Applied Genetic Technologies Corp (NASDAQ:AGTC), a biotechnology company conducting human clinical trials of adeno-associated virus (AAV)-based gene therapies for the treatment of rare diseases, today announced financial results for the quarter ended June 30, 2016.
“Over the past year we’ve continued to make progress across our clinical programs and have remained focused on advancing novel gene-based therapies to improve the lives of patients affected by rare inherited diseases,” said Sue Washer, President and CEO of AGTC. “We are continuing to advance our lead product candidates for X-linked retinoschisis and achromatopsia, serious ocular indications that are caused by mutations in single genes that significantly affect visual function and currently lack effective medical treatments.”
- In June, the company announced that the European Commission (EC) granted an orphan medicinal product designation to its investigational gene therapy product candidate for the treatment of X-linked retinitis pigmentosa (XLRP) caused by mutations in the RPGR gene. The company had previously been granted orphan drug designation from the EC and the U.S. Food and Drug Administration (FDA) for its gene therapy product candidates for the treatments of X-linked retinoschisis (XLRS) and achromatopsia (ACHM) caused by mutations in the CNGA3 and CNGB3 genes.
- In August, the company and the Medical College of Wisconsin announced that data from their studies evaluating the density of cone photoreceptors in patients with ACHM caused by mutations in the CNGB3 gene were published in Investigative Ophthalmology and Visual Science.
- Also in August, Anne M. VanLent was appointed to the company’s Board of Directors and elected Chairperson of the Audit Committee. Ms. VanLent is an industry veteran with more than 30 years of financial and healthcare leadership experience.
Clinical Trial Updates
XLRS Phase 1/2 Trial
AGTC is currently enrolling patients in a Phase 1/2 clinical trial for XLRS, a program on which the company is collaborating with Biogen. The clinical protocol anticipates enrollment of up to 27 patients. This trial is currently being conducted at six clinical sites that specialize in inherited retinal diseases. As of August 2016, the company had enrolled a total of eight patients, six of whom are in the lowest dose level group and two are in the middle dose level group.
The primary endpoint of this trial is safety and safety data to date has shown that the XLRS product candidate has been generally well tolerated. AGTC has observed mild to moderate ocular inflammation in the majority of patients which resolved either without treatment or after treatment with topical or oral corticosteroids.
Enrollment in the study has been slower than planned. Delays resulted from patients not meeting one or more eligibility criteria and as a result, the company has taken steps to increase the number of clinical sites and to enhance its outreach programs. The company made a protocol amendment to include the use of prophylactic corticosteroids that required further institutional review board approvals. Vendor errors required the company to re-test the study agent for a process component. Upon re-testing, the study agent met all specifications and the company now has several backup vendors as well as internal testing capabilities. The company believes it has resolved these factors in order to meet its future enrollment goals and is executing on a plan to complete the trial expeditiously.
The company is measuring a wide range of secondary endpoints that might provide early indications of potential efficacy and help to design a subsequent trial. The company has not observed any significant improvements in secondary endpoints in the six patients treated at the lowest dose level group. The company does not expect to report further data on the XLRS study this year, but intends to provide quarterly updates on its patient enrollment.
ACHMB3 Phase 1/2 Trial
The company’s Phase 1/2 ACHM clinical trial is being conducted at four sites that specialize in inherited retinal diseases, and an additional site is performing advanced optical testing on every patient. Two patients are currently enrolled in the trial which is a lower number than the company had planned to report on at this point in the study. The slower-than-expected enrollment was due to vendor errors identified during testing of the study agent, which resulted in a delay to the initiation of the trial. As a first—in-man study, the company’s internal and external teams are monitoring these first two patients very carefully over time in order to meet the primary objective of patient safety, before proceeding with further study enrollment involving a larger number of patients. As with the XLRS program, the company intends to provide quarterly updates on its patient enrollment for ACHM, and will release results when it has sufficient data to draw meaningful conclusions.
Pre-clinical programs and research
For its ACHM CNGA3 product candidate, the company expects to submit an Investigational New Drug application (IND) by the end of this year. The company has completed all of the pre-clinical IND-enabling studies, has finished producing the study agent, and all study agent characterization tests are on-going. Once the IND has cleared the FDA and individual sites internal review boards, the company anticipates enrolling up to 24 ACHM CNGA3 patients in a Phase 1/2 clinical trial. The study design will be similar to that of the ACHM CNGB3 study.
In the XLRP program, another on which the company is collaborating with Biogen, the company is currently conducting IND-enabling toxicology studies. A dose range finding study of the company’s XLRP product candidate in dogs demonstrated expression of the RPGR protein in photoreceptors and improvement in structural and functional parameters associated with disease progression in this model. The company expects to file an IND for XLRP in 2017.
The company is also developing treatments for three additional indications, in collaboration with Biogen, which are all in the discovery phase, and continues to evaluate other indications in order to select those most appropriate for addition to its longer-term product development pipeline. As an example, in January of this year, the company announced its research efforts in Blue Cone Monochromacy, a rare genetic disease of the retina that can result in reduced visual acuity, impaired color vision, photosensitivity, myopia and infantile-onset nystagmus.
Financial Results for the Quarter Ended June 30, 2016
Total revenue for the three months ended June 30, 2016 was $12.1 million compared to $713,000 generated during the same period in 2015. Revenue recorded during the three months ended June 30, 2016 resulted primarily from the amortization of upfront fees received under the company’s collaboration with Biogen.
Research and development expense for the three months ended June 30, 2016 increased by $701,000 to $6.8 million compared to the same period in 2015. The year-over-year increase was primarily a result of higher employee-related and share-based compensation costs from the hiring of additional employees to support the company’s increased level of research and development activity.
General and administrative expense for the three months ended June 30, 2016 increased by $182,000 to $2.9 million compared to the same period in 2015. The year-over-year increase was a result of higher employee-related costs, share-based compensation expense, and other operating costs directly attributable to the company’s continued expansion, partially offset by lower legal and professional fees.
For the three months ended June 30, 2016, the company recorded net income of $2.7 million, compared to a net loss of $7.96 million in the same period of 2015.
Financial Results for the Fiscal Year Ended June 30, 2016
Total revenue for the fiscal year ended June 30, 2016 was $47.4 million compared to $2.4 million generated during the same period in 2015. The increase was largely driven by revenue generated from the collaboration with Biogen, primarily comprised of the amortization of upfront fees and $5.0 million of milestone revenue that was earned during the fiscal year following achievement of an XLRS patient enrollment-based milestone under the terms of that collaboration agreement.
Research and development expense for the fiscal year ended June 30, 2016 increased by $20.7 million to $38.9 million compared to the same period in 2015, driven largely by the $12.0 million of incremental costs associated with the collaboration arrangement with Biogen. Also contributing to the higher research and development expense were increased fees associated with licenses and milestones that were largely driven by new collaborative arrangements entered into with external partners, combined with higher milestone payments to our research partners associated with the clinical development of our product candidates. In addition, employee-related and share-based compensation costs also increased year-over-year due primarily to the hiring of additional employees to support this increased level of research and development activity and the impact of new share-based incentives awarded during fiscal year 2016.
General and administrative expense for the fiscal year ended June 30, 2016 increased by $1.8 million to $10.6 million compared to the same period in 2015. The increase was primarily driven by the hiring of additional employees, which resulted in higher share-based compensation and other employee-related costs. Other administrative expenses were also higher compared to 2015 due primarily to ongoing expansion and the increasing costs of operating as a publicly-traded company. The impact of these incremental costs was partially offset by decreased legal and professional fees.
During the fiscal year ended June 30, 2016, the company reported a net loss of $1.4 million, compared to a net loss of $24.3 million during the same period in 2015.
At June 30, 2016, the company’s cash, cash equivalents and investments amounted to $172.7 million. The company believes that these cash, cash equivalents and investments will be sufficient to enable it to advance planned preclinical studies and clinical trials for its lead product candidates for at least the next two years. (Original Source)
Shares of Applied Genetic Technologies are currently falling 31.92% to $8.98. AGTC has a 1-year high of $21.43 and a 1-year low of $8.77. The stock’s 50-day moving average is $14.38 and its 200-day moving average is $15.00.
On the ratings front, AGTC has been the subject of a number of recent research reports. In a report released today, Janney Montgomery Scott analyst Debjit Chattopadhyay downgraded AGTC to Sell, with a price target of $11, which implies an upside of 21.1% from current levels. Separately, on the same day, Wells Fargo’s Jim Birchenough downgraded the stock to Hold and has a price target of $9.00.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Debjit Chattopadhyay and Jim Birchenough have a total average return of -1.2% and 17.9% respectively. Chattopadhyay has a success rate of 43.4% and is ranked #3262 out of 4143 analysts, while Birchenough has a success rate of 46.9% and is ranked #108.
Overall, one research analyst has rated the stock with a Sell rating, 2 research analysts have assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $9.00 which is -0.9% under where the stock opened today.
Applied Genetic Technologies Corp. is a clinical-stage biotechnology company, which engages in developing gene therapy products designed to transform the lives of patients with severe diseases in ophthalmology. Its product candidates are designed to treat X-linked retinoschisis, Achromatopsia, and X-linked retinitis pigmentosa.