10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2018

OR

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

Commission File Number: 001-36370

APPLIED GENETIC TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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

14193 NW 119^th Terrace

Suite 10

Alachua, Florida 32615

(Address of Principal Executive Offices, Including Zip Code)

(386) 462-2204

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company Emerging Growth Company	☐ ☒

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐   No  ☒

The number of shares of the registrant’s common stock outstanding as of May 2, 2018 was 18,110,536.

APPLIED GENETIC TECHNOLOGIES CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED March 31, 2018

TABLE OF CONTENTS

		Pages
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
	Condensed Balance Sheets (Unaudited) as of March 31, 2018 and June 30, 2017	3
	Condensed Statements of Operations (Unaudited) for the three and nine months ended March 31, 2018 and 2017	4
	Condensed Statements of Cash Flows (Unaudited) for the nine months ended March 31, 2018 and 2017	5
	Notes to Condensed Financial Statements (Unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28
ITEM 4.	CONTROLS AND PROCEDURES	28
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	29
ITEM 1A.	RISK FACTORS	29
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 6.	EXHIBITS	29
	SIGNATURES	30

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APPLIED GENETIC TECHNOLOGIES CORPORATION

CONDENSED BALANCE SHEETS

(Unaudited)

	March 31,			June 30,
In thousands, except per share data	2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	47,633		$	30,706
Investments		64,167			95,994
Grants receivable		133			174
Prepaid and other current assets		3,968			3,361
Total current assets		115,901			130,235
Investments, net of current portion		—			11,749
Property and equipment, net		5,526			2,661
Investment in Bionic Sight		1,995			2,000
Other assets		2,025			1,278
Total assets	$	125,447		$	147,923
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,322		$	998
Accrued and other liabilities		8,035			6,162
Deferred revenue		8,188			20,996
Total current liabilities		17,545			28,156
Deferred revenue, net of current portion		912			4,438
Other liabilities		2,294		—
Total liabilities		20,751			32,594
Stockholders' equity:
Common stock—par value $.001 per share; shares authorized: 150,000;
shares issued and outstanding: 18,121 and 18,088
at March 31, 2018 and June 30, 2017, respectively		18			18
Additional paid-in capital		209,015			204,937
Shares held in treasury of: 6 and 0 at March 31, 2018 and June 30, 2017 respectively		(23	)	—
Accumulated deficit		(104,314	)		(89,626	)
Total stockholders' equity		104,696			115,329
Total liabilities and stockholders' equity	$	125,447		$	147,923

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

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APPLIED GENETIC TECHNOLOGIES CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
				2017						2017
In thousands, except per share amounts	2018			(as adjusted)			2018			(as adjusted)
Revenue:
Collaboration revenue	$	3,588		$	8,297		$	18,727		$	30,959
Grant and other revenue		15			91			43			169
Total revenue		3,603			8,388			18,770			31,128
Operating expenses:
Research and development		7,353			6,303			23,355			17,916
General and administrative and other		3,946			2,921			11,020			8,507
Total operating expenses		11,299			9,224			34,375			26,423
Income (loss) from operations		(7,696	)		(836	)		(15,605	)		4,705
Other income:
Investment income, net		325			236			866			700
Other expense		—		—				(10	)	—
Total other income, net		325			236			856			700
Income (loss) before provision for income taxes and equity in    net earnings (losses) of affiliate		(7,371	)		(600	)		(14,749	)		5,405
Provision (benefit) for income taxes		725			600			(66	)		1,800
Income (loss) before equity in net losses of affiliate		(8,096	)		(1,200	)		(14,683	)		3,605
Equity in net losses of affiliate		(5	)	—				(5	)		—
Net income (loss)	$	(8,101	)	$	(1,200	)	$	(14,688	)	$	3,605
Weighted Average Shares Outstanding
Weighted average shares outstanding – basic		18,112			18,081			18,098			18,068
Weighted average shares outstanding – diluted		18,112			18,081			18,098			18,408
Net income (loss) per common share
Net income (loss) per share, basic	$	(0.45	)	$	(0.07	)	$	(0.81	)	$	0.20
Net income (loss) per share, diluted	$	(0.45	)	$	(0.07	)	$	(0.81	)	$	0.20

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

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APPLIED GENETIC TECHNOLOGIES CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended March 31,
				2017
In thousands	2018			(as adjusted)
Cash flows from operating activities
Net income (loss)	$	(14,688	)	$	3,605
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
Share-based compensation expense		4,072			4,161
Depreciation and amortization		821			657
Provision for uncollectible accounts		369			—
Investment premium accretion		174			320
Loss on disposal of property and equipment		20			—
Equity in net losses of affiliate		5			—
Changes in operating assets and liabilities:
Grants receivable		41			785
Prepaid and other assets		(1,946	)		(725	)
Deferred revenues		(16,334	)		(30,435	)
Accounts payable		324			(514	)
Accrued and other liabilities		1,365			1,139
Net cash (used in) operating activities		(25,777	)		(21,007	)
Cash flows from investing activities
Purchase of property and equipment		(654	)		(560	)
Purchase of and capitalized costs related to intangible assets		—			(132	)
Investment in Bionic Sight		—			(2,000	)
Maturities of investments		88,183			80,821
Purchases of investments		(44,779	)		(50,517	)
Net cash provided by investing activities		42,750			27,612
Cash flows from financing activities
Proceeds from exercise of common stock options		(17	)		27
Payments made toward capital lease obligations		(29	)	—
Net cash (used in) provided by financing activities		(46	)		27
Net change in cash and cash equivalents		16,927			6,632
Cash and cash equivalents, beginning of period		30,706			28,868
Cash and cash equivalents, end of period	$	47,633		$	35,500
Supplemental disclosure of non-cash financing activities
Capital lease obligation related to the purchase of equipment		240			—
Lease incentive obligation related to the purchase of leasehold improvements		2,588			—
Issuance of restricted stock for no consideration		25			—

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

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APPLIED GENETIC TECHNOLOGIES CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Operations:

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

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

The Company has devoted substantially all of its efforts to research and development, including clinical trials. The Company has not completed the development of any products. The Company has generated revenue from collaboration agreements, sponsored research payments and grants, but has not generated product revenue to date and is subject to a number of risks similar to those of other early stage companies in the biotechnology industry, including dependence on key individuals, the difficulties inherent in the development of commercially viable products, the need to obtain additional capital necessary to fund the development of its products, development by the Company or its competitors of technological innovations, risks of failure of clinical studies, protection of proprietary technology, compliance with government regulations and ability to transition to large-scale production of products. As of March 31, 2018, the Company had an accumulated deficit of $104.3 million. While the Company expects to continue to generate some revenue from partnering, including under the collaboration with Biogen, the Company expects to incur losses for the foreseeable future. The Company has funded its operations to date primarily through public offerings of its common stock, private placements of its preferred stock, and collaborations. At March 31, 2018, the Company had cash and cash equivalents and liquid investments of $111.8 million.

2. Summary of Significant Accounting Policies:

Basis of presentation

The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for each period presented.

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

See Note 7 for a discussion of a revision of prior financial results presented related to the recording of our income tax provision for fiscal year 2017.

The Condensed Balance Sheet as of June 30, 2017 was derived from audited financial statements, but does not include all disclosures required by GAAP. These Unaudited Condensed Financial Statements should be read in conjunction with the audited financial statements included in the Company’s 2017 Annual Report on Form 10-K, as amended, (“June 30, 2017 Form 10-K”).  Results of operations for the three and nine months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year or any other interim period.

Segment reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, we have viewed our operations and managed our business as one segment.

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Use of estimates

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

Cash and cash equivalents

Cash consists of funds held in bank accounts.  Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at the time of purchase and generally include money market accounts.

Investments

The Company’s investments consist of certificates of deposit and debt securities classified as held-to maturity.  Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date.  Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity.  Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity.  Such amortization is included in investment income.  Interest on securities classified as held-to-maturity is included in investment income.

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

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

Fair value of financial instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of financial instruments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

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

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

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

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

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Revenue recognition

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

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

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

Collaboration revenue

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

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

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

8

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

Milestone revenue

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

No milestone revenues were recognized during the three and nine month periods ended March 31, 2018 and March 31, 2017.  

Income taxes

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

The Tax Cuts and Jobs Act of 2017 was signed into law on December 22, 2017. The law includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%. In December 2017, the SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides for a measurement period of up to one year from the enactment date for companies to complete the accounting for the initial income tax effects of the Tax Act. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting is complete and provide a provisional estimate (where determinable) of the income tax effects of the Tax Act where the accounting is incomplete. The provisional estimate is required to be updated throughout the measurement period. During the quarter ending December 31, 2017, the Company recorded an income tax benefit of $791,000 relating to the Company’s minimum tax credit carryforward, which becomes refundable under the new law.

For the three and nine months ended March 31, 2017, the Company recorded an income tax provision of $0.6 million and $1.8 million respectively, related to the Company’s federal alternative minimum taxable income (“AMTI”) and state income tax in multiple states where the Company is doing business. The Company calculates its AMTI using the alternative minimum tax (“AMT”) system. The Company’s federal income tax liability is the greater of the tax computed using the regular tax system or the tax under the AMT system. Corporations are exempt from the AMT for all years in which their annual gross receipts for the 3-year period ending before the current tax year did not exceed $7.5 million. As of June 30, 2017, the Company no longer qualifies for the small company exclusion. The AMT system limits the use of net operating losses used by the taxpayer to offset taxable income.

As required by U.S. GAAP, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Any interest and penalties related

9

to uncertain tax positions will be reflected in income tax expense. The Company is subject to examination of its income tax returns in the federal and state income tax jurisdictions in which it operates.

At June 30, 2017, the total amount of unrecognized tax benefits recorded on the Company’s balance sheet was approximately $1.0 million. During the three and nine months ended March 31, 2018, the Company recognized an increase in unrecognized tax benefits as a result of tax positions taken during a prior period in the amount of $0.7 million, resulting in an ending accrued balance $1.7 million at March 31,2018. The Company recorded potential interest and penalties on unrecognized tax benefits in the amount of $0.4 million during the three months ended March 31, 2018.

The Company’s deferred tax asset, net of liabilities, decreased by $7.5 million, primarily due to a re-measurement of deferred tax assets and liabilities to the revised statutory tax rate under the Tax Act. The deferred tax asset, net of liabilities, is completely offset by valuation allowances established because realization of the deferred tax benefits are not considered more likely than not as of March 31, 2018.

For the three month and nine month periods ended March 31, 2018, the Company recorded an income tax provision (benefit) of $0.7 million and ($66,000), respectively. The income tax expense for the three months ended March 31, 2018 was primarily driven by the apportionment of income to certain state jurisdictions where the Company had not generated net operating losses (NOL’s). The income tax benefit for the nine months ended March 31, 2018 was primarily due to certain tax credit carryforwards becoming refundable under The Tax Cuts and Jobs Act of 2017, offset by income tax expense for the three months ended March 31, 2018.

Research and development

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

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

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

Prepayments related to research and development activities were $1.2 million and $1.5 million at March 31, 2018 and June 30, 2017, respectively, and are included within the prepaid and other current assets line item on the unaudited condensed balance sheets.  

Share-based compensation

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

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

Net income (loss) per share

Basic net earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net earnings (loss) per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net earnings (loss) per share calculation, stock options and warrants are considered to be common stock equivalents if they are dilutive. For the three and nine months ended March 31, 2018 and the three months ended March 31, 2017, basic and diluted net loss per share are the same due to stock options and warrants being considered anti-dilutive. If stock options and warrants had been dilutive, their impact would have increased common stock equivalents outstanding for the three and nine- month periods ended March 31, 2018 by 0.2 million shares and by 0.3 million shares for the three months ended March 31, 2017. Stock options and warrants were dilutive for the nine months ended March 31, 2017 and increased common stock equivalents outstanding by 0.4 million shares.

Comprehensive income or loss

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

New accounting pronouncements

In May 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-09, Scope of Modification Accounting, which amends ASC Topic 718, Compensation – Stock Compensation. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.  The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this standard on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation.  The amendments simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flows.  The amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company has adopted this standard for its 2018 fiscal year and it did not have a material effect on its balance sheets, results of operations or cash flows.

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

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In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces the existing accounting standards for revenue recognition with a single comprehensive five-step model. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received.  It also requires enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. The guidance applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Since its issuance, the FASB has amended several aspects of the new guidance, including provisions that address revenue recognition associated with the licensing of intellectual property. In July 2015, the FASB delayed the effective date of this guidance by one year.  The guidance is effective for public companies for annual periods beginning after December 15, 2017 as well as interim periods within those annual periods using either the full retrospective approach or modified retrospective approach. The Company is working through an adoption plan which will include a review of collaboration agreements, applying the five-step model of the new standard and comparing the results to the Company’s current accounting. As part of this, the Company is evaluating the method of adoption and assessing changes that might be necessary to its processes, internal controls and address changes in financial reporting. Effective July 1, 2018, the Company will be revising its revenue recognition accounting policy and expanding revenue disclosures to reflect the requirements of the amended revenue recognition guidance. Because of the nature of the work that remains, at this time the Company is unable to reasonably estimate the impact of adoption on its financial statements.

3. Share-based Compensation Plans:

The Company uses stock options and awards of restricted stock to provide long-term incentives for its employees, non-employee directors and certain consultants.  The Company has two equity compensation plans under which awards are currently authorized for issuance, the 2013 Employee Stock Purchase Plan and the 2013 Equity and Incentive Plan.  No awards have been issued to date under the 2013 Employee Stock Purchase Plan and all of the 128,571 shares previously authorized under this plan remain available for issuance.   A summary of the stock option activity for the nine months ended March 31, 2018 and 2017 is as follows:

	For the Nine Months Ended March 31,
	2018					2017
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
(In thousands, except per share amounts)	Shares			Price		Shares			Price
Outstanding at June 30,		2,714		$	12.96		2,037		$	13.71
Granted		819			4.75		831			11.00
Exercised		(18	)		0.35		(31	)		0.90
Forfeited		(401	)		9.89		(93	)		13.98
Expired		(18	)		15.81		(29	)		17.07
Outstanding at March 31,		3,096		$	11.24		2,715		$	12.98
Exercisable at March 31,		1,862					1,392
Weighted average fair value of options granted during    the period	$	3.43				$	7.53

For the three and nine months ended March 31, 2018, share-based compensation expense related to stock options awarded to employees, non-employee directors and consultants amounted to approximately $1.2 million and $3.9 million, respectively, compared to $1.2 million and $4.2 million, respectively, for the three and nine months ended March 31, 2017.

As of March 31, 2018, there was $7.5 million of unrecognized compensation expense related to non-vested stock options. During the nine months ended March 31, 2018, 819,468 stock options were granted to the Company’s employees and non-employee directors under the 2013 Equity and Incentive Plan. The fair value of each option granted is estimated on the grant date using the Black-Scholes stock option pricing model. The following assumptions were made in estimating fair value:

Assumption	Nine months ended March 31, 2018
Dividend yield	0.00%
Expected term	6.25 years
Risk-free interest rate	1.83-2.21%
Expected Volatility	83.53%

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4. Investments:

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

The following table summarizes the Company’s investments by category as of March 31, 2018 and June 30, 2017:

	March 31,		June 30,
In thousands	2018		2017
Investments - Current:
Certificates of deposit	$	2,819	$	3,500
Debt securities - held-to-maturity		61,348		92,494
Total investments – current	$	64,167	$	95,994
Investments - Noncurrent:
Certificates of deposit		—		2,111
Debt securities - held-to-maturity		—		9,638
Total investments - non-current	$	—	$	11,749

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

	At March 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
In thousands	Cost		Gains		Losses			Value
Investments - Current:
U.S. government and agency obligations	$	62,143	$	—	$	(80	)	$	62,063
Corporate obligations		2,024		—		(7	)		2,017
Total investments - current	$	64,167	$	—	$	(87	)	$	64,080

	At June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
In thousands	Cost		Gains		Losses			Value
Investments - Current:
U.S. government and agency obligations	$	92,494	$	—	$	(147	)	$	92,347
Corporate obligations		—		—		—			—
	$	92,494	$	—	$	(147	)	$	92,347
Investments - Noncurrent:
U.S. government and agency obligations	$	7,552	$	—	$	(52	)	$	7,500
Corporate obligations		2,086		—		(12	)		2,074
	$	9,638	$	—	$	(64	)	$	9,574

The amortized cost and fair value of held-to-maturity debt securities as of March 31, 2018, by contractual maturity, were as follows:

In thousands	Amortized Cost		Fair Value
Due in one year or less	$	64,167	$	64,080
	$	64,167	$	64,080

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The Company believes that the unrealized losses disclosed above were primarily driven by interest rate changes rather than by unfavorable changes in the credit ratings associated with these securities and as a result, the Company continues to expect to collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value.  At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting neither a significant deterioration since purchase nor other factors leading to an other-than-temporary impairment.  Therefore, the Company believes these losses to be temporary. As of March 31, 2018, the Company did not have the intent to sell any of the securities that were in an unrealized loss position at that date.

5. Fair Value of Financial Instruments and Investments:

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

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

Cash and Cash Equivalents.  The carrying value of cash and cash equivalents approximates fair value as maturities are less than three months.

Certificates of Deposit.  The Company’s certificates of deposit are placed through an account registry service.  The fair value measurement of the Company’s certificates of deposit is considered Level 2 of the fair value hierarchy as the inputs are based on rates currently offered for deposits of similar remaining maturities. The carrying amounts of the Company’s certificates of deposit reported in the unaudited condensed balance sheets approximate fair value.  

Debt securities – held-to-maturity.  The Company’s investments in debt securities classified as held-to-maturity generally include U.S. Treasury Securities, government agency obligations, and corporate obligations.  U.S. Treasury Securities are valued using quoted market prices.  Valuation adjustments are not applied.  Accordingly, U.S. Treasury Securities are considered Level 1 of the fair value hierarchy.  The fair values of U.S. government agency obligations and corporate obligations are generally determined using recently executed transactions, broker quotes, market price quotations where these are available or other observable market inputs for the same or similar securities. As such, the Company classifies its investments in U.S. government agency obligations and corporate obligations within Level 2 of the hierarchy.  

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

	Quoted prices		Significant		Significant
	in active		other observable		unobservable				Total
	markets		inputs		inputs		Total Fair		Carrying
In thousands	(Level 1)		(Level 2)		(Level 3)		Value		Value
March 31, 2018
Cash and cash equivalents	$	47,633	$	—	$	—	$	47,633	$	47,633
Certificates of deposit		—		2,811		—	$	2,811		2,819
Held-to-maturity investments:
Corporate obligations		—		2,017		—		2,017		2,024
U.S. government and agency obligations		57,256		1,996		—		59,252		59,324
Total assets	$	104,889	$	6,824	$	—	$	111,713	$	111,800
June 30, 2017
Cash and cash equivalents	$	30,706	$	—	$	—	$	30,706	$	30,706
Certificates of deposit		—		5,611		—		5,611		5,611
Held-to-maturity investments:
Corporate obligations		—		2,074		—		2,074		2,086
U.S. government and agency obligations		79,476		20,372		—		99,847		100,046
Total assets	$	110,182	$	28,057	$	—	$	138,238	$	138,449

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6. Collaboration Agreements

Biogen

On July 1, 2015, the Company entered into a Collaboration Agreement with Biogen, pursuant to which the Company and Biogen will collaborate to develop, seek regulatory approval for and commercialize gene therapy products to treat XLRS, XLRP, and discovery programs targeting three indications based on the Company’s adeno-associated virus vector technologies.  The Collaboration Agreement became effective on August 14, 2015.

Under the Collaboration Agreement, the Company will conduct all development activities through regulatory approval in the United States for the XLRS program (with activities through Phase 1/2 completion being pre-funded under the agreement and any further activities subject to incremental consideration), and all development activities through the completion of the first in human clinical trial for the XLRP program  (with activities through filing the IND being pre-funded under the agreement and any further activities subject to incremental consideration).  In addition, the Collaboration Agreement provides for discovery programs targeting three indications whereby the Company will conduct discovery, research and development activities for those additional drug candidates through the stage of clinical candidate designation, after which, Biogen may exercise an option to continue to develop, seek regulatory approval for and commercialize the designated clinical candidate. In February 2016, the Company announced Biogen’s selection of adrenoleukodystrophy as the non-ophthalmic indication of the discovery programs. Under the terms of the Collaboration Agreement, the Company, in part through its participation in joint committees with Biogen, will participate in overseeing the development and commercialization of these specific programs.

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

Activities under the Collaboration Agreement were evaluated under ASC 605-25, Revenue Recognition—Multiple Element Arrangements, as amended by ASU 2009-13, Revenue Recognition ("ASC 605-25"), to determine if they represented a multiple element revenue arrangement.  The Collaboration Agreement includes the following significant deliverables:

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

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

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

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

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

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

Accounting standards for multiple element arrangements contain a presumption that separate contracts negotiated or entered into at or near to the same time with the same entity were likely negotiated as a package and should be evaluated as a single agreement.  The Company determined that the price of $20.63 paid by Biogen included a premium of $7.45 per share over the fair value of the Company’s stock price, calculated based upon the stock price on the date of close of the agreement and adjusted for lack of marketability due to restrictions.  Accordingly, the total premium of $10.8 million was also recorded as deferred revenue and, together with the $94.0 million, allocated to the separate units of accounting identified above using the relative selling price method as discussed in Note 2 to these financial statements.  The Company records revenue based on the revenue recognition criteria applicable to each separate unit of accounting. For amounts received up-front and initially deferred, the Company recognizes the deferred revenue on a straight-line basis over the estimated service periods in which it is required to perform the research and development activities associated with each unit of accounting. At the inception of the Collaboration Agreement, the Company initially estimated the service periods to range between 2 and 3 years. However, due to certain delays which have extended the Company’s estimated period of performance, the estimated service periods are currently anticipated to be between 2 and 5 years from inception of the Collaboration Agreement.

The Company recognized collaboration revenue of $3.6 million and $8.3 million during the three months ended March 31, 2018 and 2017, respectively, and $18.7 million and $31.0 million during the nine months ended March 31, 2018 and 2017, respectively, from its collaboration with Biogen. Below is a summary of the components of the collaboration revenue:

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2018		2017		2018		2017
	(dollars in thousands)
Amortization of non-refundable upfront fees	$	2,844	$	7,907	$	16,333	$	30,435
Development services		744		390		2,394		524
Total collaboration revenue	$	3,588	$	8,297	$	18,727	$	30,959

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

The Company is also eligible to receive payments of up to $467.5 million based on the successful achievement of future milestones under its XLRS and XLRP programs. For XLRS, the Company is eligible to receive up to: (i) $40 million in milestone payments based upon the successful achievement of clinical milestones (relating to dosing in specified trials), (ii)

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$155 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories and (iii) $65 million in milestone payments based upon the achievement of worldwide sales targets. For XLRP, the Company is eligible to receive up to: (i) $42.5 million in milestone payments based upon successful achievement of clinical milestones (relating to dosing in specified trials), (ii) $102.5 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories and (iii) $62.5 million in milestone payments based upon the achievement of worldwide sales targets.  In addition, the Company is eligible to receive payments of up to $592.5 million based on the exercise of the option for and the successful achievement of future milestones under its discovery programs. Each discovery program is categorized as Category A, Category B or Category C depending on the nature of the indication it seeks to address. For Category A, the Company is eligible to receive payments of up to: (i) $20 million based upon the successful achievement of clinical milestones (relating to dosing in specified trials) and (ii) $70 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. For Category B, the Company is eligible to receive payments of up to: (i) $27.5 million based upon the successful achievement of clinical milestones (relating to dosing in specified trials) and (ii) $105 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. For Category C, the Company is eligible to receive payments of up to: (i) $40 million based upon the successful achievement of clinical milestones (relating to dosing in specified trials) and (ii) $140 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. Under certain limited circumstances, if there are discovery products from more than one discovery program in any of Category A, Category B or Category C, then the milestone payments under the applicable category shall be payable for the applicable discovery product from each such discovery program to achieve the specified milestones.

Biogen will also pay revenue-based royalties for each licensed product at tiered rates ranging from high single digit to mid-teen percentages of annual net sales of the XLRS or XLRP products and at rates ranging from mid-single digit to low-teen percentages of annual net sales for the discovery products. The Company has elected to apply the guidance in ASC 605-28 to the milestones. These milestones, if achieved, are substantive as they relate solely to past performance, are commensurate with estimated enhancement of value associated with the achievement of each milestone as a result of the Company’s performance and are reasonable when compared to other consideration amounts payable under the Collaboration Agreement; however, there can be no assurance that the Company will achieve the milestones or that the Company will receive the related revenue. Due to the uncertainty surrounding the achievement of the future milestones, such payments were not considered fixed or determinable at the inception of the Collaboration Agreement and accordingly, will not be recognized as revenue unless and until they become earned. The Company is not able to reasonably predict if and when the remaining milestones will be achieved.  

Bionic Sight

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

Under the agreement, AGTC made an initial $2.0 million payment to Bionic Sight for an equity interest in that company. This initial investment represents an approximate 5% equity interest in Bionic Sight. In addition to the initial investment, AGTC will contribute to ongoing research and development support costs through additional payments or other in-kind contributions (AGTC Ongoing R&D Support).  The AGTC Ongoing R&D Support payments and in-kind contributions will be made over time, up to the date that Bionic Sight has received both IND clearance from the FDA and receipt of written approval from an internal review board to conduct clinical trials from at least one clinical site for that product (the “IND Trigger”.)  For the three and nine months ended March 31, 2018 payments and in-kind contributions were approximately $0.2 million and $0.8 million, respectively.

If the IND Trigger is attained, AGTC will receive additional equity, based on the valuation in place at the beginning of the agreement, for the AGTC Ongoing R&D Support payments and in-kind contributions, and will be obligated to purchase additional equity in Bionic Sight for $4.0 million, at a pre-determined valuation. Due to the uncertainty of achieving the IND Trigger, the Company is expensing the AGTC Ongoing R&D Support payments and in-kind contributions made under the collaboration agreement. Such amounts are included as a component of research and development expenses in the Company’s financial statements.

The Company recorded its initial $2.0 million investment in Bionic Sight using the equity method of accounting for investments, which is recorded as its own line item on the Company’s balance sheet. During the three-month period ending March 31, 2018, the Company recorded a reduction of its investment in Bionic Sight of $5,061 and an investment loss on the

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statement of operations to reflect its equity interest in the net loss of this affiliate. The ongoing research and development costs and contributions will be recorded as a periodic cost until such time when or if the IND Trigger is achieved.

The collaboration agreement grants to AGTC, subject to achievement by Bionic Sight of certain development milestones, an option to exclusively negotiate for a limited period of time to acquire (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.

7. Revision of Prior Period Financial Statements

In the fourth quarter of fiscal 2017, the Company became aware of an immaterial error regarding the calculation of the income tax provision for the first three quarters of fiscal 2017. An assessment concluded that the error was not material to any prior period financial statements. As such, in accordance with ASC 250 (SAB No. 108, Considering Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the prior period financial statements have been revised (the "Revision") in the applicable financial statements. Periods not presented herein will be revised, as applicable, in future filings. Although management has determined that the error was not material to prior periods, the financial statements for the three and nine months ended March 31, 2017, included herein, have been revised to correct for the impact of this item. Unless otherwise indicated, the financial information as of and for the three and nine months ended March 31, 2017 presented in this Quarterly Report on Form 10-Q reflects this revision.

The following table summarize the effect of the Revision on the Statement of Operations for the three and nine months ended March 31, 2017:

	For the Three Months Ended March 31, 2017
In thousands	2017			Adjustment		2017 Adjusted
Loss before provision for income taxes	$	(600	)			$	(600	)
Provision for Income Taxes		221			379		600
Net loss	$	(821	)			$	(1,200	)
Net loss per share, basic	$	(0.05	)			$	(0.07	)
Net loss per share, diluted	$	(0.05	)			$	(0.07	)
	For the Nine Months Ended March 31, 2017
In thousands	2017			Adjustment		2017 Adjusted
Income before provision for income taxes	$	5,405				$	5,405
Provision for Income Taxes		519			1,281		1,800
Net income	$	4,886				$	3,605
Net earnings per share, basic	$	0.27				$	0.20
Net earnings per share, diluted	$	0.27				$	0.20

The following table summarize the effect of the Revision on the Statement of Cash Flows for the nine months ended March 31, 2017:

	For the Nine Months Ended March 31, 2017
In thousands	2017			Adjustment			2017 Adjusted
Net income	$	4,886			(1,281	)	$	3,605
Changes in operating assets and liabilities
Accrued and other liabilities		(142	)		1,281			1,139
Net cash (used in) operating activities	$	(21,007	)				$	(21,007	)

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8. Subsequent events

In April 2018, the Company earned a $2.5 million milestone payment from Biogen due to dosing of the first patient in the XLRP Phase 1/2 clinical trial. The company owes sublicensing fees of approximately 23% to certain collaborators associated with this milestone payment.

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

The following discussion and analysis provides an overview of our financial condition as of March 31, 2018, and results of operations for the three and nine months ended March 31, 2018 and 2017. 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.

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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:

• 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 March 31, 2018, we had cash and cash equivalents and investments totaling $111.8 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 March 31, 2018, 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.    

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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.

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 $20.0 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. We expect that milestone revenue recognized under the Biogen collaboration will increase in the near term.  In April 2018, the first patient was dosed in the XLRP Phase 1/2 clinical trial and the Company earned a $2.5 million milestone payment. Upon dosing of the fourth patient in the XLRP Phase 1/2 clinical trial, we expect to receive milestone payment of $10.0 million. We expect developmental services revenues from the Biogen collaboration will increase by approximately $2.0 million in fiscal year 2018 due to the initiation of the XLRP Phase 1/2 clinical trial.

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 March 31, 2018, we have incurred approximately $160.4 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 and explore potential applications of our gene therapy platform in other indications. Additionally, we expect sublicensing fees to increase in the fourth quarter of fiscal 2018, due to earning a $2.5 milestone payment from Biogen associated with dosing the first patient in the XLRP trial. We expect sublicensing fees to increase during fiscal 2019 upon receipt of the $10.0 million milestone payment from Biogen associated with the dosing of the fourth patient in the XLRP trial. We expect sublicensing fees to be approximately 23% of the two Biogen milestone payments.

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.

Provision for income taxes

Income tax expense (benefit) for the three and nine months ended March 31, 2018 was $0.7 million and ($66,000), respectively which was an increase in income tax expense of $0.1 million and a decrease of $1.9 million, respectively for the same time periods in 2017. The income tax expense for the three months ended March 31, 2018, was primarily driven by the apportionment of income to certain state jurisdictions where the Company had not generated net operating losses (NOL’s). The income tax benefit for the nine months ended March 31, 2018 was primarily due to certain tax credit carryforwards becoming refundable under The Tax Cuts and Jobs Act of 2017, offset by income tax expense for the three months ended March 31, 2018.

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Results of Operations

Comparison of the three months ended March 31, 2018 to the three months ended March 31, 2017

Revenue

	For the Three Months Ended March 31,				Increase			% Increase
	2018		2017		(Decrease)			(Decrease)
	(dollars in thousands)
Collaboration revenue
Amortization of upfront fees	$	2,844	$	7,907	$	(5,063	)		(64	)	%
Development services		744		390		354			91		%
Total collaboration revenue		3,588	$	8,297	$	(4,709	)		(57	)	%
Grant revenue		15		91		(76	)		(84	)	%
Total revenue	$	3,603	$	8,388	$	(4,785	)		(57	)	%

Total revenue for the three months ended March 31, 2018 was $3.6 million compared to $8.4 million generated during the same period in 2017. 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 $5.1 million for the three months ended March 31, 2018 compared to the same period in 2017 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. Development services revenue increased $0.4 million for the three months ended March 31, 2018 compared to the same period in 2017 primarily due to activities associated with preparing to conduct a Phase 1/2 clinical trial for XLRP. Grant revenue decreased $76,000 during the three months ended March 31, 2018 compared to the same period in 2017, 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 March 31, 2018 and 2017:

	For the Three Months Ended March 31,				Increase			% Increase
	2018		2017		(Decrease)			(Decrease)
	(dollars in thousands)
External research and development expenses
ACHM	$	872	$	817	$	55			7		%
XLRS		669		798		(129	)		(16	)	%
XLRP		457		524		(67	)		(13	)	%
Research and discovery programs		1,020		414		606			146		%
Total external research and development expenses		3,018		2,553		465			18		%
Internal research and development expenses
Employee-related costs		2,296		2,127		169			8		%
Share-based compensation		661		574		87			15		%
Other		1,378		1,049		329			31		%
Total internal research and development expenses		4,335		3,750		585			16		%
Total research and development expense	$	7,353	$	6,303	$	1,050			17		%

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.

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Research and development expenses for the three months ended March 31, 2018 were $7.4 million, compared to $6.3 million for the three months ended March 31, 2017, an increase of $1.1 million, or 17%. This increase was primarily attributable to:

• $0.6 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 employee-related expenses associated with the hiring of additional employees to support clinical trial execution and research and development activities.

• $0.3 million of increased general research and development expenses including training fees, equipment rental fees, dues and conference fees.

General and administrative expense

	For the Three Months Ended March 31,				Increase			% Increase
	2018		2017		(Decrease)			(Decrease)
	(dollars in thousands)
Employee-related costs	$	1,397	$	1,123	$	274			24		%
Share-based compensation		607		675		(68	)		(10	)	%
Legal and professional fees		47		215		(168	)		(78	)	%
Other		1,895		908		987			109		%
Total general and administrative expense	$	3,946	$	2,921	$	1,025			35		%

General and administrative expense for the three months ended March 31, 2018 increased by $1.0 million to $3.9 million compared to the same period in 2017. 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 increase in other expenses of $1.0 million includes increases in the provision for uncollectible accounts and state taxes. The increased expenses were partially offset by lower share-based compensation expenses and legal and professional fees during the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

Comparison of nine months ended March 31, 2018 to the nine months ended March 31, 2017

Revenue

	For the Nine Months Ended March 31,				Increase			% Increase
	2018		2017		(Decrease)			(Decrease)
	(dollars in thousands)
Collaboration revenue
Amortization of upfront fees	$	16,333	$	30,436	$	(14,103	)		(46	)	%
Development services		2,394		523		1,871			358		%
Total collaboration revenue		18,727		30,959		(12,232	)		(40	)	%
Grant revenue		43		169		(126	)		(75	)	%
Total revenue	$	18,770	$	31,128	$	(12,358	)		(40	)	%

Total revenue for the nine months ended March 31, 2018 was $18.8 million compared to $31.1 million generated during the same period in 2017. 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 $14.1 million for the nine months ended March 31, 2018 compared to the same period in 2017 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.  Development services revenue increased $1.9 million for the nine months ended March 31, 2018 compared to the same period in 2017 primarily due to activities associated with preparing to conduct a Phase 1/2 clinical trial for XLRP.  Grant revenue decreased $126,000 during the nine months ended March 31, 2018 compared to the same period in 2017, largely attributable to reduced research and development activities on grant-funded projects.    

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Research and development expense

	For the Nine Months Ended March 31,				Increase			% Increase
	2018		2017		(Decrease)			(Decrease)
	(dollars in thousands)
External research and development expenses
ACHM	$	2,626	$	2,198	$	428			19		%
XLRS		2,007		1,768		239			14		%
XLRP		1,704		1,277		427			33		%
Research and discovery programs		4,752		1,936		2,816			145		%
Total external research and development expenses		11,089		7,179		3,910			54		%
Internal research and development expenses
Employee-related costs		6,479		5,646		833			15		%
Share-based compensation		1,850		1,855		(5	)		(0	)	%
Other		3,937		3,236		701			22		%
Total internal research and development expenses		12,266		10,737		1,529			14		%
Total research and development expense	$	23,355	$	17,916	$	5,439			30		%

Research and development expenses for the nine months ended March 31, 2018 were $23.4 million, compared to $17.9 million for the nine months ended March 31, 2017, an increase of $5.4 million, or 30%. This increase was primarily attributable to:

• $2.8 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;

• $0.8 million of increased employee-related expenses associated with the hiring of additional employees to support clinical trial execution and research and development activities;

• $0.4 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 Phase1/2 clinical trial;

• $0.4 million of increased external spending on the ACHM programs primarily due to activities associated with the ongoing Phase1/2 clinical trials;

• $0.2 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 Nine Months Ended March 31,				Increase			% Increase
	2018		2017		(Decrease)			(Decrease)
	(dollars in thousands)
Employee-related costs	$	4,166	$	3,098	$	1,068			34		%
Share-based compensation		2,219		2,307		(88	)		(4	)	%
Legal and professional fees		384		701		(317	)		(45	)	%
Other		4,251		2,401		1,850			77		%
Total general and administrative expense	$	11,020	$	8,507	$	2,513			30		%

General and administrative expense for the nine months ended March 31, 2018 increased by $2.5 million to $11.0 million compared to the same period in 2017.  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. The increase in other general and administrative expenses includes increases in the provision for uncollectible accounts and state taxes.

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Liquidity and capital resources

We have incurred cumulative losses and negative cash flows from operations since our inception in 1999, and as of March 31, 2018, we had an accumulated deficit of $104.3 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.

As of March 31, 2018, we had cash, cash equivalents, and investments totaling $111.8 million.  We believe that our existing cash, cash equivalents, and investments at March 31, 2018 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 March 31, 2018, 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 Nine Months Ended March 31,						Increase			% Increase
	2018			2017			(Decrease)			(Decrease)
	(dollars in thousands)
Net cash provided by (used in):
Operating activities	$	(25,777	)	$	(21,007	)	$	(4,770	)		23		%
Investing activities		42,750			27,612			15,138			55		%
Financing activities		(46	)		27			(73	)		(270	)	%
Net increase in cash and cash equivalents:	$	16,927		$	6,632		$	10,295			155		%

Operating activities.  For the nine months ended March 31, 2018 and 2017, net cash used in operating activities was primarily the result of cash received from the collaboration with Biogen, offset by the impact of operating losses which included research and development and general and administrative expenses incurred in conducting normal business operations, and the impact of changes in our working capital accounts.

Investing activities.  Net cash provided by investing activities for the nine months ended March 31, 2018 consisted primarily of cash proceeds of $88.2 million from the maturity of investments, net of investment repurchases of $44.8 million. For the nine months ended March 31, 2017, net cash provided by investing activities consisted primarily of cash proceeds of $80.8 million from the maturity of investments, net of investment repurchases of $50.5 million.

Financing activities. Net cash provided by financing activities during the nine months ended March 31, 2018 and 2017 was associated with the exercise of common stock options and restricted stock awards.

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 March 31, 2018, 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

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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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended June 30, 2017, which is incorporated by reference herein, for a description of our market risks.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a—15(e) and 15d-15(c) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act") as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC‘s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on, and as of the time of such evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as a result of the material weakness identified by management as initially disclosed under “Item 9A—Controls and Procedures" in our Annual Report on Form 10-K for the year ended June 30, 2017.

As discussed in our Annual Report on Form 10-K for the year ended June 30, 2017, our management has determined that we have a material weakness in our internal control over financial reporting which relates to the design and operation of our closing and financial reporting processes.  Refer to Part II, Item 9A, “Controls and Procedures,” in our Annual Report on Form 10-K for the year ended June 30, 2017 for a discussion of the actions that we have previously undertaken to remediate this material weakness.  During the period covered by this Quarterly Report on Form 10-Q, we continued to: (a) provide functional and system training to employees and to prepare detailed documentation to clearly define key tasks and actions; (b) document and formalize our accounting policies and internal control processes and to help strengthen supervisory reviews by our management; (c) hire additional employees to provide further support to our finance and accounting team; and (d) design and implement monthly manual controls to manage our financial reporting close processes and to help ensure an adequate level of segregation of duties within our finance and accounting function.  Although we had not fully remediated this material weakness as of March 31, 2018, we continue to actively engage in the implementation of these and other remediation efforts to address this material weakness.

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

Changes in Internal Control over Financial Reporting

As described under “Material Weakness in Internal Control over Financial reporting,” above, during the period covered by this Quarterly Report on Form 10-Q we took and are continuing to take remedial actions intended to correct material weaknesses in our system of internal controls over financial reporting, which remedial actions have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.  Except for those remedial actions, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

28

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

Refer to Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended June 30, 2017 for a listing of our risk factors. There has been no material change in such risk factors since June 30, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides certain information with respect to our purchases of shares of the Company’s common stock during the third fiscal quarter of 2018:

Issuer Purchases of Equity Securities

Period		Total Number of Shares Purchased(a)	Average Price Paid per Share(a)		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan
January 1, 2018 through January 31, 2018		791	$	4.30	—		$	—
February 1, 2018 through February 28, 2018		733	$	3.95	—		$	—
March 1, 2018 through March 31, 2018		667	$	4.30	—		$	—
Total		2,191	$	4.18	—
(a)	These columns reflect the surrender to the Company of an aggregate of 2,191 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to an employee during the third fiscal quarter of 2018.

ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Fifth Amended and Restated Certificate of Incorporation of Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, event date March 26, 2014, filed on April 1, 2014)
3.2	Amended and Restated Bylaws of Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, event date March 26, 2014, filed on April 1, 2014)
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of Applied Genetic Technologies Corporation
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of Applied Genetic Technologies Corporation
32.1**	Section 1350 Certification of Principal Executive Officer and Principal Financial Officer of Applied Genetic Technologies Corporation
101*	Interactive Data Files pursuant to Rule 405 of Regulation S-T (XBRL)

* Filed herewith.

** Furnished herewith.

29

SIGNATURE

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

APPLIED GENETIC TECHNOLOGIES CORPORATION (Registrant)
By:	/s/ William Sullivan
	William Sullivan, Chief Financial Officer
	Date: May 8, 2018

30

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Susan B. Washer certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Applied Genetic Technologies Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2018	By:	/s/ Susan B. Washer
		Susan B. Washer
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, William A. Sullivan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Applied Genetic Technologies Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2018	By:	/s/ William A. Sullivan
		William A. Sullivan
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Applied Genetic Technologies Corporation (the “Company”) for the period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, that to her or his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 8, 2018	By:	/s/ Susan B. Washer
		Susan B. Washer
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: May 8, 2018	By:	/s/ William A. Sullivan
		William A. Sullivan
		Chief Financial Officer
		(Principal Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Applied Genetic Technologies Corporation and will be retained by Applied Genetic Technologies Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2018	May 02, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	AGTC
Entity Registrant Name	APPLIED GENETIC TECHNOLOGIES CORP
Entity Central Index Key	0001273636
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,110,536

XML

Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Current assets:
Cash and cash equivalents	$ 47,633	$ 30,706
Investments	64,167	95,994
Grants receivable	133	174
Prepaid and other current assets	3,968	3,361
Total current assets	115,901	130,235
Investments, net of current portion	0	11,749
Property and equipment, net	5,526	2,661
Investment in Bionic Sight	1,995	2,000
Other assets	2,025	1,278
Total assets	125,447	147,923
Current liabilities:
Accounts payable	1,322	998
Accrued and other liabilities	8,035	6,162
Deferred revenue	8,188	20,996
Total current liabilities	17,545	28,156
Deferred revenue, net of current portion	912	4,438
Other liabilities	2,294
Total liabilities	20,751	32,594
Stockholders' equity:
Common stock—par value $.001 per share; shares authorized: 150,000; shares issued and outstanding: 18,121 and 18,088 at March 31, 2018 and June 30, 2017, respectively	18	18
Additional paid-in capital	209,015	204,937
Shares held in treasury of: 6 and 0 at March 31, 2018 and June 30, 2017 respectively	(23)
Accumulated deficit	(104,314)	(89,626)
Total stockholders' equity	104,696	115,329
Total liabilities and stockholders' equity	$ 125,447	$ 147,923

XML

Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2018	Jun. 30, 2017
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	18,121,000	18,088,000
Common stock, shares outstanding	18,121,000	18,088,000
Treasury stock, shares held	6,000	0

XML

Condensed Statement of Operations (Unaudited) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Revenue:
Collaboration revenue	$ 3,588,000	$ 8,297,000	$ 18,727,000	$ 30,959,000
Grant and other revenue	15,000	91,000	43,000	169,000
Total revenue	3,603,000	8,388,000	18,770,000	31,128,000
Operating expenses:
Research and development	7,353,000	6,303,000	23,355,000	17,916,000
General and administrative and other	3,946,000	2,921,000	11,020,000	8,507,000
Total operating expenses	11,299,000	9,224,000	34,375,000	26,423,000
Income (loss) from operations	(7,696,000)	(836,000)	(15,605,000)	4,705,000
Other income:
Investment income, net	325,000	236,000	866,000	700,000
Other expense			(10,000)
Total other income, net	325,000	236,000	856,000	700,000
Income (loss) before provision for income taxes and equity in net earnings (losses) of affiliate	(7,371,000)	(600,000)	(14,749,000)	5,405,000
Provision (benefit) for income taxes	725,000	600,000	(66,000)	1,800,000
Income (loss) before equity in net losses of affiliate	(8,096,000)	(1,200,000)	(14,683,000)	3,605,000
Equity in net losses of affiliate	(5,000)		(5,000)
Net income (loss)	$ (8,101,000)	$ (1,200,000)	$ (14,688,000)	$ 3,605,000
Weighted Average Shares Outstanding
Weighted average shares outstanding – basic	18,112	18,081	18,098	18,068
Weighted average shares outstanding – diluted	18,112	18,081	18,098	18,408
Net income (loss) per common share
Net income (loss) per share, basic	$ (0.45)	$ (0.07)	$ (0.81)	$ 0.20
Net income (loss) per share, diluted	$ (0.45)	$ (0.07)	$ (0.81)	$ 0.20

XML

Condensed Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities
Net income (loss)	$ (14,688)	$ 3,605
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
Share-based compensation expense	4,072	4,161
Depreciation and amortization	821	657
Provision for uncollectible accounts	369
Investment premium accretion	174	320
Loss on disposal of property and equipment	20
Equity in net losses of affiliate	5
Changes in operating assets and liabilities:
Grants receivable	41	785
Prepaid and other assets	(1,946)	(725)
Deferred revenues	(16,334)	(30,435)
Accounts payable	324	(514)
Accrued and other liabilities	1,365	1,139
Net cash (used in) operating activities	(25,777)	(21,007)
Cash flows from investing activities
Purchase of property and equipment	(654)	(560)
Purchase of and capitalized costs related to intangible assets		(132)
Investment in Bionic Sight		(2,000)
Maturities of investments	88,183	80,821
Purchases of investments	(44,779)	(50,517)
Net cash provided by investing activities	42,750	27,612
Cash flows from financing activities
Proceeds from exercise of common stock options	(17)	27
Payments made toward capital lease obligations	(29)
Net cash (used in) provided by financing activities	(46)	27
Net change in cash and cash equivalents	16,927	6,632
Cash and cash equivalents, beginning of period	30,706	28,868
Cash and cash equivalents, end of period	47,633	$ 35,500
Supplemental disclosure of non-cash financing activities
Capital lease obligation related to the purchase of equipment	240
Lease incentive obligation related to the purchase of leasehold improvements	2,588
Issuance of restricted stock for no consideration	$ 25

XML

Organization and Operations

9 Months Ended

Mar. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Operations

1. Organization and Operations:

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

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

The Company has devoted substantially all of its efforts to research and development, including clinical trials. The Company has not completed the development of any products. The Company has generated revenue from collaboration agreements, sponsored research payments and grants, but has not generated product revenue to date and is subject to a number of risks similar to those of other early stage companies in the biotechnology industry, including dependence on key individuals, the difficulties inherent in the development of commercially viable products, the need to obtain additional capital necessary to fund the development of its products, development by the Company or its competitors of technological innovations, risks of failure of clinical studies, protection of proprietary technology, compliance with government regulations and ability to transition to large-scale production of products. As of March 31, 2018, the Company had an accumulated deficit of $104.3 million. While the Company expects to continue to generate some revenue from partnering, including under the collaboration with Biogen, the Company expects to incur losses for the foreseeable future. The Company has funded its operations to date primarily through public offerings of its common stock, private placements of its preferred stock, and collaborations. At March 31, 2018, the Company had cash and cash equivalents and liquid investments of $111.8 million.

XML

Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies:

Basis of presentation

The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for each period presented.

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

See Note 7 for a discussion of a revision of prior financial results presented related to the recording of our income tax provision for fiscal year 2017.

The Condensed Balance Sheet as of June 30, 2017 was derived from audited financial statements, but does not include all disclosures required by GAAP. These Unaudited Condensed Financial Statements should be read in conjunction with the audited financial statements included in the Company’s 2017 Annual Report on Form 10-K, as amended, (“June 30, 2017 Form 10-K”).  Results of operations for the three and nine months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year or any other interim period.

Segment reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, we have viewed our operations and managed our business as one segment.

Use of estimates

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

Cash and cash equivalents

Cash consists of funds held in bank accounts.  Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at the time of purchase and generally include money market accounts.

Investments

The Company’s investments consist of certificates of deposit and debt securities classified as held-to maturity.  Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date.  Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity.  Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity.  Such amortization is included in investment income.  Interest on securities classified as held-to-maturity is included in investment income.

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

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

Fair value of financial instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of financial instruments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

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

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

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

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

Revenue recognition

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

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

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

Collaboration revenue

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

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

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

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

Milestone revenue

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

No milestone revenues were recognized during the three and nine month periods ended March 31, 2018 and March 31, 2017.  

Income taxes

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

The Tax Cuts and Jobs Act of 2017 was signed into law on December 22, 2017. The law includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%. In December 2017, the SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides for a measurement period of up to one year from the enactment date for companies to complete the accounting for the initial income tax effects of the Tax Act. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting is complete and provide a provisional estimate (where determinable) of the income tax effects of the Tax Act where the accounting is incomplete. The provisional estimate is required to be updated throughout the measurement period. During the quarter ending December 31, 2017, the Company recorded an income tax benefit of $791,000 relating to the Company’s minimum tax credit carryforward, which becomes refundable under the new law.

For the three and nine months ended March 31, 2017, the Company recorded an income tax provision of $0.6 million and $1.8 million respectively, related to the Company’s federal alternative minimum taxable income (“AMTI”) and state income tax in multiple states where the Company is doing business. The Company calculates its AMTI using the alternative minimum tax (“AMT”) system. The Company’s federal income tax liability is the greater of the tax computed using the regular tax system or the tax under the AMT system. Corporations are exempt from the AMT for all years in which their annual gross receipts for the 3-year period ending before the current tax year did not exceed $7.5 million. As of June 30, 2017, the Company no longer qualifies for the small company exclusion. The AMT system limits the use of net operating losses used by the taxpayer to offset taxable income.

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

At June 30, 2017, the total amount of unrecognized tax benefits recorded on the Company’s balance sheet was approximately $1.0 million. During the three and nine months ended March 31, 2018, the Company recognized an increase in unrecognized tax benefits as a result of tax positions taken during a prior period in the amount of $0.7 million, resulting in an ending accrued balance $1.7 million at March 31,2018. The Company recorded potential interest and penalties on unrecognized tax benefits in the amount of $0.4 million during the three months ended March 31, 2018.

The Company’s deferred tax asset, net of liabilities, decreased by $7.5 million, primarily due to a re-measurement of deferred tax assets and liabilities to the revised statutory tax rate under the Tax Act. The deferred tax asset, net of liabilities, is completely offset by valuation allowances established because realization of the deferred tax benefits are not considered more likely than not as of March 31, 2018.

For the three month and nine month periods ended March 31, 2018, the Company recorded an income tax provision (benefit) of $0.7 million and ($66,000), respectively. The income tax expense for the three months ended March 31, 2018 was primarily driven by the apportionment of income to certain state jurisdictions where the Company had not generated net operating losses (NOL’s). The income tax benefit for the nine months ended March 31, 2018 was primarily due to certain tax credit carryforwards becoming refundable under The Tax Cuts and Jobs Act of 2017, offset by income tax expense for the three months ended March 31, 2018.

Research and development

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

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

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

Prepayments related to research and development activities were $1.2 million and $1.5 million at March 31, 2018 and June 30, 2017, respectively, and are included within the prepaid and other current assets line item on the unaudited condensed balance sheets.  

Share-based compensation

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

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

Net income (loss) per share

Basic net earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net earnings (loss) per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net earnings (loss) per share calculation, stock options and warrants are considered to be common stock equivalents if they are dilutive. For the three and nine months ended March 31, 2018 and the three months ended March 31, 2017, basic and diluted net loss per share are the same due to stock options and warrants being considered anti-dilutive. If stock options and warrants had been dilutive, their impact would have increased common stock equivalents outstanding for the three and nine- month periods ended March 31, 2018 by 0.2 million shares and by 0.3 million shares for the three months ended March 31, 2017. Stock options and warrants were dilutive for the nine months ended March 31, 2017 and increased common stock equivalents outstanding by 0.4 million shares.

Comprehensive income or loss

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

New accounting pronouncements

In May 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-09, Scope of Modification Accounting, which amends ASC Topic 718, Compensation – Stock Compensation. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.  The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this standard on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation.  The amendments simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flows.  The amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company has adopted this standard for its 2018 fiscal year and it did not have a material effect on its balance sheets, results of operations or cash flows.

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

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces the existing accounting standards for revenue recognition with a single comprehensive five-step model. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received.  It also requires enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. The guidance applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Since its issuance, the FASB has amended several aspects of the new guidance, including provisions that address revenue recognition associated with the licensing of intellectual property. In July 2015, the FASB delayed the effective date of this guidance by one year.  The guidance is effective for public companies for annual periods beginning after December 15, 2017 as well as interim periods within those annual periods using either the full retrospective approach or modified retrospective approach. The Company is working through an adoption plan which will include a review of collaboration agreements, applying the five-step model of the new standard and comparing the results to the Company’s current accounting. As part of this, the Company is evaluating the method of adoption and assessing changes that might be necessary to its processes, internal controls and address changes in financial reporting. Effective July 1, 2018, the Company will be revising its revenue recognition accounting policy and expanding revenue disclosures to reflect the requirements of the amended revenue recognition guidance. Because of the nature of the work that remains, at this time the Company is unable to reasonably estimate the impact of adoption on its financial statements.

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Share-based Compensation Plans

9 Months Ended

Mar. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-based Compensation Plans

3. Share-based Compensation Plans:

The Company uses stock options and awards of restricted stock to provide long-term incentives for its employees, non-employee directors and certain consultants.  The Company has two equity compensation plans under which awards are currently authorized for issuance, the 2013 Employee Stock Purchase Plan and the 2013 Equity and Incentive Plan.  No awards have been issued to date under the 2013 Employee Stock Purchase Plan and all of the 128,571 shares previously authorized under this plan remain available for issuance.   A summary of the stock option activity for the nine months ended March 31, 2018 and 2017 is as follows:

	For the Nine Months Ended March 31,
	2018					2017
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
(In thousands, except per share amounts)	Shares			Price		Shares			Price
Outstanding at June 30,		2,714		$	12.96		2,037		$	13.71
Granted		819			4.75		831			11.00
Exercised		(18	)		0.35		(31	)		0.90
Forfeited		(401	)		9.89		(93	)		13.98
Expired		(18	)		15.81		(29	)		17.07
Outstanding at March 31,		3,096		$	11.24		2,715		$	12.98
Exercisable at March 31,		1,862					1,392
Weighted average fair value of options granted during    the period	$	3.43				$	7.53

For the three and nine months ended March 31, 2018, share-based compensation expense related to stock options awarded to employees, non-employee directors and consultants amounted to approximately $1.2 million and $3.9 million, respectively, compared to $1.2 million and $4.2 million, respectively, for the three and nine months ended March 31, 2017.

As of March 31, 2018, there was $7.5 million of unrecognized compensation expense related to non-vested stock options. During the nine months ended March 31, 2018, 819,468 stock options were granted to the Company’s employees and non-employee directors under the 2013 Equity and Incentive Plan. The fair value of each option granted is estimated on the grant date using the Black-Scholes stock option pricing model. The following assumptions were made in estimating fair value:

Assumption	Nine months ended March 31, 2018
Dividend yield	0.00%
Expected term	6.25 years
Risk-free interest rate	1.83-2.21%
Expected Volatility	83.53%

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Investments

9 Months Ended

Mar. 31, 2018

Investments Schedule [Abstract]

Investments

4. Investments:

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

The following table summarizes the Company’s investments by category as of March 31, 2018 and June 30, 2017:

	March 31,		June 30,
In thousands	2018		2017
Investments - Current:
Certificates of deposit	$	2,819	$	3,500
Debt securities - held-to-maturity		61,348		92,494
Total investments – current	$	64,167	$	95,994
Investments - Noncurrent:
Certificates of deposit		—		2,111
Debt securities - held-to-maturity		—		9,638
Total investments - non-current	$	—	$	11,749

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

	At March 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
In thousands	Cost		Gains		Losses			Value
Investments - Current:
U.S. government and agency obligations	$	62,143	$	—	$	(80	)	$	62,063
Corporate obligations		2,024		—		(7	)		2,017
Total investments - current	$	64,167	$	—	$	(87	)	$	64,080

	At June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
In thousands	Cost		Gains		Losses			Value
Investments - Current:
U.S. government and agency obligations	$	92,494	$	—	$	(147	)	$	92,347
Corporate obligations		—		—		—			—
	$	92,494	$	—	$	(147	)	$	92,347
Investments - Noncurrent:
U.S. government and agency obligations	$	7,552	$	—	$	(52	)	$	7,500
Corporate obligations		2,086		—		(12	)		2,074
	$	9,638	$	—	$	(64	)	$	9,574

The amortized cost and fair value of held-to-maturity debt securities as of March 31, 2018, by contractual maturity, were as follows:

In thousands	Amortized Cost		Fair Value
Due in one year or less	$	64,167	$	64,080
	$	64,167	$	64,080

The Company believes that the unrealized losses disclosed above were primarily driven by interest rate changes rather than by unfavorable changes in the credit ratings associated with these securities and as a result, the Company continues to expect to collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value.  At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting neither a significant deterioration since purchase nor other factors leading to an other-than-temporary impairment.  Therefore, the Company believes these losses to be temporary. As of March 31, 2018, the Company did not have the intent to sell any of the securities that were in an unrealized loss position at that date.

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Fair Value of Financial Instruments and Investments

9 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments and Investments

5. Fair Value of Financial Instruments and Investments:

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

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

Cash and Cash Equivalents.  The carrying value of cash and cash equivalents approximates fair value as maturities are less than three months.

Certificates of Deposit.  The Company’s certificates of deposit are placed through an account registry service.  The fair value measurement of the Company’s certificates of deposit is considered Level 2 of the fair value hierarchy as the inputs are based on rates currently offered for deposits of similar remaining maturities. The carrying amounts of the Company’s certificates of deposit reported in the unaudited condensed balance sheets approximate fair value.  

Debt securities – held-to-maturity.  The Company’s investments in debt securities classified as held-to-maturity generally include U.S. Treasury Securities, government agency obligations, and corporate obligations.  U.S. Treasury Securities are valued using quoted market prices.  Valuation adjustments are not applied.  Accordingly, U.S. Treasury Securities are considered Level 1 of the fair value hierarchy.  The fair values of U.S. government agency obligations and corporate obligations are generally determined using recently executed transactions, broker quotes, market price quotations where these are available or other observable market inputs for the same or similar securities. As such, the Company classifies its investments in U.S. government agency obligations and corporate obligations within Level 2 of the hierarchy.  

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

	Quoted prices		Significant		Significant
	in active		other observable		unobservable				Total
	markets		inputs		inputs		Total Fair		Carrying
In thousands	(Level 1)		(Level 2)		(Level 3)		Value		Value
March 31, 2018
Cash and cash equivalents	$	47,633	$	—	$	—	$	47,633	$	47,633
Certificates of deposit		—		2,811		—	$	2,811		2,819
Held-to-maturity investments:
Corporate obligations		—		2,017		—		2,017		2,024
U.S. government and agency obligations		57,256		1,996		—		59,252		59,324
Total assets	$	104,889	$	6,824	$	—	$	111,713	$	111,800
June 30, 2017
Cash and cash equivalents	$	30,706	$	—	$	—	$	30,706	$	30,706
Certificates of deposit		—		5,611		—		5,611		5,611
Held-to-maturity investments:
Corporate obligations		—		2,074		—		2,074		2,086
U.S. government and agency obligations		79,476		20,372		—		99,847		100,046
Total assets	$	110,182	$	28,057	$	—	$	138,238	$	138,449

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Collaboration Agreements

9 Months Ended

Mar. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Collaboration Agreements

6. Collaboration Agreements

Biogen

On July 1, 2015, the Company entered into a Collaboration Agreement with Biogen, pursuant to which the Company and Biogen will collaborate to develop, seek regulatory approval for and commercialize gene therapy products to treat XLRS, XLRP, and discovery programs targeting three indications based on the Company’s adeno-associated virus vector technologies.  The Collaboration Agreement became effective on August 14, 2015.

Under the Collaboration Agreement, the Company will conduct all development activities through regulatory approval in the United States for the XLRS program (with activities through Phase 1/2 completion being pre-funded under the agreement and any further activities subject to incremental consideration), and all development activities through the completion of the first in human clinical trial for the XLRP program  (with activities through filing the IND being pre-funded under the agreement and any further activities subject to incremental consideration).  In addition, the Collaboration Agreement provides for discovery programs targeting three indications whereby the Company will conduct discovery, research and development activities for those additional drug candidates through the stage of clinical candidate designation, after which, Biogen may exercise an option to continue to develop, seek regulatory approval for and commercialize the designated clinical candidate. In February 2016, the Company announced Biogen’s selection of adrenoleukodystrophy as the non-ophthalmic indication of the discovery programs. Under the terms of the Collaboration Agreement, the Company, in part through its participation in joint committees with Biogen, will participate in overseeing the development and commercialization of these specific programs.

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

Activities under the Collaboration Agreement were evaluated under ASC 605-25, Revenue Recognition—Multiple Element Arrangements, as amended by ASU 2009-13, Revenue Recognition ("ASC 605-25"), to determine if they represented a multiple element revenue arrangement.  The Collaboration Agreement includes the following significant deliverables:

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

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

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

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

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

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

Accounting standards for multiple element arrangements contain a presumption that separate contracts negotiated or entered into at or near to the same time with the same entity were likely negotiated as a package and should be evaluated as a single agreement.  The Company determined that the price of $20.63 paid by Biogen included a premium of $7.45 per share over the fair value of the Company’s stock price, calculated based upon the stock price on the date of close of the agreement and adjusted for lack of marketability due to restrictions.  Accordingly, the total premium of $10.8 million was also recorded as deferred revenue and, together with the $94.0 million, allocated to the separate units of accounting identified above using the relative selling price method as discussed in Note 2 to these financial statements.  The Company records revenue based on the revenue recognition criteria applicable to each separate unit of accounting. For amounts received up-front and initially deferred, the Company recognizes the deferred revenue on a straight-line basis over the estimated service periods in which it is required to perform the research and development activities associated with each unit of accounting. At the inception of the Collaboration Agreement, the Company initially estimated the service periods to range between 2 and 3 years. However, due to certain delays which have extended the Company’s estimated period of performance, the estimated service periods are currently anticipated to be between 2 and 5 years from inception of the Collaboration Agreement.

The Company recognized collaboration revenue of $3.6 million and $8.3 million during the three months ended March 31, 2018 and 2017, respectively, and $18.7 million and $31.0 million during the nine months ended March 31, 2018 and 2017, respectively, from its collaboration with Biogen. Below is a summary of the components of the collaboration revenue:

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2018		2017		2018		2017
	(dollars in thousands)
Amortization of non-refundable upfront fees	$	2,844	$	7,907	$	16,333	$	30,435
Development services		744		390		2,394		524
Total collaboration revenue	$	3,588	$	8,297	$	18,727	$	30,959

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

The Company is also eligible to receive payments of up to $467.5 million based on the successful achievement of future milestones under its XLRS and XLRP programs. For XLRS, the Company is eligible to receive up to: (i) $40 million in milestone payments based upon the successful achievement of clinical milestones (relating to dosing in specified trials), (ii) $155 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories and (iii) $65 million in milestone payments based upon the achievement of worldwide sales targets. For XLRP, the Company is eligible to receive up to: (i) $42.5 million in milestone payments based upon successful achievement of clinical milestones (relating to dosing in specified trials), (ii) $102.5 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories and (iii) $62.5 million in milestone payments based upon the achievement of worldwide sales targets.  In addition, the Company is eligible to receive payments of up to $592.5 million based on the exercise of the option for and the successful achievement of future milestones under its discovery programs. Each discovery program is categorized as Category A, Category B or Category C depending on the nature of the indication it seeks to address. For Category A, the Company is eligible to receive payments of up to: (i) $20 million based upon the successful achievement of clinical milestones (relating to dosing in specified trials) and (ii) $70 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. For Category B, the Company is eligible to receive payments of up to: (i) $27.5 million based upon the successful achievement of clinical milestones (relating to dosing in specified trials) and (ii) $105 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. For Category C, the Company is eligible to receive payments of up to: (i) $40 million based upon the successful achievement of clinical milestones (relating to dosing in specified trials) and (ii) $140 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. Under certain limited circumstances, if there are discovery products from more than one discovery program in any of Category A, Category B or Category C, then the milestone payments under the applicable category shall be payable for the applicable discovery product from each such discovery program to achieve the specified milestones.

Biogen will also pay revenue-based royalties for each licensed product at tiered rates ranging from high single digit to mid-teen percentages of annual net sales of the XLRS or XLRP products and at rates ranging from mid-single digit to low-teen percentages of annual net sales for the discovery products. The Company has elected to apply the guidance in ASC 605-28 to the milestones. These milestones, if achieved, are substantive as they relate solely to past performance, are commensurate with estimated enhancement of value associated with the achievement of each milestone as a result of the Company’s performance and are reasonable when compared to other consideration amounts payable under the Collaboration Agreement; however, there can be no assurance that the Company will achieve the milestones or that the Company will receive the related revenue. Due to the uncertainty surrounding the achievement of the future milestones, such payments were not considered fixed or determinable at the inception of the Collaboration Agreement and accordingly, will not be recognized as revenue unless and until they become earned. The Company is not able to reasonably predict if and when the remaining milestones will be achieved.  

Bionic Sight

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

Under the agreement, AGTC made an initial $2.0 million payment to Bionic Sight for an equity interest in that company. This initial investment represents an approximate 5% equity interest in Bionic Sight. In addition to the initial investment, AGTC will contribute to ongoing research and development support costs through additional payments or other in-kind contributions (AGTC Ongoing R&D Support).  The AGTC Ongoing R&D Support payments and in-kind contributions will be made over time, up to the date that Bionic Sight has received both IND clearance from the FDA and receipt of written approval from an internal review board to conduct clinical trials from at least one clinical site for that product (the “IND Trigger”.)  For the three and nine months ended March 31, 2018 payments and in-kind contributions were approximately $0.2 million and $0.8 million, respectively.

If the IND Trigger is attained, AGTC will receive additional equity, based on the valuation in place at the beginning of the agreement, for the AGTC Ongoing R&D Support payments and in-kind contributions, and will be obligated to purchase additional equity in Bionic Sight for $4.0 million, at a pre-determined valuation. Due to the uncertainty of achieving the IND Trigger, the Company is expensing the AGTC Ongoing R&D Support payments and in-kind contributions made under the collaboration agreement. Such amounts are included as a component of research and development expenses in the Company’s financial statements.

The Company recorded its initial $2.0 million investment in Bionic Sight using the equity method of accounting for investments, which is recorded as its own line item on the Company’s balance sheet. During the three-month period ending March 31, 2018, the Company recorded a reduction of its investment in Bionic Sight of $5,061 and an investment loss on the statement of operations to reflect its equity interest in the net loss of this affiliate. The ongoing research and development costs and contributions will be recorded as a periodic cost until such time when or if the IND Trigger is achieved.

The collaboration agreement grants to AGTC, subject to achievement by Bionic Sight of certain development milestones, an option to exclusively negotiate for a limited period of time to acquire (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.

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Revision of Prior Period Financial Statements

9 Months Ended

Mar. 31, 2018

Accounting Changes And Error Corrections [Abstract]

Revision of Prior Period Financial Statements

7. Revision of Prior Period Financial Statements

In the fourth quarter of fiscal 2017, the Company became aware of an immaterial error regarding the calculation of the income tax provision for the first three quarters of fiscal 2017. An assessment concluded that the error was not material to any prior period financial statements. As such, in accordance with ASC 250 (SAB No. 108, Considering Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the prior period financial statements have been revised (the "Revision") in the applicable financial statements. Periods not presented herein will be revised, as applicable, in future filings. Although management has determined that the error was not material to prior periods, the financial statements for the three and nine months ended March 31, 2017, included herein, have been revised to correct for the impact of this item. Unless otherwise indicated, the financial information as of and for the three and nine months ended March 31, 2017 presented in this Quarterly Report on Form 10-Q reflects this revision.

The following table summarize the effect of the Revision on the Statement of Operations for the three and nine months ended March 31, 2017:

	For the Three Months Ended March 31, 2017
In thousands	2017			Adjustment		2017 Adjusted
Loss before provision for income taxes	$	(600	)			$	(600	)
Provision for Income Taxes		221			379		600
Net loss	$	(821	)			$	(1,200	)
Net loss per share, basic	$	(0.05	)			$	(0.07	)
Net loss per share, diluted	$	(0.05	)			$	(0.07	)
	For the Nine Months Ended March 31, 2017
In thousands	2017			Adjustment		2017 Adjusted
Income before provision for income taxes	$	5,405				$	5,405
Provision for Income Taxes		519			1,281		1,800
Net income	$	4,886				$	3,605
Net earnings per share, basic	$	0.27				$	0.20
Net earnings per share, diluted	$	0.27				$	0.20

The following table summarize the effect of the Revision on the Statement of Cash Flows for the nine months ended March 31, 2017:

	For the Nine Months Ended March 31, 2017
In thousands	2017			Adjustment			2017 Adjusted
Net income	$	4,886			(1,281	)	$	3,605
Changes in operating assets and liabilities
Accrued and other liabilities		(142	)		1,281			1,139
Net cash (used in) operating activities	$	(21,007	)				$	(21,007	)

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Subsequent events

9 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

Subsequent events

8. Subsequent events

In April 2018, the Company earned a $2.5 million milestone payment from Biogen due to dosing of the first patient in the XLRP Phase 1/2 clinical trial. The company owes sublicensing fees of approximately 23% to certain collaborators associated with this milestone payment.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Basis of presentation

Basis of presentation

The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for each period presented.

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

See Note 7 for a discussion of a revision of prior financial results presented related to the recording of our income tax provision for fiscal year 2017.

The Condensed Balance Sheet as of June 30, 2017 was derived from audited financial statements, but does not include all disclosures required by GAAP. These Unaudited Condensed Financial Statements should be read in conjunction with the audited financial statements included in the Company’s 2017 Annual Report on Form 10-K, as amended, (“June 30, 2017 Form 10-K”).  Results of operations for the three and nine months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year or any other interim period.

Segment reporting

Segment reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, we have viewed our operations and managed our business as one segment.

Use of estimates

Use of estimates

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

Cash and cash equivalents

Cash and cash equivalents

Cash consists of funds held in bank accounts.  Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at the time of purchase and generally include money market accounts.

Investments

Investments

The Company’s investments consist of certificates of deposit and debt securities classified as held-to maturity.  Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date.  Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity.  Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity.  Such amortization is included in investment income.  Interest on securities classified as held-to-maturity is included in investment income.

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

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

Fair value of financial instruments

Fair value of financial instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of financial instruments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

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

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

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

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

Revenue recognition

Revenue recognition

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

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

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

Collaboration revenue

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

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

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

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

Milestone revenue

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

No milestone revenues were recognized during the three and nine month periods ended March 31, 2018 and March 31, 2017.  

Income taxes

Income taxes

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

The Tax Cuts and Jobs Act of 2017 was signed into law on December 22, 2017. The law includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%. In December 2017, the SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides for a measurement period of up to one year from the enactment date for companies to complete the accounting for the initial income tax effects of the Tax Act. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting is complete and provide a provisional estimate (where determinable) of the income tax effects of the Tax Act where the accounting is incomplete. The provisional estimate is required to be updated throughout the measurement period. During the quarter ending December 31, 2017, the Company recorded an income tax benefit of $791,000 relating to the Company’s minimum tax credit carryforward, which becomes refundable under the new law.

For the three and nine months ended March 31, 2017, the Company recorded an income tax provision of $0.6 million and $1.8 million respectively, related to the Company’s federal alternative minimum taxable income (“AMTI”) and state income tax in multiple states where the Company is doing business. The Company calculates its AMTI using the alternative minimum tax (“AMT”) system. The Company’s federal income tax liability is the greater of the tax computed using the regular tax system or the tax under the AMT system. Corporations are exempt from the AMT for all years in which their annual gross receipts for the 3-year period ending before the current tax year did not exceed $7.5 million. As of June 30, 2017, the Company no longer qualifies for the small company exclusion. The AMT system limits the use of net operating losses used by the taxpayer to offset taxable income.

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

At June 30, 2017, the total amount of unrecognized tax benefits recorded on the Company’s balance sheet was approximately $1.0 million. During the three and nine months ended March 31, 2018, the Company recognized an increase in unrecognized tax benefits as a result of tax positions taken during a prior period in the amount of $0.7 million, resulting in an ending accrued balance $1.7 million at March 31,2018. The Company recorded potential interest and penalties on unrecognized tax benefits in the amount of $0.4 million during the three months ended March 31, 2018.

The Company’s deferred tax asset, net of liabilities, decreased by $7.5 million, primarily due to a re-measurement of deferred tax assets and liabilities to the revised statutory tax rate under the Tax Act. The deferred tax asset, net of liabilities, is completely offset by valuation allowances established because realization of the deferred tax benefits are not considered more likely than not as of March 31, 2018.

For the three month and nine month periods ended March 31, 2018, the Company recorded an income tax provision (benefit) of $0.7 million and ($66,000), respectively. The income tax expense for the three months ended March 31, 2018 was primarily driven by the apportionment of income to certain state jurisdictions where the Company had not generated net operating losses (NOL’s). The income tax benefit for the nine months ended March 31, 2018 was primarily due to certain tax credit carryforwards becoming refundable under The Tax Cuts and Jobs Act of 2017, offset by income tax expense for the three months ended March 31, 2018.

Research and development

Research and development

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

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

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

Prepayments related to research and development activities were $1.2 million and $1.5 million at March 31, 2018 and June 30, 2017, respectively, and are included within the prepaid and other current assets line item on the unaudited condensed balance sheets.  

Share-based compensation

Share-based compensation

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

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

Net income (loss) per share

Net income (loss) per share

Basic net earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net earnings (loss) per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net earnings (loss) per share calculation, stock options and warrants are considered to be common stock equivalents if they are dilutive. For the three and nine months ended March 31, 2018 and the three months ended March 31, 2017, basic and diluted net loss per share are the same due to stock options and warrants being considered anti-dilutive. If stock options and warrants had been dilutive, their impact would have increased common stock equivalents outstanding for the three and nine- month periods ended March 31, 2018 by 0.2 million shares and by 0.3 million shares for the three months ended March 31, 2017. Stock options and warrants were dilutive for the nine months ended March 31, 2017 and increased common stock equivalents outstanding by 0.4 million shares.

Comprehensive income or loss

Comprehensive income or loss

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

New accounting pronouncements

New accounting pronouncements

In May 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-09, Scope of Modification Accounting, which amends ASC Topic 718, Compensation – Stock Compensation. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.  The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this standard on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation.  The amendments simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flows.  The amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company has adopted this standard for its 2018 fiscal year and it did not have a material effect on its balance sheets, results of operations or cash flows.

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

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces the existing accounting standards for revenue recognition with a single comprehensive five-step model. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received.  It also requires enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. The guidance applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Since its issuance, the FASB has amended several aspects of the new guidance, including provisions that address revenue recognition associated with the licensing of intellectual property. In July 2015, the FASB delayed the effective date of this guidance by one year.  The guidance is effective for public companies for annual periods beginning after December 15, 2017 as well as interim periods within those annual periods using either the full retrospective approach or modified retrospective approach. The Company is working through an adoption plan which will include a review of collaboration agreements, applying the five-step model of the new standard and comparing the results to the Company’s current accounting. As part of this, the Company is evaluating the method of adoption and assessing changes that might be necessary to its processes, internal controls and address changes in financial reporting. Effective July 1, 2018, the Company will be revising its revenue recognition accounting policy and expanding revenue disclosures to reflect the requirements of the amended revenue recognition guidance. Because of the nature of the work that remains, at this time the Company is unable to reasonably estimate the impact of adoption on its financial statements.

Certificates of Deposit

Certificates of Deposit.  The Company’s certificates of deposit are placed through an account registry service.  The fair value measurement of the Company’s certificates of deposit is considered Level 2 of the fair value hierarchy as the inputs are based on rates currently offered for deposits of similar remaining maturities. The carrying amounts of the Company’s certificates of deposit reported in the unaudited condensed balance sheets approximate fair value.

Debt Securities - Held-to-maturity

Debt securities – held-to-maturity.  The Company’s investments in debt securities classified as held-to-maturity generally include U.S. Treasury Securities, government agency obligations, and corporate obligations.  U.S. Treasury Securities are valued using quoted market prices.  Valuation adjustments are not applied.  Accordingly, U.S. Treasury Securities are considered Level 1 of the fair value hierarchy.  The fair values of U.S. government agency obligations and corporate obligations are generally determined using recently executed transactions, broker quotes, market price quotations where these are available or other observable market inputs for the same or similar securities. As such, the Company classifies its investments in U.S. government agency obligations and corporate obligations within Level 2 of the hierarchy.  

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Share-based Compensation Plans (Tables)

9 Months Ended

Mar. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity

A summary of the stock option activity for the nine months ended March 31, 2018 and 2017 is as follows:

	For the Nine Months Ended March 31,
	2018					2017
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
(In thousands, except per share amounts)	Shares			Price		Shares			Price
Outstanding at June 30,		2,714		$	12.96		2,037		$	13.71
Granted		819			4.75		831			11.00
Exercised		(18	)		0.35		(31	)		0.90
Forfeited		(401	)		9.89		(93	)		13.98
Expired		(18	)		15.81		(29	)		17.07
Outstanding at March 31,		3,096		$	11.24		2,715		$	12.98
Exercisable at March 31,		1,862					1,392
Weighted average fair value of options granted during    the period	$	3.43				$	7.53

Stock Option Pricing Model Assumption

The following assumptions were made in estimating fair value:

Assumption	Nine months ended March 31, 2018
Dividend yield	0.00%
Expected term	6.25 years
Risk-free interest rate	1.83-2.21%
Expected Volatility	83.53%

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Investments (Tables)

9 Months Ended

Mar. 31, 2018

Investments Schedule [Abstract]

Summary of Company's Investments

The following table summarizes the Company’s investments by category as of March 31, 2018 and June 30, 2017:

	March 31,		June 30,
In thousands	2018		2017
Investments - Current:
Certificates of deposit	$	2,819	$	3,500
Debt securities - held-to-maturity		61,348		92,494
Total investments – current	$	64,167	$	95,994
Investments - Noncurrent:
Certificates of deposit		—		2,111
Debt securities - held-to-maturity		—		9,638
Total investments - non-current	$	—	$	11,749

Summary of Company's Debt Securities Held-to-Maturity

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

	At March 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
In thousands	Cost		Gains		Losses			Value
Investments - Current:
U.S. government and agency obligations	$	62,143	$	—	$	(80	)	$	62,063
Corporate obligations		2,024		—		(7	)		2,017
Total investments - current	$	64,167	$	—	$	(87	)	$	64,080

	At June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
In thousands	Cost		Gains		Losses			Value
Investments - Current:
U.S. government and agency obligations	$	92,494	$	—	$	(147	)	$	92,347
Corporate obligations		—		—		—			—
	$	92,494	$	—	$	(147	)	$	92,347
Investments - Noncurrent:
U.S. government and agency obligations	$	7,552	$	—	$	(52	)	$	7,500
Corporate obligations		2,086		—		(12	)		2,074
	$	9,638	$	—	$	(64	)	$	9,574

Summary of Amortized Cost and Fair Value of Held-to-Maturity Debt Securities

The amortized cost and fair value of held-to-maturity debt securities as of March 31, 2018, by contractual maturity, were as follows:

In thousands	Amortized Cost		Fair Value
Due in one year or less	$	64,167	$	64,080
	$	64,167	$	64,080

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Fair Value of Financial Instruments and Investments (Tables)

9 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of Major Category of Company's Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

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

	Quoted prices		Significant		Significant
	in active		other observable		unobservable				Total
	markets		inputs		inputs		Total Fair		Carrying
In thousands	(Level 1)		(Level 2)		(Level 3)		Value		Value
March 31, 2018
Cash and cash equivalents	$	47,633	$	—	$	—	$	47,633	$	47,633
Certificates of deposit		—		2,811		—	$	2,811		2,819
Held-to-maturity investments:
Corporate obligations		—		2,017		—		2,017		2,024
U.S. government and agency obligations		57,256		1,996		—		59,252		59,324
Total assets	$	104,889	$	6,824	$	—	$	111,713	$	111,800
June 30, 2017
Cash and cash equivalents	$	30,706	$	—	$	—	$	30,706	$	30,706
Certificates of deposit		—		5,611		—		5,611		5,611
Held-to-maturity investments:
Corporate obligations		—		2,074		—		2,074		2,086
U.S. government and agency obligations		79,476		20,372		—		99,847		100,046
Total assets	$	110,182	$	28,057	$	—	$	138,238	$	138,449

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Collaboration Agreements (Tables)

9 Months Ended

Mar. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Components of Collaboration Revenue

Below is a summary of the components of the collaboration revenue:

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2018		2017		2018		2017
	(dollars in thousands)
Amortization of non-refundable upfront fees	$	2,844	$	7,907	$	16,333	$	30,435
Development services		744		390		2,394		524
Total collaboration revenue	$	3,588	$	8,297	$	18,727	$	30,959

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Revision of Prior Period Financial Statements (Tables)

9 Months Ended

Mar. 31, 2018

Accounting Changes And Error Corrections [Abstract]

Summary of Revision of Prior Period Financial Statements

The following table summarize the effect of the Revision on the Statement of Operations for the three and nine months ended March 31, 2017:

	For the Three Months Ended March 31, 2017
In thousands	2017			Adjustment		2017 Adjusted
Loss before provision for income taxes	$	(600	)			$	(600	)
Provision for Income Taxes		221			379		600
Net loss	$	(821	)			$	(1,200	)
Net loss per share, basic	$	(0.05	)			$	(0.07	)
Net loss per share, diluted	$	(0.05	)			$	(0.07	)
	For the Nine Months Ended March 31, 2017
In thousands	2017			Adjustment		2017 Adjusted
Income before provision for income taxes	$	5,405				$	5,405
Provision for Income Taxes		519			1,281		1,800
Net income	$	4,886				$	3,605
Net earnings per share, basic	$	0.27				$	0.20
Net earnings per share, diluted	$	0.27				$	0.20

The following table summarize the effect of the Revision on the Statement of Cash Flows for the nine months ended March 31, 2017:

	For the Nine Months Ended March 31, 2017
In thousands	2017			Adjustment			2017 Adjusted
Net income	$	4,886			(1,281	)	$	3,605
Changes in operating assets and liabilities
Accrued and other liabilities		(142	)		1,281			1,139
Net cash (used in) operating activities	$	(21,007	)				$	(21,007	)

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Organization and Operations - Additional Information (Detail) $ in Thousands		1 Months Ended
	Aug. 14, 2015 TargetIndication	Jul. 31, 2015 TargetIndication	Mar. 31, 2018 USD ($)	Jun. 30, 2017 USD ($)
Summary Of Organization And Operations [Line Items]
Accumulated deficit			$ (104,314)	$ (89,626)
Cash and cash equivalents and liquid investments			$ 111,800
Collaboration Agreement [Member] | BIOGEN [Member]
Summary Of Organization And Operations [Line Items]
Number of target indications | TargetIndication	3	3

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) shares in Millions	3 Months Ended			6 Months Ended	9 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2017
Summary Of Significant Accounting Policies [Line Items]
Milestone revenue	$ 0		$ 0		$ 0	$ 0
Federal statutory income tax rate	21.00%			35.00%
Income tax provision (benefit)	$ 725,000	$ (791,000)	$ 600,000		$ (66,000)	$ 1,800,000
Alternative minimum tax exemption, description					Corporations are exempt from the AMT for all years in which their annual gross receipts for the 3-year period ending before the current tax year did not exceed $7.5 million.
Unrecognized tax benefits	1,700,000				$ 1,700,000		$ 1,000,000
Increase in unrecognized tax benefits as a result of tax positions taken in prior period	700,000				700,000
Interest and penalties on unrecognized tax benefits	$ 400,000
Decrease in deferred tax asset, net of liabilities					$ 7,500,000
Dilutive impact of options and other share based compensation awards	0.2		0.3		0.2	0.4
Prepaid and Other Current Assets [Member]
Summary Of Significant Accounting Policies [Line Items]
Advance payments	$ 1,200,000				$ 1,200,000		$ 1,500,000
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Annual gross receipts amount limit for last three years period to avail AMT exemption					$ 7,500,000

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Share-based Compensation Plans - Additional Information (Detail) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2018 USD ($) shares	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($) Plan shares	Mar. 31, 2017 USD ($) shares
Share-Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of equity compensation plans | Plan			2
Stock options granted			819,000	831,000
2013 Employee Stock Purchase Plan [Member]
Share-Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based awards issued			0
Number of shares authorized	128,571		128,571
Employees and Non-Employee Directors [Member] | 2013 Equity and Incentive Plan [Member]
Share-Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options granted			819,468
Stock Options [Member]
Share-Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense | $	$ 1.2	$ 1.2	$ 3.9	$ 4.2
Unrecognized compensation expense | $	$ 7.5		$ 7.5

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Share-based Compensation Plans - Summary of Stock Option Activity (Detail) - $ / shares shares in Thousands	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Outstanding Beginning Balance, Shares	2,714	2,037
Granted, Shares	819	831
Exercised, Shares	(18)	(31)
Forfeited, Shares	(401)	(93)
Expired, Shares	(18)	(29)
Outstanding Ending Balance, Shares	3,096	2,715
Exercisable, end of period, Shares	1,862	1,392
Weighted average fair value of options granted during the period	$ 3.43	$ 7.53
Outstanding Beginning Balance, Weighted Average Exercise Price	12.96	13.71
Granted, Weighted Average Exercise Price	4.75	11.00
Exercised, Weighted Average Exercise Price	0.35	0.90
Forfeited, Weighted Average Exercise Price	9.89	13.98
Expired, Weighted Average Exercise Price	15.81	17.07
Outstanding Ending Balance, Weighted Average Exercise Price	$ 11.24	$ 12.98

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Share-based Compensation Plans - Stock Option Pricing Model Assumption (Detail)	9 Months Ended
	Mar. 31, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Dividend yield	0.00%
Expected term	6 years 3 months
Risk-free interest rate, minimum	1.83%
Risk-free interest rate, maximum	2.21%
Expected Volatility	83.53%

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Investments - Summary of Company's Investments (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Investments - Current:
Certificates of deposit	$ 2,819	$ 3,500
Debt securities - held-to-maturity	61,348	92,494
Total investments – current	64,167	95,994
Investments - Noncurrent:
Certificates of deposit		2,111
Debt securities - held-to-maturity		9,638
Total investments - non-current	$ 0	$ 11,749

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Investments - Summary of Company's Debt Securities Held-to-Maturity (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Investments - Current [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 64,167	$ 92,494
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(87)	(147)
Fair Value	64,080	92,347
Investments - Noncurrent [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost		9,638
Gross Unrealized Gains		0
Gross Unrealized Losses		(64)
Fair Value		9,574
US Government and Agencies Obligations [Member] | Investments - Current [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	62,143	92,494
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(80)	(147)
Fair Value	62,063	92,347
US Government and Agencies Obligations [Member] | Investments - Noncurrent [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost		7,552
Gross Unrealized Gains		0
Gross Unrealized Losses		(52)
Fair Value		7,500
Corporate Obligations [Member] | Investments - Current [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	2,024	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(7)	0
Fair Value	$ 2,017	0
Corporate Obligations [Member] | Investments - Noncurrent [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost		2,086
Gross Unrealized Gains		0
Gross Unrealized Losses		(12)
Fair Value		$ 2,074

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Investments - Summary of Amortized Cost and Fair Value of Held-to-Maturity Debt Securities (Detail) $ in Thousands	Mar. 31, 2018 USD ($)
Investments Schedule [Abstract]
Amortized cost due in one year or less	$ 64,167
Total amortized cost	64,167
Fair value due in one year or less	64,080
Total fair value	$ 64,080

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Fair Value of Financial Instruments and Investments - Schedule of Major Category of Company's Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, carrying value	$ 125,447	$ 147,923
Fair Value on a Recurring Basis [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	111,713	138,238
Assets, carrying value	111,800	138,449
Fair Value on a Recurring Basis [Member] | Cash and Cash Equivalents [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	47,633	30,706
Assets, carrying value	47,633	30,706
Fair Value on a Recurring Basis [Member] | Certificate of Deposit [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	2,811	5,611
Assets, carrying value	2,819	5,611
Fair Value on a Recurring Basis [Member] | Corporate Obligations [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	2,017	2,074
Assets, carrying value	2,024	2,086
Fair Value on a Recurring Basis [Member] | US Government and Agencies Obligations [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	59,252	99,847
Assets, carrying value	59,324	100,046
Fair Value on a Recurring Basis [Member] | Quoted Prices in Active markets (Level 1) [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	104,889	110,182
Fair Value on a Recurring Basis [Member] | Quoted Prices in Active markets (Level 1) [Member] | Cash and Cash Equivalents [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	47,633	30,706
Fair Value on a Recurring Basis [Member] | Quoted Prices in Active markets (Level 1) [Member] | US Government and Agencies Obligations [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	57,256	79,476
Fair Value on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	6,824	28,057
Fair Value on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Certificate of Deposit [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	2,811	5,611
Fair Value on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Obligations [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	2,017	2,074
Fair Value on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | US Government and Agencies Obligations [Member]
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	$ 1,996	$ 20,372

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Collaboration Agreements - Additional Information (Detail)				1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 02, 2017 USD ($) Site	Aug. 14, 2015 TargetIndication	Jun. 30, 2015	Aug. 31, 2015 USD ($) $ / shares shares	Jul. 31, 2015 TargetIndication	Mar. 31, 2018 USD ($) shares	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($) Program shares	Mar. 31, 2017 USD ($)	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015	Jun. 30, 2017 USD ($) shares
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Common stock, shares issued | shares						18,121,000		18,121,000				18,088,000
Aggregate cash purchase price						$ 18,000		$ 18,000				$ 18,000
Collaboration revenue						3,588,000	$ 8,297,000	18,727,000	$ 30,959,000
Milestone revenue						0	0	0	0
Equity method investments						1,995,000		1,995,000				$ 2,000,000
Reduction in equity interest investment in net loss of affiliate						5,000		$ 5,000
Collaboration Agreement [Member] | BIOGEN [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of target indications | TargetIndication		3			3
Non-refundable upfront payments received				$ 94,000,000
Common stock, shares issued | shares				1,453,957
Purchase price of common stock | $ / shares				$ 20.63
Aggregate cash purchase price				$ 30,000,000
Aggregate net proceeds received				$ 30,000,000
Percentage common stock post-issuance			8.10%
Premium price per share | $ / shares				$ 7.45
Premium recorded as deferred revenue				$ 10,800,000
Deferred revenue recognition period								For amounts received up-front and initially deferred, the Company recognizes the deferred revenue on a straight-line basis over the estimated service periods in which it is required to perform the research and development activities associated with each unit of accounting. At the inception of the Collaboration Agreement, the Company initially estimated the service periods to range between 2 and 3 years. However, due to certain delays which have extended the Company’s estimated period of performance, the estimated service periods are currently anticipated to be between 2 and 5 years from inception of the Collaboration Agreement[12.15].
Collaboration revenue						3,588,000	$ 8,297,000	$ 18,727,000	$ 30,959,000
Milestone revenue										$ 5,000,000
Total collaboration costs										12,000,000
Share-settled collaboration expense										$ 636,000
Collaboration Agreement [Member] | BIOGEN [Member] | Minimum [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue recognition estimated service period								2 years			2 years
Collaboration Agreement [Member] | BIOGEN [Member] | Minimum [Member] | Category A Discovery Program [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of programs | Program								1
Collaboration Agreement [Member] | BIOGEN [Member] | Minimum [Member] | Category B Discovery Program [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of programs | Program								1
Collaboration Agreement [Member] | BIOGEN [Member] | Minimum [Member] | Category C Discovery Program [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of programs | Program								1
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue recognition estimated service period								5 years			3 years
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | Category A Discovery Program [Member] | Clinical Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						20,000,000		$ 20,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | Category A Discovery Program [Member] | Regulatory Approvals and First Commercial Sale in Specified Territories [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						70,000,000		70,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | Category B Discovery Program [Member] | Clinical Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						27,500,000		27,500,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | Category B Discovery Program [Member] | Regulatory Approvals and First Commercial Sale in Specified Territories [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						105,000,000		105,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | Category C Discovery Program [Member] | Clinical Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						40,000,000		40,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | Category C Discovery Program [Member] | Regulatory Approvals and First Commercial Sale in Specified Territories [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						140,000,000		140,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | XLRS and XLRP [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						467,500,000		467,500,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | XLRS [Member] | Clinical Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						40,000,000		40,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | XLRS [Member] | Regulatory Approvals and First Commercial Sale in Specified Territories [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						155,000,000		155,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | XLRS [Member] | Worldwide Sales Targets [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						65,000,000		65,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | XLRP [Member] | Clinical Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						42,500,000		42,500,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | XLRP [Member] | Regulatory Approvals and First Commercial Sale in Specified Territories [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						102,500,000		102,500,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | XLRP [Member] | Worldwide Sales Targets [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						62,500,000		62,500,000
Collaboration Agreement [Member] | BIOGEN [Member] | Maximum [Member] | Discovery Programs [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential future milestone payments receivable						592,500,000		592,500,000
Collaboration Agreement [Member] | Research Partner Institution [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Common stock, shares issued | shares										40,000
Strategic Research and Development Collaboration Agreement [Member] | Bionic Sight LLC [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payments to acquire equity interest	$ 2,000,000
Percentage of initial investment in equity interest	5.00%
Payments and in-kind contributions						200,000		$ 800,000
Equity method investments	$ 2,000,000
Reduction in equity interest investment in net loss of affiliate						$ 5,061
Strategic Research and Development Collaboration Agreement [Member] | Bionic Sight LLC [Member] | If IND Trigger Attained [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Obligated to purchase additional equity at pre-determined valuation	$ 4,000,000
Strategic Research and Development Collaboration Agreement [Member] | Bionic Sight LLC [Member] | Minimum [Member] | IND Trigger [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of clinical site required to conduct clinical trials | Site	1

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Collaboration Agreements - Components of Collaboration Revenue (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaboration revenue	$ 3,588	$ 8,297	$ 18,727	$ 30,959
Collaboration Agreement [Member] | BIOGEN [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amortization of non-refundable upfront fees	2,844	7,907	16,333	30,435
Development services	744	390	2,394	524
Total collaboration revenue	$ 3,588	$ 8,297	$ 18,727	$ 30,959

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Revision of Prior Period Financial Statements - Summary of Revision on Statements of Operations (Detail) - USD ($)	3 Months Ended			9 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Income (Loss) before provision for income taxes			$ (600,000)		$ 5,405,000
Provision for Income Taxes	$ 725,000	$ (791,000)	600,000	$ (66,000)	1,800,000
Net income (loss)	$ (8,101,000)		$ (1,200,000)	$ (14,688,000)	$ 3,605,000
Net earnings (loss) per share, basic	$ (0.45)		$ (0.07)	$ (0.81)	$ 0.20
Net earnings (loss) per share, diluted	$ (0.45)		$ (0.07)	$ (0.81)	$ 0.20
As Previously Reported [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Income (Loss) before provision for income taxes			$ (600,000)		$ 5,405,000
Provision for Income Taxes			221,000		519,000
Net income (loss)			$ (821,000)		$ 4,886,000
Net earnings (loss) per share, basic			$ (0.05)		$ 0.27
Net earnings (loss) per share, diluted			$ (0.05)		$ 0.27
Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Provision for Income Taxes			$ 379,000		$ 1,281,000
Net income (loss)					$ (1,281,000)

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Revision of Prior Period Financial Statements - Summary of Revision on Statements of Cash (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net income	$ (8,101)	$ (1,200)	$ (14,688)	$ 3,605
Changes in operating assets and liabilities
Accrued and other liabilities			1,365	1,139
Net cash (used in) operating activities			$ (25,777)	(21,007)
As Previously Reported [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net income		$ (821)		4,886
Changes in operating assets and liabilities
Accrued and other liabilities				(142)
Net cash (used in) operating activities				(21,007)
Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net income				(1,281)
Changes in operating assets and liabilities
Accrued and other liabilities				$ 1,281

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Subsequent events - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 30, 2018	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2016
Subsequent Event [Line Items]
Milestone payment earned		$ 0	$ 0	$ 0	$ 0
Collaboration Agreement [Member] | BIOGEN [Member]
Subsequent Event [Line Items]
Milestone payment earned						$ 5,000,000
Collaboration Agreement [Member] | BIOGEN [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Milestone payment earned	$ 2,500,000
Percentage of sublicensing fees to certain collaborators associated with milestone payment	23.00%