One of the cheapest stocks in our All Investable Screener, which you can subscribe to here, is Applied Genetic Technologies Corp (NASDAQ:AGTC).
Applied Genetic Technologies is a clinical-stage biotechnology company that uses its proprietary gene therapy platform to develop products designed to transform the lives of patients with severe diseases in ophthalmology.
AGTC’s lead product candidates focus on X-linked retinoschisis, achromatopsia and X-linked retinitis pigmentosa, which are inherited orphan diseases of the eye, caused by mutations in single genes that significantly affect visual function and currently lack effective medical treatments.
Applied Genetic Technologies is also using its gene therapy expertise to expand into disease indications with large market opportunity such as wet AMD.
As you can see below, the company’s share price has been hammered in the past twelve months, down 45.95% from $18.07 on December 17, 2015 to its latest closing price of $8.75.
Applied Genetic Technologies
Collaborative Agreement with Biogen Inc
Earlier this year Applied Genetic Technologies formed a collaboration agreement with biopharmaceutical giant Biogen Inc.
AGTC’s agreement with Biogen is a broad collaboration and license agreement focused on the development of gene-based therapies for two orphan diseases of the retina and three options for early stage discovery programs in two ophthalmic diseases and one non-ophthalmic condition. The deal also includes an equity investment in AGTC by Biogen and a license agreement for manufacturing rights.
Under the terms of the agreements, Biogen will make near-term payments including an upfront payment in the amount of $124 million to AGTC, which includes a $30 million equity investment at a purchase price of $20.63 per share. Applied Genetic Technologies is eligible to receive upfront and milestone payments exceeding $1 billion in total. Biogen will be granted a license to the XLRS and XLRP programs and the option to license discovery programs for three additional indications at the time of clinical candidate selection.
Biogen obtains worldwide commercialization rights for the XLRS and XLRP programs. AGTC has an option to share development costs and profits after the initial clinical trial data are available, and an option to co-promote the second of these products to be approved in the United States.
AGTC will lead the clinical development programs of XLRS through product approval and of XLRP through the completion of first-in-human trials. Biogen will support the clinical development costs, subject to certain conditions, following the first-in-human study for XLRS and IND-enabling studies for XLRP.
Under the manufacturing license, Biogen will receive an exclusive license to use AGTC’s proprietary technology platform to make AAV vectors for up to six genes, three of which are in AGTC’s discretion, in exchange for payment of milestones and royalties.
In July 2015, when the agreement was made Sue Washer, Chief Executive Officer of AGTC said, “We are excited to combine our deep experience in gene therapy and ophthalmology with Biogen’s strong track record of developing and marketing therapies for complex and rare diseases”.
“This collaboration will provide many synergies, enabling us to accelerate our lead programs for the treatment of X-Linked Retinoschisis (XLRS) and X-linked Retinitis Pigmentosa (XLRP), two ocular conditions with significant unmet needs, and three discovery programs, including a non-ophthalmic condition.”
“In addition, we now have expanded resources to accelerate the development of several internal programs, including our program for the treatment of achromatopsia.”
Latest Financial Results
On September 12, 2016 the company released it latest financial results with highlights including:
- In June, the company announced that the European Commission (EC) granted an orphan medicinal product designation to its investigational gene therapy product candidate for the treatment of X-linked retinitis pigmentosa (XLRP) caused by mutations in the RPGR gene. The company had previously been granted orphan drug designation from the EC and the U.S. Food and Drug Administration (FDA) for its gene therapy product candidates for the treatments of X-linked retinoschisis (XLRS) and achromatopsia (ACHM) caused by mutations in the CNGA3 and CNGB3 genes.
- In August, the company and the Medical College of Wisconsin announced that data from their studies evaluating the density of cone photoreceptors in patients with ACHM caused by mutations in the CNGB3 gene were published in Investigative Ophthalmology and Visual Science.
- Also in August, Anne M. VanLent was appointed to the company’s Board of Directors and elected Chairperson of the Audit Committee. Ms. VanLent is an industry veteran with more than 30 years of financial and healthcare leadership experience.
This is what CEO Sue Washer had to say about the results, “Over the past year we’ve continued to make progress across our clinical programs and have remained focused on advancing novel gene-based therapies to improve the lives of patients affected by rare inherited diseases. We are continuing to advance our lead product candidates for X-linked retinoschisis and achromatopsia, serious ocular indications that are caused by mutations in single genes that significantly affect visual function and currently lack effective medical treatments.”
AGTC also provided the following information on its Clinical Trial Updates.
XLRS Phase 1/2 Trial
AGTC is currently enrolling patients in a Phase 1/2 clinical trial for XLRS, a program on which the company is collaborating with Biogen. The clinical protocol anticipates enrollment of up to 27 patients. This trial is currently being conducted at six clinical sites that specialize in inherited retinal diseases. As of August 2016, the company had enrolled a total of eight patients, six of whom are in the lowest dose level group and two are in the middle dose level group.
The primary endpoint of this trial is safety and safety data to date has shown that the XLRS product candidate has been generally well tolerated. AGTC has observed mild to moderate ocular inflammation in the majority of patients which resolved either without treatment or after treatment with topical or oral corticosteroids.
Enrollment in the study has been slower than planned. Delays resulted from patients not meeting one or more eligibility criteria and as a result, the company has taken steps to increase the number of clinical sites and to enhance its outreach programs. The company made a protocol amendment to include the use of prophylactic corticosteroids that required further institutional review board approvals.
Vendor errors required the company to re-test the study agent for a process component. Upon re-testing, the study agent met all specifications and the company now has several backup vendors as well as internal testing capabilities. The company believes it has resolved these factors in order to meet its future enrollment goals and is executing on a plan to complete the trial expeditiously.
ACHMB3 Phase 1/2 Trial
The company’s Phase 1/2 ACHM clinical trial is being conducted at four sites that specialize in inherited retinal diseases, and an additional site is performing advanced optical testing on every patient. Two patients are currently enrolled in the trial which is a lower number than the company had planned to report on at this point in the study. The slower-than-expected enrollment was due to vendor errors identified during testing of the study agent, which resulted in a delay to the initiation of the trial.
As a first—in-man study, the company’s internal and external teams are monitoring these first two patients very carefully over time in order to meet the primary objective of patient safety, before proceeding with further study enrollment involving a larger number of patients. As with the XLRS program, the company intends to