2 million during the nine months ended March 31, 2020 primarily consisted of proceeds of $34.9 million from the issuance of common stock, net of issuance costs, and proceeds from exercises of common stock options of $0.3 million, partially offset by principal payments on a finance lease.
To date, we
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
| a) | Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures |
| b) | Changes in Internal Control over Financial Reporting |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
Third parties
Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter partes reexamination proceedings before the United States Patent and Trademark Office and corresponding foreign patent offices. Numerous United States and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidatescommon stock may be subject to claimsdelisting from the Nasdaq Global Market.
Third partiespublicly 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
For example, we are aware of a third-party U.S. patent that may be construed to cover our gene therapy compositions for treating XLRP. We are also aware of corresponding international applications owned by such third party, which are counterparts to such U.S. patent. If such third party asserts this U.S. patent or any other patents that may issue from such corresponding international patent applications against us and our XLRP product candidate, we believe that we would have defenses against any such assertion, however, there can be no assurance that any such defenses will be successful. If such patents, or any other third-party patents, were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, and are not held to be invalid or unenforceable, the holders of any such patents may be able to block our ability to commercialize such product candidate, including our XLRP product candidate, unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, methods for manufacture or methods of use, including combination therapy, and are not held to be invalid or unenforceable, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates, including our XLRP product candidate. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.
In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement. If a license is available from the applicable third party, we may have to pay royalties, upfront fees and other amounts, and/or grant cross-licenses under our intellectual property rights. Further, we may be required to redesign our infringing products so they do not infringe the applicable third-party patents or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
ITEM |
EXHIBITS |
Manufacturing Facility Lease
On May 13, 2021, the Company entered into a Lease (the “Lease”) with Alachua Foundation Park Holding Company II, LLC, as Landlord, for a to-be-constructedbuild-to-suit single story facility of approximately 21,250 square feet to be known as Foundation Park Building II, 14100 N.W. 113th Terrace, Alachua, Florida (the “Premises”) for office, research and development, laboratory, light pharmaceutical and medical systems manufacturing and fabrication and distribution use. The Landlord will be 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 will be responsible for completion of the remaining tenant fit out work. The Landlord will be responsible for the cost of the base building work and will contribute approximately $6.0 million towards the tenant fit out work, with the Company responsible for all costs in excess of such amount.
The Lease will commence upon substantial completion of the Premises, including the tenant fit out work, estimated to be completed in the second half of calendar year 2022 (the “Commencement Date”), and the rent commencement date will occur simultaneous with the Commencement Date, provided that the Company will not pay base rent for the first twelve months of the term of the Lease and reduced rent for the next six months of the term (as further outlined below). The initial lease term is twenty years from the Commencement Date (the “Term”). Under the Lease, the Company will pay annual base rent as set forth below.
Lease Months | Annual Base Rent | |||
1-12 | $ | — | ||
13-18 | $ | 637,500 | ||
19-30 | $ | 1,253,750 | ||
Base rent shall increase 1.5% each lease year (12-month period) thereafter commencing in month 31 for the remainder of the Term. | ||||
During the Term, the Company will also pay its share of operating expenses, taxes and any other expenses payable under the Lease. The Lease includes three extension options of five years each at an annual base rental rate of the greater of a 1.5% increase from the previous year or pursuant to the increase in the Consumer Price Index for the applicable prior year.
In addition, the Lease provides the Company with a one-time option to terminate the Lease after year 16.5 by providing notice of such termination prior to the end of the 15th Lease year and paying a termination fee of $3.3 million. The Company has the further option to expand the facility to double the initial square footage during the first five years of the Term.
The Lease also includes customary representations, warranties and covenants on behalf of the parties and provides for certain customary mutual indemnities. No security deposit is required upon lease execution, provided that the Landlord reserves the right to instate a security deposit if the Company defaults in its Lease obligations.
Amendment to Hercules Loan Agreement
On May 13, 2021, the Company entered into the First Amendment to Loan and Security Agreement (the “First Amendment”) with the several banks and other financial institutions or entities from time to time parties to the Loan and Security Agreement (collectively, referred to as the “Lenders”), and Hercules Capital, Inc., in its capacity as administrative agent and collateral agent for itself and Lenders, which amends certain terms of the Loan and Security Agreement.
The First Amendment provides for, among other things, (i) a second term loan advance under the Loan Agreement of $10.0 million, which was authorized by the Lenders and advanced to the Company on May 13, 2021, and (ii) an extension of the Company’s option to draw down an additional tranche of up to $5.0 million of the $25.0 million term loan facility provided under the Loan and Security Agreement (the “Term Loan”), subject to the Lenders’ investment committee’s sole discretion, among other customary conditions, to prior to April 1, 2022 or, if certain conditions are satisfied, then prior to January 1, 2023. The First Amendment also (i) extends the interest-only payment period to March 31, 2022, with the possibility to extend the interest-only period to December 31, 2022 upon the Company’s achievement of certain performance milestones, and (ii) extends the maturity date of the Term Loan to April 1, 2024 or, in the event that the Company meets certain conditions, including achievement of certain performance milestones, then July 1, 2024.
Departure of Chief Financial Officer and Officer Appointments
On May 12, 2021, William A. Sullivan, the Chief Financial Officer and Treasurer of the Company, notified the Company that he will be resigning from his positions, effective June 9, 2021 (the “Termination Date”). On May 13, 2021, the Company appointed Gerald A. Reynolds, age 58, as its Chief Accounting Officer, principal accounting officer and Treasurer, in each case effective on the Termination Date. Susan B. Washer, the Company’s President and Chief Executive Officer will serve as the Company’s principal financial officer effective on the Termination Date.
Mr. Reynolds has served as the Company’s Vice President, Accounting since March 2020. Prior to joining the Company, Mr. Reynolds was Director of External Financial Reporting at Gartner, Inc., a global research and advisory firm, from March 2017 to March 2020. From January 2016 to February 2017, Mr. Reynolds was Vice President of Financial Reporting at WCI Communities, Inc., a lifestyle community developer and luxury homebuilder, and from October 2013 to December 2015 he was Director of Financial Reporting at WCI Communities, Inc. Prior to that, Mr. Reynolds was Director of Financial Reporting at Health Management Associates, Inc., a hospital owner and healthcare services provider to patients in hospitals and other health care facilities in non-urban communities located primarily in the southeastern United States, from May 2005 to April 2013. Mr. Reynolds received a B.B.A. in accounting from Adelphi University and an M.S. in taxation from Long Island University, C.W. Post Campus.
There are no arrangements or understandings between Mr. Reynolds and any other persons pursuant to which he was appointed as principal accounting officer, there are no family relationships among any of the Company’s directors or executive officers and Mr. Reynolds and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
On May 14, 2021, the Company entered into a First Amendment to Employment Agreement with Mr. Sullivan (the “Amendment”). Pursuant to the terms of the Amendment, for six months following the Termination Date, the Company will contribute to the cost of COBRA continuation coverage at the same rate it contributed to Mr. Sullivan’s coverage prior to the Termination Date. In addition, Mr. Sullivan will receive a payment equal to six months of his current base salary and a prorated bonus for the fiscal year ending June 30, 2021. The Amendment also provides that any stock options previously granted to Mr. Sullivan by the Company that are unvested as of the Termination Date will continue to vest through and including December 31, 2021, and Mr. Sullivan will be permitted to exercise any vested stock options held by him until the later to occur of (i) December 31, 2022 and (ii) the date that is 90 calendar days after the date on which the Company issues a press release that reports the six-month masked interim analysis in the XLRP Vista trial.
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Exhibit Number | Description | |
| 3.1 | Fifth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, | |
| 3.2 | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, | |
| 31.1* | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| Inline XBRL Instance Document – the instance document does not appear in the Interactive Data 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 10-Q has been formatted in Inline XBRL and | |
| * | Filed herewith. |
| ** | Furnished herewith. |
APPLIED GENETIC TECHNOLOGIES CORPORATION (Registrant) | ||
| By: | /s/ | |
| Date: May | ||
31