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APPLIED GENETIC TECHNOLOGIES CORP (AGTC)
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APPLIED GENETIC TECHNOLOGIES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

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02/09/2018 | 10:18pm CEST
The following discussion and analysis provides an overview of our financial
condition as of December 31, 2017, and results of operations for the three and
six months ended December 31, 2017 and 2016. This discussion should be read in
conjunction with the accompanying Unaudited Condensed Financial Statements and
accompanying notes, as well as our Annual Report on Form 10-K for the year ended
June 30, 2017, as amended, ("June 2017 Form 10-K"). In addition to historical
financial information, the following discussion contains forward-looking
statements that reflect our plans, estimates, assumptions and beliefs. Our
actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to these
differences include those discussed below and elsewhere in this report as well
as those set forth in Part I, Item 1A, "Risk Factors" of the June 2017
Form 10-K. Forward-looking statements include information concerning our
possible or assumed future results of operations, business strategies and
operations, financing plans, potential growth opportunities, potential market
opportunities and the effects of competition. Forward-looking statements include
all statements that are not historical facts and can be identified by terms such
as "anticipates," "believes," "could," "seeks," "estimates," "expects,"
"intends," "may," "plans," "potential," "predicts," "projects," "should,"
"will," "would" or similar expressions and the negatives of those terms. Given
these uncertainties, you should not place undue reliance on these
forward-looking statements. Also, forward-looking statements represent our
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," or the "Company" refer to Applied Genetic Technologies Corporation.

Overview

We are a clinical-stage biotechnology company that uses a proprietary gene
therapy platform to develop transformational genetic therapies for patients
suffering from rare and debilitating diseases. Our initial focus is in the field
of ophthalmology, where we have active clinical programs in X-linked
retinoschisis (XLRS), achromatopsia (ACHM) and X-linked retinitis pigmentosa
(XLRP), and a preclinical program in optogenetics. In addition to ophthalmology,
we have recently initiated preclinical programs in adrenoleukodystrophy (ALD)
and otology. With a number of important clinical milestones on the horizon, we
believe we are well positioned to advance multiple programs towards pivotal
studies. In addition to our product pipeline, we have also developed broad
technological capabilities through our collaborations with 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.

Since our inception in 1999, we have devoted substantially all of our resources
to development efforts relating to our proof-of-concept programs in
ophthalmology and alpha-1 antitrypsin deficiency, or AAT deficiency, an
inherited orphan lung disease, including activities to manufacture product in
compliance with good manufacturing practices, preparing to conduct and
conducting clinical trials of our product candidates, providing general and
administrative support for these operations and protecting our intellectual
property. We do not have any products approved for sale and have not generated
any revenue from product sales. To date, we have funded our operations primarily
through the private placement of preferred stock, common stock, convertible
notes and warrants to purchase preferred stock, through our public offerings
consummated in April 2014 and July/August 2014, and through development
services, upfront and milestone payments from our partners. We have also been
the recipient, either independently or with our collaborators, of grant funding
administered through federal, state, and local governments and agencies,
including the United States Food and Drug Administration, or FDA, and by patient
advocacy groups such as The Foundation Fighting Blindness, or FFB, and the
Alpha-1 Foundation.

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 have incurred losses from operations in
each other year since inception. Our net income for the fiscal year ended
June 30, 2017 was $0.4 million, compared to net losses of $1.4 million and
$24.3 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 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:



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• conduct preclinical studies and clinical trials for our XLRS, ACHM and

         XLRP product candidates;



• continue our research and development efforts, including exploration

         through early preclinical studies of potential applications of our gene
         therapy platform in:




  •   orphan ophthalmology indications;




        •    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;




  •   seek regulatory approval for our product candidates;




  •   further develop our gene therapy platform;



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




  •   continue to operate as a public company.

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

We do not expect to generate revenue from product sales unless and until we
successfully complete development 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
cash and cash equivalents and investments at December 31, 2017, will be
sufficient to allow us to generate data from our ongoing clinical programs, to
move our pre-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 complete the process of
obtaining 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, 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 or a combination of these approaches. However, 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.

Critical Accounting Policies

Our management's discussion and analysis of our financial condition and results
of operations are based on our financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation
of these 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. On
an ongoing basis, we evaluate our estimates and judgments, including those
related to accrued expenses and share-based compensation. We base our estimates
on historical experience, 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 estimates under different assumptions or conditions.

For a description of our accounting policies that, in our opinion, involve the
most significant application of judgment or involve complex estimation and which
could, if different judgments or estimates were made, materially affect our
reported results of operations, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Critical Accounting Policies and
Estimates" in our June 2017 Form 10-K, for the year ended June 30, 2017.

New Accounting Pronouncements

Refer to Note 2 to the condensed financial statements included in this quarterly report for further information on recently issued accounting standards.

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Financial operations review

Revenue

We primarily generate revenue through collaboration agreements, sponsored
research arrangements with nonprofit organizations for the development and
commercialization of product candidates and from federal research and
development grant programs. In the future, we may generate revenue from a
combination of: product sales, license fees, milestone payments, development
services, research and development grants, and 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 any are 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, our results of
operations and financial position would be materially adversely affected.

We expect in fiscal year 2018 that revenues from our Biogen collaboration
associated with amortization of non-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 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 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 to
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 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 as well as any

additional clinical trials 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 received from our partners;




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




  •   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;




  •   significant and changing government regulation; and




  •   the timing and receipt of any regulatory approvals.


A change in the outcome of any of these variables 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, we could be required to expend significant additional financial
resources and time on the completion of clinical development.

From inception through December 31, 2017, we have incurred approximately
$153.0 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.

General and administrative expenses

General and administrative expenses 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, 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 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. Additionally, if and when we believe a regulatory approval
of the 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 our product
candidates.

Other income (expense), net

Other income and expense consists primarily of interest earned on cash and cash equivalents and our held-to-maturity investments.

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Results of Operations

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

Revenue



                                      For the Three
                                       Months Ended
                                       December 31,           Increase        % Increase
                                    2017         2016        (Decrease)       (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 )%



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, 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.

Research and development expense

The following table 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           % Increase
                                             2017          2016          (Decrease)          (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 %



External research and development costs consist of collaboration, licensing,
manufacturing, testing, and other miscellaneous expenses that are directly
attributable to our most advanced product candidates and discovery programs. We
do not allocate personnel-related costs, including stock-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.

Research and development expenses for the three months ended December 31, 2017 were $7.7 million, compared to $6.0 million for the three months ended December 31, 2016, an increase of $1.7 million, or 28%. This increase was primarily attributable to:



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$1.2 million of increased external spending on general research and

discovery programs primarily due to increased spending on the

optogenetics, otology, and adrenoleukodystrophy (ALD) preclinical programs

and increased spending on general research activities in ophthalmology to

         support ongoing clinical programs;




     •   $0.2 million of increased external spending on the ACHM programs primarily
         due to activities associated with ongoing Phase 1/2 clinical trials;




     •   $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           % Increase
                                              2017          2016         (Decrease)          (Decrease)
                                                               (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 %



General and administrative expense for the three months ended December 31, 2017
increased by $0.6 million to $3.3 million compared to the same period in 2016.
The increase was primarily driven by higher employee-related costs and other
expenses which resulted from hiring additional employees to support our
continued expansion. The increases were partially offset by lower share-based
compensation expenses and legal and professional fees during the three months
ended December 31, 2017 compared to the three months ended December 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        % Increase
                                    2017         2016        (Decrease)       (Decrease)
                                                  (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 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.



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Research and development expense


                                                For the Six
                                               Months Ended
                                               December 31,               Increase           % Increase
                                            2017           2016          (Decrease)          (Decrease)
                                                              (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 %


Research and development expenses for the six months ended December 31, 2017 were $16.0 million, compared to $11.6 million for the six months ended December 31, 2016, an increase of $4.4 million, or 38%. This increase was primarily attributable to:

$2.2 million of increased external spending on general research and
         discovery programs primarily due to increased spending on the

optogenetics, otology, and adrenoleukodystrophy (ALD) preclinical programs

and increased spending on general research activities 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
         research and development activities;



$0.5 million of increased external spending on the XLRP program primarily

associated with filing an Investigational New Drug application with the

U.S. Food and Drug Administration in August 2017 and activities associated

         with preparing to conduct a Phase 1/2 clinical trial;




     •   $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           % Increase
                                              2017          2016          (Decrease)          (Decrease)
                                                                (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 %



General and administrative expense for the six months ended December 31, 2017
increased by $1.5 million to $7.0 million compared to the same period in 2016.
The increase was primarily driven by increased corporate infrastructure and
employee-related costs which resulted from hiring additional employees to
support our continued expansion, partially offset by lower legal and
professional fees.

Liquidity and capital resources

We have incurred cumulative losses and negative cash flows from operations since
our inception in 1999, and as of December 31, 2017, we had an accumulated
deficit of $96.2 million. It will be several years, if ever, before we have a
product candidate ready for commercialization. We expect that our research and
development and general and administrative 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.



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As of December 31, 2017, we had cash, cash equivalents, and investments totaling
$119.7 million. We believe that our existing cash, cash equivalents, and
investments at December 31, 2017 will be sufficient 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.

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 24 months. As of
December 31, 2017, our cash and cash equivalents were held in bank accounts and
money market funds, while our investments consisted of certificates of deposit
and corporate and government bonds, none of which mature more than 24 months
after the balance sheet date, consistent with our investment policy that seeks
to maintain adequate liquidity and preserve capital.

Cash flows

The following table 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         % Increase
                                                2017            2016           (Decrease)        (Decrease)
                                                                  (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 %



Operating activities. For the six months ended December 31, 2017 and 2016, net
cash used in operating activities was primarily the result of cash payments made
for normal business operations and the impact of changes in our working capital
accounts.

Investing activities. Net cash provided by investing activities for the six months ended December 31, 2017 consisted primarily of cash proceeds of $58.3 million from the maturity of investments.

Financing activities. Net cash used in financing activities during the six
months ended December 31, 2017 was primarily associated with payments toward
capital lease obligations, with a minor offset resulting from the exercise of
common stock options. Net cash provided by financing activities during the six
months ended December 31, 2016 was associated with the exercise of common stock
options.

Operating capital requirements

To date, we have not generated any revenue from product sales. We do not know
when, or if, we will generate any revenue from product sales. We do not expect
to generate 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 cash and cash equivalents and investments at
December 31, 2017, will be will be sufficient to allow us to generate data from
our ongoing clinical programs, to move our pre-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 complete the process of obtaining 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.



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