Decreasing Earnings and COVID Delays Spell Trouble for AGCT

Applied Genetic Technologies Corporation (AGCT) is a biotech specializing in gene therapies for the treatment of rare inherited retinal diseases, hearing loss-related diseases, and central nervous system diseases. Over the last year, their stock has decreased in value by more than 33%, while the NASDAQ Biotechnology Index has gained more than 26%. 

On Sept 23rd, the Massachusetts-based company reported financial results for the year, disclosing a decrease in revenue by 80%. Delays due to the COVID-19 pandemic have sent the stock another 5.56% down. As a comparison, the NASDAQ Biotechnology Index decreased by 1.88% in the same period.

AGCT specializes in adeno-associated virus (AAV)-based gene therapies. Their therapies treat genetic diseases by introducing a normal or functional copy of a mutated gene. AGCT has developed novel proprietary formulations, manufacturing systems, and AAVs to improve delivery and enhance the ability of the therapy to benefit patients.

Their current pipeline includes clinical trials for rare visual disorders—X-linked Retinitis Pigmentosa (XLRP), and Achromatopsia (ACHM). Their most advanced XLRP program is currently recruiting for a Phase 2/3 clinical trial. Other programs in the IND enabling stage include treatments for frontotemporal dementia, dry macular degeneration, amyotrophic lateral sclerosis, and non-syndromic hearing loss.

Decreasing Revenue, and COVID Delays

Paying for all these programs is expensive, and a healthy amount of revenue is necessary. However, the financial results for the year showed revenue decreased 80% from $2.5 million last year to $0.5 million this year. This is on top of an increase in R&D expenses, which include the leasing of a new 21,250 manufacturing facility. Their net loss for the year is $57.8 million, and their money reserves totaled $107.1 million. Sufficient for 2 more years of liquidity. 

Additionally, the COVID-19 pandemic has delayed the recruitment of patients for the Skyline and Vista Phase 2/3 clinical trials, which are intended to support a filing of a biologics license application for laruparetigene zosaparvovec, its XLRP product candidate. The company has seen more than 50% patient screening cancelation rate in the last 2 months. AGCT has been forced to push the release of the interim data for the Skyline trail to the first half of 2022.

This news, together with reports that suspected unexpected serious adverse reactions were observed in some of the groups in their ACHM clinical trial, spooked investors and has led to a drop of more than 5% in the stock. 

Sue Washer, President and CEO of AGTC focused on positive milestones of the past year by saying   “During the past 12 months, we made significant progress towards our corporate and clinical goals with the release of meaningful data in our two wholly-owned lead programs and the addition of key industry leaders to our board and executive team as we begin to plan for the potential commercialization of these programs,”

She continued “We expect the next 12 months to be a catalyst-rich period as we prepare for data readouts in the XLRP and ACHM programs, additional clinical data from our partnered optogenetics program, and the advancement of one or more of our preclinical programs towards a potential IND filing.”

Author

Daniel Ojeda