Applied Genetic
Annual Report 2019

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549 FORM 10-K (Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended June 30, 2019OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number: 001-36370 APPLIED GENETIC TECHNOLOGIES CORPORATION(Exact Name of Registrant as Specified in Its Charter) Delaware 59-3553710(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.)14193 NW 119th Terrace, Suite 10, Alachua, Florida 32615(Address of Principal Executive Offices, Including Zip Code)(386) 462-2204(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act: Title of class TradingSymbol(s) Name of exchangeon which registeredCommon Stock, $0.001 par value AGTC Nasdaq Global MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒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 thepreceding 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 90days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation 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 suchfiles). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of theExchange Act. Large accelerated filer ☐ Accelerated filer ☐Non-accelerated filer ☒ 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 revisedfinancial 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 aggregate market value of the voting common shares held by non-affiliates of the registrant was approximately $44.9 million, computed by reference to the closingsale price of the common stock as reported by The Nasdaq Global Market on December 31, 2018, the last trading day of the registrant’s most recently completed secondfiscal quarter. The Company has no non-voting common shares.The number of shares of the registrant’s common stock outstanding as of September 24, 2019 was 18,218,402.DOCUMENTS INCORPORATED BY REFERENCECertain information required to be provided in Part III of this Annual Report on Form 10-K will be provided by a definitive Proxy Statement for the registrant’s AnnualMeeting of Stockholders (the “Proxy Statement”) to be filed with the Securities and Exchange Commission (the “SEC”) on or before October 26, 2019. Table of ContentsAPPLIED GENETIC TECHNOLOGIES CORPORATIONANNUAL REPORT ON FORM 10-KFOR FISCAL YEAR ENDED JUNE 30, 2019TABLE OF CONTENTS Page PART I Item 1. Business 1 Item 1A. Risk Factors 29 Item 1B. Unresolved Staff Comments 72 Item 2. Properties 72 Item 3. Legal Proceedings 72 Item 4. Mine Safety Disclosures 72 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 73 Item 6. Selected Financial Data 73 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 74 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 86 Item 8. Financial Statements and Supplementary Data 87 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 117 Item 9A. Controls and Procedures 117 Item 9B. Other Information 118 PART III Item 10. Directors, Executive Officers and Corporate Governance 118 Item 11. Executive Compensation 118 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 118 Item 13. Certain Relationships and Related Transactions, and Director Independence 119 Item 14. Principal Accountant Fees and Services 119 PART IV Item 15. Exhibits and Financial Statement Schedules 119 Item 16. Form 10-K Summary 123 SIGNATURES 125 Table of ContentsCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K, including the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of FinancialCondition and Results of Operations,” contains forward-looking statements. These statements may relate to, but are not limited to, expectations of ourfuture results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities and theeffects of competition, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, someof which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under “Risk Factors.” In some cases,you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,”“estimate,” “predict,” “intend,” “potential,” “might,” “would,” “continue” or the negative of these terms or other comparable terminology. Thesestatements are only predictions. Actual events or results may differ materially.There may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from theexpectations we describe in our forward-looking statements. Except as required by applicable law, including the securities laws of the United States and therules and regulations of the SEC, we do not plan to publicly update or revise any forward-looking statements contained in this Annual Report on Form 10-Kafter we file it, whether as a result of any new information, future events or otherwise. Before you invest in our common stock, you should be aware that theoccurrence of any of the events described in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K could harm our business,prospects, operating results and financial condition. Although we believe that the expectations reflected in the forward-looking statements are reasonable,we cannot guarantee future results, levels of activity, performance or achievements.As used herein, except as otherwise indicated by context, references to “we,” “us,” “our,” or the “Company” refer to Applied Genetic TechnologiesCorporation. Item 1.BusinessApplied Genetic Technologies Corporation (“AGTC”) is a clinical-stage biotechnology company that uses a proprietary gene therapy platform to developtransformational genetic therapies for patients suffering from rare and debilitating diseases. Our initial focus is in the field of ophthalmology, where wecontinue to progress clinical programs in X-linked retinitis pigmentosa (XLRP) and achromatopsia (ACHM). In addition, we have preclinical programs inoptogenetics and adrenoleukodystrophy (ALD), which is a disease of the central nervous system (CNS), and several other ophthalmology, CNS and otologyindications. With a number of important clinical milestones on the horizon, we believe we are well positioned to advance multiple programs towards pivotalstudies. In addition to our product pipeline, we have also developed broad technological capabilities in the design, construction and manufacture of viralvectors using adeno-associated virus (AAV) technology. Finally, we have augmented these capabilities through multiple academic and commercialcollaborations which provide us with additional expertise.Our StrategyOur objective is to become a leader in developing and commercializing gene therapy treatments for patients with severe diseases, with an initial focus inophthalmology, and thereby provide a better life for patients with these diseases. Our strategy to accomplish this goal is to: • Develop and commercialize gene therapies in orphan ophthalmology. Our lead product candidates are treatments for the severe orphan eyediseases XLRP and ACHM. Given the severity of these diseases and the current lack of treatment options, a one-time-treatment alternative thatcorrects the underlying genetic defect would provide long-term value for patients, their families and the healthcare system more broadly. 1Table of Contents • Expand our position in ophthalmology. • Continue our leadership position in orphan ophthalmology. We have developed significant experience in the orphan ophthalmologyspace through our ongoing work on XLRP and ACHM, our previous experience in X-linked retinoschisis (XLRS) and Leber’sCongenital Amaurosis Type 2 (LCA2) and in our preclinical ophthalmology programs. We are applying this knowledge to additionalpre-clinical programs. • Leverage capabilities into larger ocular market opportunities: the insight and understanding gained in connection with our inheritedretinal disease programs enhance the capabilities to apply our technology to larger ophthalmology indications such as our pre-clinicalprogram in dry age-related macular degeneration (AMD). • Seek opportunities for strategic partnerships and acquisitions in ophthalmology gene therapy. In February 2017, we entered into acollaboration agreement with Bionic Sight to develop an optogenetic product candidate for patients with advanced retinal disease thatleverages our deep experience in gene therapy and ophthalmology and Bionic Sight’s innovative neuro-prosthetic device and algorithmfor retinal coding. We believe there may be additional opportunities for us to partner with companies and academic groups inophthalmology and more generally. We expect that our breadth of experience in research, manufacturing, clinical and regulatory matterswill help us to identify and execute in-licenses, co-development agreements, intellectual property acquisitions or manufacturingagreements that could further extend our leadership position in ophthalmology gene therapy. • Extend our expertise in adeno-associated virus, or AAV, vector design, manufacturing and delivery. We believe that our understandingof our target indications and our robust internal expertise in viral vector design gives us a significant competitive advantage. Thisunderstanding includes the identification of novel capsids and the optimization of genes and promoters, physical vector delivery, vectormanufacturing, clinical trial design and clinical trial conduct. We intend to continue to devote substantial resources both internally and withothers, such as our external research collaborations with Synpromics and the University of Florida, to identify next generation capsids and todevelop optimized promoters. We are also expanding our discovery capabilities to further enhance our ability to develop next generationproducts. • Expand our manufacturing capabilities. We continue to invest in the development and expansion of our internal manufacturingcapabilities. We have a fully functional process development and pilot manufacturing facility used to manufacture early stage researchmaterials, and as we advance further into clinical development, we plan to further develop our internal manufacturing capabilities. We havedecreased our dependence on a single contract manufacturer by qualifying and contracting with multiple backup contractors. Further, wecontinue to invest in process and analytical improvements that have resulted in a ten-fold increase in manufacturing yields and robust qualitycontrol enhancements that are amenable to characterization of commercial products. We believe these investments will facilitate the morerapid advancement of our product candidates through regulatory approval while reducing risk and will enhance the therapeutic andcommercial potential of our gene therapy platform. • Pursue indications outside of ophthalmology with high unmet medical need and strong probability of a streamlined clinical,regulatory and commercial pathway. We will continue to focus on diseases for which the underlying genetic defect is well characterized andcan be addressed by correcting or inserting a single gene, for which predictive animal models exist and for which clinical endpoints areobjective and accepted by regulatory authorities. We believe that focusing on these types of indications will enable us to obtain data morerapidly and accelerate clinical studies and regulatory approval of our product candidates. Given the relatively low prevalence of patients whohave these orphan diseases and the strong key opinion leader communities and patient advocacy groups that support them, we also believethese markets can be served with a small, targeted commercial infrastructure. Our research in otology and CNS are examples of this strategy. 2Table of ContentsOur Focus in OphthalmologySight is critical to the human experience. Many people fear blindness more than premature death. Consequently, we have initially decided to focus ourexpertise in gene therapy on orphan diseases in ophthalmology. These orphan indications have patient populations that are small enough to allow for clinicaltrials on a manageable scale but have a sufficient prevalence to provide substantial commercial opportunity. By focusing initially on orphan ophthalmologyproduct candidates, we are also able to leverage our experience and develop strong relationships within the relevant scientific and medical communities. Ourclinical trials are conducted mainly at academic test centers and by working with the principal investigators and surgeons at these test centers, we haverealized a number of important synergies.Our most advanced product candidates consist of three ophthalmology development programs across two targets: XLRP caused by mutations in the RPGRgene, and ACHM, caused by mutations in either the CNGB3 gene or the CNGA3 gene. These inherited orphan diseases of the eye are caused by mutationsin single genes that significantly affect visual function and currently lack effective medical treatments. • XLRP is a disease of the rod and cone photoreceptors characterized by progressive degeneration of the retina, which can lead to total blindnessin adult men. According to a published study, the incidence rate for retinitis pigmentosa is about one in 4,000 people and we estimate thatthere are about 200,000 patients in the United States and Europe combined. It is estimated that about ten percent, or 20,000, of these peoplehave XLRP. We are currently enrolling patients in Phase 1/2 clinical trials for our XLRP product candidate. • ACHM is characterized by the absence of cone photoreceptor function, resulting in extremely poor visual acuity, extreme light sensitivity, dayblindness and complete loss of color discrimination. According to a published study, the incidence rate for ACHM is approximately one in30,000 people, and we therefore estimate that there are about 27,000 patients in the United States and Europe combined. Of these patients,about 75% have the form of disease caused by mutations in the CNGB3 gene or the CNGA3 gene. We are currently enrolling patients inPhase 1/2 clinical trials for both our ACHM CNGB3 product candidate and our ACHM CNGA3 product candidate.In addition to these clinical-stage ophthalmology programs, we have a pre-clinical program in collaboration with Bionic Sight to develop anoptogenetic product candidate for patients with advanced retinal disease.Recent Corporate MilestonesIn July 2019, we announced we completed enrollment of the third dose group in the phase 1/2 clinical trial for our ACHM CNGA3 product candidate.In June 2019, we announced that Dr. Theresa G.H. Heah, M.D., M.B.A and Brian Krex, J.D. joined the Company as Chief Medical Officer and GeneralCounsel, respectively.In April 2019, we completed enrollment of the fourth dosing group of the phase 1/2 clinical trial for our ACHM CNGB3 product candidate and theexpansion group (including pediatric patients) of the phase 1/2 clinical trial for our XLRP product candidate.In March 2019, in connection with the termination of our collaboration with Biogen MA Inc. (Biogen), we received back the exclusive license rights todevelop, manufacture and commercialize the product candidates for all of our previously partnered programs including our XLRP program, XLRS programand three discovery programs.In December 2018, we reported the topline interim six-month data from our phase 1/2 clinical trial for our XLRS product candidate, that demonstrated thesafety and tolerability of our gene delivery platform but did not demonstrate signs of clinical activity at six months. 3Table of ContentsOur StrengthsWe believe the combination of our technology expertise and product development know-how positions us well to be leaders in the gene therapy field. Webelieve our strengths include: • Product candidates in clinical development, including three ongoing Phase 1/2 clinical trials with sufficient capital to complete enrollment andinitial data analysis on all of these trials; • Significant relationships with key opinion leaders in the fields of ophthalmology, otology, CNS, and AAV production; • Robust preclinical product development pipeline including ophthalmology, otology and CNS disorders; • A collaboration with Bionic Sight for the development of an optogenetic gene therapy and a neuro-prosthetic device with an algorithm foradvanced retinal coding; • Proprietary gene therapy manufacturing system, capable of making significant quantities of high quality viral vectors in accordance with GoodManufacturing Practice (GMP) standards as successfully demonstrated in seven different clinical trials, and has recently demonstrated a10-fold increase in productivity as a result of our internal development efforts; • Product candidates which, to date, use recombinant AAV vector technology, a well-studied, versatile and efficient gene therapy approach; • Topline interim six-month and 12- month data from our phase 1/2 clinical trial for our XLRS product candidate demonstrating the safety andtolerability of our gene delivery platform (though it did not demonstrate signs of clinical activity); • Technical expertise in analytical techniques, synthetic promoter development, engineered capsids, optimized capsids and specializedformulation and delivery techniques; and • Capabilities in clinical operations and medical affairs to power our multiple clinical programs forward.Our Gene Therapy PlatformAlthough the concept of gene therapy is relatively straightforward, the process of developing and manufacturing vectors capable of delivering geneticmaterial safely into a patient’s own cells is highly technical and demands significant expertise, experience and know-how. Our approach to gene therapyproduct development is built on our core competencies in four key areas: vector selection, design, manufacturing and delivery, each of which is described infurther detail below. One of our key capabilities is our depth of understanding of the complex interplay between the clinical disease, the cells in the patient’sbody that need treatment, the selection of a capsid and a promoter, the design of the gene construct and the physical administration method. We have spentmore than 18 years conducting research on the best combinations of these elements with the aim of developing safe and effective product candidates.Vector SelectionThe success of a gene therapy platform is highly dependent on the vector selected. Our platform is based on the use of a modified version of thenon-replicating AAV to deliver the correct DNA directly to the nucleus of the cells affected by the disease. As an underlying platform, we believe that AAVvectors are particularly well suited for treating our target diseases and have advantages over other viral vectors, such as adenovirus, herpes virus andlentivirus. These advantages include: • AAV is a small, simple non-enveloped virus with only two native genes, which makes the virus easy to engineer as an effective vector; • AAV is inherently stable and resistant to degradation; 4Table of Contents • AAV vectors are capable of delivering functional genes in a manner that supports long-term production of protein, leading to sustainedtherapeutic effect, without altering the patient’s native DNA; • AAV vectors have a demonstrated safety profile across multiple human clinical trials in several indications; and • AAV vectors are versatile, having the ability to carry therapeutic gene sequences of up to 4,000 base pairs in length into a patient’s cell. Asmore than 90% of human genes have coding sequences less than 3,000 base pairs in length, this allows AAV vectors to be used in a widevariety of indications.Vector DesignAfter selection of the vector type, there are other critical factors to be considered to maximize the safety and efficacy of the final gene therapy product: • Gene of Interest: The first step in vector design is to identify either the therapeutic protein that we want the patient’s own cells to produce(which is expressed from a DNA sequence that defines the gene of interest), or other cargo content, such as gene editing components or anRNA targeting sequence. In many cases the DNA sequence must be engineered to be stable during manufacturing and delivery. • Promoter: Production of the protein in the cell requires a promoter, which is a genetic element that drives expression. Certain promotersfunction well only in certain cell types, whereas other promoters function well in almost any cell type. We make our selection by comparingdifferent promoters in the specific type of cells that are affected in each disease target, ideally in an animal whose physiology is close to that ofhumans, to find the promoter that best enables production of therapeutic levels of protein in that cell type. We have on-going internal andexternal research efforts to design promoters that optimize therapeutic constructs for maximum expression with a smaller size, betterexpression and increased cell specificity. • Capsid: after the promoter and gene of interest are selected, these elements must be packaged into an AAV capsid. There are 108 to 109variations of AAV capsids with different abilities to bind to and enter varying cell types. Not only do we engineer these capsids in-house, wealso collaborate with commercial and academic researchers to develop novel capsids that efficiently enter the type of cells that are affected byeach of our targeted diseases.Vector ManufacturingWe have developed a proprietary, high-yield vector manufacturing process using scalable technologies. While our manufacturing method uses the herpesvirus as a helper in the first step of a four-step AAV vector manufacturing process, there is no herpes virus in the final product. Our propriety process forAAV manufacturing uses robust cell lines that are well characterized and have been included in multiple regulatory submissions in the United States,Canada and Europe. This process is highly efficient and selective, generating more packaged vector with higher fidelity of target sequences than otherproduction systems. We have developed and transferred over 30 robust and quantitative product-specific assays consistent with expected requirements forclinical development and are currently validating the assays as required for regulatory approval. We supplement our deep manufacturing experience withcharacterization of the resulting candidate technology. We have successfully completed technology transfer for vector manufacturing to multiple ContractManufacturing Organizations (CMOs) and multiple partners. Additionally, we have made several process improvements leading to a ten-fold increase inproductivity and conversion to a fully scalable suspension process.Our manufacturing process has been reviewed by the FDA, Health Canada, the Irish Medicines Board, and the Israeli Ministry of Health and has beenauthorized for production of product candidates for use in clinical trials in the United States, Canada, Europe and Israel. To date we have successfullymanufactured clinical trial material for seven different indications using three different manufacturing vendors, to ensure sufficient capacity, and 5Table of Contentsbelieve we are the only AAV gene therapy company with this level of experience. Our manufacturing process is reproducible and scalable. Our processdevelopment facility is operational and we are conducting equipment evaluation runs with multiple vendors to support development of commercial processesfor our product candidates.We own or have licensed 67 issued patents, nine pending patent applications and three allowed patent applications covering our manufacturing technology.We believe that our core competency and intellectual property estate in vector manufacturing differentiate us competitively and provide a keydifferentiating element of our gene therapy platform.The complexity of gene therapy manufacturing and lack of dedicated infrastructure to support it have historically resulted in poor reproducibility and lack ofreliability in meeting material needs beyond the early human clinical setting. rAAV vector manufacturing has been limited by inefficient constructs, poorscalability, inadequate yields and insufficient purity. We have committed substantial resources to developing an integrated production and testing platformcapable of meeting both clinical and commercial needs, including: • Our propriety platform for AAV production generates high quality rAAV vectors with high packaging fidelity, high infectivity and low emptyparticles across multiple serotypes. • Our AAV production system generates high volumetric productivities and has been demonstrated to work in multiple vendors’ single-usebioreactor (SUB) systems and has achieved more than 10-fold improvement in productivity compared to other manufacturing formats. • We have adapted our HSV helper manufacturing system to SUBs, removing scale and format limitations attendant with adherent cell culture. • We have optimized purification and formulation activities to yield multiple rAAV serotypes in a dose-ready form with exceptional purity atpreviously unattainable genomic concentrations. • Our integrated testing platform has generated over 30 product-specific characterization assays that have been successfully transferred for theevaluation of HSV helpers and AAV vectors at contract testing organizations. • The robust cell substrates we employ are well characterized and have been reviewed in several regulatory submissions in the US, Canada,Israel and Europe. • Our ability to successfully transfer the technology to multiple contract manufacturing organizations as well as collaboration partnersdemonstrates the robustness of our manufacturing process.Taken together, we believe the efficiency, productivity, scalability, characterization and regulatory definition of our proprietary rAAV manufacturingplatform uniquely position us to accelerate from early phase human clinical trials to late phase, BLA-enabling data in all our clinical programs. We arecurrently at commercial scale for our orphan ophthalmology programs given the relatively small volume per doses required per treatment and the ability toachieve thousands of doses from a small bioreactor. As such, in the near term, it is more efficient for us to pursue a hybrid strategy where we have developedand optimized the manufacturing process and leverage a CDMO’s investment in capital equipment when neededVector DeliveryOur gene therapy platform allows for vector delivery by a variety of methods, and we select the method that is best suited for the disease and cell type thatwe are targeting.In ophthalmology, the product candidate can best be delivered to cells in the eye by either injecting the product candidate under the retina, a sub-retinalinjection or by injecting the product candidate into the vitreous of the eye, an intravitreal injection. We are using sub-retinal injection as the method ofdelivery for our XLRP and 6Table of ContentsACHM product candidates in our ongoing clinical trials and have developed an extensive training program for surgeons in order to assure consistentdelivery across patients. We expect to use intravitreal injection as the method of delivery for Bionic Sights’ optogenetic product candidate.Established surgical techniques used to introduce AAV in otology indications include microinjection into the cochlea via an apical cochleostomy or throughthe round window membrane. Like the eye, the inner ear sensory organ – the organ of Corti – is bathed by fluid-filled spaces, enabling accessible vectoradministration.Once a product candidate is identified in our ALD discovery program, we expect it will be administered by intrathecal delivery, which is an injection intothe cerebrospinal fluid.Our Product Candidate PipelineOur most advanced product candidates address ophthalmology indications XLRP, ACHM B3, and ACHM A3, which are orphan diseases of the eye that arecaused by mutations in single genes, significantly affect visual function starting at birth and currently lack effective medical treatments. Ophthalmology isattractive to us as a clinical stage company because treatments for diseases affecting vision have clearly defined, objective clinical endpoints with validatedmeasurement tools that are accepted by regulatory authorities. Other orphan drug companies have spent considerable time and resources working withregulatory authorities to identify acceptable clinical endpoints and develop measurement tools in rare diseases with limited epidemiology data available. Inophthalmology there are four accepted endpoints—visual acuity, visual fields, contrast sensitivity and color vision—that are well understood by clinicians.In addition, the FDA consistently applies these endpoints and works with industry to provide guidance on how much improvement is required for clinicalrelevancy. We believe that these endpoints could help accelerate the process of clinical study and regulatory approval for our ophthalmic product candidates.We have also been encouraged by guidance from FDA for rare and inherited retinal disease that we believe signals the agency’s willingness to workcollaboratively on novel clinical design and novel endpoints that could help advance products to patients more efficiently.Our lead programsX-linked Retinitis Pigmentosa (XLRP)Retinitis pigmentosa is an inherited retinal disease with progressive loss of vision, meaning children are born with defective genes that cause poor visualfunction that significantly affects daily activities and worsens over time. XLRP is commonly first observed in boys and young men who notice problemswith vision under low light conditions, or night blindness, followed by a restriction of peripheral visual fields, or tunnel vision, leading to poor central visionand eventually to total blindness.The incidence rate for retinitis pigmentosa is about one in 4,000 people, according to a published study, and we estimate that there are about 75,000 peoplein the United States and 125,000 people in Europe with retinitis pigmentosa, or 200,000 people in the United States and Europe. According to a publishedstudy, about 10% of cases of retinitis pigmentosa are XLRP, from which we therefore estimate that there are about 20,000 persons with XLRP in the UnitedStates and Europe combined.Our XLRP product candidateOur gene therapy approach to the treatment of XLRP involves using an AAV vector to insert a functional copy of the RPGR gene into the patient’sphotoreceptor cells. Our XLRP product candidate contains an optimized and stabilized RPGR gene and a promoter that have been shown in preclinicalstudies to drive efficient gene expression in primate rods and cones as well as restore photoreceptor function in dog and mouse models of XLRP 7Table of ContentsClinical developmentWe are currently enrolling patients in a Phase 1/2 clinical trial at multiple clinical sites that specialize in inherited retinal diseases. The primary endpoint ofthis clinical trial is safety, and available data thus far have shown that the XLRP product candidate is generally safe and well tolerated. In addition to safety,this trial will measure biologic activity by assessing changes in several measures of visual function and quality of life.The clinical protocol is designed as a dose escalating trial to evaluate our product candidate in XLRP patients at multiple dose levels. As of September 26,2019, we have completed enrollment of 22 patients in the dose escalation and expansion portions of the XLRP trial. We will continue additional dosingunder the Phase 1/2 protocol to further enrich our analysis and build a robust set of safety and efficacy data to support our BLA filing, maximize the benefitto the greatest range of patients, and create the strongest data package for approval and commercialization.On September 26th 2019 we provided the planned XLRP topline six-month data from the dose escalation groups as well as a preliminary look at three-monthdata from the XLRP dose expansion group showing a favorable safety profile with stability of visual function in peripherally dosed patients andimprovement of visual function in 50% of centrally dosed patients.We are also conducting a natural history study in patients with XLRP caused by RPGR mutations. This study documents the progression of the disease in theabsence of treatment and is providing important information about the best methods for measuring visual function and other parameters in these patients,which will guide us in the design and evaluation of subsequent clinical trials in which our product candidate will be tested for safety and efficacy.Successful completion of the Phase 1/2 clinical study and the natural history study will guide us in finalizing the design of the pivotal clinical trial. Ifsuccessful, we believe the results of this pivotal trial could support our submission of a BLA to the FDA and of an MAA to the EMA for our XLRP productcandidate. We expect the trial to include approximately 46 patients randomized into two dose groups with an active phase of 12 months. We currently expectthat the most likely endpoint will be microperimetry supported by continued safety as well as stable OCT and stable or improving visual acuity.Achromatopsia (ACHM)ACHM is an inherited retinal disease, meaning that children are born with the defective gene that causes poor visual function, which significantly affectsdaily activities. ACHM is present from birth and throughout life and is characterized by a lack of cone photoreceptor function. Cone photoreceptors whichare concentrated in the macula and the fovea, respond to moderate or bright intensity light and mediate fine visual acuity. Individuals with ACHM havemarkedly reduced visual acuity, photophobia or light sensitivity, and complete loss of color discrimination. Their only functioning photoreceptors are rodphotoreceptors, which respond to low intensity light conditions and mediate night vision but cannot achieve fine visual acuity. Best-corrected visual acuity inpersons affected by ACHM, even under subdued light conditions, is usually about 20/200, a level at which people are considered legally blind. They alsoexperience extreme light sensitivity resulting in even worse visual acuity under normal daylight conditions, or day blindness.ACHM can be caused by mutations in any of at least five genes that are required for normal cone photoreceptor function. The most common causes aremutations in the CNGB3 gene (about half of all cases) or CNGA3 gene (about one-fourth of all cases). These genes encode the CNGB3 and CNGA3proteins, which combine to form a channel in the photoreceptor membrane that is required for photo-transduction, the process of converting light intoelectrical signals that the brain can understand. According to published reports, the incidence rate for ACHM is approximately one in 30,000 people, and wetherefore estimate that there are about 10,000 people in the United States and about 17,000 people in Europe with ACHM. Of these, more than 75% havedisease caused by mutations in the CNGA3 or CNGB3 gene. 8Table of ContentsOur ACHM product candidatesOur gene therapy approach to treatment of ACHM involves using an AAV vector to insert a functional copy of the CNGB3 or CNGA3 gene into thepatient’s photoreceptor cells. Our ACHM product candidates contain either the CNGB3 or the CNGA3 gene and a proprietary cone specific promoter thathas been shown in preclinical studies to drive efficient gene expression in all three types of primate cone photoreceptors and restores cone photoreceptorfunction in dog, mouse and sheep models of ACHM.Clinical development of our CNGB3 and CNGA3 related ACHM product candidateWe are currently enrolling patients in two Phase 1/2 clinical trials at multiple clinical sites that specialize in inherited retinal diseases. The primary endpointof these clinical trials is safety, and while available data thus far have shown that the ACHM CNGB3 and CNGA3 product candidates are generally safe andwell tolerated, we did experience initial variability in surgical procedures, which we have now resolved through our extensive surgical training procedures.In addition to safety, these trials will measure biologic activity by assessing changes in visual function and quality of life. The clinical protocols are designedas dose escalating trials to evaluate our product candidates in ACHMA3 and ACHMB3 patients at multiple dose levels.As of September 26, 2019, we completed enrollment of 15 and 12 patients in the dose escalation portions of the CNGB3 and CNGA3 trials, respectively.The safety profile in both trials remains favorable; the Data Safety Monitoring Committee (DSMC) has allowed dose escalation and dosing of pediatricpatients. We will continue additional dosing under our Phase 1/2 clinical protocol to enrich and build a robust set of safety and efficacy data to support ourBLA filing, maximize the benefit to the greatest range of patients and create the strongest data package for approval and commercialization.On September 26, 2019, we provided early achromatopsia (ACHM) data indicating biologic activity in the dose escalation portions in both the B3 and theA3 trials. At the middle dose level one of three patients in each trial and at the high dose level 2 of 3 patients in the B3 trial have shown clinicallymeaningful improvements, defined as greater than one log change from baseline, in light discomfort at three months. Anecdotal statements from the patientssupport these improvements as being meaningful to their daily lives.We have also completed enrollment in a natural history study in persons affected by ACHM caused by CNGB3 mutations and CNGA3 mutations and resultsfrom the studies will be presented in appropriate scientific meetings and publications.Successful completion of the Phase 1/2 clinical studies and the natural history studies will guide us in finalizing the design of the pivotal clinical trial. Ifsuccessful, we believe the results of this pivotal trial could support our submission of a BLA to the FDA and of an MAA to the EMA for our ACHM productcandidates.Ongoing Research in Support for our Current and Future Clinical ProgramsIn support of our clinical programs described above, we continue to conduct research to fully understand the underlying technology. Additionally, we haveinitiated or continued several programs that are in early safety and preclinical proof of concept stages that are described below.XLRP product candidate differentiationThree AAV gene therapy vectors are currently in Phase I/2 clinical development for treatment of patients with XLRP. To compare the relative attributes ofthese vectors, a study was conducted which compared the photoreceptor transduction efficiency of subretinally delivered AAVTYF, the AAV capsid used inAGTC product candidates, AAV5 and AAV8 capsids in a head-to-head non-human primate (NHP) experiment. Non-human primates were injected witheach of the vectors and were followed for 13 weeks. Safety parameters 9Table of Contentsincluded ocular exams, clinical observations, clinical pathology, and anatomic histopathology. A direct comparison between AAVTYF (n=12), AAV5 (n=4)and AAV8 (n=8) revealed that AAVTYF was comparable to or superior to both AAV5 or AAV8 in transduction of photoreceptors in NHPs when deliveredsubretinally, while demonstrating a similar, moderate inflammatory response. Therefore, AAVTYF represents, an attractive therapeutic choice for humanXLRP gene therapy. Understanding the ocular inflammatory response to AAV administrationBoth intravitreal, and to a lesser extent, subretinal administration elicits an inflammatory response to AAV. In the eye, it remains unclear what specificproperty of the vector preparation drives inflammation. To this end, through a series of detailed, well-controlled studies in non-human primates, weperformed a systematic evaluation of the potential contributory factors involved. A brief summary of the studies conducted is shown in the table below, andthe accompanying illustrative figures. Purpose Parameters ObservationsVector Methodology(Transfection (TFX) versusHAVE (Herpes simplex virussystem)) Ocular inflammation following intravitreal administration No difference in ocular inflammatory response betweenmanufacturing methodologiesVector Components(Full capsids, empty capsids,process residuals) In-life ocular inflammation, transduction efficiency, andcytokine/cellular immune responses following intravitrealadministration Reduction of empty capsids lowers inflammation andenhances transduction Transient minimal response in cytokines or immunecells (local and systemic), with no clear distinctionacross treatment groupsCapsid serotype(AAVTYF, AAV5, AAV8) In-life ocular inflammation, transduction efficiencyfollowing sub-retinal administration No difference in ocular inflammatory response betweencapsid serotypes, two-fold improvement of transductionefficiency with AAVTYF relative to AAV5 & AAV8Pre-existing Immunity(Low, Medium & High) In-life ocular inflammation, prevention of vectortransduction, and neutralizing antibody correlation betweeneyes following intravitreal administration Pre-existing immunity has no impact on ocularinflammation, and is not sufficient in itself to blockvector transduction Neutralizing antibody in one eye does not impactneutralizing antibody levels in the contralateral eye 10Table of Contents The ocular inflammation is most strongly correlated to total vector dose, and appears to occur in two phases: immediate, surgery/injection related (moreexplicit with sub-retinal injections) and delayed, in response to vector (processing of capsid and/or transgene expression). The studies outlined above haveallowed us to eliminate the following as key drivers of inflammation: production methodology (transfection versus HSV), characteristics of the AAVproduct (transgene and process residuals) and capsid serotype (AAV2 versus AAV8) or novel engineered variant (AAVTYF). To date, none of the studiesindicate that we should make changes in our product candidates, but we continue to work in non-human primates to understand ocular inflammation. Thefirst publication of this work has recently been accepted by Human Gene Therapy (Timmers et al., 2019; see https://agtc.com/science/).Advanced Retinal DiseaseAs part of our collaboration with Bionic Sight we are developing an optogenetic candidate treatment for individuals having retinitis pigmentosa (RP) whohave lost light sensitivity. RP is a large group of inherited retinal disorders in which progressive degeneration of photoreceptors or retinal pigmentepithelium (RPE) leads to vision loss which is independent of a patients’ genetic mutation. In Europe and the United States, about 200,000 patients sufferfrom RP and every year between 15,000 and 20,000 patients with RP suffer vision loss. The clinical manifestations of affected individuals present first asdefective dark adaptation or “night blindness,” followed by reduction of peripheral visual fields and, eventually, loss of central vision. While thephotoreceptor cell layers of these patients degenerate, the ganglion cell layer remains intact.Optogenetics is a biological technique by which cells are modified by AAV vectors to express light-sensitive proteins. These light sensitive proteins open orclose in response to light and allow millisecond-scale temporal manipulation of electrical events. Therefore, optogenetics provides a way to manipulate theactivity of cells by controlling these proteins with light.The candidate treatment being developed by AGTC and Bionic Sight is a recombinant AAV that expresses an optogenetic protein, ChronosFP, in the retinalganglion cells. Light then activates the ChronosFP to send electrical signals from the retinal ganglion cells to the brain. Bionic Sight is developing a devicewith that uses an algorithm to provide light signals to the retinal ganglion cells that will result in an image the brain can recognize and may significantlyenhance vision in patients who have received the optogenetic treatment. Bionic Sight filed an IND for the program in advance of completing the finalformulation and testing of clinical trial material produced by their contract manufacturing organization. The FDA has put the trial on hold pending fullreview of the final testing to assure comparability to the material in the toxicology study. Bionic Sight has reported that it expects clearance of the IND andinitiation of the Phase 1/2 clinical trial in the second half of calendar 2019.X-linked Retinoschisis (XLRS)XLRS is an inherited retinal disease, meaning that children are born with the defective gene that causes poor visual function that significantly affects dailyliving activities. XLRS is specifically caused by mutations in the 11Table of ContentsRS1 gene, which is located on the X chromosome and encodes the retinoschisin, or RS1, protein which provides structural integrity in the retina.We previously conducted a phase 1/2 clinical trial for our XLRS gene therapy product candidate. In December 2018, we announced the topline interimsix-month data from the phase 1/2 clinical trial of our XLRS product candidate that showed it is generally safe and well-tolerated but demonstrated no signsof clinical activity at six months. Per the study protocol, we will continue to monitor enrolled patients at scheduled visits through the end of the study, butwe do not plan to continue clinical development of our XLRS product candidate. On September 14, 2019 Dr. Mark Pennesi presented 12-month data thatwas consistent with the 6-month data.Other opportunities in ophthalmologyWe believe our advanced gene therapy platform will enable us to develop and test new AAV vectors that carry gene sequences for other inherited diseases inophthalmology (it is estimated that approximately 290 genes causing inherited retinal disease have been identified), and that by leveraging our work on ourlead programs we can reduce the need for early research work. In this way, we anticipate being able to move products efficiently through preclinical studiesand into clinical development. We have recently added two additional ophthalmology programs to our preclinical pipeline: • New Orphan Ophthalmology Indication: We have selected a new orphan ophthalmology indication with a substantial patient population,defined clinical phenotype and available animal models to move forward towards the clinic. We are currently conducting a final non-humanprimate, or NHP, targeting study of the product candidate that we will need to complete before moving into IND-enabling safety studies • Dry AMD: An estimated 15 million people in North America have age-related macular degeneration (AMD), of which 85-90 percent arediagnosed with the non-exudative dry form (www.aao.org). This medical condition may result in blurred or no vision in the center of the visualfield. Loss of central vision can make it hard to recognize faces, read, drive and perform daily activities. This program leverages our deepexpertise in ophthalmic gene delivery and large-scale manufacturing while providing another opportunity to expand our pipeline beyonddiseases that result solely from mutations in single genes. We are currently analyzing data from proof of concept animal studies that we willneed to complete prior to initiating IND-enabling safety studies.Central Nervous SystemA new strategic area of focus for AGTC is in the central nervous system, or CNS, where we see unique opportunities to leverage our comprehensivecapabilities in vector design, delivery and manufacturing to address severe unmet medical needs in several diseases. We are actively developing threeopportunities and have established a world-class scientific advisory board to assist and guide our efforts as we advance these programs through preclinicaldevelopment:Adrenoleukodystrophy (ALD): This disease is an X-linked disorder of fatty acid metabolism that leads to accumulation of very long chain fatty acidsin tissues throughout the body, mainly in the central nervous system and the adrenal gland. Patients with ALD cannot break down long-chain fattyacids, leading to their accumulation in cells of the nervous system, brain and adrenal gland. This leads to progressive loss of the membrane thatinsulates nerves in the brain and spinal cord and may cause damage to the outer layer of the adrenal gland. Clinically, ALD is a heterogeneous disorderwith several distinct phenotypes, including rapidly declining neurological function and early death in young boys or progressive muscular weaknessleading to lower limb paralysis in adults. There are approximately 14,000 patients with ALD in the United States. Early data from our preclinicalstudies support a gene therapy-based approach to treating the disease and warrant advancing it to our preclinical pipeline. We have made significantprogress on vector design, animal model proof of concept and targeting studies in non-human primates [NHP] in order to obtain data to supportmoving a potential product candidate to IND enabling studies. 12Table of ContentsTwo Additional CNS indications: We are working on two additional rare genetic CNS indications that have substantial patient populations and well-defined clinical phenotypes. We have access to robust animal models and are using novel vector transgene engineering technologies to design the genecassette and exploring the optimum approach to administering the AAV to the brain and spinal cord.OtologyHearing loss is one of the most common human sensory deficits and it is estimated that nearly half of the cases have a genetic origin. Of the inherited formsof hearing loss, more than 300 genetic causes have been defined with the specific gene identified for more than 70. Despite the impairment that can becaused by deafness, very little progress has been made in developing therapies that go beyond the temporary and partial solutions provided by hearing aidsand cochlear implants. In multiple academic research studies, replacement of defective genes in animal models with normal copies has been shown toimprove sound propagation in the auditory hair cells, making this a potentially promising application of AAV gene therapy. Additionally, the inner earshares many of the characteristics that make ophthalmology attractive: it is anatomically well defined and is a small, well contained space where the targetcells to be treated are easily identified. Also, the clinical outcome measures for treatments for hearing loss are well defined. Developing product candidatesfor conditions having these characteristics is a natural complement to our ophthalmology portfolio strategy as we apply our core capabilities and expertise toa new disease field. As part of our efforts in otology, we formed a scientific advisory board and have conducted a detailed evaluation of the development andcommercial landscape. From these efforts, we have selected targets which we believe are technically feasible and commercially viable. To augment thisexercise, we have been actively screening novel capsid variants in mouse and guinea-pig for their ability to transduce the key cell types of the cochlear –inner and outer hair cells, and support cells. We are advancing the most promising candidates into non-human primate studies to demonstrate the feasibilityof safely administering AAV into the ear, both unilaterally and bilaterally, without adversely affecting auditory brainstem responses. Below is arepresentative example from one of the studies demonstrating GFP reporter transgene expression by immunohistochemistry (shown as brown staining in thefigure) in the cell types of interest. In addition to the capsid identification studies, we intend to control the specificity of transgene expression by designing and testing novel syntheticpromoters for the cochlear cell types of interest highlighted above. Such promoters, when placed upstream of the transgene of interest, will ensure that thegene replacement occurs in the correct cell, and limit the likelihood of inappropriate gene expression leading to adverse consequences from a safetyperspective. 13Table of ContentsStrategic collaborationsWe have formed strategic alliances in which both parties contribute expertise to enable the discovery and development of potential gene therapy productcandidates. To access the substantial funding and other resources required to develop and commercialize gene therapy products, we intend to seek additionalopportunities to form strategic alliances with collaborators who can augment our industry-leading gene therapy expertise.On February 2, 2017, we entered into a strategic research and development collaboration agreement with Bionic Sight to develop therapies for patients withvisual deficits and blindness due to retinal disease. Through the AGTC-Bionic Sight collaboration, the companies seek to develop a new optogenetic therapythat leverages AGTC’s deep experience in gene therapy and ophthalmology and Bionic Sight’s innovative neuro-prosthetic device and algorithm for retinalcoding.Under the agreement, AGTC made an initial $2.0 million payment to Bionic Sight for an equity interest, of approximately 5 percent, in that company. Inaddition to the initial investment, AGTC will contribute to ongoing research and development costs through additional payments or other in-kindcontributions. These payments and contributions will be made over time, up to the date that Bionic Sight has received both investigational new drugclearance from the FDA and receipt of written approval from an institutional review board to conduct clinical trials from at least one clinical site for thatproduct candidate.AGTC will receive additional equity, based on the valuation in place at the beginning of the agreement, for these cash and in-kind research and developmentcontributions and will be obligated to purchase additional equity in Bionic Sight for $4.0 million, at a pre-determined valuation, upon the filing of an INDfor the product candidate and successful clearance by a relevant Institutional Review Board (IRB), both of which are required before a clinical trial canproceed. Bionic Sight filed an IND for the program in March 2019 in advance of completing the final formulation and testing of clinical trial materialproduced by their contract manufacturing organization. The FDA has put the Bionic Sight trial on hold pending full review of the final testing to assurecomparability to the material in the toxicology study. Bionic Sight expects clearance of the IND and the IRB in the second half of calendar year 2019, atwhich time we will be required to make the additional $4.0 million equity investment.We previously entered into a Collaboration and License Agreement (the “Collaboration Agreement”) with Biogen MA Inc. (“Biogen”) on July 1, 2015.Effective March 8, 2019, Biogen terminated the Collaboration Agreement.Under the terms of the Collaboration Agreement, we agreed to collaborate with Biogen to develop, seek regulatory approval for and commercialize genetherapy products to treat XLRS and XLRP based on our AAV vector technologies. The Collaboration Agreement also provided for discovery programstargeting three indications using our AAV technology whereby we would conduct discovery, research and development activities for those additional drugcandidates through the stage of clinical candidate designation, after which, Biogen would have been eligible to exercise an option to continue to develop,seek regulatory approval for and commercialize the designated clinical candidate. Upon termination of the Collaboration Agreement, we received back theexclusive license rights to develop, manufacture or commercialize XLRP, XLRS and the three discovery programs.We will continue to seek to partner with other gene therapy companies and academic institutions to leverage our expertise in vector design, research,manufacturing and the regulatory process. The goal of these collaborations would be to forge strategic partnerships around technologies and programs thatwould fit with our current and future development pipeline. In general, we would seek new intellectual property, development programs in rare diseases,pipeline products where the regulatory pathway is understood, partners with strong scientific, clinical, commercialization and management expertise, andprograms that have synergy with our current knowledge base and product pipeline that would add to our industry leadership. We would also be looking atprograms where the disease being treated has a large enough patient population that there would be adequate financial returns for the investment ofresources. 14Table of ContentsOur relationship with the University of FloridaAll of our scientific founders spent part of their careers at the University of Florida, or UF, and two are still UF faculty members. Since our inception wehave licensed significant technology from and funded research at multiple labs at UF. Pursuant to four agreements, we have licensed three U.S. patents andmultiple pending applications covering inventions made at UF. UF has multiple capabilities in genetic cloning, gene therapy manufacturing, novel capsididentification, animal model development and facilities for both small and large animal testing, and in certain instances we have benefited from the ability toconduct important research at UF without having to expand in-house facilities and personnel.In May 2013, we and UF were jointly awarded an $8.3 million grant from the National Eye Institute to support development of our ACHM CNGB3 productcandidate, with Dr. William Hauswirth, one of our scientific founders a Professor and holder of the Rybaczki-Bullard Chair in the Department ofOphthalmology at UF, as principal investigator. As of June 30, 2019, we have received payments in the aggregate amount of $3.2 million under this grant.Our relationships with patient advocacy groups and academic centersWe have long believed that when developing product candidates to treat orphan indications it is important to form strong relationships with patient advocacygroups, and we have done this successfully with both the Foundation Fighting Blindness, or FFB (U.S.), and the Alpha-1 Foundation. Both organizations arewell known for their advocacy of patients’ interests in obtaining diagnosis, developing treatments and providing for reimbursement. Both actively supportresearch into treatment, and we have been awarded three research grants totaling $1.6 million from the FFB and one grant of $0.3 million from the Alpha-1Foundation. More importantly, both organizations have been instrumental in assisting us in forming ties with disease experts, recruiting patients into clinicaltrials and helping us to understand the needs, wants and concerns of patients. We also have relationships with other advocacy organizations such as AchromaCorp, the BCM Family Foundation, MOMS For Sight, Curing Retinal Blindness Foundation, Sofia Sees Hope, National Organization for Rare Disorders,ALD Connect, FFB (Canada), Italian Achromatopsia Association (IAA), and Alliance for Regenerative Medicine Global Genes.In addition, we have formed strong relationships with key academic centers across the United States that have core competencies in gene therapy, orphanophthalmology and AAT deficiency. These centers conduct sponsored research, act as advisors and collaborate with us on grant proposals. Since ourinception, we have been awarded a variety of grant funding, either independently or with our collaborators. This funding has provided peer-reviewedscientific validation of our programs and has facilitated critical early stage research for our lead product candidates.Intellectual propertyWe strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of ourbusiness, including seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties and seeking patent termextensions where available. We also rely on trade secrets relating to our proprietary technology platform and on know-how, continuing technologicalinnovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of gene therapy that may be important forthe development of our business. In addition to IP and trade secrets, we also will rely on regulatory protection afforded through orphan drug designations,data exclusivity and market exclusivity for our product candidates, when possible.Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially importanttechnology, inventions and know-how related to our business; defend and 15Table of Contentsenforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and proprietary rights ofthird parties. Our ability to stop third parties from making, using, selling, offering to sell or importing our product candidates may depend on the extent towhich we have rights under valid and enforceable patents or trade secrets that cover these activities. With respect to both licensed and company-ownedintellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patentapplications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will becommercially useful in protecting our commercial product candidates and methods of manufacturing the same.We have developed or in-licensed numerous patents and patent applications and possess substantial know-how and trade secrets relating to the development,commercialization and manufacture of gene therapy product candidates. Our proprietary intellectual property, including patent and non-patent intellectualproperty, is generally directed to, for example, certain genes and promoters, methods of transferring genetic material into cells, processes to manufacture ourAAV-based product candidates and other proprietary technologies and processes related to our lead product candidates.As of September 1, 2019, our patent portfolio included approximately 71 patents and patent applications that we own and approximately 56 patents andpatent applications that we have licensed. More specifically, we own nine U.S. patents, eight pending U.S. applications, 32 foreign patents and 22 foreignpatent applications. We have licensed six U.S. patents, four pending U.S. applications, 41 foreign patents and two pending foreign patent applications. Of thepatents and patent applications that we own or license, 79 cover methods to manufacture AAV vectors, the longest lived and most significant of which isexpected to expire in 2029. In October 2017, we were awarded US Patent Number 9,783,826 directed to methods of producing recombinant AAV viralparticles using suspension BHK cells. This patent extends the protection on our AAV manufacturing platform from 2025 to 2029. Two of the patents and 18of the patent applications that we own are directed to small cone promoters and uses thereof. A patent issuing from this group could have an expiration datein 2034.Our objective is to continue to expand our portfolio of patents and patent applications in order to protect our gene therapy product candidates and AAVmanufacturing process. Our owned and licensed patent portfolio includes patents and patent applications directed to our XLRS, ACHM, and XLRPprograms, as well as our foundational AAV production platform. See also “License agreements”.In addition to the above, we have established expertise and development capabilities focused in the areas of preclinical research and development,manufacturing and manufacturing process scale-up, quality control, quality assurance, regulatory affairs and clinical trial design and implementation. Webelieve that our focus and expertise will help us develop product candidates based on our proprietary intellectual property and to expand our intellectualproperty portfolio.The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, thepatent term is 20 years from the date of filing the non-provisional application. In the United States, a patent’s term may be lengthened by patent termadjustment, which compensates a patentee for administrative delays by the United States Patent and Trademark Office in granting a patent, or may beshortened if a patent is terminally disclaimed over an earlier-filed patent. The issued patents that are material to our business are expected to expire onvarious dates from 2019 to 2029.The term of a patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration of a U.S. patentas compensation for the patent term lost during the FDA regulatory review process. The Hatch-Waxman Act permits a patent term extension of up to fiveyears beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. Apatent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent perapproved drug may be extended. Moreover, a patent can only be extended once, and thus, if a single patent is applicable to multiple product candidates, itcan 16Table of Contentsonly be extended based on one product candidate. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patentthat covers an approved drug. When possible, depending upon the length of clinical trials and other factors involved in the filing of a BLA, we expect toapply for patent term extensions for patents covering our product candidates and their methods of use.We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets can be difficult to protect. We seek to protect ourproprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors andcontractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises andphysical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems,agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwisebecome known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual propertyowned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.License agreementsWe have rights to use and exploit multiple technologies disclosed in issued and pending patents under licenses from other entities. We consider thecommercial terms of these licenses, which provide for modest milestone and royalty payments, and their provisions regarding diligence, insurance,indemnification and other similar matters, to be reasonable and customary for our industry.Information about our principal licenses is set forth below.The University of FloridaWe currently have four agreements with the University of Florida Research Foundation, or UFRF, an affiliate of UF, of which the principal licenses are asfollows: • A joint license from UFRF and Johns Hopkins University, or JHU, signed in October 2003 relates to a particular HSV construct and variouscompositions thereof. We have an exclusive license in all fields of use.Under the terms of this license, we made cash and stock-based up-front payments to UFRF and JHU and are required to make paymentsranging from the mid-five figures to the low-six figures based upon development, regulatory and commercial milestones for any productcandidates covered by the in-licensed intellectual property. Assuming that we meet each of the specified development, regulatory andcommercial milestones not more than once for each product candidate, which we expect will be the case, the maximum aggregate milestonepayments payable under this license with respect to any individual product candidate that we commercialize will be $0.5 million. We will alsobe required to pay a royalty on net sales of product candidates covered by the in-licensed intellectual property in the low-single digits. We havethe right to sublicense our rights under this agreement, and we will be required to pay a percentage of such license income in the low-doubledigits. We are required to make annual maintenance payments in the low four figures under this license, which payments are creditable againstroyalty payments on a year-by-year basis.This license will terminate upon the earlier to occur of the expiration of all of the patents subject to the license and the date on which royaltypayments, once commenced, cease for more than three calendar quarters. Additionally, UFRF and JHU may terminate this license upon certainbreaches by us of the terms of the license and we may terminate the license at any time by submitting written notice to UFRF. 17Table of ContentsThe longest-lived patent covered by this license is expected to expire in 2022. • Two licenses from UFRF, signed in September and November 2012, respectively, relate to the use of engineered AAV capsids. We have anexclusive license to the patents covered by the November 2012 license in the fields of ACHM, XLRS and XLRP and a semi-exclusive licensein all other fields of orphan ophthalmology. We have a non-exclusive license in all fields of use with respect to the patents covered by theSeptember 2012 license. Currently these patents are most useful for ACHM, XLRS and XLRP but could be important for treating a widevariety of diseases as the mutant capsids have been shown to be able to enter cells more effectively than standard AAV capsids.Under the terms of these licenses, we made cash up-front payments to UFRF and are required to make payments ranging from the mid-fivefigures to the low-six figures based upon development, regulatory and commercial milestones for any product candidates covered by thein-licensed intellectual property. Assuming that we meet each of the specified development, regulatory and commercial milestones not morethan once for each product candidate, which we expect will be the case, the maximum aggregate milestone payments payable under theselicenses with respect to any individual product that we commercialize will be $0.6 million. We will also be required to pay a royalty on netsales of products covered by the in-licensed intellectual property in the low-single digits. We have the right to sublicense our rights under theseagreements, and we will be required to pay a percentage of such license income in the mid-single digits. We are required to make annualmaintenance payments in the mid four figures under these licenses, which payments are creditable against royalty payments on a year-by-yearbasis.These licenses will continue until the expiration of all of the patents subject to the licenses, provided or, if later, a date specified in the license.Additionally, UFRF may terminate this license upon certain breaches by us of the terms of the licenses and we may terminate the licenses atany time by submitting written notice to UFRF.The longest-lived patent covered by these licenses is expected to expire in 2029. There are also patent applications pending under theselicenses. • An Evaluation and License Agreement from UFRF, signed in May 2019, relate to the use of engineered AAV capsids in the field of otology.Under the terms of the agreement, we are evaluating promising capsid candidates for potential application in otology.The University of Alabama at BirminghamA license agreement from the UAB Research Foundation affiliated with The University of Alabama at Birmingham signed in 2006, relates to one U.S. patentwith claims covering the use of HSV helpers to produce AAV vectors. The patent is expected to expire in 2025. Effective in July 2015, we modified thelicense from co-exclusive to exclusive.Under the terms of this license, we made a cash up-front payment to the UAB Research Foundation, and we will be required to make payments ranging fromthe mid-five figures to the low-six figures based upon development and regulatory milestones for any products covered by the in-licensed intellectualproperty. Assuming that we meet each of these development and regulatory milestones not more than once for each product, which we expect will be thecase, the maximum aggregate milestone payments payable under this license with respect to any individual product that we commercialize will be$0.5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low-single digits. Wehave the right to sublicense our rights under this agreement, and we will be required to pay a percentage of such license income in the mid-single digits. Weare required to make annual maintenance payments in the mid-four figures under this license, which payments are creditable against royalty payments on ayear-by-year basis.This license will terminate upon the expiration of all of the patents subject to the license. Additionally, the UAB Research Foundation may terminate thislicense upon certain breaches by us of the terms of the license and we may terminate the license at any time by submitting written notice to the UABResearch Foundation. 18Table of ContentsCollaborations with 4DMT and SynpromicsIn April 2015, the Company entered into a collaboration and option agreement with 4D to discover and develop optimized AAV vectors to treat specificophthalmic disease indications. The AGTC Agreement expired in October 2018 when AGTC chose to not exercise its option to license during the optionperiod. We continue to collaborate with Synpromics in order to develop novel synthetic promoters.CompetitionThe biotechnology and pharmaceutical industries, including the gene therapy field, are characterized by intense and rapidly changing competition to developnew technologies and proprietary products, and any product candidates that we successfully develop and commercialize will have to compete with existingtherapies and new therapies that may become available in the future. While we believe that our proprietary technology estate and scientific expertise in thegene therapy field provide us with competitive advantages, we face potential competition from many different sources, including larger and better-fundedpharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic institutions and governmental agencies and public andprivate research institutions that may develop potentially competitive products or technologies.Currently there are no approved products for any of our lead orphan ophthalmology indications of ACHM and XLRP. We are aware of a number ofcompanies focused on developing gene therapies in various indications, including Adverum Biotechnologies Inc., Allergan plc, Biogen Inc., bluebird bio,Inc., Editas Medicine, Inc., 4D Molecular Therapeutics, GenSight Biologics S.A., Horama, S.A., Limelight Bio, Inc., MeiraGTx Limited (partnered withJanssen Pharmaceuticals ), IVERIC bio, Oxford Biomedica plc, ProQR Therapeutics N.V., REGENXBIO Inc., the Roche Group (acquiring SparkTherapeutics), Ultragenyx Pharmaceuticals, Inc. and uniQure N.V., as well as several companies addressing other methods for modifying genes andregulating gene expression. Any advances in gene therapy technology made by a competitor may be used to develop therapies that could compete againstany of our product candidates. For XLRP, MeiraGTx and Biogen are developing AAV-based gene therapies and MeiraGTx also has competing programs inACHM-B3 and ACHM-A3. We believe companies such as REGENXBIO and others could be planning to initiate clinical trials in the future that have thepotential to be competitive with AGTC’s programs. We believe the key competitive factors that will affect the success of our product candidates, ifapproved, are likely to be their efficacy, safety, convenience of administration and delivery, price, the level of generic competition, market exclusivity andthe availability of reimbursement from government and other third-party payors.Government RegulationBiological products, including gene therapy products, are subject to regulation under the Federal Food, Drug, and Cosmetic Act, or FD&C Act, and thePublic Health Service Act, or PHS Act, and other federal, state, local and foreign statutes and regulations. Both the FD&C Act and the PHS Act and theircorresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution,reporting, advertising and other promotional practices involving biological products. Before clinical testing of biological products may begin, we mustsubmit an IND which must go into effect, and each clinical trial protocol for a gene therapy product candidate is reviewed by the FDA and, in someinstances, potentially the NIH, through its Novel and Exceptional Technology and Research Advisory Committee, or NExTRAC, formerly the RecombinantDNA Advisory Committee, or RAC, which now focuses on emerging areas of research including, but not restricted to, technologies surrounding advancesin recombinant or synthetic nucleic acid research. FDA approval of a BLA also must be obtained before marketing of biological products in the UnitedStates. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes andregulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals.Within the FDA, the Center for Biologics Evaluation and Research, or CBER, regulates gene therapy products. CBER works closely with the NIH, both ofwhich may engage in a public discussion of scientific, safety, ethical 19Table of Contentsand societal issues related to proposed and ongoing gene therapy protocols. The FDA and the NIH have published guidance documents with respect to thedevelopment and submission of gene therapy protocols. The FDA also has published guidance documents related to, among other things, gene therapyproducts in general, their preclinical assessment, observing subjects involved in gene therapy studies for delayed adverse events, potency testing, andchemistry, manufacturing and control information in gene therapy INDs, and gene therapy products for rare diseases and retinal disorders.Ethical, social and legal concerns about gene therapy, genetic testing and genetic research have led to the enactment of legislation such as the GeneticInformation Nondiscrimination Act of 2008 and could result in additional regulations restricting or prohibiting the processes we may use. Federal and stateagencies, congressional committees and foreign governments have expressed interest in further regulating biotechnology. More restrictive regulations orclaims that our product candidates are unsafe or pose a hazard could prevent us from commercializing any product candidates. New governmentrequirements may be established that could delay or prevent regulatory approval of our product candidates under development. It is impossible to predictwhether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impactof such changes, if any, may be.Recent developments in regulation of gene therapyIn August 2017, Kymriah (tisagenlecleucel) became the first gene therapy product approved by the FDA. It was followed by three additional gene therapyapprovals, including Luxturna (voretigene neparvovec-rzyl) in December 2017. The Luxturna approval is of relevance to AGTC because it is a subretinallyadministered AAV vector that treats patients with a rare form of inherited vision loss. It is also the first FDA approved gene therapy that targets a diseasecaused by mutations in a specific gene.FDA’s acknowledged recognition of the promise of gene therapy and their expectation that the field will continue to expand has led them to take additionalsteps this past year to support the advancement of gene therapy products. In July 2018 they issued a suite of draft guidance documents that provide insightinto their expectations for product development including manufacturing, clinical trial design and development in rare diseases. AGTC’s review of the draftguidelines found we are aligned with the Agency’s approach to product development and we see opportunities to advance our programs as anticipatedfollowing the collection of appropriate safety and efficacy data.In Europe, six gene therapy products have been approved. In 2012, the EMA approved a gene therapy product called Glybera, which is the first gene therapyproduct approved by regulatory authorities anywhere in the Western world. Most recently, Zynteglo became the sixth gene therapy product approved by theEMA.United States biological products development processThe process required by the FDA before a biological product candidate may be marketed in the United States generally involves the following: • completion of nonclinical laboratory tests and animal studies according to applicable good laboratory practices, or GLP, requirements andapplicable requirements for the humane use of laboratory animals or other applicable regulations; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • performance of adequate and well-controlled human clinical trials according to good clinical practice, or GCP, standards and IND and humansubject protection regulations, and requirements to ensure the privacy and confidentiality of human research subjects and their healthinformation, to establish the safety and efficacy of the proposed biological product candidate for its intended use; 20Table of Contents • validation of the biological product candidate manufacturing and control processes; • submission to the FDA of a Biologics License Application, or BLA, for marketing approval that includes substantial evidence of safety, purity,and potency from results of nonclinical testing and clinical trials; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product candidate is produced toassess compliance with GMP requirements, to assure that the facilities, methods and controls are adequate to preserve the biological productcandidate’s identity, strength, quality and purity; • potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the BLA; and • FDA review and approval, or licensure, of the BLA prior to any commercial marketing or sale of the product candidate in the United States.Before testing any biological product candidate, including a gene therapy product candidate, in humans, the product candidate enters the preclinical testingstage. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well asanimal studies to assess the potential safety and activity of the product candidate. The conduct of the preclinical tests must comply with federal regulationsand requirements including applicable GLP requirements.Sponsors or institutions receiving NIH funding are responsible for compliance with the NIH Guidelines for Research Involving Recombinant or SyntheticNucleic Acid Molecules, or the NIH Guidelines. However, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarilyfollow them. The oversight bodies at the clinical site(s) (Institutional Review Board (IRB) and Institutional Biosafety Committee (IBC)) are responsible fordetermining whether or not the clinical study may be conducted there. The IBC may determine that the protocol raises novel or particularly importantscientific, safety or ethical considerations, and may refer it to the OSP. Should the OSP determine that public review is required, the protocol could bereviewed by the new NExTRAC, which is expected to hold its first meeting in late 2019.The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical dataor literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND is submitted. TheIND automatically becomes effective 30 days after receipt by the FDA, although IND sponsors generally wait until the FDA affirmatively provides noticethat the agency has no issues with the IND. If the FDA places the clinical trial on a clinical hold within that 30-day time period, the IND sponsor and theFDA must resolve any outstanding concerns before the clinical trial can begin. With gene therapy protocols, if the FDA allows the IND to proceed, and thetrial oversight bodies and the OSP decide that full public review of the protocol is warranted, initiation of the protocol could be delayed if the newNExTRAC implements a review process similar to the RAC. The FDA may also impose clinical holds on a biological product candidate at any time beforeor during clinical trials due to, for example, safety concerns, deficiencies in the study design, or non-compliance with IND regulations. If the FDA imposes aclinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure thatsubmission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such trials.Clinical trials involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified investigators,generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols detailing, among other things, theobjectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, includingstopping rules that assure a clinical trial will be stopped if certain adverse events occur. Each protocol and any amendments to the protocol must besubmitted to the FDA as part of the 21Table of ContentsIND. Clinical trials must be conducted and monitored in accordance with the GCP standards, human subject protection requirements, and FDA’sinvestigational new drug requirements, including the requirement that all research subjects provide informed consent. Further, each clinical trial must bereviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at which the clinical trial will be conducted. AnIRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in theclinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent thatmust be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. Clinical trials also must bereviewed by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees basic and clinical research conducted atthat institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment.Human clinical trials are typically conducted in three sequential phases that may overlap, be combined, or be bifurcated into two parts: • Phase 1. The biological product candidate is initially introduced into healthy human subjects and tested for safety. In the case of some productcandidates for severe or life-threatening diseases, especially when the product candidate may be too inherently toxic to ethically administer tohealthy volunteers, the initial human testing is often conducted in patients. • Phase 2. The biological product candidate is evaluated in a limited patient population to identify possible adverse effects and safety risks, topreliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance, optimal dosageand dosing schedule. • Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population atgeographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the product candidateand provide an adequate basis for product approval and labeling.Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be required as a condition of approval or may be recommended after initialmarketing approval if required. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeuticindication, particularly for long-term safety follow-up. Depending on the type of product and mechanism of action, the FDA may recommend that sponsorsobserve subjects for potential gene therapy-related delayed adverse events as part of a long-term follow up that includes annual examinations and/or annualqueries, either in person or by questionnaire, of trial subjects.During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinicaltrial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must bepromptly submitted to the FDA and the investigators for serious and unexpected suspected adverse reactions, any findings from other trials, tests inlaboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspectedadverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after thesponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspectedadverse reaction within seven calendar days after the sponsor’s initial receipt of the information. Phase 1, Phase 2 and Phase 3 clinical trials may not becompleted successfully within any specified period, if at all. The FDA or the sponsor, or its data safety monitoring board may suspend a clinical trial at anytime on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB cansuspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if thebiological product candidate has been associated with unexpected serious harm to patients. 22Table of ContentsHuman gene therapy products are a new category of therapeutics. Although the FDA recently approved four gene therapy products in the United States,gene therapy remains a relatively new and expanding area of novel therapeutic interventions. Consequently, there can be no assurance as to the length of thetrial period, the number of patients the FDA will require to be enrolled in the trials in order to establish the safety, efficacy, purity and potency of humangene therapy products, or that the data generated in these trials will be acceptable to the FDA to support marketing approval. Over the last several years theFDA has issued helpful guidance on development of gene therapy products and has recently shown an increased willingness to work closely withdevelopers, especially with those working in orphan disease areas.Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the physicalcharacteristics of the biological product candidate as well as finalize a process for manufacturing the product candidate in commercial quantities inaccordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents with the use of biological products, the PHS Actemphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capableof consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity,strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studiesmust be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.United States review and approval processesAfter the completion of clinical trials of a biological product candidate, FDA approval of a BLA must be obtained before commercial marketing of thebiological product candidate. The BLA must include results of product development, laboratory and animal studies, human trials, information on themanufacture and composition of the product candidate, proposed labeling and other relevant information. In addition, under the Pediatric Research EquityAct, or PREA, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological product candidate for the claimedindications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product candidateis safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does notapply to any biological product candidate for an indication for which orphan designation has been granted. The testing and approval processes requiresubstantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on atimely basis, if at all.Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a user fee. The FDA adjusts the PDUFA user feeson an annual basis. According to the FDA’s fee schedule for fiscal year 2020, which becomes effective October 1, 2019, the user fee for an applicationrequiring clinical data, such as a BLA, is $2,942,965. PDUFA also imposes an annual prescription drug program fee ($325,424) for certain approvedproducts. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a smallbusiness. Additionally, no user fees are assessed on BLAs for product candidates designated as orphan drugs, unless the product candidate also includes anon-orphan indication.Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agencyaccepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may requestadditional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to reviewbefore the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDAreviews the BLA to determine, among other things, whether the proposed product candidate is safe and potent, or effective, for its intended use, and has anacceptable purity profile, and whether the product candidate is being manufactured in accordance with cGMP regulations to ensure 23Table of Contentsand preserve the product candidate’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biological products orbiological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts,for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by therecommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological productapproval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy, or REMS, is necessary to assure the safe use of thebiological product candidate. A REMS may be imposed to ensure safe use of the drug, and could include medication guides, physician communicationplans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. If the FDA concludes aREMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.Before approving a BLA, the FDA will inspect the facilities at which the product candidate is manufactured. The FDA will not approve the productcandidate unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to ensure consistentproduction of the product candidate within required specifications. Additionally, before approving a BLA, the FDA may inspect one or more clinical sites toensure that the clinical trials were conducted in compliance with IND trial requirements and GCP requirements. To assure cGMP and GCP compliance, anapplicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria forapproval and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret thesame data. If the agency decides not to approve the BLA in its present form, the FDA will issue a complete response letter that usually describes all of thespecific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, forexample, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the applicant might take toplace the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of thedeficiencies identified in the letter, or withdraw the application.If a product candidate receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use mayotherwise be limited, which could restrict the commercial value of the product candidate. Further, the FDA may require that certain contraindications,warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, ordispensing in the form of a REMS, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical trials, sometimesreferred to as Phase 4 clinical trials, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs tomonitor the safety of approved products that have been commercialized.One of the performance goals agreed to by the FDA under the PDUFA is to review 90% of standard BLAs in 10 months and 90% of priority BLAs in sixmonths, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its reviewgoals are subject to change from time to time. The review process and the PDUFA goal date may be extended by three months if the FDA requests or theBLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last threemonths before the PDUFA goal date.Orphan drug designationUnder the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product candidate intended to treat a rare disease or condition,which is defined as a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the UnitedStates if there is no 24Table of Contentsreasonable expectation that the cost of developing and making a drug or biological product available in the United States for this type of disease or conditionwill be recovered from sales of the product candidate. Orphan product designation must be requested before submitting an NDA or BLA. After the FDAgrants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan productdesignation does not convey any advantage in or shorten the duration of the regulatory review and approval process. Orphan designation may also berescinded if the product candidate no longer meets the criteria for designation.If a product candidate that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has suchdesignation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the samedrug or biological product for the same indication for seven years; however, the FDA has not yet established what characteristics of a gene therapy productare relevant to determining whether two gene therapy products would be considered the same for purposes of orphan drug market exclusivity. The FDA mayapprove a second drug or biological product during an exclusivity period in limited circumstances, such as a showing of clinical superiority to the productwith orphan exclusivity. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity orobtain approval for the same product but for a different indication for which the orphan product does not have exclusivity. Orphan product exclusivity alsocould block the approval of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the FDA or ifour product candidate is determined to be contained within the competitor’s product for the same indication or disease. If a drug or biological productdesignated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan productexclusivity. Orphan drug status in the European Union has similar, but not identical, benefits.Expedited development and review programsThe FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drugs and biological products that meet certaincriteria. Specifically, new drugs and biological products are eligible for Fast Track designation if they are intended to treat a serious or life-threateningdisease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to thecombination of the product candidate and the specific indication for which it is being studied. The sponsor of a new drug or biologic may request the FDA todesignate the drug or biologic as a Fast Track product candidate at any time during the clinical development of the product candidate. Unique to a Fast Trackproduct candidate, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, ifthe sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determinesthat the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.Any product candidate submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programsintended to expedite development and review, such as priority review and accelerated approval. Any product candidate is eligible for priority review if it hasthe potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis orprevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a newdrug or biological product candidate designated for priority review in an effort to facilitate the review, and aims to review such applications within sixmonths as opposed to ten months for standard review. Additionally, a product candidate may be eligible for accelerated approval. Drug or biologicalproducts studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit overexisting treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trialsestablishing that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effecton a clinical endpoint other than survival or irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence 25Table of Contentsof the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biologicalproduct candidate receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. In addition, the FDA currentlyrequires, as a condition for accelerated approval, the pre-approval of promotional materials, which could adversely impact the timing of the commerciallaunch of the product.Under the provisions of the Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted in 2012, a sponsor can request designation of aproduct candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more otherdrugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantialimprovement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinicaldevelopment. Drugs designated as breakthrough therapies are also eligible for accelerated approval and receive the same benefits as drugs with Fast Trackdesignation. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review ofan application for approval of a breakthrough therapy.Following the establishment of the breakthrough therapy designation, FDA established the regenerative medicine advanced therapy (RMAT) designation inconjunction with the 2016 21st Century Cures Act. Like the breakthrough designation, the RMAT designation requires preliminary clinical evidenceindicating that the therapy has the potential to address unmet medical needs. However, the RMAT designation does not require evidence to indicate that thedrug may offer a substantial improvement over the available therapies, which the breakthrough therapy designation does. Fast Track, breakthrough therapy,and RMAT designations may also be rescinded if the product candidate does not continue to meet the designation criteria.Fast Track designation, priority review, accelerated approval, breakthrough therapy designation and RMAT designation do not change the standards forapproval but may expedite the development or approval process.Post-approval requirementsMaintaining compliance with applicable federal, state, and local statutes and regulations requires the expenditure of substantial time and financial resources.Rigorous and extensive FDA regulation of biological products continues after approval, particularly with respect to cGMP requirements. We will rely, andexpect to continue to rely, on third parties for the production of clinical and commercial quantities of any products that we may commercialize.Manufacturers of our products are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assuranceand maintenance of records and documentation. Other post-approval requirements applicable to biological products include reporting of cGMP deviationsthat may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse effects, reportingupdated safety and efficacy information, and complying with electronic record and signature requirements. After a BLA is approved, the product may alsobe subject to official lot release. In this case, as part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of theproduct before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of productto the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s testsperformed on the lot. The FDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots fordistribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, andeffectiveness of biological products.We also must comply with the FDA’s advertising and promotion requirements, such as the prohibition of preapproval promotion, requirements related todirect-to-consumer advertising, the prohibition on promoting products for uses or in-patient populations that are not described in the product’s approvedlabeling (known as “off-label use”), limitations on industry-sponsored scientific and educational activities, and promotional activities 26Table of Contentsinvolving the internet. Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result inrestrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions. Failure to complywith the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant ormanufacturer to administrative or judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pendingapplications, withdrawal of an approval, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of productionor distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution,disgorgement of profits, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.Biological product manufacturers and other entities involved in the manufacture and distribution of approved biological products are required to registertheir establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies forcompliance with cGMPs and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and qualitycontrol to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holderof an approved BLA, including withdrawal of the product from the market. In addition, changes to the manufacturing process or facility generally requireprior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labelingclaims, are also subject to further FDA review and approval.United States patent term restoration and marketing exclusivityDepending upon the timing, duration and specifics of product development and the FDA review of a BLA, some of our U.S. patents may be eligible forlimited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-WaxmanAmendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during productdevelopment and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and thesubmission date of a BLA plus the time between the submission date of a BLA and the approval of that application. Only one patent applicable to anapproved biological product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. TheUnited States Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.In the future, we may apply for restoration of patent term for one or more of our currently owned or licensed patents to add patent life beyond its currentexpiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.A biological product can obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivityperiods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on thevoluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or Affordable Care Act, signed into lawon March 23, 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, which created an abbreviated approval pathwayfor biological products shown to be similar to, or interchangeable with, an FDA-licensed reference biological product. This amendment to the PHS Actattempts to minimize duplicative testing. Biosimilarity, which requires that there be no clinically meaningful differences between the biological product andthe reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical trial or trials.Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be 27Table of Contentsexpected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologicmay be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of thereference biologic. However, complexities associated with the larger, and often more complex, structure of biological products, as well as the process bywhich such products are manufactured, pose significant hurdles to implementation that are still being worked out by the FDA.A reference biologic is granted twelve years of exclusivity from the time of first licensure of the reference product. On June 23, 2016 the Price Relief,Innovation, and Competition for Essential Drugs (PRICED) Act was introduced, which would reduce exclusivity for biological drugs from twelve to sevenyears. The first biologic product submitted under the biosimilar abbreviated approval pathway that is determined to be interchangeable with the referenceproduct has exclusivity against other biologics submitting under the abbreviated approval pathway for the lesser of (i) one year after the first commercialmarketing, (ii) 18 months after approval if there is no legal challenge, (iii) 18 months after the resolution in the applicant’s favor of a lawsuit challenging thebiologics’ patents if an application has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-monthperiod.Pharmaceutical coverage, pricing and reimbursementSales of our products, when and if approved for marketing, will depend, in part, on the extent to which our products will be covered by third-party payors,such as federal, state, and foreign government health care programs, commercial insurance and managed healthcare organizations. These third-party payorsare increasingly reducing reimbursements for medical products, drugs and services. In addition, the U.S. government, state legislatures and foreigngovernments have continued implementing cost containment programs, including price controls, restrictions on coverage and reimbursement andrequirements for substitution of generic products. Adoption of price controls and cost containment measures, and adoption of more restrictive policies injurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our productcandidates or a decision by a third-party payor not to cover our product candidates could reduce physician usage of our products once approved and have amaterial adverse effect on our sales, results of operations and financial condition. Given the potential for long term durable therapeutic benefit from thesingle administration of a gene therapy product, the question of appropriate pricing and method of payment, including annuity payments and “pay forperformance” schemes, is currently an active discussion and, depending on outcome, could affect the use of our products and our financial performance.Other healthcare lawsAlthough we currently do not have any products on the market, we may be subject to additional healthcare regulation and enforcement by the federalgovernment and by authorities in the states and foreign jurisdictions in which we conduct our business. Such laws include, without limitation, state andfederal anti-kickback, fraud and abuse, false claims, privacy and security and physician sunshine laws and regulations, many of which may become moreapplicable to us if our product candidates are approved and we begin commercialization. If our operations are found to be in violation of any of such laws orany other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, civil and criminal penalties, damages,fines, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs and imprisonment, any ofwhich could adversely affect our ability to operate our business and our financial results.Research and DevelopmentOur research and development expenses were $33.2 million for the year ended June 30, 2019 and $32.2 million for the year ended June 30, 2018. 28Table of ContentsEmployeesAs of June 30, 2019, we had 85 full-time employees, 51 of whom have Ph.D., M.D. or other post-graduate degrees. Of these full-time employees, 61 areengaged in research and development activities and 24 are engaged in finance, human resources, facilities and general management.As of June 30, 2019, all of our personnel were co-employees of AGTC and a professional human resource service organization, TriNet HR Corporation, orTriNet. Under our agreement with TriNet, TriNet was a co-employer of our personnel, and was responsible for administering all payroll functions, includingtax withholding, and providing health insurance and other benefits for these individuals. We reimbursed TriNet for these costs and paid TriNet anadministrative fee for its services. We were responsible for, and controlled, all aspects of the hiring, retention, compensation, management and supervisionof our personnel. We consider the terms of our contract with TriNet to be reasonable and customary and believe this arrangement provided substantialbenefit to us, in the form of lower costs for employee benefits and a reduced administrative burden on us. Effective as of July 1, 2019, we engaged InsperityPEO Services, L.P. to replace TriNet as our professional human resource service organization.We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We consider our relations with ouremployees to be good.Corporate informationWe were incorporated in Florida in January 1999 and reincorporated in Delaware in October 2003. On April 1, 2014, we completed our initial publicoffering of our common stock, which is traded on the Nasdaq Global Market under the symbol “AGTC.” Our principal executive offices are located at14193 NW 119th Terrace, Suite 10, Alachua, Florida 32615, and our telephone number is (386) 462-2204. Our corporate website address is www.agtc.com.Through our website, we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K andany amendments to those reports, as well as proxy statements, and, from time to time, other documents as soon as reasonably practicable after weelectronically file such material with, or furnish it to, the SEC. Information contained on or accessible through our website is not a part of this annual report.We use “AGTC” and the double helix logo as trademarks in the United States and other countries. As of June 30, 2019, these trademarks have beenregistered in the United States, European Union and Japan.This annual report contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade namesreferred to in this annual report, including logos, artwork, and other visual displays, may appear without the or ™ symbols, but such references are notintended to indicate that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarksand trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement orsponsorship of us by, any such companies. Item 1A.Risk factorsYou should carefully consider the risks and uncertainties described below, together with the information included elsewhere in this Annual Report on Form10-K and other documents we file with the SEC. The risks and uncertainties described below are those that we have identified as material, but are not theonly risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other companies, such as overall U.S.and non-U.S. economic and industry conditions including a global economic slowdown, geopolitical events, changes in laws or accounting rules,fluctuations in interest and exchange rates, terrorism, international conflicts, major health concerns, natural disasters or other disruptions of expectedeconomic and business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impairour business operations and liquidity. 29Table of ContentsRisks related to our financial condition and capital requirementsWe have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.We are a clinical-stage biotechnology company, and we have not yet generated revenues from product sales. With the exception of the fiscal year endedJune 30, 2017, in which we reported net income of $0.4 million due in part to the amortization associated with our collaboration agreement with Biogen, wehave incurred losses from operations in each year since our inception in 1999. For the fiscal years ended June 30, 2019 and 2018, we reported net losses of$2.0 million and $21.3 million, respectively. As of our most recent fiscal year ended June 30, 2019, we had an accumulated deficit of $135.5 million. Ourprior losses, combined with expected future losses, have had and may continue to have an adverse effect on our stockholders’ equity and working capital.We have devoted most of our financial resources to research and development, including our clinical and preclinical development activities. To date, wehave financed our operations primarily through the sale of equity securities and, to a lesser extent, through research grants from third parties or milestonepayments from a collaborator. The amount of our future net losses will depend, in part, on the rate of our future expenditures and our ability to obtainfunding through equity or debt financings, strategic collaborations or additional grants. We anticipate that it will be several years, if ever, before we have aproduct candidate ready for commercialization. Even if we obtain regulatory approval to market a product candidate, our future revenues will depend uponthe size of any markets in which our product candidates have received approval, and our ability to achieve sufficient market acceptance, reimbursement fromthird-party payors and adequate market share for our product candidates in those markets.We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increasesubstantially if and as we: • continue our research and preclinical and clinical development of our product candidates; • expand the scope of our current clinical trials for our product candidates; • initiate additional preclinical studies, clinical trials or other studies for our product candidates; • further develop our gene therapy platform, including the process for design, delivery and manufacturing of our vectors for our productcandidates; • change or add additional manufacturers or suppliers; • seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials; • establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketingapproval; • seek to identify and validate additional product candidates; • acquire or in-license other product candidates and technologies; • make milestone or other payments under any in-license agreements; • maintain, protect and expand our intellectual property portfolio; • attract and retain skilled personnel; • create additional infrastructure to support our operations as a public company and our product development and planned futurecommercialization efforts; and • experience any delays or encounter issues with any of the above. 30Table of ContentsThe net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results ofoperations may not be a good indication of our future performance. In any particular quarter or quarters, our operating results could be below theexpectations of securities analysts or investors, which could cause our stock price to decline.Our ability to generate revenue from product sales is highly uncertain and we may never achieve or sustain profitability, which could depress the marketprice of our common stock, and could cause you to lose part or all of your investment.All of our revenue generated to date has come from research grants from third parties or license fees or milestone payments from collaborations. Our abilityto generate substantial revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners such as Bionic Sight, tosuccessfully complete the development of, and obtain the regulatory approvals necessary to commercialize, our product candidates. We do not anticipategenerating revenues from product sales for at least the next several years, if ever. If any of our product candidates fail in clinical trials or do not gainregulatory approval, or if any of our product candidates, if approved, fail to achieve market acceptance, we may never become profitable. Even if we achieveprofitability in the future, we may not be able to sustain profitability in subsequent periods. Our ability to generate future revenues from product salesdepends heavily on our success in: • completing research and preclinical and clinical development of our product candidates; • seeking and obtaining regulatory and marketing approvals for product candidates for which we complete clinical trials; • establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality)products and services to support clinical development and the market demand for our product candidates, if approved; • launching and commercializing product candidates for which we obtain regulatory and marketing approval, either by collaborating with apartner or, if launched independently, by establishing a sales, marketing and distribution infrastructure; • obtaining and maintaining adequate coverage and reimbursement from third-party payors for our product candidates; • obtaining market acceptance of our product candidates and gene therapy as a viable treatment option; • addressing any competing technological and market developments; • implementing additional internal systems and infrastructure, as needed; • identifying and validating new gene therapy product candidates; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and • attracting, hiring and retaining qualified personnel.Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated withcommercializing any approved product candidate, particularly to the extent that we seek to commercialize any product for an indication, such as wet AMD,that has a patient population significantly larger than those addressed by our current lead product candidates. Our expenses could increase beyondexpectations if we are required by the FDA, the EMA or other regulatory agencies, domestic or foreign, to perform clinical trials and other studies in additionto those that we currently anticipate. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable andmay 31Table of Contentsneed to obtain additional funding to continue operations. Our failure to become and remain profitable would depress the market price of our common stockand could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations.As a result of the termination of the Biogen Collaboration Agreement, we will not receive any future milestone-based or royalty payments under theagreement after March 8, 2019.Effective March 8, 2019, Biogen terminated the Biogen Collaboration Agreement. Under the terms of the Collaboration Agreement, we agreed tocollaborate with Biogen to develop, seek regulatory approval for and commercialize gene therapy products to treat XLRS and XLRP based on our AAVvector technologies. The Collaboration Agreement also provided for discovery programs targeting three indications using our AAV technology whereby wewould conduct discovery, research and development activities for those additional drug candidates through the stage of clinical candidate designation, afterwhich, Biogen would have been eligible to exercise an option to continue to develop, seek regulatory approval for and commercialize the designated clinicalcandidate. We also granted Biogen: (i) an exclusive, royalty-bearing license, with the right to grant sublicenses, to use adeno-associated virus vectortechnology and other technology controlled by us for the purpose of researching, developing, manufacturing and commercializing licensed productsdeveloped under the agreement and (ii) a non-exclusive, worldwide, royalty-free, fully paid license, with the right to grant sublicenses, of our interest inother intellectual property developed pursuant to the agreement. Upon the termination of the Collaboration Agreement, we received back the exclusivelicense rights to develop, manufacture or commercialize XLRP, XLRS and the three discovery programs. However, as a result of the termination of theCollaboration Agreement, we will not receive any future milestone-based or royalty payments.In order to obtain regulatory approval for and commercialize our product candidates, we will need to raise additional funding in the future, which maynot be available on acceptable terms, or at all. Failure to obtain necessary capital when needed may force us to delay, limit or terminate our productdevelopment efforts or other operations.Other than our product candidates for the treatment of XLRS, XLRP, ACHM CNGB3 and ACHM CNGA3, all of our lead programs in orphanophthalmology and otology are currently in preclinical development. Developing gene therapy products is expensive, and we expect our research anddevelopment expenses to increase substantially as we advance our current product candidates in clinical trials and as we undertake preclinical studies of newproduct candidates.Our operations have consumed substantial amounts of cash since inception. As of June 30, 2019, and 2018, our cash and cash equivalents and investmentsamounted to $82.0 million and $104.9 million, respectively. Our research and development expenses were $33.2 million and $32.2 million for the fiscalyears ended June 30, 2019 and 2018, respectively. We believe that our existing cash and cash equivalents at June 30, 2019 will be sufficient to enable us toadvance planned preclinical studies and clinical trials for our lead product candidates into the first half of 2021. In order to complete the process of obtainingregulatory approval for our lead product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary tocommercialize our lead product candidates, if approved, we will require substantial additional funding. Also, our current operating plan may change as aresult of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debtfinancings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensingarrangements, or a combination of these approaches.Any such fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop andcommercialize our product candidates. In addition, financing may not be available to us in the future in sufficient amounts or on terms acceptable to us, if atall. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities,whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our 32Table of Contentsshares to decline. The sale of additional equity or convertible securities would dilute all of our stockholders. The incurrence of indebtedness would result inincreased fixed payment obligations and a portion of our operating cash flows, if any, being dedicated to the payment of principal and interest on suchindebtedness, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on ourability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirableor on terms that are less favorable than might otherwise be available, and we may be required to relinquish or license on unfavorable terms rights to some ofour technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business,financial condition, results of operations and prospects and cause the price of our common stock to decline.As a result of the termination of the Biogen Collaboration Agreement, we will not receive any future milestone-based or royalty payments under thatagreement which will make it more likely that we will 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, ora combination of these approaches. If we are unable to obtain needed funding on a timely basis, we may be required to significantly curtail, delay ordiscontinue one or more of our research or development programs or the commercialization of any product candidates or be unable to expand our operationsor otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition, results of operations andprospects and cause the price of our common stock to decline.Risks related to the discovery and development of our product candidatesAll of our product candidates are in preclinical or clinical development. Clinical drug development is expensive, time consuming and uncertain, and wemay ultimately not be able to obtain regulatory approvals for the commercialization of some or all of our product candidates.The research, testing, manufacturing, labeling, approval, selling, marketing and distribution of drug products are subject to extensive regulation by the FDAand other regulatory authorities, which regulations differ from country to country. Our product candidates are in various stages of development and aresubject to the risks of failure typical of drug development. The development and approval process is expensive and can take many years to complete, and itsoutcome is inherently uncertain. We have not submitted an application for or received marketing approval for any of our product candidates. We havelimited experience in conducting and managing the later-stage clinical trials necessary to obtain regulatory approvals, including approval by the FDA. Toreceive regulatory approval, we must, among other things, demonstrate with substantial evidence from clinical trials that the product candidate is safe, pureand effective for each indication for which approval is sought, and failure can occur in any stage of development. Satisfaction of the approval requirementstypically takes several years and the time needed to satisfy them may vary substantially, based on the type, complexity and novelty of the pharmaceuticalproduct. We cannot predict if or when we might receive regulatory approvals for any of our product candidates currently under development.The FDA and foreign regulatory authorities also have substantial discretion in the drug approval process. The number and types of preclinical studies andclinical trials that will be required for regulatory approval varies depending on the product candidate, the disease or condition that the product candidate isdesigned to address, and the regulations applicable to any particular product candidate. Approval policies, regulations, or the type and amount of clinical datanecessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, and there may bevarying interpretations of data obtained from preclinical studies or clinical trials, either of which may cause delays or limitations in the approval or thedecision not to approve an application. Regulatory agencies can delay, limit or deny approval of a product candidate for many reasons, including: • the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; 33Table of Contents • we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safeand effective for its proposed indication; • the results of clinical trials may not meet the level of statistical or clinical significance required by the FDA or comparable foreign regulatoryauthorities for approval; • the patients recruited for a particular clinical program may not be sufficiently broad or representative to assure safety in the full population forwhich we seek approval; • the results may not confirm the positive results from earlier preclinical studies or clinical trials; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of our product candidates may not be sufficient to the satisfaction of FDA or comparable foreignregulatory authorities to support the submission of a biologics license application, or BLA, or other comparable submission in foreignjurisdictions or to obtain regulatory approval in the United States or elsewhere; • regulatory agencies might not approve or might require changes to our manufacturing processes or facilities; or • regulatory agencies may change their approval policies or adopt new regulations in a manner rendering our clinical data insufficient forapproval.Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability to generate revenue from the particular productcandidate, which likely would result in significant harm to our financial position and adversely impact our stock price. Furthermore, any regulatory approvalto market a product candidate may be subject to limitations on the indicated uses for which we may market the product candidate. These limitations maylimit the size of the market for the product candidate.We are not permitted to market our product candidates in the United States or in other countries until we receive approval of a BLA from the FDA ormarketing authorization from applicable regulatory authorities outside the United States. We are also not permitted to promote our product candidates assafe and effective therapies until after receiving approval. Obtaining approval of a BLA can be a lengthy, expensive and uncertain process. If we fail toobtain FDA approval to market our product candidates, we will be unable to sell our product candidates in the United States, which will significantly impairour ability to generate any revenues. In addition, failure to comply with FDA and non-U.S. regulatory requirements may, either before or after productapproval, if any, subject our company to administrative or judicially imposed sanctions, including: • restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned trials; • restrictions on the products, manufacturers or manufacturing process; • warning letters or untitled letters alleging violations; • civil and criminal penalties; • injunctions; • suspension or withdrawal of regulatory approvals; • product seizures, detentions or import bans; • voluntary or mandatory product recalls and publicity requirements; • total or partial suspension of production; 34Table of Contents • imposition of restrictions on operations, including costly new manufacturing requirements; and • refusal to approve pending BLAs or supplements to approved BLAs.Even if we do receive regulatory approval to market a product candidate, any such approval may be subject to limitations on the indicated uses for which wemay market the product. It is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will everobtain the appropriate regulatory approvals necessary for us or our collaborators to commence product sales. Any delay in obtaining, or an inability toobtain, applicable regulatory approvals would prevent us from commercializing our product candidates, generating revenues and achieving and sustainingprofitability.Our gene therapy product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidatedevelopment and subsequently obtaining regulatory approval. To date, four gene therapy products have been approved in the United States and fivesuch products have been approved in Europe.We have concentrated our product research and development efforts on our gene therapy platform, and our future success depends on the successfuldevelopment of this approach. There can be no assurance that any development problems we experience in the future related to our gene therapy platformwill not cause significant delays or unanticipated costs, or that such development problems can be solved. We may also experience unanticipated problemsor delays in expanding our manufacturing capacity or transferring our manufacturing process to commercial partners, which may prevent us fromcompleting our clinical trials or commercializing our products on a timely or profitable basis, if at all.In addition, the clinical trial requirements of the FDA, the EMA and other regulatory agencies and the criteria these regulators use to determine the safetyand efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of such product candidates.The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better known or extensivelystudied pharmaceutical or other product candidates.Regulatory requirements governing gene and cell therapy products have changed frequently and may continue to change in the future. For example, theFDA established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the reviewof gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. Gene therapy clinicaltrials conducted at institutions that receive funding for recombinant DNA research from the United States National Institutes of Health, or the NIH, are alsosubject to review by the NIHNovel and Exceptional Technology and Research Advisory Committee, or NExTRAC, formerly the Recombinant DNAAdvisory Committee, or RAC, which now focuses on emerging areas of research including, but not restricted to, technologies surrounding advances inrecombinant or synthetic nucleic acid research. Although the FDA decides whether individual gene therapy protocols may proceed, it is possible theNExTRAC review process, which is still being implemented, could delay the initiation of a clinical trial, even if the FDA has reviewed the trial design anddetails and approved its initiation. Before a clinical trial can begin at a study site, that institution’s Institutional Review Board, or IRB, and its InstitutionalBiosafety Committee, or IBC, have to review the proposed clinical trial to assess the safety of the trial. In addition, adverse developments in clinical trials ofgene therapy products conducted by others may cause the FDA or other regulatory bodies to change the requirements for approval of any of our productcandidates.These regulatory review committees and advisory groups and the new guidelines they promulgate may lengthen the regulatory review process, require us toperform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval andcommercialization of these product candidates or lead to significant post-approval limitations or restrictions. As we advance our product candidates, we willbe required to consult with these regulatory and advisory groups, and comply with applicable 35Table of Contentsguidelines. If we fail to do so, we may be required to delay or discontinue development of our product candidates. These additional processes may result in areview and approval process that is longer than we otherwise would have expected for orphan ophthalmology product candidates. Delay or failure to obtain,or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficientproduct revenue to maintain our business.Success in animal studies or early clinical trials may not be indicative of results obtained in later trials.Trial designs and results from animal studies or previous clinical trials are not necessarily predictive of our future clinical trial designs or results, and interimresults of a clinical trial are not necessarily indicative of final results. Our product candidates may also fail to show the desired safety and efficacy in clinicaldevelopment despite demonstrating positive results in animal studies or having successfully advanced through initial clinical trials. There can be noassurance that the success we achieved in the animal studies for our lead product candidates will result in success in our clinical trials of those productcandidates.There is a high failure rate for drugs and biological products proceeding through clinical trials. A number of companies in the pharmaceutical andbiotechnology industries have suffered significant setbacks in later stage clinical trials even after achieving promising results in earlier stage clinical trials.Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. Inaddition, we may experience regulatory delays or rejections as a result of many factors, including due to changes in regulatory policy during the period ofour product candidate development.We may find it difficult to enroll patients in our clinical trials, which could delay or prevent clinical trials of our product candidates.Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials dependson the speed at which we can recruit patients to participate in testing our product candidates as well as completion of required follow-up periods. If patientsare unwilling to participate in our gene therapy studies because of negative publicity from adverse events in the biotechnology or gene therapy industries orfor other reasons, including competitive clinical trials for similar patient populations, the timeline for recruiting patients, conducting studies and obtainingregulatory approval of our product candidates may be delayed. For example, trials using early versions of lentiviral vectors, which integrate with, andthereby alter, the host cell’s DNA, have led to several well-publicized adverse events, including reported cases of leukemia. If there are delays inaccumulating the required number of clinical events in trials for our product candidates where clinical events are a primary endpoint, there may be delays incompleting the trial. These delays could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness of ourtechnology or termination of the clinical trials altogether.We may not be able to identify, recruit and enroll a sufficient number of patients, or those with the required or desired characteristics to achieve diversity ina trial, to complete our clinical trials in a timely manner. For example, enrolling eligible patients in novel orphan drug trials can be challenging and wepreviously encountered slower-than-expected enrollment in our phase 1/2 clinical trial for our XLRS product candidate as a result of patients not meetingone or more study eligibility criteria. Challenges such as these in enrolling a sufficient number of patients to conduct our clinical trials as planned, may causeus to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business. We could also encounter delaysif physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates.In particular, most of the conditions for which we plan to evaluate our product candidates are rare genetic disorders with limited patient pools from which todraw for clinical trials. The eligibility criteria of our clinical trials will further limit the pool of available trial participants. 36Table of ContentsPatient enrollment is affected by factors including: • severity of the disease under investigation; • design of the clinical trial protocol; • size and nature of the patient population; • eligibility criteria for the trial in question; • perceived risks and benefits of the product candidate under trial; • proximity and availability of clinical trial sites for prospective patients; • availability of competing therapies and clinical trials; • clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, includingany new drugs that may be approved for the indications we are investigating; • efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; and • our ability to monitor patients adequately during and after treatment.We plan to seek initial marketing approval for our product candidates in the United States and the European Economic Area, or EEA. We may not be able toinitiate or continue clinical trials if we cannot enroll a sufficient number of eligible patients to participate in the clinical trials required by the FDA, the EMAor other foreign regulatory authorities. Our ability to successfully initiate, enroll and complete a clinical trial in any foreign country is subject to numerousrisks unique to conducting business in foreign countries, including: • difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians; • different standards for conducting clinical trials; • our inability to locate qualified local consultants, physicians and partners; and • the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation ofpharmaceutical and biotechnology products and treatments.We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatoryauthorities.Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials todemonstrate the safety and efficacy of such product candidates in humans. Clinical testing is expensive, time-consuming and uncertain as to outcome. Wecannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. Our clinical trials have and may continue to bedelayed by the necessity to re-test study agent, the decision to use a single surgeon to treat patients and protocol amendments that require approval byinstitutional review boards at the clinical sites. A failure of one or more clinical trials can occur at any stage of testing.Events that may prevent successful or timely completion of clinical development include: • delays in raising, or inability to raise, sufficient capital to fund the planned clinical trials; • inability to generate sufficient preclinical, toxicology, or other data to support the initiation of human clinical trials; • delays in reaching a consensus with regulatory agencies on trial design; 37Table of Contents • identifying, recruiting and training suitable clinical investigators; • delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensivenegotiation and may vary significantly among different CROs and trial sites; • delays in obtaining required IRB and IBC approval at each clinical trial site; • delays in recruiting suitable patients to participate in our clinical trials; • delays due to changing standard of care for the diseases we are targeting; • adding new clinical trial sites; • imposition of a clinical hold by regulatory agencies, after review of an IND application or equivalent application or an inspection of ourclinical trial operations or trial sites; • failure by our CROs, other third parties or us to adhere to clinical trial requirements; • loss of product due to shipping delays or delays in customs in connection with delivery to foreign countries for use in clinical trials; • failure to perform in accordance with the FDA’s good clinical practices, or GCP requirements or applicable regulatory guidelines in othercountries; • delays in the manufacture, testing, release, import or export for the use of sufficient quantities of our product candidates for the use in clinicaltrials by our vendors, such as the vendor testing errors previously experienced in our ongoing clinical trials; failure by us or our vendors tomanufacture our product candidate in accordance with FDA’s good manufacturing practice, or GMP, requirements or applicable regulatoryguidelines in other countries; • delays by us or our contract vendors in the testing, validation and delivery of our product candidates to the clinical trial sites; • delays in having patients’ complete participation in a trial or return for post-treatment follow-up; • clinical trial sites deviating from trial protocol or clinical trial sites or patients dropping out of a trial; • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • changes in regulatory requirements, FDA policy, and guidance that require amending or submitting new clinical protocols; • the costs of clinical trials of our product candidates may be greater than we anticipate; or • clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, toconduct additional clinical trials or abandon drug development programs.Further, a clinical trial may be suspended or terminated by us, our collaborators, the IRBs, in the institutions in which such trials are being conducted, theData Safety Monitoring Board, or DSMB, for such trial, or by the FDA or other regulatory authorities due to a number of factors, including failure to conductthe clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA orother regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefitfrom using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Inappropriate circumstances, we may also elect to temporarily suspend an ongoing clinical trial to further study unexpected results, even if those results wouldnot require us to formally suspend the trial under the applicable regulatory requirements or clinical protocols. Such temporary suspension could includefurther testing of trial 38Table of Contentsmaterials and the need to review subject responses to ensure safety. If we experience termination of, or delays in the completion of, any clinical trial of ourproduct candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of theseproduct candidates will be delayed. Furthermore, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trialsmay also ultimately lead to the denial of regulatory approval of our product candidates.Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenuesfrom product sales, regulatory and commercialization milestones and royalties. In addition, if we or our third-party collaborators make manufacturing orformulation changes to product candidates, we or they may need to conduct additional trial to bridge the modified product candidates to earlier versions.Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow ourcompetitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may harmour business and results of operations.If the results of our clinical trials are inconclusive or if there are safety concerns or adverse events associated with our product candidates, we may: • be delayed in obtaining marketing approval for our product candidates, if at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be subject to changes with the way the product is administered; • be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; • have regulatory authorities withdraw their approval of the product or impose restrictions on its distribution in the form of a modified riskevaluation and mitigation strategy; • be subject to the addition of labeling statements, such as warnings or contraindications; • be sued; or • experience damage to our reputation.Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercializeour product candidates.Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit thecommercial profile of an approved label, or result in significant negative consequences following any potential marketing approval.As with many pharmaceutical and biological products, treatment with our product candidates may produce undesirable side effects or adverse reactions.These adverse reactions may occur despite our belief that our AAV vectors have a generally acceptable safety profile.Known adverse reactions that could occur with treatment with AAV vectors include an immunologic reaction to the capsid protein or gene at early timepoints after administration. In previous clinical trials involving AAV viral vectors for gene therapy, some subjects experienced serious adverse events,including the development of T-cell response due to immune response against the vector capsid proteins. If our vectors demonstrate a similar effect, or otheradverse events, we may be required to halt or delay further clinical development of our product candidates. In addition, theoretical adverse reactions of AAVvectors include replication and spread of the virus 39Table of Contentsto other parts of the body and insertional oncogenesis, which is the process whereby the insertion of a functional gene near a gene that is important in cellgrowth or division results in uncontrolled cell division, also known as cancer, which could potentially enhance the risk of malignant transformation.Potential procedure-related adverse reactions, including inflammation, can also occur and have, in fact, been observed in our XLRS, XLRP and ACHMCNGB3 trials. There is also the potential risk of delayed adverse reactions following exposure to gene therapy products due to persistent biological activityof the genetic material or other components of products used to carry the genetic material. If any such adverse reactions occur, our clinical trials could besuspended or terminated and the FDA, the EMA or other foreign regulatory authorities could order us to cease further development of or deny approval ofour product candidates for any or all targeted indications. The product-related side effects could affect patient recruitment or the ability of enrolled patientsto complete the trial. If we elect or are required to delay, suspend or terminate any clinical trial of any of our product candidates, the commercial prospects ofsuch product candidates will be harmed and our ability to generate product revenues from any of these product candidates will be delayed or eliminated.Any of these occurrences may harm our business, financial condition and prospects significantly.Additionally, if any of our product candidates receive marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategy, orREMS, to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of gene therapies fordistribution to patients and a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused byour product candidate, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw approvals of such product candidate; • regulatory authorities may require additional warnings on the label; • we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way a product candidate is administered or conduct additional clinical trials; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer.Any of these events could prevent or delay us from achieving or maintaining market acceptance of our product candidates and could significantly harm ourbusiness, prospects, financial condition and results of operations.We may be unable to obtain orphan product designation or exclusivity for some of our product candidates. If our competitors are able to obtain orphanproduct exclusivity for their products that are considered to be the same as our product candidates, we may not be able to have competing productsapproved by the applicable regulatory authority for a significant period of time.Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphandrugs. Under the Orphan Drug Act of 1983, the FDA may designate a product candidate as an orphan drug if it is intended to treat a rare disease orcondition, which is generally defined as having a patient population of fewer than 200,000 individuals diagnosed annually in the United States, or a patientpopulation greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered fromsales in the United States. In the European Union, the EMA’s Committee for Orphan Medicinal Products, or COMP, grants orphan drug designation topromote the development of products that are intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating conditionaffecting not more than 5 in 10,000 persons in the European Union Community. Additionally, designation is granted for products intended for the diagnosis,prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, 40Table of Contentswithout incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drugor biological product. Our product candidates for the treatment of XLRS, ACHM (in the form caused by mutations in the CNGB3 and CNGA3 genes) andXLRP (in the form caused by mutations in the RPGR gene) have been granted orphan medicinal product designation by the FDA and the EuropeanCommission. We may request orphan drug designation for our other product candidates in the future but there can be no assurances that the FDA will grantany of our product candidates such designation. Additionally, the designation by the FDA of any of our product candidates as an orphan drug does notguarantee that the FDA will accelerate regulatory review of or ultimately approve that product candidate. Orphan drug designation may also be rescinded ifFDA concludes that the product candidate no longer meets the criteria for designation.Generally, if a product candidate with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has suchdesignation, the product is entitled to a period of marketing exclusivity, which precludes the EMA or the FDA from approving another marketing applicationfor the same drug and indication for that time period, except in limited circumstances. The FDA has not defined the meaning of “same drug” specifically forgene therapy products and it is possible that the FDA could conclude that no two gene therapy products could be considered the same. The applicable periodis seven years in the United States and 10 years in Europe. The European exclusivity period can be reduced to six years if a product no longer meets thecriteria for orphan drug designation or if the product is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity maybe lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantityof the product to meet the needs of patients with the rare disease or condition, or if a gene product considered to be the same as our product candidate issuperior in certain respects.Even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product candidate from competitionbecause different drugs can be approved for the same condition. In the United States, even after an orphan drug is approved, the FDA can subsequentlyapprove another drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective ormakes a major contribution to patient care.Even if we complete the necessary clinical trials, we cannot predict when or if we will obtain regulatory approval to commercialize a product candidateor the approval may be for a narrower indication than we expect.We cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if ourproduct candidates demonstrate safety and efficacy in clinical trials, the regulatory agencies may not complete their review processes in a timely manner, orwe may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommendsnon-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from futurelegislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials and the review process.Regulatory agencies also may approve a product candidate for fewer or more limited indications than requested, may not approve the price we intend tocharge for our product candidate, may impose significant limitations in the form of narrow indications, warnings, precautions or contra-indications withrespect to conditions of use or may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory agencies maynot approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates. Any of the foregoingscenarios could materially harm the commercial prospects for our product candidates. 41Table of ContentsEven if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.Even if we obtain regulatory approval in a jurisdiction for our product candidates, they will be subject to ongoing regulatory requirements formanufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, and submission of safety and other post-market information.Any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the productmay be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, andsurveillance to monitor the safety and efficacy of the product. For example, the holder of an approved BLA is obligated to monitor and report adverse eventsand any failure of a product to meet the specifications in the BLA. FDA guidance advises that patients treated with some types of gene therapy undergofollow-up observations for potential adverse events and this follow-up may extend for many years. The holder of an approved BLA must also submit new orsupplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising andpromotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.In addition, product manufacturers are subject to payment of program fees and continual review and periodic inspections by the FDA and other regulatoryauthorities for compliance with GMP requirements and adherence to commitments made in the BLA or foreign marketing application. If we or a regulatoryagency discovers previously unknown problems with a product such as adverse events of unanticipated severity or frequency, or problems with the facilitywhere the product is manufactured or with the integrity or sufficiency of data, records, or documentation, or disagrees with the promotion, marketing orlabeling of that product, a regulatory agency may impose restrictions relative to that product, the manufacturing facility or us, including requiring recall orwithdrawal of the product from the market or suspension of manufacturing.If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory agency may: • issue a warning letter asserting that we are in violation of the law; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; • suspend any ongoing clinical trials; • refuse to approve a pending BLA or comparable foreign marketing application (or any supplements thereto) submitted by us or our strategicpartners; • restrict the marketing or manufacturing of the product; • seize or detain product or otherwise require the withdrawal of product from the market; • refuse to permit the import or export of products; or • refuse to allow us to enter into supply contracts, including government contracts.Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negativepublicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenues.In addition, the FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval ofour product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrativeaction, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements orpolicies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieveor sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations. 42Table of ContentsEven if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval for our product candidates outside ofthe United States, which would limit our market opportunities and adversely affect our business.Approval of a product candidate in the United States by the FDA does not ensure approval of such product candidate by regulatory authorities in othercountries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries orby the FDA. Sales of our product candidates outside of the United States will be subject to foreign regulatory requirements governing clinical trials andmarketing approval. Even if the FDA grants marketing approval for a product candidate, comparable regulatory authorities of foreign countries must alsoapprove the manufacturing and marketing of the product candidates in those countries. Approval procedures vary among jurisdictions and can involverequirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies orclinical trials. In many countries outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale inthat country. In some cases, the price that we intend to charge for our products, if approved, is also subject to approval. We intend to submit a marketingauthorization application to the EMA for approval in the EEA, but obtaining such approval is a lengthy and expensive process and the EMA has its ownprocedures for approval of product candidates. Even if a product candidate is approved, the FDA or the EMA, as the case may be, may limit the indicationsfor which the product may be marketed, require extensive warnings on the product labeling or require expensive and time-consuming clinical trials orreporting as conditions of approval. Regulatory authorities in countries outside of the United States and the EEA also have requirements for approval ofproduct candidates with which we must comply prior to marketing in those countries. Obtaining foreign regulatory approvals and compliance with foreignregulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our product candidatesin certain countries.Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries and regulatory approval of a productcandidate in one country does not ensure approval in any other country, while a failure or delay in obtaining regulatory approval in one country may have anegative effect on the regulatory approval process in others. Also, regulatory approval for any of our product candidates may be withdrawn. If we fail tocomply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and ourability to realize the full market potential of our product candidates will be harmed and our business will be adversely affected.Risks related to our reliance on third partiesWe expect to rely on third parties to conduct aspects of our product manufacturing and protocol development, and these third parties may not performsatisfactorily.We do not expect to independently conduct all aspects of our vector production, product manufacturing, protocol development, and monitoring andmanagement of our ongoing and planned preclinical and clinical programs. We have expanded our internal capabilities to include a full-scale pilot facility tofacilitate continued improvement in our manufacturing process. We have completed the design phase for a cGMP facility at our Florida headquarters tosupport later stage clinical development. We currently rely, and expect to continue to rely, to a significant degree, on third parties for the production of ourclinical trial materials. In such cases, we expect to control only certain aspects of their activities.Under certain circumstances, these third parties may be entitled to terminate their engagements with us or we may seek to terminate our engagement withthem. Because of the complexities inherent in gene therapy manufacturing, we expect that any engagement by us of a new third-party manufacturer for ourproduct candidates would take a substantial amount of time to establish. Accordingly, if we need to enter into alternative arrangements, it could delay ourproduct development activities. We are currently negotiating with and conducting pilot work at three alternative third-party manufacturers to expand ourcapacity and mitigate risk. Our 43Table of Contentsreliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilityto ensure compliance with all required regulations and study and trial protocols. If these third parties do not successfully carry out their contractual duties,meet expected deadlines or conduct our studies in accordance with regulatory requirements or our stated study and trial plans and protocols, or if there aredisagreements between us and these third parties, we will not be able to complete, or may be delayed in completing, the preclinical studies and clinical trialsrequired to support future IND submissions and approval of our product candidates. In some such cases, we may need to locate an appropriate replacementthird-party relationship, which may not be readily available or on acceptable terms, which would cause additional delay with respect to the approval of ourproduct candidates and would thereby have a material adverse effect on our business, financial condition, results of operations and prospects.In addition, reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured the product candidates ourselves,including: • the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; • delays in the production of our product candidates associated with transitioning to a new third-party manufacturer; • reduced control as a result of using third-party manufacturers for all aspects of manufacturing activities; • termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; and • disruptions to the operations of our third-party manufacturers or suppliers caused by conditions unrelated to our business or operations,including the bankruptcy of the manufacturer or supplier.Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize futureproduct candidates. Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of productmanufacture.We and our contract manufacturers are subject to significant regulatory oversight with respect to manufacturing our products. The manufacturingfacilities on which we rely may not continue to meet regulatory requirements and may have limited capacity.All parties involved in the preparation of therapeutics for clinical trial or commercial sale are subject to extensive regulation. Components of a finishedtherapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with GMP requirements. Theseregulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to controland assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction ofadventitious agents or other contaminants, or to inadvertent changes in the properties or stability of our product candidates that may not be detectable infinal product testing. We or our contract manufacturers must supply all necessary documentation in support of a BLA on a timely basis and must adhere tothe FDA’s GMP requirements enforced by the FDA through its facilities inspection program. Our facilities and quality systems and the facilities and qualitysystems of some or all of our third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition ofregulatory approval of our product candidates. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involvedwith the preparation of our product candidates or the associated quality systems for compliance with the regulations applicable to the activities beingconducted. If these facilities do not pass a pre-approval plant inspection, FDA approval of the products will not be granted.The regulatory authorities also may, at any time following approval of a product for sale, audit our manufacturing facilities or those of our third-partymanufacturers. If any such inspection or audit identifies a 44Table of Contentsfailure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such aninspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or our third-party manufacturers to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary orpermanent closure of a manufacturing facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harmour business.As described above in “Business,” we have encountered delays in clinical trial material availability as a result of difficulties in proper testing. If we or any ofour third-party manufacturers or testing contractors fail to maintain regulatory compliance, the FDA can impose regulatory sanctions including, amongother things, refusal to approve a pending application for a new product candidate, or revocation of a pre-existing approval. Such an occurrence may causeour business, financial condition and results of operations to be materially harmed.Additionally, if supply from an approved manufacturer is interrupted, there could be a significant disruption in commercial supply of our products. Becauseof the complexities inherent in our gene therapy manufacturing, we expect that there will be a significant period of time following our engagement of analternative third-party manufacturer before that manufacturer will be in a position to provide an adequate supply of our product candidates for our clinicaltrials. In addition, any alternative manufacturer will also need to be qualified through a BLA supplement which could result in further delay. The regulatoryagencies may also require additional trials if a new manufacturer is relied upon for commercial production. Switching manufacturers may involvesubstantial costs and is likely to result in a delay in our desired clinical and commercial timelines.These factors could cause the delay of clinical trials, regulatory submissions, required approvals or commercialization of our product candidates, cause us toincur higher costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet contractual requirements, andwe are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed, or wecould lose potential revenue.We expect to rely on third parties to conduct and supervise our clinical trials, and if these third parties perform in an unsatisfactory manner, it may harmour business.We expect to continue to rely on academic research institutions and CROs along with clinical trial sites to ensure our clinical trials are conducted properlyand on time. While we will have agreements governing their activities, we will have limited influence over their actual performance and will control onlycertain aspects of our CROs’ activities. Nevertheless, we will be responsible for ensuring that each of our clinical trials is conducted in accordance with theapplicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.We and our CROs are required to comply with the FDA’s and other regulatory authorities’ GCP, GMP and good laboratory practice, or GLP, requirementsfor conducting, recording and reporting the results of our preclinical studies and clinical trials to assure that the data and reported results are credible andaccurate and that the rights, integrity and confidentiality of clinical trial participants are protected. The FDA enforces these requirements through periodicinspections of study sponsors, principal investigators and clinical trial sites. If we or our CROs fail to comply with applicable GCP requirements, the clinicaldata generated in our future clinical trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving anymarketing applications. Upon inspection, the FDA may determine that our clinical trials did not comply with GCP requirements, which may render the datagenerated in those trials unreliable. In addition, our future clinical trials will require a sufficient number of test subjects to evaluate the safety andeffectiveness of our product candidates. Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of patients, wemay be required to repeat such clinical trials, which would delay the regulatory approval process.Our CROs are not our employees, and, except for remedies available to us under our agreements with such CROs, we are therefore unable to directlymonitor whether or not they devote sufficient time and resources to our 45Table of Contentsclinical and nonclinical programs. Our CROs also have relationships with other commercial entities, including our competitors, for whom they may also beconducting clinical trials or other drug development activities that could harm our competitive position. If our CROs do not successfully carry out theircontractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to thefailure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our clinical trials may be extended, delayed or terminated, andwe may not be able to obtain regulatory approval for, or successfully commercialize our product candidates. As a result, our financial results and thecommercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenues could be delayed.Switching or adding CROs involves substantial cost and requires extensive management time and focus. In addition, there is a natural transition period whena new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Thoughwe carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or thatthese delays or challenges will not have a material adverse impact on our business, prospects, financial condition and results of operations.We also expect to rely on other third parties to store and distribute our vectors and products for any clinical trials that we may conduct. Any performancefailure on the part of our distributors could delay clinical development, regulatory review or marketing approval of our product candidates orcommercialization of our products, if approved, producing additional losses and depriving us of potential product revenue.Collaborations with third parties may be important to our business. If these collaborations are not successful, our business could be adversely affected.In addition to our current collaborations, we may in the future seek third-party collaborators for the development and commercialization of productcandidates based on our gene therapy platform. If we enter into such collaborations, we will have limited control over the amount and timing of resourcesthat our collaborators will dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from any futurecollaboration or license agreement will depend on the collaborators’ abilities to successfully perform the functions assigned to them in these arrangements. Inaddition, any collaborators may have the right to abandon research or development projects and terminate applicable agreements, including any fundingobligations, prior to or upon the expiration of the agreed upon terms. For example, on December 7, 2018, we received notice from Biogen that the BiogenCollaboration Agreement would be terminated effective March 8, 2019. As a result of the termination, we will not receive any future milestone-based orroyalty payments under the Collaboration Agreement after March 8, 2019.Our current collaborations or any collaboration that we enter into in the future, may pose a number of risks, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not perform their obligations as expected; • exclusivity rights we negotiate with our collaborators may be unenforceable in certain jurisdictions; • collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect notto continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus oravailable funding, or external factors, such as an acquisition, that divert resources or create competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a productcandidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; 46Table of Contents • collaborators may decide not to continue the development of collaboration products and could independently develop, or develop with thirdparties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitiveproducts are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidatesor products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • take-over or step-in rights granted to a collaborator with respect to one or more of our product candidates, may cause us to have limited controlover future development activities and/or realize diminished economic or other benefits upon the ultimate commercialization of that productcandidate; • a collaborator with marketing, distribution and commercialization rights to one or more of our product candidates that achieve regulatoryapproval may not commit sufficient resources to the marketing and distribution of any such product candidate; • if we fail to obtain orphan product designation for a partnered product, we may realize diminished economic benefit upon the ultimatecommercialization of that product candidate; • restrictions and commitments contained in collaborations may have the effect of preventing us from independently undertaking developmentand other efforts that may appear to be attractive to us; • disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course ofdevelopment of any product candidates, might cause delays or termination of the research, development or commercialization of such productcandidates, might lead to additional responsibilities for us with respect to such product candidates, or might result in litigation or arbitration,any of which would be time-consuming and expensive; • collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as toinvite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • collaborations may be terminated at the convenience of the collaborator or for a material breach by either party, and, if a collaboration isterminated, we could be required to make payments to the collaborator or have our potential payments under the collaboration reduced; and • in the event of the termination of a collaboration, like the termination of the Biogen Collaboration Agreement effective as of March 8,2019, we could be required to raise additional capital to pursue further development or commercialization of the product candidates returnedto us by our former collaborator.If our collaborations do not result in the successful development and commercialization of products or if one of our collaborators terminates its agreementwith us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding weexpect under these agreements, our development of our gene therapy platform and product candidates could be delayed and we may need additionalresources to develop product candidates and gene therapy platform. As a result of these or other factors, we may not receive the benefits that we expect fromour collaborations.Additionally, subject to its contractual obligations to us, if one of our collaborators is involved in a business combination, the collaborator mightdeemphasize or terminate the development or commercialization of any product candidate licensed to it by us. If one of our collaborators terminates itsagreement with us, we may find it more difficult to attract new collaborators and our perception in the business and financial communities could beadversely affected. 47Table of ContentsWe may in the future determine to collaborate with other pharmaceutical and biotechnology companies for development and potential commercialization ofproduct candidates other than those covered by our collaboration with Biogen. These relationships or those like them may require us to incur non-recurringand other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management andbusiness. In addition, we could face significant competition in seeking appropriate collaborators and the negotiation process is time-consuming and complex.Our ability to reach a definitive collaboration agreement with any such new party will depend, among other things, upon our assessment of the collaborator’sresources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Moreover,we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because our researchand development pipeline may be insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effortand third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy. If we license product candidates,we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and companyculture. We cannot be certain that, following a strategic transaction or license, we will achieve the revenues or specific net income that justifies suchtransaction.If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of aproduct candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization orreduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our ownexpense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise andadditional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds orexpertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates or bringthem to market or continue to develop our gene therapy platform and our business may be materially and adversely affected.Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our tradesecrets will be misappropriated or disclosed.Because we rely on third parties to manufacture our viral vectors and our product candidates, and because we collaborate with various organizations andacademic institutions on the advancement of our gene therapy platform, we must, at times, share trade secrets with them. We seek to protect our proprietarytechnology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consultingagreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietaryinformation. These agreements typically limit the rights of the third parties to use or disclose our confidential information, such as trade secrets.Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases therisk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used inviolation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our tradesecrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.In addition, these agreements typically restrict the ability of our collaborators, advisors, employees and consultants to publish data potentially relating to ourtrade secrets. Our academic collaborators typically have rights to publish data, provided that we are notified in advance and may delay publication for aspecified time in order to secure our intellectual property rights arising from the collaboration. In other cases, publication rights are controlled exclusively byus, although in some cases we may share these rights with other parties. We also conduct joint research and development programs that may require us toshare trade secrets under the terms of 48Table of Contentsour research and development partnerships or similar agreements. Despite our efforts to protect our trade secrets, our competitors may discover our tradesecrets, either through breach of these agreements, independent development or publication of information including our trade secrets in cases where we donot have proprietary or otherwise protected rights at the time of publication. A competitor’s discovery of our trade secrets would impair our competitiveposition and have an adverse impact on our business.Risks related to commercialization of our product candidatesIf we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, wemay be unable to generate any revenues.We currently have no sales and marketing organization and have no experience selling and marketing our product candidates. To successfullycommercialize any products that may result from our development programs, we will need to develop these capabilities, either on our own or with others.The establishment and development of our own sales force or the establishment of a contract sales force to market any products we may develop will beexpensive and time-consuming, particularly to the extent that we seek to commercialize any product for an indication, such as wet AMD, that has a patientpopulation significantly larger than those addressed by our current lead product candidates, and could delay any product launch. Moreover, we cannot becertain that we will be able to successfully develop this capability. We may enter into collaborations with other entities to utilize their mature marketing anddistribution capabilities, but we may be unable to enter into marketing agreements on favorable terms, if at all. If our future collaborators do not commitsufficient resources to commercialize our future products, if any, and we are unable to develop the necessary marketing capabilities on our own, we will beunable to generate sufficient product revenue to sustain our business. We will be competing with many companies that currently have extensive and well-funded marketing and sales operations to recruit, hire, train and retain marketing and sales personnel. We also face competition in our search for third partiesto assist us with the sales and marketing efforts of our product candidates. Without an internal team or the support of a third party to perform marketing andsales functions, we may be unable to compete successfully against these more established companies.We face intense competition and rapid technological change and the possibility that our competitors may develop therapies that are more advanced oreffective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our product candidates.The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies and proprietaryproducts, and any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies thatmay become available in the future. While we believe that our proprietary technology estate and scientific expertise in the gene therapy field provide us withcompetitive advantages, we face potential competition from many different sources, including larger and better-funded pharmaceutical, specialtypharmaceutical and biotechnology companies, as well as from academic institutions and governmental agencies and public and private research institutionsthat may develop potentially competitive products or technologies.Currently there are no approved products for any of our lead orphan ophthalmology indications of XLRS, ACHM and XLRP. We believe the keycompetitive factors that will affect the success of our product candidates, if approved, are likely to be their efficacy, safety, convenience of administrationand delivery, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.A number of companies have announced that they are working on AAV-based gene therapy technology and there are companies developing gene therapiesin the field of orphan ophthalmology, on which we are currently focused, which have programs that are at the clinical and pre-clinical stages. Othercompanies could also potentially seek to enter this field. 49Table of ContentsMany of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and human resources than we do andsignificantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of treatments and thecommercialization of those treatments. To the extent that we develop product candidates for indications with larger patient populations, such as wet AMD,we expect to experience particularly intense competition from larger and better funded pharmaceutical companies. Mergers and acquisitions in thebiotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. Ourcommercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer orless severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or otherregulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong marketposition before we are able to enter the market. Additionally, market exclusivity provisions for products with orphan designation could severely limit thesales potential for any of our product candidates that do not gain first-to-market approval.The insurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage andreimbursement for our products, if approved, could limit our ability to market those products and decrease our ability to generate revenue.We expect the cost of a single administration of gene therapy products such as those we are developing to be substantial, when and if they achieve regulatoryapproval. We expect that coverage and reimbursement by governmental and private payors will be essential for most patients to be able to afford thesetreatments. Accordingly, sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of ourproduct candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed bygovernment authorities, private health coverage insurers and other third-party payors. Coverage and reimbursement by a third-party payor may depend upona number of factors, including the third-party payor’s determination that use of a product is: • a covered benefit under its health plan; • safe, effective and medically necessary; • appropriate for the specific patient; • cost-effective; and • neither experimental nor investigational.Obtaining coverage and reimbursement for a product from governmental and private payors is a time-consuming and costly process that could require us toprovide to the payor supporting scientific, clinical and cost-effectiveness data for the use of our products. We may not be able to provide data sufficient toreceive a positive coverage determination. If coverage and reimbursement are not available, or are available only to limited levels, we may not be able tosuccessfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow usto establish or maintain pricing sufficient to realize a sufficient return on our investment.There is significant uncertainty related to third-party coverage and reimbursement of newly approved products. In the United States, third-party payors,including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which newdrugs and biologics will be covered and reimbursed. The Medicare and Medicaid programs increasingly are used as models for how private payors and othergovernmental payors develop their coverage and reimbursement policies for drugs and biologics. Currently, no gene therapy products have been approvedfor coverage under the Medicare program. The Centers for Medicare & Medicaid Services, or CMS, the agency responsible for administering the Medicareprogram, covers some items and services nationally through National Coverage Determinations. More 50Table of Contentsfrequently, coverage determinations for new products are made by the individual Medicare Administrative Contractors (MACs) that operate the program ona day-to-day basis in their awarded geographic jurisdictions. It is difficult to predict what CMS or the local MACs will decide with respect to coverage andreimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products. Moreover,Medicare reimbursement is determined in part based on where the drug or biologic is administered. Drugs or biologics administered in the inpatient settingare bundled along with other services into Diagnosis Related Groups for payment purposes. In the outpatient setting drugs and biologics such as our productcandidates are generally reimbursed at Average Sales Price (ASP) + 6 %. Outside of the United States, agencies in Europe may be more conservative thanCMS with respect to reimbursement. For example, a number of cancer drugs have been approved for reimbursement in the United States and have not beenapproved for reimbursement in certain European countries. It is difficult to predict at this time what third-party payors will decide with respect to thecoverage and reimbursement for our product candidates.Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and webelieve the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricingand usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of nationalhealth systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies tofix their own prices for medical products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulationcould restrict the amount that we are able to charge for our product candidates and delay their commercial launch. Accordingly, in markets outside theUnited States, the reimbursement for our products may be reduced or delayed compared with the United States and may be insufficient to generatecommercially reasonable revenues and profits.Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause suchorganizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequatepayment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates, due to the trendtoward managed healthcare, the increasing influence of health maintenance organizations and potential legislative changes on both the federal and statelevels. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become veryintense. As a result, increasingly high barriers are being erected to the entry of new products.Negative public opinion and increased regulatory scrutiny of gene therapy and genetic research may damage public perception of our productcandidates or adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.Gene therapy remains a novel technology, with only four gene therapy products approved to date in the United States and only five gene therapy productsapproved to date in Europe. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of thepublic or the medical community. In particular, our success will depend upon physicians specializing in the treatment of those diseases that our productcandidates target prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments they are alreadyfamiliar with and for which greater clinical data may be available. More restrictive government regulations or negative public opinion would have a negativeeffect on our business or financial condition and may delay or impair the development and commercialization of our product candidates or demand for anyproducts we may develop. For example, trials using early versions of lentiviral vectors, which integrate with, and thereby alter, the host cell’s DNA, haveled to several well-publicized adverse events, including reported cases of leukemia. Although none of our current product candidates utilize lentiviralvectors, our product candidates use a viral delivery system. Adverse events in our clinical trials or the clinical trials of other gene therapy companies, even ifnot ultimately attributable to our product candidates, and the resulting publicity could result in increased governmental regulation, unfavorable 51Table of Contentspublic perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidatesthat are approved and a decrease in demand for any such product candidates.Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, thePatient Protection and Affordable Care Act, or the ACA, was passed, which substantially changes the way health care is financed by both governmental andprivate insurers, and significantly impacts the U.S. pharmaceutical industry. The ACA, among other things, subjects biologic products to potentialcompetition by lower-cost biosimilars, addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program arecalculated for drugs that are inhaled, infused, instilled, implanted or injected, increases the minimum Medicaid rebates owed by manufacturers under theMedicaid Drug Rebate Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations, establishes annual fees andtaxes on manufacturers of certain branded prescription drugs, and subjects additional drugs to lower pricing under the 340B drug pricing program by addingnew entities to the program.In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. On August 2, 2011, the BudgetControl Act of 2011 among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked withrecommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering thelegislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers up to 2% per fiscalyear, which went into effect on April 1, 2013. We expect that additional state and federal healthcare reform measures will be adopted in the future, any ofwhich could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for ourproduct candidates or additional pricing pressures.Some of the provisions of the ACA have been subject to judicial and Congressional challenges, and we expect there to be further challenges in the future.On January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive,defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on states or a cost, fee, tax,penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. More recently,President Trump has been seeking to repeal or replace all or portions of the ACA but to date they have been unable to agree on any such legislation. In thecoming years, additional legislative and regulatory changes could be made to governmental health programs that could significantly impact our business.We cannot predict what legislation, if any, to repeal or replace the ACA will become law, or what impact any such legislation may have on us or ourpartners’ business and financial condition, if any.The commercial success of any of our product candidates will depend upon its degree of market acceptance by physicians, patients, third-party payorsand others in the medical community.Ethical, social and legal concerns about gene therapy and genetic research could result in additional regulations restricting or prohibiting the products andprocesses we may use. Even with the requisite approvals from the FDA in the United States and other government bodies internationally, the commercialsuccess of our product candidates will depend in part on the medical community’s, patients’, and third-party payors’ acceptance of gene therapy products ingeneral, and our product candidates in particular, as medically necessary, cost-effective, and safe. Any product that we bring to the market may not gainmarket acceptance by physicians, patients, third-party payors and others in the medical community. If these products do not achieve an adequate level ofacceptance, we may not generate significant product revenue and may not become profitable. The degree of market 52Table of Contentsacceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including: • the efficacy and safety of such product candidates as demonstrated in clinical trials; • the potential and perceived advantages of product candidates over alternative treatments; • the clinical indications for which the product candidate is approved; • the safety of product candidates seen in a broader patient group, including its use outside the approved indications; • the prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA or other regulatory authorities, including any limitations or warnings contained in aproduct’s approved labeling; • the cost of treatment relative to alternative treatments; • relative convenience and ease of administration; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of marketing and distribution support; • label limitations required by regulatory authorities, which could limit size of market; • the timing of market introduction of competitive products; • publicity concerning our products or competing products and treatments; and • sufficient third-party insurance coverage and reimbursement.Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will notbe fully known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the product candidates mayrequire significant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by theconventional technologies marketed by our competitors. If any of our product candidates is approved but fails to achieve market acceptance amongphysicians, patients, or health care payors, we will not be able to generate significant revenues from such product, which could have a material adverseeffect on our business, prospects, financial condition and results of operations.If we obtain approval to commercialize our product candidates outside of the United States, a variety of risks associated with international operationscould materially adversely affect our business.If any of our product candidates are approved for commercialization, we may enter into agreements with third parties to market them on a worldwide basisor in more limited geographical regions. We expect that we will be subject to additional risks related to entering into international business relationships,including: • different regulatory requirements for approval of drugs and biologics in foreign countries; • the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to importgoods from a foreign market (with low or lower prices) rather than buying them locally; • challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protectintellectual property rights to the same extent as the United States; • unexpected changes in tariffs, trade barriers and regulatory requirements; 53Table of Contents • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doingbusiness in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; • potential liability under the Foreign Corrupt Practices Act of 1977 or comparable foreign regulations; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons,floods and fires.These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations.We may not be successful in our efforts to identify or discover additional product candidates.The success of our business depends primarily upon our ability to identify, develop and commercialize product candidates based on our gene therapyplatform. Although certain of our product candidates are currently in clinical or preclinical development, we may fail to identify other potential productcandidates for clinical development for a number of reasons. For example, our research methodology may be unsuccessful in identifying potential productcandidates or our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the productsunmarketable or unlikely to receive marketing approval.If any of these events occur, we may be forced to abandon our development efforts with respect to a particular product candidate, which would have amaterial adverse effect on our business and could potentially cause us to cease operations. Research programs to identify new product candidates requiresubstantial technical, financial and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimatelyprove to be unsuccessful.Risks related to our business operationsWe previously identified a material weakness in our internal control over financial reporting, which has now been remediated. If we fail to maintain aneffective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which couldadversely affect investor confidence in the Company, and in turn, our results of operations and our stock price.Effective internal controls are necessary for us to provide reliable financial reports and operate successfully as a public company. Section 404 of theSarbanes-Oxley Act of 2002 requires that companies evaluate and report on their systems of internal control over financial reporting.As disclosed in our Form 10-K for the fiscal year ended June 30, 2017, we previously identified a material weakness in our internal controls over financialreporting relating to the design and operation of our closing and financial reporting processes. We completed our remediation efforts related to the materialweakness by, among other things, hiring additional employees to provide further support to our finance and accounting team; 54Table of Contentsrestructuring our finance team to better align the functional areas to the overall strategy of the company, while at the same time providing more focus for theaccounting team in maintaining proper control over the financial reporting process commensurate to support standalone external financial reporting underpublic company or SEC requirements; providing functional and system training to employees and preparing detailed documentation to clearly define keytasks and actions, as well as the positions responsible for those tasks and actions; engaging a consulting firm to assist in documenting and formalizing ouraccounting policies and internal control processes and to help strengthen supervisory reviews by our management; designing and implementing monthlymanual controls to manage our financial reporting close processes and to help ensure an adequate level of segregation of duties within our finance andaccounting function; developing and implementing policies and procedures related to security access, including security access reviews of our key financialsystems’ users to ensure the appropriateness of their roles and security access levels; and performing testing related to the functioning of these controls, andcontinuing to monitor these controls and make enhancements as needed.Although we have remediated this material weakness in our internal controls over financial reporting, any failure to maintain effective internal controlscould cause a delay in compliance with our reporting obligations, SEC rules and regulations or Section 404 of the Sarbanes-Oxley Act of 2002, which couldsubject us to a variety of administrative sanctions, including, but not limited to, SEC enforcement action, ineligibility for short form registration, thesuspension or delisting of our common stock from the stock exchange on which it is listed and the inability of registered broker-dealers to make a market inour common stock, which could adversely affect our business and the trading price of our common stockIf we are unable to manage expected growth in the scale and complexity of our operations, our performance may suffer.If we are successful in executing our business strategy, we will need to continue to expand our managerial, operational, financial and other systems andresources to manage our operations, continue our research and development activities, and, in the longer term, build a sales force and commercialinfrastructure to support commercialization of any of our product candidates that are approved for sale. Future growth would impose significant addedresponsibilities on members of management. It is possible that our management, finance, development personnel, systems and facilities currently in placemay not be adequate to support this future growth. Our need to effectively manage our operations, growth and products requires that we continue to developmore robust business processes and improve our systems and procedures in each of these areas and to attract and retain sufficient numbers of talentedemployees. We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development andgrowth goals.We may enter into or seek to enter into business partnerships, combinations and/or acquisitions which may be difficult to integrate, disrupt ourbusiness, divert management attention or dilute stockholder value.A key element of our strategy is to enter into business partnerships, combinations and/or acquisitions. We have limited experience in making acquisitions,which are typically accompanied by a number of risks, including: • the difficulty of integrating the operations and personnel of the acquired companies; • the potential disruption of our ongoing business and distraction of management; • potential unknown liabilities and expenses; • the failure to achieve the expected benefits of the combination or acquisition; • the maintenance of acceptable standards, controls, procedures and policies; and • the impairment of relationships with employees as a result of any integration of new management and other personnel.If we are not successful in completing acquisitions that we may pursue in the future, we would be required to reevaluate our business strategy and we mayhave incurred substantial expenses and devoted significant 55Table of Contentsmanagement time and resources in seeking to complete the acquisitions. In addition, we could use substantial portions of our available cash as all or aportion of the purchase price, or we could issue additional securities as consideration for these acquisitions, which could cause our stockholders to suffersignificant dilution.Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.We are highly dependent on our executive officers, the loss of whose services may adversely impact the achievement of our objectives. Recruiting andretaining other qualified employees, consultants and advisors for our business, including scientific and technical personnel, will also be critical to oursuccess. There is currently a shortage of skilled executives and scientific personnel in our industry, which is likely to continue. As a result, competition forskilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competitionamong numerous pharmaceutical and biotechnology companies for individuals with similar skill sets. In addition, failure to succeed in preclinical studies orclinical trials may make it more challenging to recruit and retain qualified personnel. The inability to recruit or loss of the services of any executive, keyemployee, consultant or advisor may impede the progress of our research, development and commercialization objectives.In order to induce valuable employees to remain at AGTC, in addition to salary and cash incentives, we have provided stock options that vest over time. Thevalue to employees of stock options that vest over time may be significantly affected by movements in our stock price that are beyond our control and mayat any time be insufficient to counteract more lucrative offers from other companies.Despite our efforts to retain valuable employees, members of our management, scientific and development teams have in the past and may in the futureterminate their employment with us. The loss of the services of any of our executive officers or other key employees and our inability to find suitablereplacements could potentially harm our business, prospects, financial condition or results of operations. We do not maintain “key man” insurance policieson the lives of these individuals or any of our other employees. Our success also depends on our ability to continue to attract, retain and motivate highlyskilled junior, mid-level, and senior managers as well as junior, mid-level, and senior scientific and medical personnel.Many of the other biotechnology and pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources,different risk profiles and a longer history in the industry than we do. They may also provide more diverse opportunities and better chances for careeradvancement. Some of these characteristics may be more appealing to high quality candidates than what we can offer. If we are unable to continue to attractand retain high quality personnel, the rate and success at which we can discover, develop and commercialize product candidates will be limited.Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities.We are exposed to the risk that our employees, CROs, principal investigators, consultants and commercial partners may engage in fraudulent conduct orother illegal activity or may fail to disclosure unauthorized activities to us. Misconduct by these parties could include intentional, reckless and/or negligentfailures to comply with: • the laws and regulations of the FDA and non-U.S. regulators, including those laws requiring the reporting of true, complete and accurateinformation to such regulatory bodies; • manufacturing standards we have established; • healthcare fraud and abuse laws and regulations in the United States and similar foreign laws; or • laws requiring the accurate reporting of financial information or data or the disclosure of unauthorized activities to us. 56Table of ContentsIn particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud,misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting,marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct could also involve theimproper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. Wehave adopted a code of conduct applicable to all of our employees, but it is not always possible to identify and deter employee misconduct, and theprecautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us fromgovernmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are institutedagainst us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, includingthe imposition of significant fines or other sanctions.We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy andsecurity laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.Our operations may be directly, or indirectly through our prescribers, customers and purchasers, subject to various federal and state fraud and abuse laws. Ifwe obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, many of these laws will becomemore directly applicable to our operations, including, without limitation, the federal Health Care Program Anti-Kickback Statute, the federal civil andcriminal False Claims Acts and Physician Payments Sunshine Act and regulations. These laws may impact, among other things, our proposed sales,marketing and educational programs. In addition, we may be subject to patient privacy laws by both the federal government and the states in which weconduct our business. The laws that may affect our ability to operate include, but are not limited to: • the federal Health Care Program Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfullysoliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly,in cash or in kind in return for, the purchase, recommendation, leasing or furnishing of an item or service reimbursable under a federalhealthcare program, such as the Medicare and Medicaid programs; • federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities fromknowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other government payers thatare false or fraudulent; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit aperson from knowingly and willfully executing a scheme or from making false or fraudulent statements to defraud any healthcare benefitprogram, regardless of the payor (e.g., public or private); • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementingregulations, and as amended again by the final HIPAA omnibus rule, Modifications to the HIPAA Privacy, Security, Enforcement, and BreachNotification Rules Under HITECH and the Genetic Information Nondiscrimination Act; Other Modifications to HIPAA, published in January2013, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health informationwithout appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses and health care providers; • federal transparency laws, including the federal Physician Payment Sunshine Act that requires disclosure of payments and other transfers ofvalue provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providersand their immediate family members and applicable group purchasing organizations; • the ACA and its implementing regulations, which may impact, among other things, reimbursement rates by federal health care programs andcommercial insurers; 57Table of Contents • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harmconsumers; • federal government price reporting laws, which require us to calculate and report complex pricing metrics to government programs, where suchreported prices may be used in the calculation of reimbursement and/or discounts on our marketed drugs, when and if approved; participationin these programs and compliance with the applicable requirements may subject us to potentially significant discounts on our products, whenand if approved, increased infrastructure costs and potentially limit our ability to offer certain marketplace discounts; and • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or servicesreimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with theindustry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwiserestrict certain payments that may be made to healthcare providers and other potential referral sources; state laws that require drugmanufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketingexpenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from eachother in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specificdisease states.In addition, any sale of our products or product candidates, if commercialized outside of the United States, may also subject us to foreign laws governingprescription drug marketing and fraud and abuse, including laws similar to the U.S. healthcare laws mentioned above. Because of the breadth of these lawsand the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challengeunder one or more of such laws. In addition, recent health care reform legislation has strengthened these laws. For example, the ACA, among other things,amends the intent requirements of the federal Anti-Kickback Statute and the criminal statute governing healthcare fraud. A person or entity can now befound guilty of violating the Anti-Kickback Statute and the federal criminal healthcare fraud statute without actual knowledge of the statute or specific intentto violate it. In addition, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federalAnti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act.If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject topenalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare andMedicaid, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, imprisonment, and the curtailment or restructuringof our operations, any of which could adversely affect our ability to operate our business and our results of operations.If the use of our product candidates harms patients, we could be subject to costly and damaging product liability claims.The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of productliability claims. Product liability claims might be brought against us by consumers, healthcare providers, pharmaceutical companies or others selling orotherwise coming into contact with our products. For example, we may be sued if any product candidate we develop allegedly causes injury or is found to beotherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects inmanufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. Claims couldalso be asserted under state consumer protection acts. If we cannot successfully defend against product liability claims, 58Table of Contentswe could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in: • impairment of our business reputation; • withdrawal of clinical trial participants; • initiation of investigations by regulators; • costs due to related litigation; • distraction of management’s attention from our primary business; • substantial monetary awards to trial participants, patients or other claimants; • loss of revenue; • exhaustion of any available insurance and our capital resources; • the inability to commercialize our product candidates; and • decreased demand for our product candidates, if approved for commercial sale.Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could preventor inhibit the commercialization of products we develop. While we believe our product liability insurance coverage is sufficient in light of our currentclinical programs. The amount of the product liability coverage that we carry varies from time to time, depending on a number of factors, the mostsignificant of which are the nature and scope of the clinical trials in which we are engaged and the number of patients being treated with our productcandidates in these trials. This amount may increase or decrease in the future. We may not be able to maintain insurance coverage at a reasonable cost or insufficient amounts to protect us against losses due to liability and any claim that may be brought against us could result in a court judgment or settlement inan amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. If and when we obtainmarketing approval for product candidates, we intend to expand our insurance coverage to include the commercial sale of our products; however, we may beunable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. Our insurance policies also have various exclusions,and we may be subject to a product liability claim for which we have no coverage. A successful product liability claim or series of claims brought against uscould cause our stock price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business.If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that couldhave a material adverse effect on the success of our business.We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use,storage, treatment, manufacture and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials,including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for thedisposal of these materials and wastes. Although we believe that our procedures for using, handling, storing and disposing of these materials comply withlegally prescribed standards, we cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resultingfrom our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incursignificant costs associated with civil or criminal fines and penalties.Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from theuse of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, we mayincur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws andregulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantialfines, penalties or other sanctions. 59Table of ContentsWe rely on our relationship with a professional employer organization for our human relations function and as a co-employer of our personnel, and ifthat party failed to perform its responsibilities under that relationship, our relations with our employees could be damaged and we could incur liabilitiesthat could have a material adverse effect on our business.All of our personnel, including our executive officers, are co-employees of AGTC and a professional employer organization, Insperity. Under the terms ofour arrangement, Insperity is the formal employer of all of our personnel, and is responsible for administering all payroll, including tax withholding, andproviding health insurance and other benefits for these individuals. We reimburse Insperity for these costs, and pay Insperity an administrative fee for itsservices. If Insperity fails to comply with applicable laws, or its obligations under this arrangement, our relationship with our employees could be damaged.We could, under certain circumstances, be held liable for a failure by Insperity to appropriately pay, or withhold and remit required taxes from payments to,our employees. In such a case, our potential liability could be significant and could have a material adverse effect on our business.We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plansmay not adequately protect us from a serious disaster.Substantially all of our manufacturing operations and a majority of our research and development operations are conducted from our headquarters locatednear Gainesville, Florida. Hurricanes or other natural disasters could severely disrupt our operations, damage our research facilities or destroy storedresearch materials that could be difficult to replace, and otherwise have a material adverse effect on our business, results of operations, financial conditionand prospects. In addition, despite the implementation of security measures, our internal computer systems and those of our current and any future CROsand other contractors and consultants and collaborators are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism,war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a materialdisruption of our development programs and our business operations. If a natural disaster, power outage or other event occurred that prevented us fromusing all or a significant portion of our headquarters, that damaged critical infrastructure or that otherwise disrupted our operations or the operations of ourthird-party contract manufacturer, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. Forexample, the loss of clinical trial data from our clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs torecover or reproduce the data. If our security measures, disaster recovery and business continuity plans are not adequate in the event of such a breach,serious disaster or similar event, we could incur substantial expenses and the further development and commercialization of our product candidates could bedelayed, which could have a material adverse effect on our business.Interruptions in the supply of product or inventory loss may adversely affect our operating results and financial condition.Our product candidates are manufactured using technically complex processes requiring specialized facilities, highly specific raw materials and otherproduction constraints. The complexity of these processes, as well as strict company and government standards for the manufacture and storage of ourproducts, subjects us to production risks. While product batches released for use in clinical trials or for commercialization undergo sample testing, suchtesting is subject to human error and some defects may only be identified following product release. In addition, process deviations or unanticipated effectsof approved process changes may result in these intermediate products not complying with stability requirements or specifications. Most of our productcandidates must be stored and transported at temperatures within a certain range. If these environmental conditions deviate, our product candidates’remaining shelf lives could be impaired or their efficacy and safety could become adversely affected, making them no longer suitable for use. Theoccurrence or suspected occurrence of production and distribution difficulties can lead to lost inventories, and in some cases product recalls, withconsequential reputational damage and the risk of product liability. The investigation and 60Table of Contentsremediation of any identified problems can cause production delays, substantial expense, lost sales and delays of new product launches. Any interruption inthe supply of finished products or the loss thereof could hinder our ability to timely distribute our products and satisfy customer demand. Any unforeseenfailure in the storage of the product or loss in supply could delay our clinical trials and, if our product candidates are approved, result in a loss of our marketshare and negatively affect our revenues and operations.We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs orproduct candidates that may be more profitable or for which there is a greater likelihood of success.Because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for indications that laterprove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitablemarket opportunities. Our spending on current and future research and development programs for product candidates may not yield any commercially viableproducts. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights tothat product candidate through strategic collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous forus to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in atherapeutic area in which it would have been more advantageous to enter into a partnering arrangement.The U.S. Tax Cuts and Jobs Act enacted in December 2017 includes significant changes from prior tax law which could result in significant changes toour future tax positions.The U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017 contains many provisions which differ from prior tax law. These changesinclude, but are not limited to, the reduction in the federal corporate income tax rate from 35% to 21% and the elimination of a corporation’s ability tocarryback net operating losses to prior taxable income periods. We accounted for the Tax Act during the year ended June 30, 2018, which resulted in adecrease to the deferred tax asset and a decrease to the valuation allowance due to the reduction of the federal corporate income tax rate from 35% to21%. Given the complexity of the Tax Act, anticipated guidance from the U.S. Treasury regarding implementation of the Tax Act, and potential for guidancefrom the Securities and Exchange Commission or the Financial Accounting Standards Board related to the Tax Act, adjustments may be required in futureperiods to reflect any such guidance provided.Our ability to use our net operating loss carryforwards may be subject to limitation.Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in our ownership may limit the amount of net operating losscarryforwards that could be utilized annually in the future to offset our taxable income. Specifically, this limitation may arise in the event of a cumulativechange in ownership of our company of more than 50% within a three-year period. Any such annual limitation may significantly reduce the utilization ofour net operating loss carryforwards before they expire. We believe it is likely that transactions that have occurred in the past and other transactions that mayoccur in the future, could trigger an ownership change pursuant to Section 382, which could limit the amount of net operating loss carryforwards that couldbe utilized annually in the future to offset our taxable income, if any.Further, the Tax Act changed the federal rules governing net operating loss carryforwards. For net operating loss carryforwards arising in tax yearsbeginning after December 31, 2017, the Tax Act limits a taxpayer’s ability to utilize such carryforwards to 80% of taxable income. In addition, net operatingloss carryforwards arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. Netoperating loss carryforwards generated before January 1, 2018 will not be subject to the Tax Act’s taxable income limitation and will continue to have atwenty-year carryforward period. Nevertheless, our net operating loss carryforwards and other tax assets could expire before utilization and could be subjectto limitations, which could harm our business, revenue, and financial results. 61Table of ContentsCyber-attacks or other breaches of network or other information technology security could have an adverse effect on our business.Cyber-attacks or other breaches of network or information technology security may cause equipment failures or disruptions to our operations. While, to date,we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, have been material to our operations or financialcondition, the preventative actions we take to prevent or detect the risk of cyber incidents and protect our information technology and networks may beinsufficient to prevent or detect a major cyber-attack in the future. If we fail to prevent the theft of valuable information such as financial data, sensitiveinformation about the us, our patients or our intellectual property, or if we fail to protect the privacy of patient and employee confidential data againstbreaches of network or information technology security, it would result in damage to our reputation, which could adversely impact the confidence of ourpartners, investors and employees. Any of these occurrences could result in a material adverse effect on our results of operations and financial condition.Risks related to our intellectual propertyIf we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is notsufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfullycommercialize our technology and products may be impaired.Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to ourproprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to ournovel technologies and product candidates.The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applicationsat a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before itis too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patentapplications, or to maintain the patents, covering technology that we license from third parties. Therefore, these patents and applications may not beprosecuted and enforced in a manner consistent with the best interests of our business.The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has inrecent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of theUnited States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does.Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and otherjurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we werethe first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protectionof such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending andfuture patent applications may not result in issued patents that protect our technology or products, in whole or in part, or which effectively prevent othersfrom commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States andother countries may diminish the value of our patents or narrow the scope of our patent protection.Moreover, we may be subject to a third-party pre-issuance submission of prior art to the United States Patent and Trademark Office, or become involved inopposition, derivation, reexamination, inter parties review, post-grant review or interference proceedings challenging our patent rights or the patent rights ofothers. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our 62Table of Contentspatent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inabilityto manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by ourpatents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or futureproduct candidates.Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection,prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent ourowned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.In addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may bechallenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patentclaims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializingsimilar or identical technology and products, or limit the duration of the patent protection of our technology and products. Given the amount of time requiredfor the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after suchcandidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others fromcommercializing products similar or identical to ours.Third parties may initiate legal proceedings alleging claims of intellectual property infringement, the outcome of which would be uncertain and couldhave a material adverse effect on the success of our business.Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount oflitigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceuticalindustries, including patent infringement lawsuits, interferences, oppositions and inter parties reexamination proceedings before the United States Patent andTrademark Office and corresponding foreign patent offices. Numerous United States and foreign issued patents and pending patent applications, which areowned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand andmore patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applicationswith claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates.Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that ourproduct candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon thesepatents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, anymolecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability tocommercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire.Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, methods for manufacture or methodsof use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable productcandidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms orat all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. 63Table of ContentsParties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop andcommercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense andwould be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to paysubstantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one ormore licenses from third parties, which may be impossible or require substantial time and monetary expenditure.We may not be successful in obtaining or maintaining necessary rights to gene therapy product components and processes for our development pipelinethrough acquisitions and in-licenses.Presently we have rights to the intellectual property to develop our gene therapy product candidates. Because a key element of our business strategy is topursue in-licensing and intellectual property acquisitions for additional product candidates that may require the use of proprietary rights held by third parties,the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our product candidatesmay require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license anycompositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify on terms that we find acceptable,or at all. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are alsopursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have acompetitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.For example, we sometimes collaborate with United States and foreign academic institutions to accelerate our preclinical research or development underwritten agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights intechnology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a licensewithin the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights toother parties, potentially blocking our ability to pursue our program.In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquirethird-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtainrights to required third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experiencedisruptions to our business relationships with our licensors, we could lose license rights that are important to our business.Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues and is complicated bythe rapid pace of scientific discovery in our industry. We are a party to intellectual property license agreements with the University of Florida ResearchFoundation, an affiliate of the University of Florida, Johns Hopkins University and the UAB Research Foundation, an affiliate of The University ofAlabama at Birmingham, each of which is important to our business, and we expect to enter into additional license agreements in the future. Our existinglicense agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations onus. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate thelicense, in which event we would not be able to market products covered by the license.We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done so fromtime to time. It is possible that we may fail to obtain any of these 64Table of Contentslicenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to develop or licensereplacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could harm ourbusiness significantly. We cannot provide any assurances that third-party patents do not exist which might be enforced against our current productcandidates or future products, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royaltiesand/or other forms of compensation to third parties.In many cases, patent prosecution of our licensed technology is controlled solely by the licensor. If our licensors fail to obtain and maintain patent or otherprotection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respectto those rights, and our competitors could market competing products using the intellectual property. In certain cases, we control the prosecution of patentsresulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to ourlicensing partners. Disputes may arise regarding intellectual property subject to a licensing agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • the sublicensing of patent and other rights under our collaborative development relationships; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and ourpartners; and • the priority of invention of patented technology.If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms,we may be unable to successfully develop and commercialize the affected product candidates.We may become involved in lawsuits to protect or enforce our patents or other intellectual property or the patents or other intellectual property of ourlicensors, which could be expensive, time-consuming and ultimately unsuccessful.Competitors may infringe our patents or other intellectual property or the patents or other intellectual property of our licensors. In response, we may berequired to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke theseparties to assert counterclaims against us, alleging that we infringe their patents. Additionally, if the party against whom we bring a claim of infringementhas a relationship with one or more of our collaborators, licensors or other strategic counterparties, our relationship with that counterparty may be harmed.Similarly, because our intellectual property is potentially useful for the treatment of serious diseases, any third-party infringers may be viewedsympathetically by the public and our assertion of an infringement claim against them may hurt our reputation. In addition, in a patent infringementproceeding, a court may decide that a patent of ours or our licensors is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly orrefuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result inany litigation or defense proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patentapplications at risk of not issuing.Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents orpatent applications or those of our licensors. An unfavorable outcome 65Table of Contentscould require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if theprevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even ifsuccessful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors,misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of ourconfidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results ofhearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have amaterial adverse effect on the price of our common stock.Issued patents covering our product candidates or methods of manufacturing could be found invalid or unenforceable if challenged in court.If we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, or methodsof manufacturing our product candidates, the defendant could counterclaim that the patent covering our product candidate or method is invalid orunenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for avalidity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement.Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information fromthe United States Patent and Trademark Office, or made a misleading statement, during prosecution. Third parties may also raise similar claims beforeadministrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review, andequivalent proceedings in foreign jurisdictions. Such proceedings could result in the revocation of or amendment to our patents in such a way that they nolonger cover our product candidates or manufacturing methods. The outcome following legal assertions of invalidity and unenforceability is unpredictable.With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner wereunaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we could lose at least part, and perhaps all,of the patent protection on one or more of our product candidates or methods of manufacturing our products. Such a loss of patent protection could have amaterial adverse impact on our business.We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information ofthird parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors orpotential competitors. Although we have enacted policies and procedures designed to ensure that our employees, consultants and independent contractors donot use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants orindependent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, ofany of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any suchclaims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business.Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and otheremployees. 66Table of ContentsWe may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.We may be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectualproperty. While it is our policy to require our employees and contractors who may be involved in the development of intellectual property to executeagreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact developsintellectual property that we regard as our own. We could be subject to ownership disputes arising, for example, from conflicting obligations of consultantsor others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenginginventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual propertyrights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business.Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and otheremployees.Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses andcould distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results ofhearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative it could have asubstantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce theresources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or otherresources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedingsmore effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation orother proceedings could compromise our ability to compete in the marketplace.Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements.Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the UnitedStates Patent and Trademark Office and various governmental patent agencies outside of the United States in several stages over the lifetime of the patentsand/or applications. We rely on our outside counsel to pay these fees due to non-U.S. patent agencies. The United States Patent and Trademark Office andvarious non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisionsduring the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse canbe cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance canresult in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such anevent, potential competitors might be able to enter the market and this circumstance could have a material adverse effect on our business.Changes in United States patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcingpatents in the biotechnology industry involve both technological 67Table of Contentsand legal complexity, and therefore obtaining and enforcing biotechnology patents is costly, time-consuming and inherently uncertain.Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement ordefense of our issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted andmay also affect patent litigation. The United States Patent and Trademark Office recently developed new regulations and procedures to governadministration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first tofile provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation ofour business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patentapplications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.Moreover, recent United States Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened therights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination ofevents has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the United States Congress, the federal courts,and the United States Patent and Trademark Office, the laws and regulations governing patents could change in unpredictable ways that would weaken ourability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.We have not yet sought FDA approval of names for any of our product candidates and failure to secure such approvals could adversely affect ourbusiness.Any name we propose to use with our product candidates in the United States must be approved by the FDA, regardless of whether we have registered it, orapplied to register it, as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusionwith other product names. If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additionalresources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of thirdparties and be acceptable to the FDA.We may not be able to protect our intellectual property rights throughout the world.Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectualproperty rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreigncountries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able toprevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using ourinventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patentprotection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, butenforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rightsmay not be effective or sufficient to prevent them from competing.Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems ofcertain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection,particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or 68Table of Contentsmarketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could resultin substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpretednarrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuitsthat we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectualproperty rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.Risks related to ownership of our common stockThe market price for our common stock has been, and is likely to continue to be volatile, which could contribute to the loss of your investment.Fluctuations in the price of our common stock could contribute to the loss of all or part of your investment. Our stock price has been volatile and could besubject to wide fluctuations in response to various factors, many of which are beyond our control. Since our initial public offering in March 2014 andthrough August 31, 2019, the price of our common stock on the Nasdaq Global Market has ranged from $2.26 to $34.37. Any of the factors listed belowcould have a material adverse effect on your investment in our common stock. In such circumstances, the trading price of our common stock may notrecover and may experience a further decline.Factors affecting the trading price of our common stock may include: • our failure to develop and commercialize our product candidates; • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; • changes in the market’s expectations about our operating results; • adverse results or delays in our preclinical studies or clinical trials; • reports of adverse events in other gene therapy products or clinical studies of such products; • our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial; • any delay in filing an IND or BLA for any of our product candidates and any adverse development or perceived adverse development withrespect to the FDA’s review of that IND or BLA; • adverse regulatory decisions, including failure to receive regulatory approval for any of our product candidates; • success of competitive products; • adverse developments concerning our collaborations and our manufacturers; • inability to obtain adequate product supply for any product candidate for clinical trials or commercial sale or inability to do so at acceptableprices; • the termination of a collaboration or the inability to establish additional collaborations; • unanticipated serious safety concerns related to the use of any of our product candidates; • our ability to effectively manage our growth; • the size and growth, if any, of the orphan ophthalmology and other targeted markets; • our operating results failing to meet the expectation of securities analysts or investors in a particular period or failure of securities analysts topublish reports about us or our business; 69Table of Contents • changes in financial estimates and recommendations by securities analysts concerning our company, the gene therapy market, or thebiotechnology and pharmaceutical industries in general; • operating and stock price performance of other companies that investors deem comparable to us; • overall performance of the equity markets; • announcements by us or our competitors of acquisitions, new product candidates or programs, significant contracts, commercial relationshipsor capital commitments; • our ability to successfully market our product candidates; • changes in laws and regulations affecting our business, including but not limited to clinical trial requirements for approvals; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection forour product candidates and gene therapy platform; • commencement of, or involvement in, litigation involving our company, our general industry, or both; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our common stock available for public sale; • additions or departures of key scientific or management personnel; • any major change in our board or management; • changes in accounting practices; • ineffectiveness of our internal control over financial reporting; • sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such salescould occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war orterrorism.Broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance. The stock marketin general, and The Nasdaq Global Market and the market for biotechnology companies in particular, have experienced extreme price and volumefluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices andvaluations of these stocks, and of ours, may not be predictable. A loss of investor confidence in the market for technology or software stocks or the stocks ofother companies which investors perceive to be similar to us, the opportunities in the digital simulation market or the stock market in general, could depressour stock price regardless of our business, prospects, financial conditions or results of operations.If securities analysts do not publish research or reports about our business or if they downgrade our stock, the price of our common stock could decline.The trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us, our business,our markets and our competitors. We do not control these analysts. As a newly public company, we have only limited coverage by securities analysts. Ifsecurities analysts do not continue to cover our common stock, the lack of research coverage may adversely affect the market price of our common stock.Furthermore, if one or more of the analysts who do cover us downgrade our stock or if those analysts issue other unfavorable commentary about us or ourbusiness, our stock price would likely decline. If one or more of these analysts cease coverage of us or fails to regularly publish reports on us, we could losevisibility in the market and interest in our stock could decrease, which in turn could cause our stock price or trading volume to decline and may also impairour ability to expand our business with existing customers and attract new customers. 70Table of ContentsFuture sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result inadditional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.We expect that significant additional capital may be needed in the future to continue our planned operations, including conducting clinical trials,commercialization efforts, expanded research and development activities, potential acquisitions, in-licenses, or collaborations and costs associated withoperating a public company. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions atprices and in a manner, we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than onetransaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and newinvestors could gain rights, preferences and privileges senior to the holders of our common stock.We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend onthe appreciation in the price of our common stock.We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings to fund our future growth and donot expect to declare or pay any dividend on shares of our common stock in the foreseeable future. As a result, you may only receive a return on yourinvestment in our common stock if the market price of our common stock appreciates and you sell your shares at a price above your cost.We could be subject to securities class action litigation.In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk isespecially relevant for us because biotechnology companies have experienced significant stock price volatility in recent years. If we face such litigation, itcould result in substantial costs and a diversion of management’s attention and resources, which could harm our business.Anti-takeover provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions in Delawarelaw, might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price ofour common stock.Our certificate of incorporation, bylaws and Delaware law contain provisions that could have the effect of rendering more difficult or discouraging anacquisition deemed undesirable by our board of directors, even if doing so would benefit our stockholders or remove our current management. Ourcorporate governance documents include provisions: • providing for three classes of directors with the term of office of one class expiring each year, commonly referred to as a staggered board; • authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our commonstock; • limiting the liability of, and providing indemnification to, our directors and officers; • eliminating the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of ameeting; • requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations ofcandidates for election to our board of directors; • controlling the procedures for the conduct and scheduling of board and stockholder meetings; • limiting the determination of the number of directors on our board and the filling of vacancies or newly created seats on the board to our boardof directors then in office; and • providing that directors may be removed by stockholders only for cause. 71Table of ContentsThese provisions, alone or together, could delay hostile takeovers and changes in control or changes in our management.As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, whichprohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which togetherwith its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in whichthe person became an interested stockholder, unless the business combination is approved in a prescribed manner.The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares ofour common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for yourcommon stock in an acquisition. ITEM 1B.UNRESOLVED STAFF COMMENTSNot Applicable. ITEM 2.PROPERTIESAlachua, FloridaOur corporate headquarters are located in Alachua, Florida. In January 2016, we moved into a new combined-use facility consisting of approximately21,500 square feet of laboratory and office space. The initial lease term for this facility is 12 years and we have options to extend the term of the lease forthree additional five-year periods.Cambridge, MassachusettsIn August 2015, we entered into a two-year lease to occupy approximately 3,000 square feet of office and laboratory space in Cambridge, Massachusetts. OnJuly 31, 2017, we entered into a new lease to increase our office and laboratory space in Cambridge by approximately 5,000 square feet to a total ofapproximately 8,000 square feet and extend the term of the lease for an additional seven years, with an option to further extend the lease for one additionalthree-year term. The Cambridge facility primarily focuses on business development, pharmacology, and basic research and development. ITEM 3.LEGAL PROCEEDINGSWe are not a party to any pending legal proceedings. ITEM 4.MINE SAFETY DISCLOSURESNot applicable. 72Table of ContentsPART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASESOF EQUITY SECURITIESMarket InformationOur common stock has been listed on The NASDAQ Global Market under the symbol “AGTC” since March 27, 2014. Prior to that date, there was nopublic market for our common stock.As of September 24, 2019, a total of 18,218,402 shares of our common stock were outstanding and we had 27 holders of record of our common stock.Dividend policyWe have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and future earnings, if any, tofinance the growth and development of our business. We do not expect to pay any cash dividends on our common stock in the foreseeable future.Securities authorized for issuance under equity compensation plansFor information regarding securities authorized for issuance under our equity compensation plans, see Part III, Item 12, “Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters.”Issuer Purchases of Equity SecuritiesThe following table provides certain information with respect to our purchases of shares of the Company’s common stock during the fourth quarter of fiscal2019.Issuer Purchases of Equity Securities Period Total Numberof SharesPurchased(a) Average PricePaid per Share(a) Total Numberof SharesPurchased asPart of PubliclyAnnounced Plan ApproximateDollar Value ofShares ThatMay Yet BePurchasedUnder the Plan April 1, 2019 through April 30, 2019 606 $4.61 — $— May 1, 2019 through May 31, 2019 685 $4.06 — $— June 1, 2019 through June 30, 2019 685 $3.70 — $— Total 1,976 $4.12 — — (a)These columns reflect the surrender to the Company of an aggregate of 1,976 shares of common stock to satisfy tax withholding obligations in theconnection with the vesting of restricted stock issued to an employee during the fourth quarter of fiscal 2019. ITEM 6:SELECTED FINANCIAL DATANot applicable. 73Table of ContentsITEM 7:MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements andnotes included in Part IV, Item 15 of this Annual Report on Form 10-K. In addition to historical financial information, the following discussion containsforward-looking statements that reflect our plans, estimates 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 Annual Report, includingbut not limited to those set forth in “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”OverviewWe are a clinical-stage biotechnology company that uses a proprietary gene therapy platform to develop transformational genetic therapies for patientssuffering from rare and debilitating diseases. Our initial focus is in the field of ophthalmology, where we have active clinical programs in X-linkedretinoschisis (XLRS), X-linked retinitis pigmentosa (XLRP), and achromatopsia (ACHM) and a preclinical program in optogenetics. In addition toophthalmology, we have initiated preclinical programs in adrenoleukodystrophy (ALD) and otology. With a number of important clinical milestones on thehorizon, we believe we are well positioned to advance multiple programs towards pivotal studies. In addition to our product pipeline, we have alsodeveloped broad technological capabilities through our collaborations with Synpromics Limited (Synpromics) and the University of Florida, which provideus with expertise in vector design and manufacturing as well as synthetic promoter development and optimization.Since our inception in 1999, we have devoted substantially all of our resources to development efforts relating to our proof-of-concept programs inophthalmology and alpha-1 antitrypsin deficiency, or AAT deficiency, an inherited orphan lung disease, including activities to manufacture product incompliance with good manufacturing practices, preparing to conduct and conducting clinical trials of our product candidates, providing general andadministrative support for these operations and protecting our intellectual property. We do not have any products approved for sale and have not generatedany revenue from product sales. We have funded our operations to date primarily through public offering of our common stock, private placement ofpreferred stock, and collaborations. We have also been the recipient, either independently or with our collaborators, of grant funding administered throughfederal, state, and local governments and agencies, including the United States Food and Drug Administration, or FDA, and by patient advocacy groups suchas The Foundation Fighting Blindness, or FFB, and the Alpha-1 Foundation.We have incurred losses from operations in each year since inception, except for fiscal 2017, in which we reported net income of $0.4 million due in part tothe amortization associated with our collaboration agreement with Biogen. For the fiscal years ended June 30, 2019 and 2018, we reported net losses of$2.0 million and $21.3 million, respectively. Substantially all our net losses resulted from costs incurred in connection with our research and developmentprograms and from general and administrative costs associated with our operations. We expect to continue to incur significant operating expenses for at leastthe 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 genetherapy 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; 74Table of Contents • 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 June 30, 2019, we had cash and cash equivalents and investments totaling $82.0 million.We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one ormore 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 ourexisting cash and cash equivalents and investments at June 30, 2019, will be sufficient to allow us to generate data from our ongoing clinical programs, tomove our pre-clinical optogenetic program in collaboration with Bionic Sight into the clinic and to fund our currently planned research and discoveryprograms into the first half of 2021. 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 requiresubstantial additional funding. Also, our current operating plan may change as a result of many factors currently unknown to us, and we may need to seekadditional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing anddistribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. However, we maybe 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 intosuch other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our product candidates.Strategic CollaborationsBiogenIn July 2015, we entered into a Collaboration Agreement (the “Collaboration Agreement”) with Biogen, pursuant to which we and Biogen collaborated todevelop, seek regulatory approval for and commercialize gene therapy products to treat XLRS, XLRP, and discovery programs targeting three indicationsbased on the Company’s adeno-associated virus vector technologies. Effective March 8, 2019, Biogen terminated the Collaboration Agreement. Upontermination, we received back the exclusive license rights to develop, manufacture and commercialize the product candidates for all of our partneredprograms including our XLRP program, XLRS program and our three discovery programs. As we reported on December 12, 2018, based on toplineinterim six-month data from our Phase 1/2 clinical trial of our XLRS product candidate that showed no clinical activity at six-months, we will completepatient monitoring activities on the XLRS program according to the clinical protocol, but we will not further develop our XLRS product candidate. We planto continue to advance our XLRP and ACHM product candidates, as we believe the general safety and tolerability of our gene delivery platform is supportedby our XLRS clinical data.During the term of the Collaboration Agreement, we received an aggregate of $111.5 million in upfront payments and milestone payments. For the fiscalyears ended June 30, 2019 and 2018, we recognized revenue of approximately $41.1 million and $24.1 million, respectively, under the CollaborationAgreement, including $20.4 million recognized in fiscal 2019, which was the remaining deferred revenue balance as of the termination date.Bionic Sight, LLCIn February 2017, we entered into a collaboration agreement with Bionic Sight to develop a gene therapy treatment to be used with Bionic Sight’s innovativeneuroprosthetic device and algorithm for retinal coding. 75Table of ContentsUnder the agreement, AGTC made an initial $2.0 million payment to Bionic Sight for an equity interest in that company. This initial investment representsan approximate 5 percent equity interest in Bionic Sight. In addition to the initial investment, we are contributing to ongoing research and developmentsupport costs through additional payments or other in-kind contributions. These payments and contributions will be made over time, up to the date thatBionic Sight has received both investigational new drug clearance from the FDA and receipt of written approval from an internal review board to conductclinical trials from at least one clinical site for that product candidate (the “IND Trigger”). As of June 30, 2019, we had incurred approximately $2.0 millionin research and development support cost related to in-kind contributions. If and when, the IND Trigger is attained, we will receive additional equity, basedon the valuation in place at the beginning of the agreement, for its cash and research and development contributions and will be obligated to purchaseadditional equity in Bionic Sight for $4.0 million. Bionic Sight filed an IND for the program on March 1, 2019 in advance of completing the finalformulation and testing of clinical trial material produced by their contract manufacturing organization. The FDA has put the trial on hold pending fullreview of the final testing to assure comparability to the material in the toxicology study. Bionic Sight expects the FDA to lift the hold on the IND and thePhase 1/2 clinical trial to be initiated in the first half of fiscal year 2020.Financial operations overviewRevenueWe primarily generate revenue through collaboration agreements, sponsored research arrangements with nonprofit organizations for the development andcommercialization of product candidates and from federal research and development grant programs. In the future, we may generate revenue from acombination of: product sales, license fees, milestone payments, development services, research and development grants, and from collaboration and royaltypayments 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 developmentprograms, manufacturing efforts and reimbursements, collaboration milestone payments, and the sale of our products, to the extent any are successfullycommercialized. 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 thedevelopment of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, our results ofoperations and financial position would be materially adversely affected. Following the termination of the Collaboration Agreement, we do not expect toreceive any material collaboration related payments in the near term.On July 1, 2018, we adopted Accounting Standard Codification (ASC) 606, Revenue from Contracts with Customers (“Topic 606”) using the modifiedretrospective method. For further information, refer to Note 2: Revenue Recognition, to the financial statements set forth in this Annual Report on Form10-K.Bionic Sight, LLC, In-Kind ContributionsWe assessed the nature of in-kind contributions under the scope of ASC 606, Revenue from Contracts with Customers, following the five-step approach, asthe services rendered represent a distinct service delivered to a counterparty that meets the definition of a customer. The Company considered these servicesto represent one combined performance obligation. Given that the consideration that the Company is entitled to is contingent upon achievement of the INDTrigger, the consideration is determined to be variable. The Company believes that the amount of variable consideration related to the achievement of theIND Trigger should be fully constrained as the achievement of this event is highly susceptible to factors outside of the Company’s control. The Companyevaluates the amount of potential receipt of the variable consideration and the likelihood that the consideration will be received. Utilizing the most likelyamount method, and if it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price. Thevariable consideration related 76Table of Contentsto Bionic Sight agreement has been fully constrained since the inception of the agreement and no amounts have been recognized as revenue to date. If INDTrigger is achieved, we expect to receive equity interest in Bionic Sight based on the valuation in place at the beginning of the agreement and recognizerevenue equal to the amount of in-kind contributions.Research and development expensesResearch 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 thatconduct 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, andother supplies.Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of the progress tocompletion 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 whatextent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may neversucceed in achieving regulatory approval for any of our product candidates. The duration, costs, and timing of clinical trials and development of our productcandidates 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; • whether or not we elect to cost share with our collaborators; • 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 anddeveloping 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 andtiming associated with the development of that product candidate. For example, if the FDA, or another regulatory authority were to require us to conductclinical trials beyond those 77Table of Contentsthat we currently anticipate will be required for the completion of clinical development of a product candidate or if we experience significant delays inenrollment in or execution of any of our clinical trials, we could be required to expend significant additional financial resources and time on the completionof clinical development.From inception through June 30, 2019, we have incurred approximately $202.4 million in research and development expenses. We expect our research anddevelopment expenses to increase for the foreseeable future as we continue the development of our product candidates and explore potential applications ofour gene therapy platform in other indications.General and administrative expensesGeneral and administrative expenses consist primarily of salaries and related costs for personnel, including share-based compensation and travel expensesfor our employees in executive, operational, legal, business development, finance and human resource functions. Other general and administrative expensesinclude costs to support employee training and development, board of directors’ costs, depreciation, insurance expenses, facility-related costs not otherwiseincluded 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 thefuture as we hire additional employees to support our continued research and development efforts, collaboration arrangements, and the potentialcommercialization of our product candidates. Additionally, if and when we believe a regulatory approval of the first product candidate appears likely, weanticipate an increase in payroll and related expenses as a result of our preparation for commercial operations, especially as it relates to the sales andmarketing of our product candidates.Other income/(expense), netOther income/(expense), net consists primarily of investment income on cash and cash equivalents and our held-to-maturity investments.Critical accounting policies and estimatesOur management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have beenprepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of these financial statements requires us to makeestimates and judgments that affect the reported amounts of assets, liabilities and equity at the date of the financial statements and reported amounts ofrevenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, judgments and methodologies. Estimates are based onhistorical experience, current conditions and on various other assumptions that management believes are reasonable under the circumstances, the results ofwhich form the basis for making judgments about the carrying values of assets, liabilities and equity and the amounts of revenues and expenses. Actualresults may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in Note 2 to ourfinancial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies are most critical to thepreparation of our financial statements.Revenue recognitionWe have generated revenue primarily through collaboration agreements, sponsored research arrangements with nonprofit organizations for the developmentand commercialization of product candidates and revenues from federal research and development grant programs. Under Topic 606, we recognize revenuewhen our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange forthose goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606,we perform the following five 78Table of Contentssteps: (i) identification of the contract; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of thetransaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and(v) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the five-step model to contracts when it is probable that wewill collect consideration we are entitled to in exchange for the goods or services we transfer to the customer.Performance obligations are promises to transfer distinct goods or services to the customer. Promised goods or services are considered distinct when (i) thecustomer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service isseparately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, we consider factors such as thestage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own or whether therequired expertise is readily available.We estimate the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. Theconsideration may include both fixed consideration or variable consideration. At the inception of an arrangement that includes variable consideration and ateach reporting period, we evaluate the amount of potential payment and the likelihood that the payments will be received. We utilize either the most likelyamount method or expected amount method to estimate the amount to be received based on which method better predicts the amount expected to bereceived. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price. We will assessour revenue generating arrangements in order to determine whether a significant financing component exists and conclude that a significant financingcomponent does not exist in any of our arrangements if: (a) the promised consideration approximates the cash selling price of the promised goods andservices or any significant difference is due to factors other than financing; and (b) timing of payment approximates the transfer of goods and services andperformance is over a relatively short period of time within the context of the entire term of the contract.Our contracts will often include development and regulatory milestone payments. At contract inception and at each reporting period, we evaluate whetherthe milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amountmethod. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestonepayments that are not within our control or the customer’s control, such as regulatory approvals, are not included in the transaction price. At the end of eachsubsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary,adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaborationrevenues and earnings in the period of adjustment.For arrangements that may include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be thepredominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligationto which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have not recognized any royalty revenueresulting from any of our collaboration arrangements.We allocate the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variableconsideration to one or more performance obligations. We must develop assumptions that require judgment to determine the stand-alone selling price foreach performance obligation identified in the contract. We utilize key assumptions to determine the stand-alone selling price, which may include othercomparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certainvariable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to thesatisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amounts the Companywould expect to receive for each performance obligation. 79Table of ContentsFor performance obligations consisting of licenses and other promises, we utilize judgment to assess the nature of the combined performance obligation todetermine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuringprogress for purposes of recognizing revenue from non-refundable, up-front fees. We evaluate the measure of progress at each reporting period and, ifnecessary, adjust the measure of performance and related revenue recognition. If the license is determined to be distinct from the other performanceobligations identified in the arrangement, then we will recognize revenue from non-refundable, up-front fees allocated to the license when the license istransferred to the customer and the customer is able to use and benefit from the license.We receive payments from its customers based on billing terms established in each contract. Such billings generally have 30-day payment terms. Upfrontpayments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements.Amounts are recorded as accounts receivable when the right to consideration is unconditional.Research and development expensesResearch and development costs include costs incurred in identifying, developing and testing product candidates and generally comprise compensation andrelated 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 our financial statements, we are required to estimate our accrued expenses. This process involves reviewing quotationsand contracts, identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred forthe service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrearsfor services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our financialstatements based on facts and circumstances known to us at that time. The significant estimates in our accrued research and development expenses arerelated to expenses incurred with respect to academic research centers, CROs, and other vendors in connection with research and development activities forwhich we have not yet been invoiced.There may be instances in which our service providers require advance payments at the inception of a contract or in which payments made to these vendorswill exceed the level of services provided, resulting in a prepayment of the research and development expense. Such prepayments are charged to researchand development expense as and when the service is provided or when a specific milestone outlined in the contract is reached.Share-based compensationWe account for share-based awards issued to employees in accordance with Accounting Standard Codification (ASC) Topic 718, Compensation—StockCompensation (ASC 718) generally recognize share-based compensation expense on a straight-line basis over the periods during which the employees andnon-employee directors are required to provide service in exchange for the award. In addition, we issue stock options and restricted shares of common stockto non-employees in exchange for consulting services and account for these in accordance with the provisions of ASC Subtopic 505-50, Equity-BasedPayments to Non-employees (ASC 505-50). Under ASC 505-50, share-based awards to non-employees are subject to periodic fair value re-measurementover their vesting terms.For purposes of calculating stock-based compensation, we estimate the fair value of stock options using a Black-Scholes option-pricing model. Thedetermination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by our stock price and a number ofassumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The expected volatility is primarily based on thehistorical volatility of peer company data while the expected life of the stock options is based on historical and 80Table of Contentsother economic data trended into the future. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms ofour stock options. The dividend yield assumption is based on our history and expectation of no dividend payouts. If factors change and we employ differentassumptions, stock-based compensation expense may differ significantly from what we have recorded in the past. If there is a difference between theassumptions used in determining stock-based compensation expense and the actual factors which become known over time, specifically with respect toanticipated forfeitures, we may change the input factors used in determining stock-based compensation costs for future grants. These changes, if any, maymaterially impact our results of operations in the period such changes are made.Income taxesWe use the asset and liability method for accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimatedfuture tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respectiveincome tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which thosetemporary differences are expected to be recovered or settled.As required by U.S. GAAP, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would morelikely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financialstatements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Anyinterest and penalties related to uncertain tax positions will be reflected in income tax expense. The Company is subject to examination of its income taxreturns in the federal and state income tax jurisdictions in which it operates. On December 28, 2015, the United States Internal Revenue Service, or IRS,notified the Company of an income tax audit for the tax period ending June 30, 2014. As of June 30, 2017, the IRS audit was closed, and the Companyincurred no penalties or payment liabilities for its income tax positions. For fiscal years ended June 30, 2019 and 2018, we recorded income tax expense as aresult of uncertainties related to state income taxes.The Tax Cut and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act contains several key provisions including, among other things,reducing the U.S. federal corporate tax rate from 35% to 21%. We have enacted this reduction in tax rate effective January 1, 2018, and as such is using ablended rate for the fiscal year ended June 30, 2018. In addition, federal net operating losses (NOLs) generated during future periods will be carried forwardindefinitely but will be subject to an 80% utilization against taxable income. The Company has completed its evaluation of the Tax Act with no materialadjustments to its initial analysis.For the fiscal year ended June 30, 2019, the Company recorded an income tax provision as a result of uncertainties related to state income taxes.Recent Accounting PronouncementsRefer to Note 2 to our financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-Kfor a description of recent accounting pronouncements applicable to our business. 81Table of ContentsResults of operationsComparison of the fiscal years ended June 30, 2019 and 2018Revenue Year ended June 30, Increase(Decrease) % Increase(Decrease) In thousands 2019 2018 Collaboration revenue License and related services $27,000 $18,529 $8,471 46% Development services 2,736 3,028 (292) (10)% Milestone revenue 11,392 $2,500 8,892 356% Total Collaboration revenue $41,128 $24,057 $17,071 71% Grant revenue 564 129 435 337% Total revenue $41,692 $24,186 $17,506 72% Total revenue for fiscal year 2019 increased by $17.5 million to $41.7 million compared to fiscal year 2018 primarily due to increased milestone revenue of$8.9 million, increased license and related services revenue of $8.5 million, and increased grant revenue of $0.4 million, which was partially offset bydecreased development services revenue of $0.3 million. The increase in license and related services revenue was primarily due to recognizing revenue of$18.0 million as result of the termination of the Collaboration Agreement with Biogen effective March 8, 2019, partially offset by the Company’s revisedpattern of revenue recognition under ASC 606. The increase in grant revenue was attributable to higher research and development activities on grant-fundedprojects. The increase in milestone revenue was primarily due to recognizing revenue of $8.3 million associated with the receipt of a $10.0 million milestonepayment from Biogen under the Collaboration Agreement during the first quarter of fiscal year 2019, recognizing revenue of $0.6 million under ASC Topic606 and recognizing revenue of $2.4 million as a result of the termination of the Collaboration Agreement with Biogen, partially offset by recognizingrevenue of $2.5 million in fiscal year 2018 associated with receiving a milestone payment from Biogen. The decrease in development services revenue wasprimarily due to timing of Phase 1/2 study activities related to the Company’s XLRP program and due to the termination of the Collaboration Agreementwith Biogen.Research and development expensesThe following table summarizes our research and development expenses by product candidate or program for the fiscal year ended June 30, 2019 and 2018: Year Ended June 30, Increase(Decrease) % Increase(Decrease) In thousands 2019 2018 External research and development expenses ACHM $4,729 $4,202 $527 13% XLRS 1,197 2,399 (1,202) (50)% XLRP 4,539 2,688 1,851 69% Research and discovery programs 3,363 6,077 (2,714) (45)% Total external research and development expenses 13,828 15,366 (1,538) (10)% Internal research and development expenses Employee-related costs 10,908 8,897 2,011 23% Share-based compensation 1,895 2,443 (548) (22)% Other 6,552 5,475 1,077 20% Total internal research and development expenses 19,355 16,815 2,540 15% Total research and development expense $33,183 $32,181 $1,002 3% 82Table of ContentsExternal research and development costs consist of clinical trial, collaboration, licensing, manufacturing, testing, and other miscellaneous expenses that aredirectly attributable to our most advanced product candidates and discovery programs. We do not allocate personnel-related costs, including stock-basedcompensation, costs associated with broad technology platform improvements or other indirect costs, to specific programs, as they are deployed acrossmultiple projects under development and, as such, are separately classified as internal research and development expenses in the table above.Research and development expenses for fiscal 2019 were $33.2 million, compared to $32.2 million for fiscal 2018, an increase of $1.0 million, or 3%. Thisincrease was primarily attributable to: • $2.0 million of increased employee-related expenses associated with the hiring of additional employees to support clinical trial execution andresearch and development activities; • $1.9 million of increased external spending related to XLRP primarily due to incurring sublicense expenses associated with receiving a$10.0 million XLRP milestone payment from Biogen under the Collaboration Agreement; • $1.1 million of increased general research and development expenses associated with consulting, depreciation and rent expense; and • $0.5 million of increased external spending related to ACHM primarily due to increased patient enrollment.These increases were partially offset by: • $2.7 million of decreased research and discovery spending primarily due to decreased pre-clinical ophthalmology activities; • $1.2 million of decreased external XLRS expenses primarily due to reaching full enrollment on the Phase 1/2 clinical trial; and • $0.5 million of decreased share-based compensation expenses primarily due to timing of grants.General and administrative expenses Year Ended June 30, Increase(Decrease) % Increase(Decrease) In thousands 2019 2018 Employee-related costs $4,773 $5,557 $(784) (14)% Share-based compensation 2,134 2,751 (617) (22)% Legal and professional fees 774 437 337 77% Other general and administrative expenses 5,178 5,644 (466) (8)% Total general and administrative expenses $12,859 $14,389 $(1,530) (11)% General and administrative expenses for the fiscal 2019 were $12.9 million, compared to $14.4 million for fiscal 2018, a decrease of $1.5 million, or 11%.The decrease was primarily driven by a decrease in employee-related costs of $1.4 million and a decrease in other general and administrative expenses of$0.5 million attributable to decrease in bad debt expense and other administrative expenses incurred during normal course of business operations for the yearended June 30, 2019.Other income/(expense), netOther income/(expense), net, which consists primarily of investment income, increased to $2.5 million for the year ended June 30, 2019, compared to$1.2 million for the year ended June 30, 2018. The increase in other income/(expense), net of $1.3 million was primarily due to better investmentperformance and settlement of recovery cost as result of the termination of the Collaboration Agreement with Biogen. 83Table of ContentsLiquidity and capital resourcesWe have incurred cumulative losses and negative cash flows from operations since our inception in 1999, and as of June 30, 2019, we had an accumulateddeficit of $135.5 million. It will be several years, if ever, before we have a product candidate ready for commercialization. We expect that our research anddevelopment and general and administrative expenses will continue to increase and as a result, we anticipate that we will require additional capital to fundour operations, which we may raise through a combination of equity offerings, debt financings, other third-party funding, marketing and distributionarrangements and other collaborations, strategic alliances and licensing arrangements.As of June 30, 2019, our cash and cash equivalents were held in bank accounts and money market funds, while our investments consisted of U.S. TreasurySecurities, none of which mature more than 12 months after the balance sheet date, consistent with our investment policy that seeks to maintain adequateliquidity and preserve capital.Cash flowsThe following table sets forth the primary sources and uses of cash for each of the periods set forth below: In thousand June 30, 2019 June 30, 2018 Net cash and cash equivalents provided by (used in): Operating activities $(23,457) $(32,520) Investing activities 19,027 33,015 Financing activities 68 (136) Net (decrease)/increase in cash and cash equivalents $(4,362) $359 Operating activities. Cash used in operating activities of $23.5 million for the fiscal year ended June 30, 2019 was primarily due to changes in operatingassets and liabilities of $25.6 million, partially offset by non-cash items of $4.2 million, including $4.0 million in stock-based compensation expense, and anet loss of $2.0 million. For the fiscal year ended June 30, 2019, the change in operating assets and liabilities was primarily due to recognizing the entiredeferred revenue balance as a result of the termination of the Collaboration Agreement. Cash used in operating activities of $32.5 million during the fiscalyear ended June 30, 2018 was primarily due to changes in operating assets and liabilities of $18.2 million, partially offset by non-cash items of $7.0 million,including $5.2 million of stock-based compensation expense, and a net loss of $21.3 million.Investing activities. Cash provided by investing activities of $19.0 million for the fiscal year ended June 30, 2019 was primarily due to maturity ofinvestments of $94.1 million, partially offset by purchases of investments of $74.8 million and the purchase of property and equipment of $0.2 million andintellectual property of $0.1 million. Cash provided by investing activities of $33.0 million for the fiscal year ended June 30, 2018 was primarily due tomaturity of investments of $100.9 million, partially offset by purchases of investments of $67.1 million and the purchase of property and equipment andintellectual property of $0.8 million.Financing activities. Net cash (used in)/provided by financing activities for fiscal year 2019 and 2018 was $68,000 and ($136,000), respectively. Net cashprovided in financing for year ended June 30, 2019 consisted primarily of proceeds from the exercise of common stock options. Net cash used in financingactivities for the year ended June 30, 2018 was associated with deferred offering costs.Operating capital requirementsTo 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 notexpect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize one of our current or futureproduct candidates. We 84Table of Contentsanticipate that we will continue to generate losses for the foreseeable future as we continue the development of, and seek regulatory approvals for, ourproduct candidates, and begin to commercialize any approved products. We are subject to all of the risks incident in the development of new gene therapyproducts, 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 June 30, 2019, will be sufficient to allow us to generate data from our ongoingclinical programs, to move our pre-clinical optogenetic program in collaboration with Bionic Sight into the clinic and to fund our currently planned researchand discovery programs into the first half of 2021. In order to complete the process of obtaining regulatory approval for our lead product candidates and tobuild the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our lead product candidates, if approved, wewill require substantial additional funding.We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capitalresources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization ofpharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend onmany factors, including, but not limited to: • the timing and costs our clinical trials for our XLRP and ACHM product candidates; • the timing and costs of our preclinical studies of our discovery program product candidates; • the timing and level of activity as determined by us or jointly with our partners; • the level of funding received from our partners; • whether or not we elect to cost share with our partners; • the initiation, progress, timing, costs and results of preclinical studies relating to potential applications of our gene therapy platform in otherindications; • our success in scaling our manufacturing method and expanding our manufacturing capabilities; • the number and characteristics of product candidates that we pursue; • the outcome, timing and costs of seeking regulatory approvals; • subject to receipt of marketing approval, revenue received from commercial sales of our product candidates; • the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish; • the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing,prosecution, defense and enforcement of any patents or other intellectual property rights; • the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defendingagainst intellectual property related claims; • the extent to which we in-license or acquire other products and technologies; and • the timing of payments for our additional equity purchase obligations under the Bionic Sight collaboration agreement.Contractual obligations and commitmentsOur current leased facilities encompass approximately 21,500 square feet of laboratory and office space in Alachua, Florida under a lease arrangement thatwill expire in December 31, 2027. In addition, we occupy 85Table of Contentsapproximately 8,000 square feet of office and laboratory space in Cambridge, Massachusetts. On July 31, 2017, we entered into a new lease to increase ouroffice and laboratory space in Cambridge by approximately 5,000 square feet to a total of approximately 8,000 square feet and extend the term of the leasefor an additional seven years, with an option to further extend the lease for one additional three-year term.Contingent contractual obligationsWe also have obligations arising under our license agreements to make future payments to third parties that become due and payable on the achievement ofcertain development, regulatory and commercial milestones (such as the start of a clinical trial, filing of a Biologics License Application, or BLA, approvalby the FDA or product launch). We have not included these obligations on our balance sheet or in the table above because the achievement and timing ofthese milestones is not fixed nor determinable. These obligations include: • Under each of our various licenses with the University of Florida Research Foundation, or UFRF, covering the AAV construct containing theAAT gene and the method to treat AAT deficiency using this construct, a small cone cell specific promoter, and the use of engineered capsidsand under our joint license with UFRF and Johns Hopkins University covering a particular HSV construct and various compositions thereof,we will be required to make payments based upon development, regulatory and commercial milestones for any products covered by thein-licensed intellectual property. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectualproperty. We have the right to sublicense our rights under this agreement, and we will be required to pay a percentage of such license income.We are required to make annual maintenance payments under these licenses, which payments are creditable against royalty payments on ayear-by-year basis. • Under our license agreement with the UAB Research Foundation pursuant to which we license a patent covering the use of HSV helpers toproduce AAV vectors, we will be required to make payments based upon development and regulatory milestones for any products covered bythe in-licensed intellectual property. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectualproperty. We have the right to sublicense our rights under this agreement, and we will be required to pay a percentage of such license income.We are required to make annual maintenance payments under this license, which payments are creditable against royalty payments on ayear-by-year basis.If any of our product candidates that utilize technology licensed under these agreements reached commercialization, we will be obligated to make royaltypayments ranging from 0.5% to 4.0% of our net sales of the applicable product. We are responsible for a portion of the costs related to the preparation,filing, issuance, prosecution and maintenance of the patents covered by the license agreements.We enter into contracts in the normal course of business with contract research organizations for preclinical research studies, research supplies and otherservices and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts.Off-balance sheet arrangementsWe did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations ofthe Securities and Exchange Commission. ITEM 7A. QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISKNot Applicable. 86Table of ContentsITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAAPPLIED GENETIC TECHNOLOGIES CORPORATIONINDEX TO FINANCIAL STATEMENTS Page(s) Report of Independent Registered Public Accounting Firm 88 Financial Statements Balance Sheets at June 30, 2019 and 2018 89 Statements of Operations for the years ended June 30, 2019 and 2018 90 Statements of Stockholders’ Equity for the years ended June 30, 2019 and 2018 91 Statements of Cash Flows for the years ended June 30, 2019 and 2018 92 Notes to Financial Statements 93-116 Schedule II—Valuation and Qualifying Accounts 124 87Table of ContentsReport of Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of Applied Genetic Technologies CorporationOpinion on the Financial StatementsWe have audited the accompanying balance sheets of Applied Genetic Technologies Corporation (the Company) as of June 30, 2019 and 2018, the relatedstatements of operations, stockholders’ equity and cash flows for each of the two years in the period ended June 30, 2019, and the related notes and financialstatement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements presentfairly, in all material respects, the financial position of the Company at June 30, 2019 and 2018, and the results of its operations and its cash flows for eachof the two years in the period ended June 30, 2019, in conformity with U.S. generally accepted accounting principles.Adoption of New Accounting StandardAs discussed in Note 2 to the financial statements, the Company changed its method for accounting for revenue recognition in 2019.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulationsof the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control overfinancial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2017.Tampa, FloridaSeptember 26, 2019 88Table of ContentsAPPLIED GENETIC TECHNOLOGIES CORPORATIONBALANCE SHEETS As of June 30, In thousands, except per share data 2019 2018 ASSETS Current assets: Cash and cash equivalents $26,703 $31,065 Investments 55,292 73,840 Grants receivable 13 210 Prepaid and other current assets 2,276 4,009 Total current assets 84,284 109,124 Property and equipment, net 4,430 5,254 Intangible assets, net 1,013 968 Investment in Bionic Sight 1,945 1,980 Other assets 544 1,206 Total assets $92,216 $118,532 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $1,331 $945 Accrued and other liabilities 8,024 7,155 Deferred revenue — 6,295 Total current liabilities 9,355 14,395 Deferred revenue, net of current portion — 610 Other long-term liabilities 4,152 4,345 Total liabilities 13,507 19,350 Commitments and contingencies Stockholders’ equity: Common stock, par value $.001 per share, 150,000 shares authorized; 18,226 and 18,137 shares issued; 18,207 and18,126 shares outstanding as of June 30, 2019, and 2018, respectively 18 18 Additional paid-in capital 214,324 210,139 Shares held in treasury of: 19 and 11 as of June 30, 2019 and 2018 respectively (85) (49) Accumulated deficit (135,548) (110,926) Total stockholders’ equity 78,709 99,182 Total liabilities and stockholders’ equity $92,216 $118,532 The accompanying notes are an integral part of these financial statements. 89Table of ContentsAPPLIED GENETIC TECHNOLOGIES CORPORATIONSTATEMENTS OF OPERATIONS Year Ended June 30, In thousands, except per share data 2019 2018 Revenue: Collaboration revenue $41,128 $24,057 Grant revenue 564 129 Total revenue 41,692 24,186 Operating expenses: Research and development 33,183 32,181 General and administrative 12,859 14,389 Total operating expenses 46,042 46,570 Loss from operations (4,350) (22,384) Other income/(expense): Investment income, net 2,009 1,301 Other income/(expense) 446 (125) Total other income, net 2,455 1,176 Loss before provision for income taxes (1,895) (21,208) Provision for income taxes 76 72 Loss before equity in net losses of affiliate (1,971) (21,280) Equity in net losses of affiliate (35) (20) Net Loss $(2,006) $(21,300) Loss per share: Basic $(0.11) $(1.18) Diluted $(0.11) $(1.18) Weighted average shares outstanding: Basic 18,157 18,105 Diluted 18,157 18,105 The accompanying notes are an integral part of these financial statements. 90Table of ContentsAPPLIED GENETIC TECHNOLOGIES CORPORATIONSTATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Treasury Stock AdditionalPaid-inCapital AccumulatedDeficit Total In thousands OutstandingShares Amount OutstandingShares Amount Balance, June 30, 2017 18,088 $18 — $— $204,937 $(89,626) $115,329 Share-based compensation expense — — — — 5,193 — 5,193 Shares (purchased)/issued under employee plans 38 — 11 (49) 9 — (40) Net loss — — — — — (21,300) (21,300) Balance, June 30, 2018 18,126 18 11 $(49) $210,139 $(110,926) $99,182 Cumulative impact of adoption of ASC 606 — — — — — (22,616) (22,616) Share-based compensation expense — — — — 4,029 — 4,029 Shares (purchased)/issued under employee plans 81 — 8 (36) 156 — 120 Net loss — — — — — (2,006) (2,006) Balance, June 30, 2019 18,207 $18 19 $(85) $214,324 $(135,548) $78,709 The accompanying notes are an integral part of these financial statements. 91Table of ContentsAPPLIED GENETIC TECHNOLOGIES CORPORATIONSTATEMENTS OF CASH FLOWS Year Ended June 30 In thousands 2019 2018 Cash flows from operating activities: Net loss $(2,006) $(21,300) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation expense 4,029 5,193 Depreciation and amortization 1,273 1,175 Investment premium amortization/(discount accretion) (790) 85 (Recovery)/provision for uncollectible accounts, net (358) 375 Equity in net losses of affiliate 35 20 Loss on disposal of property, plant and equipment — 1 Loss on disposal of intangible assets — 126 Changes in operating assets and liabilities: Grants receivable 186 (36) Prepaid and other assets 1,635 (1,903) Accounts payable 327 (53) Deferred revenues (28,392) (18,529) Accrued and other liabilities 604 2,326 Net cash used in operating activities (23,457) (32,520) Cash flows from investing activities: Purchase of property and equipment (163) (662) Purchase of and capitalized costs related to intangible assets (148) (141) Investment in Bionic Sight — — Maturity of investments 94,119 100,900 Purchase of investments (74,781) (67,082) Net cash provided by investing activities 19,027 33,015 Cash flows from financing activities: Proceeds from exercise of common stock options 156 9 Taxes paid related to equity awards (36) — Payments made toward capital lease obligations (52) (43) Deferred offering costs — (102) Net cash provided by/(used in) financing activities 68 (136) Net (decrease)/increase in cash and cash equivalents (4,362) 359 Cash and cash equivalents, beginning of year 31,065 30,706 Cash and cash equivalents, end of year $26,703 $31,065 Supplemental information: Cash paid during the year for income taxes $— $617 Capital lease obligation related to the purchase of equipment $— $240 Lease incentive obligation related to the purchase of leasehold improvements $— $2,588 Costs related to future offering costs included in accounts payable and accrued liabilities $— $163 Cost related to purchase of property and equipment included in accounts payable and accrued liabilities $124 $— Cost related to purchase of intellectual property included in accounts payable $59 — Issuance of restricted stock for no consideration $36 $49 The accompanying notes are an integral part of these financial statements. 92Table of ContentsAPPLIED GENETIC TECHNOLOGIES CORPORATIONNOTES TO FINANCIAL STATEMENTS 1.Organization and OperationsApplied Genetic Technologies Corporation (the “Company” or “AGTC”) was incorporated as a Florida corporation on January 19, 1999 and reincorporatedas a Delaware corporation on October 24, 2003. The Company is a clinical-stage biotechnology company that uses a proprietary gene therapy platform todevelop 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 ofBiogen Inc. (“Biogen”), pursuant to which the Company and Biogen collaborated to develop, seek regulatory approval for and commercialize gene therapyproducts to treat X-linked retinoschisis (“XLRS”), X-linked retinitis pigmentosa (“XLRP”), and discovery programs targeting three indications based on theCompany’s adeno-associated virus vector technologies. The Collaboration Agreement became effective in August 2015. On December 7, 2018, theCompany received notice from Biogen that it had elected to terminate the Collaboration Agreement, which became effective on March 8, 2019. TheCollaboration Agreement and other transactions with Biogen are discussed further in Note 7 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 thedevelopment of any products. The Company has generated revenue from collaboration agreements, sponsored research payments and grants, but has notgenerated product revenue to date and is subject to a number of risks similar to those of other early stage companies in the biotechnology industry, includingdependence on key individuals, the difficulties inherent in the development of commercially viable products, the need to obtain additional capital necessaryto 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 June 30,2019, the Company had an accumulated deficit of $135.5 million. While the Company expects to continue to generate some revenue from partnering, theCompany expects to incur losses for the foreseeable future. The Company has funded its operations to date primarily through public offerings of its commonstock, private placements of its preferred stock, and collaborations. As of June 30, 2019, the Company had cash and cash equivalents and liquid investmentsof $82.0 million. 2.Summary of Significant Accounting PoliciesBasis of PresentationThe accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America(“U.S. GAAP”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results ofoperations, and cash flows for each period presented.Segment ReportingOperating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chiefoperating decision-maker in making decisions regarding resource allocation and assessing performance. To date, we have viewed our operations andmanaged our business as one segment.Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP and U.S. Securities and Exchange Commission (“SEC”), requires management tomake estimates and assumptions that affect the reported amounts 93Table of Contentsof assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues andexpenses during the reporting periods. Actual results could differ from those estimates.Cash and cash equivalentsCash consists of funds held in bank accounts. Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less atthe time of purchase and generally include money market accounts.InvestmentsThe Company’s investments consist of certificates of deposit and debt securities classified as held-to-maturity. Management determines the appropriateclassification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Debt securities are classified asheld-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortizedcost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income. Interest on securitiesclassified 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 forimpairment 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 thesecurity 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 tobe other-than-temporary, an impairment charge is recorded to other income/(expense) and a new cost basis in the investment is established.Concentrations of Credit RiskThe Company maintains its cash and cash equivalents and certificates of deposit with two financial institutions that are federally insured. Some of thesefinancial instruments are in excess of federally insured limits and as a result, could potentially expose the Company to significant concentrations of creditrisk. To date, the Company has not experienced any losses associated with this credit risk and continues to believe that this exposure is not significant. TheCompany invests its excess cash primarily in money market funds, certificates of deposit, and debt instruments of corporations and U.S. governmentagencies. These investments generally mature within a two-year period from their purchase date, in line with the Company’s investment policy that seeks tomaintain adequate liquidity and preserve capital.InventoryPurchases of clinical materials stored for master and working viral banks that remain at the sites in anticipation of their future use at that site are charged toexpense when they are incurred. Since the Company can use each of the raw materials in only a single product, each raw material is deemed to have nofuture economic value independent of the development status of that single drug.Fair value of financial instrumentsThe Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used indetermining the reported fair values. The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, FairValue Measurements and Disclosures 94Table of Contents(“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset orliability based on market data obtained from sources independent of the Company. Unobservable inputs are those that reflect the Company’s assumptionsabout the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in thecircumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of financial instruments and is not ameasure 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 atthe 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 areobservable, 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 areunobservable.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 morejudgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. Afinancial 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.Property and equipmentProperty and equipment, consisting of laboratory equipment, furniture and fixtures, computer equipment and leasehold improvements, are recorded at cost.Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are generally three to ten years. The weightedaverage useful life is 6.8 years. Leasehold improvements are stated at cost and are amortized over the shorter of the estimated useful lives of the assets or thelease term, including any renewal periods that are deemed to be reasonably assured. Repair and maintenance costs that do not improve service potential orextend an asset’s economic life are recorded as an expense when incurred.Intangible assetsIntangible assets primarily include licenses and patents. The Company obtains licenses from third parties and capitalizes the costs related to exclusivelicenses that have alternative future use in multiple potential programs. The Company also capitalizes costs related to filing, issuance, and prosecution ofpatents. The Company reviews its capitalized costs periodically to determine that such costs relate to patent applications that have future value and analternative future use and writes off any costs associated with patents that are no longer being actively pursued or that have no future benefit.Amortization expense is computed using the straight-line method over the estimated useful lives of the assets, which are generally eight to twenty years. Theweighted average amortization period is 8.6 years. The Company amortizes in-licensed patents and patent applications from the date of the applicablelicense and internally developed patents and patent applications from the date of the initial application. Licenses and patents converted to research use onlyare immediately written off to expense.Impairment of long-lived assetsThe Company reviews its long-lived assets for impairment when impairment indicators are present. If impairment indicators exist, management determineswhether impairment in value has occurred by comparing the estimated undiscounted cash flows from future operations with the carrying values of the assets.Management 95Table of Contentsconsiders several indicators in assessing impairment, including trends and prospects, as well as the effects of obsolescence, demand, competition and othereconomic factors. No impairment charges were recorded for each of the fiscal years ended June 30, 2019 and 2018.Revenue recognitionEffective July 1, 2018, the Company adopted the provisions of ASC 606, Revenue from Contracts with Customers, (“Topic 606”), using the modifiedretrospective transition method. Under this method, the Company recorded the cumulative effect of initially applying the new standard to all contracts inprocess as of the date of adoption. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards.The adoption of the new revenue recognition guidance resulted in an increase of $22.6 million in deferred revenue and accumulated deficit as of July 1,2018. For the year ended June 30, 2019, revenue increased by $25.4 million, net income increased by $25.4 million and basic and diluted earnings per shareincreased by $1.40 per share, respectively, based on revenue recognition under Topic 606 as compared to the Company’s prior revenue recognitionmethodology under ASC 605, Revenue Recognition. These changes were primarily caused by the differences in determining and allocating transaction priceand recognizing revenue on a proportional performance basis under Topic 606.Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the considerationwhich the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized forarrangements determined to be within the scope of Topic 606, the Company performs the following five steps: (i) identification of the contract;(ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price, including the constrainton variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Companysatisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collectconsideration it is entitled to in exchange for the goods or services it transfers to the customer.Performance obligations are promises to transfer distinct goods or services to the customer. Promised goods or services are considered distinct when (i) thecustomer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service isseparately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers factors suchas the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own orwhether the required expertise is readily available.The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract.The consideration may include both fixed consideration or variable consideration. At the inception of an arrangement that includes variable considerationand at each reporting period, the Company evaluates the amount of potential payment and the likelihood that the payments will be received. The Companyutilizes either the most likely amount method or expected amount method to estimate the amount to be received based on which method better predicts theamount expected to be received. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transactionprice. The Company will assess its revenue generating arrangements in order to determine whether a significant financing component exists and concludethat a significant financing component does not exist in any of its arrangements if: (a) the promised consideration approximates the cash selling price of thepromised goods and services or any significant difference is due to factors other than financing; and (b) timing of payment approximates the transfer ofgoods and services and performance is over a relatively short period of time within the context of the entire term of the contract.The Company’s contracts will often include development and regulatory milestone payments. At contract inception and at each reporting period, theCompany evaluates whether the milestones are considered probable of 96Table of Contentsbeing reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significantrevenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’scontrol or the customer’s control, such as regulatory approvals, are not included in the transaction price. At the end of each subsequent reporting period, theCompany re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of theoverall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in theperiod of adjustment.For arrangements that may include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be thepredominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performanceobligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized anyroyalty revenue resulting from any of the Company’s collaboration arrangements.The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case ofcertain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine thestand-alone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the stand-aloneselling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete therespective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when theterms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligationare consistent with the amounts the Company would expect to receive for each performance obligation.For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performanceobligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method ofmeasuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress at eachreporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual propertyis determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable,up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.The Company receives payments from its customers based on billing terms established in each contract. Such billings generally have 30-day payment terms.Upfront payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements.Amounts are recorded as accounts receivable when the right to consideration is unconditional.Collaboration revenueTo date, the Company’s collaboration revenue has been generated from its collaboration arrangement with Biogen as further described in Note 7,“Collaboration Agreements”.The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) todetermine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed tosignificant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangementbased on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multipleelements, the Company first 97Table of Contentsdetermines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customerrelationship and therefore within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, anappropriate recognition method is determined and applied consistently, generally by analogy to ASC 606.Income taxesThe Company uses the asset and liability method for accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized forthe estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and theirrespective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in whichthose temporary differences are expected to be recovered or settled.The Tax Cut and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act contains several key provisions including, among other things,reducing the U.S. federal corporate tax rate from 35% to 21%. In addition, federal net operating losses (“NOLs”) will be carried forward indefinitely but willbe subject to an 80% utilization against taxable income. For the year ended June 30, 2018, the Company followed the guidance in SEC Staff AccountingBulletin 118 (SAB 118) which provides additional clarification regarding the application of ASC Topic 740 in situations where the Company does not havethe necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act for thereporting period in which the Act was enacted. SAB 118 provides for a measurement period beginning in the reporting period that includes the Act’senactment date and ending when the Company has obtained, prepared, and analyzed the information needed in order to complete the accountingrequirements but in no circumstances should the measurement period extend beyond one year from the enactment date. The Company has enacted thereduction in tax rate effective January 1, 2018, which resulted in a decrease to the deferred tax asset and a decrease to the valuation allowance. For the yearended June 30, 2019, the Company has completed the analysis of the Tax Act with no material adjustments to its initial analysis.For the fiscal year ended June 30, 2019, the Company recorded an income tax provision, as a result of uncertainties related to state income tax. For thefiscal year ended June 30, 2018, the Company recorded an income tax provision, related to the Company’s Federal alternative minimum tax credit anduncertainties related to state income taxes.As required by U.S. GAAP, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authoritywould more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized inthe financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant taxauthority. Any interest and penalties related to uncertain tax positions will be reflected in income tax expense. The Company is subject to examination of itsincome tax returns in the federal and state income tax jurisdictions in which it operates for the tax years ended June 30, 2015 through 2019.The uncertain tax position liability for years ended June 30, 2019 and 2018, was $2,035,000 and $1,959,000, respectively.Research and development expensesResearch and development costs include costs incurred in identifying, developing and testing product candidates and generally comprise compensation andrelated 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 financial statements, the Company is required to estimate its accrued expenses. This process involves reviewingquotations and contracts, identifying services that have been 98Table of Contentsperformed on its behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet beeninvoiced or otherwise notified of the actual cost. The majority of the Company’s service providers invoice the Company monthly in arrears for servicesperformed or when contractual milestones are met. The Company makes estimates of its accrued expenses as of each balance sheet date in its financialstatements based on facts and circumstances known to it at that time. The significant estimates in the Company’s accrued research and developmentexpenses are related to expenses incurred with respect to academic research centers, contract research organizations (“CROs”), and other vendors inconnection 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 tothese vendors will exceed the level of services provided, resulting in a prepayment of the research and development expense. Such prepayments are chargedto 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 approximately $0.7 million and $1.0 million at June 30, 2019 and 2018, respectively, andare included within the prepaid and other current assets line item on the balance sheets.Share-based compensationThe Company accounts for share-based awards issued to employees in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”)and generally recognizes share-based compensation expense on a straight-line basis over the periods during which the employees are required to provideservice in exchange for the award. In addition, the Company issues stock options and restricted shares of common stock to non-employees in exchange forconsulting services and accounts for these in accordance with the provisions of ASC Subtopic 505-50, Equity-Based Payments to Non-employees (“ASC505-50”). 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 numberof assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The expected volatility is primarily based on thehistorical 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 dividendyield assumption is based on the Company’s history and expectation of no dividend payouts. If factors change and the Company employs differentassumptions, stock-based compensation expense may differ significantly from what has been recorded in the past. If there is a difference between theassumptions used in determining stock-based compensation expense and the actual factors which become known over time, specifically with respect toanticipated forfeitures, the Company may change the input factors used in determining stock-based compensation costs for future grants. These changes, ifany, may materially impact the Company’s results of operations in the period such changes are made.Net loss per shareBasic net loss per share is calculated by dividing net loss by the weighted average shares outstanding during the period, without consideration for commonstock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stockequivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculations, stock optionsare considered to be common stock equivalents if they are dilutive. The dilutive impact of stock options for the years ended June 30, 2019 and 2018 was0.2 million. 99Table of ContentsThe dilutive impact of stock options has been excluded from the calculation of diluted net loss per share for the year ended June 30, 2019 and 2018 as theireffect would be anti-dilutive. Therefore, for the years ended June 30, 2019 and 2018 basic and diluted net loss per share were the same.Comprehensive lossComprehensive loss consists of net loss and changes in equity during a period from transactions and other equity and circumstances generated fromnon-owner sources. The Company’s net loss equals comprehensive loss for all periods presented.New Accounting PronouncementsAdopted in the current periodRevenue recognitionIn May 2014, Topic 606, replaced the existing accounting standards for revenue recognition with a single comprehensive five-step model. The core principleis to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. It alsorequires enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively, and improvesguidance for multiple-element arrangements. The guidance was effective for public companies for annual periods beginning after December 15, 2017 as wellas interim periods within those annual periods using either the full retrospective approach or modified retrospective approach. The Company adopted thenew standard effective July 1, 2018 using the modified retrospective approach. Refer to Note 7 for the impact of adoption.Share-Based CompensationIn 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 standard provides guidance about which changes to the terms or conditions of a share-based payment awardrequire an entity to apply modification accounting in Topic 718. The amendment is effective for fiscal years beginning after December 15, 2017, and interimperiods within those fiscal years and early adoption is permitted. The Company has adopted this standard in the first quarter of fiscal 2019 and it did not havea material effect on its financial statements.Financial Instrument AccountingIn January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of FinancialAssets and Financial Liabilities. The new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including therequirement that equity investments with readily determinable fair values be measured at fair value with changes in fair value recognized in the results ofoperations. The new standard was effective July 1, 2018. The Company adopted ASU No. 2016-01 in the first quarter of 2019. The adoption of the newstandard did not have a material impact on the Company’s financial position and results of operations.To be adopted in future periodsLeasesIn February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and providesprinciples for the recognition, measurement, presentation and disclosure of 100Table of Contentsleases for both lessees and lessors. The new accounting guidance will require the recognition of all long-term lease assets and lease liabilities by lessees andsets forth new disclosure requirements for those lease assets and liabilities. The standard requires lessees to recognize right-of-use assets and lease liabilitieson the balance sheet using a modified retrospective approach at the beginning of the earliest comparative period in the financial statements. A lessee is alsorequired to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a termof 12 months or less will be accounted for similar to existing guidance for operating leases. The FASB subsequently issued several ASUs amending the newstandard. This standard will be effective for the Company on July 1, 2019. Early adoption is permitted. The Company is currently evaluating the potentialimpact on its financial position and results of operations of adopting this guidance. The Company is in the process of finalizing the impact of adoption of theASU on its financial statements, and it has determined that the most significant change will be related to the recognition of right-of-use assets and leaseliabilities on the Company’s balance sheet.Financial Instruments—Credit LossesIn June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments. The new standard requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected andseparately measure an allowance for credit losses that is deducted from the amortized cost basis of the financial assets. This standard will be effective for theCompany on July 1, 2020. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company’sfinancial statements.Share-Based CompensationIn June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based PaymentAccounting. The new standard aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at thegrant date, which may lower their cost and reduce volatility in the income statement. The standard will be effective for the Company on July 1, 2020. Earlyadoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this standard on its financial statements.Fair Value MeasurementIn August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the DisclosureRequirements for Fair Value Measurement. The new standard eliminates, adds and modifies certain disclosure requirements for fair value measurement aspart of its disclosure framework project. The amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy will no longer berequired to be disclosed, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputsfor Level 3 fair value measurements. This standard will be effective for the Company on July 1, 2020. Early adoption is permitted. The adoption of thisguidance is not expected to have a significant impact on the Company’s financial statements.Collaborative ArrangementsIn November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic606. The new standard clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 whenthe counterparty is a customer. It precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue fromcontracts with customers if the counterparty is not a customer for that transaction. The guidance amends ASC 808 to refer to the unit-of-account guidance inASC 606 and requires it to be used only when 101Table of Contentsassessing whether a transaction is in the scope of ASC 606. This standard will be effective for the Company on July 1, 2021. Early adoption is permitted.The adoption of this guidance is not expected to have a significant impact on the Company’s financial statements. 3.InvestmentsCash in excess of our immediate requirements is invested in accordance with the Company’s investment policy that primarily seeks to maintain adequateliquidity and preserve capital.The net carrying amounts of the Company’s investments by category are as follows: In thousands As of June 30,2019 As of June 30,2018 Certificates of deposit $— $2,106 Debt securities—held-to-maturity (due in one year or less) 55,292 71,734 Total investments $55,292 $73,840 A summary of the Company’s debt investment securities classified as held-to-maturity is as follows: June 30, 2019 In thousands Amortized Cost GrossUnrealizedGains GrossUnrealizedLosses Fair Value U.S. Treasury Securities $55,292 $78 $— $55,370 Total investments $55,292 $— $— $55,370 June 30, 2018 In thousands Amortized Cost GrossUnrealizedGains GrossUnrealizedLosses Fair Value U.S. Treasury Securities $69,731 $— $(60) $69,671 Corporate obligations 2,003 — (1) 2,002 Total investments $71,734 $— $(61) $71,673 The Company believes that the unrealized losses disclosed above were primarily driven by interest rate changes rather than by unfavorable changes in thecredit ratings associated with these securities and as a result, the Company continues to expect to collect the principal and interest due on its debt securitiesthat have an amortized cost in excess of fair value. At each reporting period, the Company evaluates securities for impairment when the fair value of theinvestment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting neither a significantdeterioration since purchase nor other factors leading to other-than-temporary impairment. 4.Fair Value MeasurementsCertain assets and liabilities are measured at fair value in the Company’s financial statements or have fair values disclosed in the notes to the financialstatements. These assets and liabilities are classified into one of three levels of a hierarchy defined by U.S. GAAP. The Company’s assessment of thesignificance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset orliability. 102Table of ContentsThe following methods and assumptions were used to estimate the fair value and determine the fair value hierarchy classification of each class of financialinstrument 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’scertificates of deposit is considered Level 2 of the fair value hierarchy as the inputs are based on quoted prices for identical assets in markets that are notactive. The carrying amounts of the Company’s certificates of deposit reported in the 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 notapplied. Accordingly, U.S. Treasury Securities are considered Level 1 of the fair value hierarchy. The fair values of U.S. government agency obligations andcorporate obligations are generally determined using recently executed transactions, broker quotes, market price quotations where these are available orother observable market inputs for the same or similar securities. As such, the Company classifies its investments in U.S. government agency obligationsand corporate obligations within Level 2 of the hierarchy. The following fair value hierarchy table presents information about each major category of theCompany’s financial assets and liabilities measured at fair value on a recurring basis. In thousands (Level 1) (Level 2) (Level 3) Total FairValue June 30, 2019 Cash and cash equivalents $26,703 $— $— $26,703 Held-to-maturity investments: U.S. Treasury Securities 55,370 — — 55,370 Total assets $82,073 $— $— $82,073 June 30, 2018 Cash and cash equivalents $31,065 $— $— $31,065 Certificates of deposit — 2,100 — 2,100 Held-to-maturity investments: Corporate obligations — 2,002 — 2,002 U.S. Treasury Securities 69,671 — — 69,671 Total assets $100,736 $4,102 $— $104,838 5.Property and Equipment, NetProperty and equipment consist of the following: June 30, In thousands 2019 2018 Laboratory equipment $2,938 $2,929 Equipment construction in progress 206 — Leasehold improvements 3,851 3,835 Office equipment 1,074 1,077 Property and equipment, gross 8,069 7,841 Less: Accumulated depreciation (3,639) (2,587) Property and equipment, net $4,430 $5,254 103Table of ContentsDepreciation expense of $1.1 million and $0.9 million was recorded for fiscal years ended June 30, 2019 and 2018, respectively. 6.Intangible Assets, NetIntangible assets subject to amortization consist of the following: June 30, 2019 In thousands Cost AccumulatedAmortization Net ofAccumulatedAmortization Patents $2,392 $(1,499) $893 Licenses 289 (199) 90 Other 49 (19) 30 Intangible assets, net $2,730 $(1,717) $1,013 June 30, 2018 In thousands Cost AccumulatedAmortization Net ofAccumulatedAmortization Patents $2,193 $(1,357) $836 Licenses 289 (182) 107 Other 54 (29) 25 Intangible assets, net $2,536 $(1,568) $968 Amortization expense related to intangible assets for the years ended June 30, 2019 and 2018 was $163,000 and $266,000, respectively.Estimated amortization expense (in thousands) for the next five years and thereafter is as follows: Year Ending June 30, Amount 2020 $160 2021 160 2022 143 2023 60 2024 27 Thereafter 440 $990 7.Collaboration AgreementsBiogenOn July 1, 2015, the Company entered into a Collaboration Agreement with Biogen, pursuant to which the Company and Biogen collaborated to develop,seek regulatory approval for and commercialize gene therapy products to treat XLRS, XLRP, and discovery programs targeting three indications based onthe Company’s adeno-associated virus vector technologies. Effective March 8, 2019, Biogen terminated the Collaboration Agreement.Under the Collaboration Agreement, the Company granted to Biogen with respect to the XLRS and XLRP programs, and upon exercise of the option for theapplicable discovery program, an exclusive, royalty-bearing 104Table of Contentslicense, with the right to grant sublicenses, to use adeno-associated virus vector technology and other technology controlled by the Company for the licensedproducts or discovery programs developed under the Collaboration Agreement. Biogen and the Company also granted each other worldwide licenses, withthe right to grant sublicenses, of their respective interests in other intellectual property developed under the collaboration outside the licensed products ordiscovery programs. Biogen pre-funded the Company to conduct all development activities through the completion of a first in human trial for the XLRSprogram and all development activities through the date of Investigational New Drug Application (“IND”) and the completion of a natural history study forthe XLRP program. In addition, Biogen pre-funded the Company to conduct discovery, research and development activities for additional drug candidatesthrough the stage of clinical candidate designation for discovery programs targeting three indications (of which one indication has two development plans atcontract inception), after which, Biogen had an option to continue to develop, seek regulatory approval for and commercialize the designated clinicalcandidate. The pre-funded research and development activities for each program are referred to as “Pre-Funded Activities”.In February 2016, the Company announced Biogen’s selection of adrenoleukodystrophy as the non-ophthalmic indication of the discovery programs. Underthe terms of the Collaboration Agreement, the Company, in part through its participation in joint committees with Biogen, would participate in overseeingthe development and commercialization of these specific programs.Pursuant to the Manufacturing Agreement, Biogen had an option to receive a manufacturing license for up to six genes for a fixed fee per gene elected. Ifexercised, the Company would have been eligible to receive certain event milestones and royalties.Under the Collaboration Agreement, the Company was paid an upfront nonrefundable fee of $94.0 million of which $58.4 million was contractuallydescribed as relating to the Pre-Funded Activities (“Pre-Funded Amounts”) and $35.6 million was contractually described as relating to the access oflicenses. In addition, under the terms of the Equity Agreement, Biogen purchased 1,453,957 shares of the Company’s common stock at a price of $20.63 pershare, for an aggregate cash purchase price of $30.0 million of which $10.8 million was considered to be allocated consideration as part of the CollaborationAgreement. The shares issued to Biogen represented approximately 8.1% of the Company’s outstanding common stock on a post-issuance basis, calculatedon the number of shares that were outstanding at June 30, 2015, and constituted restricted securities that could not be resold by Biogen other than in atransaction registered under, or pursuant to an exemption from the registration requirements of, the Securities Act of 1933, as amended.The Company was also eligible to receive total payments of up to $472.5 million based on the successful achievement of future milestones under its XLRSand XLRP programs. For XLRS, the Company was eligible to receive up to: (i) $45.0 million in milestone payments based upon the successful achievementof clinical milestones (relating to dosing in specified trials), (ii) $155.0 million in milestone payments based upon the achievement of regulatory approvalsand first commercial sale in specified territories and (iii) $65.0 million in milestone payments based upon the achievement of worldwide sales targets. Forthe XLRS program, the Company had an option to share development costs and profits after the initial clinical trial data were available instead of receivingmilestone payments. For XLRP, the Company was eligible to receive up to: (i) $42.5 million in milestone payments based upon successful achievement ofclinical milestones (relating to dosing in specified trials), (ii) $102.5 million in milestone payments based upon the achievement of regulatory approvals andfirst commercial sale in specified territories and (iii) $62.5 million in milestone payments based upon the achievement of worldwide sales targets. For theXLRP program, the Company had an option to share development costs and profits after the initial clinical trial data were available instead of receivingmilestone payments. In addition, the Company was eligible to receive payments of up to $592.5 million based on the exercise of the option for and thesuccessful achievement of future milestones under its discovery programs. Each discovery program was categorized as Category A, Category B orCategory C depending on the nature of the indication it sought to address. For Category A, the Company was eligible to receive payments of up to:(i) $20.0 million based upon the successful achievement of clinical milestones (relating to dosing in specified trials) and (ii) $70.0 million in 105Table of Contentsmilestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. For Category B, the Company waseligible 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) $105.0 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale in specified territories. ForCategory C, the Company was eligible to receive payments of up to: (i) $40.0 million based upon the successful achievement of clinical milestones (relatingto dosing in specified trials) and (ii) $140.0 million in milestone payments based upon the achievement of regulatory approvals and first commercial sale inspecified territories. Under certain limited circumstances, if there were 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 would have been payable for the applicable discovery product fromeach such discovery program to achieve the specified milestones.Prior to 2018, the Company received a $5.0 million milestone payment related to initial dosing of a XLRS patient. In April 2018, the Company triggered a$2.5 million milestone payment related to the initial dosing of a XLRP patient. In July 2018, the Company triggered a $10.0 million milestone paymentrelated to the treatment of a first patient of second cohort in a Phase 1/2 Clinical XLRP Study.While the Company recognized additional revenue as it continued to perform under the Collaboration Agreement prior to March 8, 2019, the terminationdate of the agreement, the Company will not receive any milestone-based or royalty payments under the Collaboration Agreement after its termination.Accounting AnalysisFor the periods prior to July 1, 2018, the Company applied the provisions of ASC 605 in accounting for this arrangement.Under ASC 605 and Topic 606, the Company has concluded that the Collaboration Agreement, the Manufacturing Agreement and the Equity Agreementshould be accounted for as one arrangement as the agreements were with the same party and were negotiated and executed contemporaneously.The performance obligations and the allocated transaction price as of the date of initial application of Topic 606 are as follows: In thousands AllocatedTransaction Price XLRS License and Pre-Funded Activities $52,060 XLRP License and Pre-Funded Activities 43,570 Pre-Funded Activities associated with the Discovery Programs 16,700 $112,330 The Pre-Funded Activities associated with the Discovery Programs amount is comprised of four distinct performance obligations based on the separatedevelopment plans for discovery candidates at contract inception. The Company concluded that the delivered license was not distinct from the Pre-FundedActivities as Biogen cannot obtain the benefit of the license without the related services. Further, each of the license and related Pre-Funded Activitiesperformance obligation is considered a distinct performance obligation as each development plan is pursued independent of every other development plan.The Company concluded that Post-Funded Activities represent customer options that are not material rights as any services requested by Biogen andprovided by the Company are reimbursed at a rate that reflects the estimated standalone selling price for the services. As such, the Company will recognizerevenue related to Post-Funded Activities as the services are provided. Through the date of adoption of ASC 606, the Company recognized revenue of$4.7 million for Post-Funded Activities. The Company recorded revenue of $2.7 million for the year ended June 30, 2019 related to Post-Funded Activities. 106Table of ContentsThe Company concluded that the option to receive i) commercial licenses for the Discovery Programs that achieve clinical candidate designation, as definedin the Collaboration Agreement and ii) manufacturing licenses for up to six genes pursuant to the Manufacturing Agreement represent customer options thatare not material rights as the exercise price for such options reflects the estimated standalone selling price for such option. As such, the Company wouldaccount for such option if and when the options are exercised.As of the date of the initial application of Topic 606, the total transaction price for the Biogen Agreement was $112.3 million which included a $5.0 millionmilestone payment for initiation of dosing of XLRS and a $2.5 million milestone payment for initiation of dosing of XLRP. The Company used the most-likely method to determine the amount of variable consideration in the Biogen Agreement. The Company believes that any estimated amount of variableconsideration related to clinical and regulatory milestone payments should be fully constrained as the achievement of such milestones was highly susceptibleto factors outside of the Company’s control. The Company determined that the commercial milestones and sales-based royalties would be recognized whenthe related sales occurred as they were deemed to relate predominately to the license granted and therefore were also excluded from the transaction price.In the quarter ended September 30, 2018, the Company received a $10.0 million milestone payment related to XLRP which increased the transaction price.Based on an understanding between the parties in the quarter ended September 30, 2018, the Company also reallocated $1.1 million of Pre-Funded amountsto cover Post-Funded Activities which resulted in a decrease to the transaction price and deferred revenue of $1.1 million in the quarter ended September 30,2018. Additionally, the Company reallocated $1.8 million of variable consideration between Pre-Funded Activities associated with Discovery Programsperformance obligations based on changes to the underlying development plans of the product candidates.The reallocation between Discovery Programs generated an insignificant cumulative catch up adjustment to revenue in the quarter ended September 30,2018. The cumulative catch-up adjustment to revenue that relates to changes or reallocations of the transaction price are further discussed in the Summary ofContract Assets and Liabilities section below.The transaction price was allocated to the performance obligations based on the relative estimated standalone selling price of each performance obligation or,in the case of certain variable consideration, to one or more performance obligations. The estimated standalone selling prices for performance obligations,that include a license and Pre-Funded Activities, were developed using the estimated selling price of the license and an estimate of the overall effort toperform the Pre-Funded Activities. The estimated selling price of the licenses were determined using a discounted cash flow valuation utilizing forecastedrevenues and costs for the Company’s product candidate licenses.The Company recognized revenue related to the performance obligations which included a license and Pre-Funded Activities over the estimated period ofthe research and development services using a proportional performance model. The Company measured proportional performance based on the costsincurred relative to the total costs expected to be incurred to satisfy the performance obligation. Management believes that recognizing revenue on aproportional performance basis based on costs incurred faithfully depicts the transfer of goods and services to the customer because the customer consumedthe Company’s services as such services were performed. The Company accounted for the termination of the Collaboration Agreement upon the effectivedate of the termination and updated its total costs incurred to satisfy the performance obligations as of June 30, 2019; including any impact of thetermination.For the years ended June 30, 2019 and 2018, the Company recorded revenue of $41.1 million and $24.1 million, respectively, from its collaboration withBiogen. The Company had no accounts receivable balances as of June 30, 2019 and had $1.7 million as of June 30, 2018, related to the Biogen Agreement.As a result of the termination of the Collaboration Agreement with Biogen effective March 8, 2019, the Company recognized the remaining deferredrevenue balance as of the termination date. Therefore, at June 30, 2019, the Company had no 107Table of Contentsdeferred revenue related to the Biogen Agreement. For further details regarding deferred revenue, refer to Summary of Contract Assets and Liabilitiessection.The Company’s revenue is comprised of the following related to the Biogen Agreement: In thousands June 30, 2019 June 30, 2018 Collaboration revenue Licenses and related services $27,000 $18,529 Development services 2,736 3,028 Milestone revenue 11,392 2,500 Total collaboration revenue $41,128 $24,057 License and related services revenue is comprised of revenue related to the Company’s completion of performance obligations that contain the delivery oflicenses and Pre-Funded Activities. Development services revenue relates to the delivery of Post Funded Activities. Milestone revenue relates to the portionof milestone payments received that are recognized as revenue based on the proportional performance of the underlying performance obligation and revenuerecognized due to the termination of the Collaboration Agreement.Summary of Contract Assets and LiabilitiesThe following table presents changes in the balances of our contract assets and liabilities during the year ended June 30, 2019: In thousands June 30, 2018 Additions Deductions June 30, 2019 Contract assets $— $— $— $— Contract liabilities: Deferred revenue $29,521 $10,000 $39,521 $— The Company recorded an entry to increase deferred revenue and accumulated deficit for $22.6 million as of July 1, 2018 related to the adoption of Topic606. The impact of the adoption of Topic 606 is reflected within the beginning of period balance. Additions for the year ended June 30, 2019 include the$10 million milestone payment received associated with the XLRP program. For the year ended June 30, 2019, the Company recognized revenue of$29.5 million related to deferred revenue that existed as of June 30, 2018.Bionic SightOn February 2, 2017, the Company entered into a strategic research and development collaboration agreement with Bionic Sight, LLC (“Bionic Sight”), todevelop therapies for patients with visual deficits and blindness due to retinal disease. Through the AGTC-Bionic Sight collaboration, the companies seek todevelop 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 representsan approximate 5% equity interest in Bionic Sight. In addition to the initial investment, AGTC is contributing ongoing research and development supportcosts through additional payments and other in-kind contributions (AGTC Ongoing R&D Support). The AGTC Ongoing R&D Support payments andin-kind contributions are made over time and may continue up to the date Bionic Sight receives both IND clearance from the FDA and receipt of writtenapproval from an internal review board to conduct clinical trials from at least one clinical site for that product candidate (the “IND Trigger”). As of June 30,2019, the Company had incurred approximately $2.0 million in ongoing research and development support costs and in-kind contributions. 108Table of ContentsIf the IND Trigger is attained, AGTC will (i) receive additional equity, based on the valuation in place at the beginning of the agreement, for the AGTCOngoing R&D Support payments and in-kind contributions, and (ii) will be obligated to purchase additional equity in Bionic Sight for $4.0 million, at apre-determined valuation. The Company has concluded that the AGTC Ongoing R&D Support is within the scope of ASC 606, Revenue from Contractswith Customers, as the services rendered represent a distinct service delivered to a counterparty that meets the definition of a customer. The Companyconsiders these services to represent one combined performance obligation. Given that the consideration that the Company is entitled to is contingent uponachievement of the IND Trigger, the consideration is determined to be variable. The Company believes that the amount of variable consideration related tothe achievement of the IND Trigger should be fully constrained as the achievement of this event is highly susceptible to factors outside of the Company’scontrol. The Company evaluates the amount of potential receipt of the variable consideration and the likelihood that the consideration will be received.Utilizing the most likely amount method, and if it is probable that a significant revenue reversal would not occur, the variable consideration is included in thetransaction price. The variable consideration related to Bionic Sight agreement has been fully constrained since the inception of the agreement and noamounts have been recognized as revenue to date. With regard to the obligation to purchase additional equity in Bionic Sight for $4.0 million, the Companyconcluded that this represents a forward contract to be accounted for within the scope of ASC 321, Investments—Equity Securities. The Company assessedthe fair value of this forward contract at inception of the Bionic Sight agreement and determined the value to be de minimis. As the forward contract doesnot have a readily determinable fair value, the Company has elected to use the measurement alternative for the subsequent measurement of this instrument.Under the measurement alternative, the forward contract will be remeasured to fair value when observable transactions involving the underlying equitysecurities or impairment of those securities occur. No such observable transactions or impairment involving the underlying equity securities have occurredsince the inception of the arrangement.Due to the uncertainty of achieving the IND Trigger, the Company is expensing the AGTC Ongoing R&D Support payments and in-kind contributions madeunder the collaboration agreement. Such amounts are included as a component of research and development expenses in the Company’s financialstatements.The Company recorded its initial $2.0 million investment in Bionic Sight using the equity method of accounting for investments, which is recorded as itsown line item on the Company’s balance sheet. During fiscal 2019, the Company recorded a reduction of its investment in Bionic Sight of $35,000 and aninvestment loss on the statement of operations to reflect its equity interest in the net loss of this affiliate. As of June 30, 2019, the amount of the Company’sunderlying equity in net assets of Bionic Sight is not representative of the amount at which the investment is carried due to retained losses experienced byBionic Sight prior to the Company’s investment.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 negotiatefor 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. 8.Share-based Compensation PlansThe Company uses stock options and awards of restricted stock to provide long-term incentives for its employees, non-employee directors and certainconsultants. The Company has two equity compensation plans under which awards are currently authorized for issuance, the 2013 Employee Stock PurchasePlan 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 128,571shares previously authorized under this plan remain available for issuance. As of June 30, 2019, the total number of shares available for issuance under the2013 Equity and Incentive Plan was 1,244,754. 109Table of ContentsThe Compensation Committee of the Board of Directors, as the plan administrator, has the authority to select the individuals to whom share-based awardsare granted and to determine the terms of each award, including (i) the number of shares of common stock subject to a stock option or restricted shareaward; (ii) the date on which the stock option becomes exercisable; (iii) the option exercise price, which, in the case of incentive stock options, must be atleast 100% (110% in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company’s stock) of the fair market valueof the common stock as of the date of grant; (iv) the vesting term; and (v) the duration of the option (which, in the case of incentive stock options, may notexceed ten years). Employee options typically vest over a three- or four-year period.A summary of the stock option activity is as follows: June 30, 2019 June 30, 2018 (In thousands, except per share amounts) Shares WeightedAverageExercisePrice Shares WeightedAverageExercisePrice Outstanding, beginning of year 3,107 $10.93 2,716 $12.95 Granted 1,172 4.5 914 4.72 Exercised (65) 2.4 (18) 0.35 Forfeited (317) 7.2 (415) 9.86 Expired (312) 12.4 (90) 15.92 Outstanding, end of year 3,585 $9.19 3,107 $10.93 Exercisable, end of year 2,167 1,900 Weighted average fair value of options granted during the year $2.89 $3.37 For the year ended June 30, 2019, the Company granted 24,000 restricted stock awards to employees with weighted average exercise price of $4.54, whichvested on the grant date. Therefore, the weighted average exercise price for the granted stock awards and weighted average exercise price for vested stockawards is the same, and no restricted stock awards were outstanding as of June 30, 2019.The intrinsic value of options exercised during the years ended June 30, 2019 and 2018 was $0.2 million and $0.1 million, respectively. The total fair valueof options that vested during the fiscal years ended June 30, 2019 and 2018 was $3.9 million and $5.1 million, respectively.The following table summarizes information about stock options exercisable, and vested and expected to vest as of June 30, 2019: (In thousands, except per share amounts) Shares WeightedAverageExercise Price AggregateIntrinsicValue Weighted AverageContractual Life(in years) Vested and expected to vest 3,447 $9.35 $518 7.07 Exercisable 2,167 $11.75 $505 6.02 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock forthe options that were in the money as of June 30, 2019.In accounting for stock options to non-employees, the fair value of services related to the options granted are generally recorded as an expense as theseservices are provided to the Company over the relating service periods. The Company re-measures any non-vested, non-employee options to fair value at theend of each reporting period using the Black-Scholes pricing model.Share-based compensation expense related to stock options awarded to employees, non-employee directors and consultants amounted to $3.9 million and$5.0 million for the fiscal years ended June 30, 2019 and 2018, respectively. 110Table of ContentsShare-based compensation expense related to restricted shares of common stock awarded to employees and consultants amounted to $113,090 and $145,600for the fiscal years ended June 30, 2019 and 2018, respectively.Total share-based expense associated with stock options and restricted shares of common stock was allocated as follows: In thousands June 30, 2019 June 30, 2018 General and administrative $2,134 $2,821 Research and development 1,895 2,372 $4,029 $5,193 The fair value of each option granted is estimated on the grant date using the Black-Scholes stock option pricing model. The following assumptions weremade in estimating fair value: Assumption June 30, 2019 June 30, 2018 Dividend yield 0.00% 0.00% Expected term 6.00 to 6.25 years 6.00 to 6.50 years Risk-free interest rate 1.82% to 3.11% 1.83% to 2.87% Expected volatility 69.22% 83.53% The dividend yield is based upon the assumption that the Company will not declare a dividend over the life of the options. Since adopting ASC 718, theCompany has been unable to use historical employee exercise and option expiration data to estimate the expected term assumption for the Black-Scholesgrant-date valuation. The Company therefore has utilized the “simplified” method, as prescribed by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, to estimate on a formula basis the expected term of our stock options considered to have “plain vanilla” characteristics. The risk-freeinterest rate is based on the U.S. Treasury yield curve on the date of valuation. For the year ended June 30, 2019, the expected volatility is based on thehistorical volatility of the company stock price. For the year ended June 30, 2018 the expected volatility was primarily based on the historical volatility ofpeer company data. If the Company had used peer company data for the year ended June 30, 2019, share-based compensation expense for the reportingperiod would have differed by an insignificant amount. Forfeitures are estimated at the time of the grant and revised, if necessary, in subsequent periods ifactual forfeitures differ from those estimates. Share-based compensation expense recognized in the statements of operations for the fiscal years endedJune 30, 2019 and 2018 does not reflect tax related effects on stock-based compensation given the Company’s historical and anticipated operating losses andoffsetting changes in its valuation allowance that fully reserves against potential deferred tax assets.Unrecognized compensation expense related to non-vested employee stock options amounted to $4.5 million as of June 30, 2019. Such compensationexpense is expected to be recognized over a weighted-average period of 2.54 years. 9.Commitments and ContingenciesOperating LeasesAlachua, FloridaThe Company’s corporate headquarters are located in Alachua, Florida. In January 2016, the Company moved into a new combined-use facility consistingof approximately 21,500 square feet of laboratory and office space. The initial lease term for this facility is 12 years and the Company has options to extendthe term of the lease for three additional five-year periods. The Company’s prior leased facilities encompassed approximately 7,000 square feet of office andlaboratory space. The operating leases associated with the prior facilities expired in December 2015. 111Table of ContentsCambridge, MassachusettsIn August 2015, the Company entered into a two-year lease to occupy approximately 3,000 square feet of office and laboratory space in Cambridge,Massachusetts. In July 2017, the Company entered into a new lease to increase our office and laboratory space in Cambridge by approximately 5,000 squarefeet to a total of approximately 8,000 square feet and extend the term of the lease for an additional seven years, with an option to further extend the lease forone additional three-year term. This additional facility primarily focuses on business development, pharmacology, clinical operations and basic research anddevelopment.For the fiscal years ended June 30, 2019 and, 2018, rent expense under these operating leases amounted to $1,109,000, and $909,000, respectively. Futureannual minimum lease payments (in thousands) under these non-cancelable operating leases are as follows: Year Ending June 30, Amount 2020 $1,353 2021 1,376 2022 1,400 2023 1,425 2024 1,450 Thereafter 2,638 $9,642 License and Other AgreementsUnder various agreements, the Company will be required to pay royalties and milestone payments upon the successful development and commercializationof products. The Company has entered into funding agreements with various not-for-profit organizations. The Company may become obligated to payroyalties on net product sales of any collaboration product that it successfully develops and subsequently commercializes or, if it out-licenses rights to acollaboration product, a specified percentage of certain payments it receives from its licensee. The Company is not obligated to make such payments unlessand until annual sales of a collaboration product exceed a designated threshold. The Company’s obligation to make such payments would end upon itspayment of a specified amount.The Company is also party to various agreements entered into in the ordinary course of its business, principally relating to licensed technology. TheCompany had seven license agreements with six different entities, including four with the University of Florida Research Foundation. The Company isresponsible for all costs related to preparation, filing, issuance, prosecution and maintenance of the underlying patents covered in the license agreements.The Company is required to pay minimum annual royalty and license maintenance for all licenses until such time when the license is terminated by eitherexpiration of underlying patents or voluntary termination by either party per the agreement.These license agreements also require future payments related to milestones or royalties on future sales of specified products. Payments under theseagreements generally become due and payable only upon achievement of certain developmental, regulatory or commercial milestones. Amounts related tocontingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development,regulatory and commercial milestones. There is uncertainty regarding the various activities and outcomes needed to reach these milestones, and they maynot be achieved. The Company may terminate its license agreements with zero to ninety days written notice depending upon the terms of each specificagreement.The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies,holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s businesspartners or customers, in 112Table of Contentsconnection with any U.S. patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company’sproducts. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could berequired to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related tothese indemnification agreements. From time to time, the Company may be involved in claims and legal actions that arise in the normal course of business.Management has no reason to believe that the outcome of any such legal actions would have a significant adverse effect on the Company’s financialposition, results of operations or cash flows. 10.Income TaxesFor the fiscal years ended June 30, 2019 and 2018, the Company recorded the following current and deferred income tax expense or (benefit). For the fiscalyears ended June 30, 2019 and 2018, the federal and state income tax provision (benefit) summarized as follows: June 30, In thousands 2019 2018 Current provision: Federal $— $(790) State 76 862 76 72 Deferred tax liabilities: Federal $— $— State — — — — Provision for income taxes $76 $72 Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. Thesignificant components of the Company’s deferred tax assets (liabilities) are comprised of the following: June 30, In thousands 2019 2018 Deferred tax assets: Net operating loss carryforwards $20,526 $13,910 Tax credit carryforwards 25,501 23,567 Accruals and other 3,513 4,625 Depreciation and amortization 238 112 Gross deferred tax assets 49,778 42,214 Deferred tax asset valuation allowance (49,778) (42,214) Total deferred tax assets, net of valuation allowance — — Deferred tax liabilities: Depreciation and amortization — — Total deferred tax liabilities — — Net deferred tax asset (liability) $— $— As of June 30, 2019, the Company had federal and state net operating losses of approximately $24.8 million and $5.1 million (tax effected), respectively,that may be applied against future taxable income and expire in various 113Table of Contentsyears ranging from 2022 to 2038 and federal net operating losses of $53.6 million that do not expire under the Tax Act. As of June 30, 2019, the Companyalso had federal and state research and development tax credits of approximately $25.5 million and $45,000, respectively, which may provide future taxbenefits and expire in various years ranging from 2027 to 2048.The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on its history of operatinglosses, the Company has concluded that as of June 30, 2019, it is more likely than not that the benefit of its deferred tax assets will not be realized.Therefore, any tax benefits to be realized in future years as a result of the utilization of the Company’s net operating loss carry forwards as of June 30, 2019,computed based on statutory federal and state rates, are completely offset by valuation allowances established because realization of the deferred tax benefitsare not considered more likely than not as of that date. The valuation allowance increased by approximately $7.6 million during the fiscal year endedJune 30, 2019, due primarily to the net increase in federal net operating losses and equity adjustments as a result of ASC 606 revenue recognition standardsand its impact on deferred revenue.On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”). The Act includes a number ofchanges in existing tax law impacting businesses including, among other things, a permanent reduction in the corporate income tax rate from 35% to 21%,effective January 1, 2018. The Company’s deferred tax assets and valuation reserve decreased by $7.6 million from the impact of the corporate tax ratechange from the Tax Act.The differences between the effective income tax rate reflected in the provision for income taxes and the amounts, which would be determined by applyinga 21% rate for the year ended June 30, 2019 and a blended statutory federal income tax rate of 28% for the year ended June 30, 2018, is summarized asfollows: June 30, 2019 June 30, 2018 Federal income tax benefit at statutory rate 21% 28% State income tax, net of federal benefit (3) 3 Permanent differences-incentive stock compensation (27) (2) Permanent differences-transportation and travel (9) — Permanent differences-research expenses — (7) Research and development tax credits 100 24 Tax Act-refundable AMT credit — 4 Rate change 14 — Other (9) (2) Change in unrecognized tax benefit — (3) Remeasurement of net deferred tax assets — (36) Change in valuation allowance, including remeasurement (91) (9) Effective income tax rate (4)% 0% Under the provisions of the Internal Revenue Code, the Company’s net operating loss and tax credit carry forwards are subject to review and possibleadjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carry forwards may become subject to an annuallimitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, asdefined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of taxattributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the valueof the Company immediately prior to the ownership change. Since its inception, the Company has completed several financings and sales of common stockwhich have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code. Subsequent ownership changes may furtheraffect the limitation in future years. A full valuation allowance has been provided against the Company’s net operating loss 114Table of Contentscarryforwards and, if an adjustment were to be required, this adjustment would be offset by an adjustment to the deferred tax asset established for the netoperating loss carryforwards and the valuation allowance.For fiscal years through June 30, 2019, the Company generated research credits but has not conducted a study to document the qualified activities. Thisstudy may result in an adjustment to the Company’s research and development tax credit carry forwards; however, until a study is completed, and anyadjustment is known, no amounts are being presented as an uncertain tax position as of June 30, 2019 or 2018. A full valuation allowance has been providedagainst the Company’s research and development tax credits and, if an adjustment were to be required, this adjustment would be offset by an adjustment tothe deferred tax asset established for the tax credit carry forwards and the valuation allowance.The Company files income tax returns in the United States and in multiple states. The federal and state returns are generally subject to tax examinations forthe tax years ended June 30, 2015 through June 30, 2019. To the extent the Company has tax attribute carry forwards, the tax years in which the attributewas generated may still be adjusted upon examination by the Internal Revenue Service (IRS), or state authorities, to the extent such attributes are utilized ina future period. On December 28, 2015, the IRS, notified the Company of an income tax audit for the tax period ending June 30, 2014. As of June 30, 2017,the IRS audit was closed and the Company incurred no penalties or payment liabilities for its income tax positions.The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination.For the year ended June 30, 2019, the Company increased the uncertain tax position reserve by $76,000 which includes interest and penalties. A reserve of$2,035,000 was recorded for the year ended June 30, 2019 and a reserve of $1,959,000 was recorded for the year ended June 30, 2018. The entire amount ofthe reserve would reduce the annual effective tax rate if recognized. The Company does not anticipate that the amount of unrecognized tax benefits as ofJune 30, 2019 will significantly change within the next twelve months. The Company’s practice is to recognize interest and/or penalties related to uncertainincome tax positions in income tax expense. The Company had $424,000 of interest and/or penalties accrued on the Company’s balance sheets as of June 30,2019. The Company had $348,000 of interest and/or penalties accrued on the Company’s balance sheet as of June 30, 2018. The Company recognized$76,000 of interest and/or penalties in the statement of operations for the year ended June 30, 2019 related to uncertain tax positions. The Companyrecognized $348,000 of interest and/or penalties in the statement of operations for the year ended June 30, 2018 related to uncertain tax positions. Theliability for uncertain tax positions as of June 30, 2019 is included in other long-term liabilities on the balance sheet. A reconciliation of the unrecognizedtax benefits, excluding interest and penalties, is summarized below: In thousands June 30,2019 June 30,2018 Balance at beginning of period $1,611 $950 Additions related to current period tax positions — — Additions related to prior period tax positions — 661 Balance at end of period $1,611 $1,611 11.Accrued ExpensesAccrued expenses as of June 30, 2019 and 2018 consisted of the following: June 30, In thousands 2019 2018 Research and development-related $4,909 $4,164 Compensation-related 2,406 2,186 General and administrative- related 709 805 $8,024 $7,155 115Table of Contents12.Defined Contribution PlanThe Company sponsors an employee 401(k) salary deferral plan (“401(k) Plan”) that covers substantially all of its employees and is administered throughits staff leasing company. Under the 401(k) Plan, employees may elect to defer up to 25% of their compensation per year (subject to a maximum limitprescribed by federal tax law) and the Company matches a portion of such employee contributions up to a maximum of 4% of the eligible salary. TheCompany’s matching contributions to the 401(k) Plan amounted to $327,000 and $302,000 for the years ended June 30, 2019 and 2018, respectively. 13.Common Stock, Preferred Stock and Stockholders’ EquityCommon StockAs of June 30, 2019, there were 150,000,000 shares of $0.001 par value common stock and 5,000,000 shares of preferred stock that were authorized to beissued. As of that date, a total of 18,226,356 and 18,207,352 shares of common stock were issued and outstanding, respectively, while none of the preferredshares were issued and outstanding.The following shares of common stock were reserved for future issuance: In thousands June 30, 2019 Stock options issued and outstanding 3,585,351 Authorized for future grant under the 2013 Employee Stock Purchase Plan 128,571 Authorized for future grant under the 2013 Equity and Incentive Plan 1,244,754 4,958,676 14.Quarterly Financial Information (Unaudited)Summarized quarterly information for the two fiscal years ended June 30, 2019 and 2018, respectively, is as follows: Year 2019 by Quarter: In thousands, except per share data First Second Third Fourth Revenue $14,034 $5,934 $21,318 $406 Income/loss from operations $756 $(4,671) $11,005 $(11,440) Net income/(loss) $1,200 $(4,181) $11,489 $(10,514) Net earnings/(loss) per common share, basic $0.07 $(0.23) $0.63 $(0.58) Net earnings/(loss) per common share, diluted $0.07 $(0.23) $0.63 $(0.58) Year 2018 by Quarter: In thousands, except per share data First Second Third Fourth Revenue $10,315 $4,852 $3,603 $5,416 Loss from operations $(1,667) $(6,242) $(7,696) $(6,779) Net loss $(1,397) $(5,190) $(8,101) $(6,612) Net loss per common share, basic $(0.08) $(0.29) $(0.45) $(0.36) Net loss per common share, diluted $(0.08) $(0.29) $(0.45) $(0.36) 116Table of ContentsITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone. ITEM 9A.CONTROLS AND PROCEDURESDisclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules andforms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate,to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controlsand procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours aredesigned to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adoptoutweigh their costs.Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design andoperation of our disclosure controls and procedures (as defined in Rules 13a-15e and 15d-15e under the Securities Exchange Act of 1934, as amended as ofthe end of the period covered by this quarterly report). Based on this evaluation the Chief Executive Officer and Chief Financial Officer concluded that thesedisclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted underthe Exchange Act is recorded, summarized and reported within the requisite time periods.Management’s Report on Internal Control Over Financial ReportingManagement is responsible for establishing and maintaining adequate “internal control over financial reporting,” as such term is defined underRule 13a-15(f) of the Exchange Act. We maintain internal control over financial reporting designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Internal control over financialreporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance thattransactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of ourassets are made in accordance with management’s authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of ourassets that could have a material effect on the financial statements would be prevented or detected on a timely basis.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. Therefore, internal control over financial reporting determined to be effective provides onlyreasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles.Management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2019. In making this assessment,management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on this assessment, management has concluded that the Company’s internal control over financial reporting waseffective as of June 30, 2019. Accordingly, our management has concluded that the financial statements included in this Annual Report on Form 10-Kpresent fairly, in all material respects, our financial position, results of 117Table of Contentsoperations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.As a non-accelerated filer, we are not required to comply with the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act.Changes in Internal Control over Financial ReportingThere 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) ofthe Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting. ITEM 9B.OTHER INFORMATIONNone.PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information regarding directors, executive officers and corporate governance included in our definitive proxy statement to be filed with the Securitiesand Exchange Commission pursuant to Regulation 14A no later than 120 days after the end of our fiscal year in connection with our fiscal 2019 AnnualMeeting of Stockholders (the “Proxy Statement”) is incorporated herein by reference.We are required under Item 405 of Regulation S-K to provide information concerning delinquent filers of reports under Section 16 of the Securities andExchange Act of 1934, as amended. This information will be set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in ourProxy Statement and is incorporated herein by reference. ITEM 11.EXECUTIVE COMPENSATIONThe information regarding executive compensation included in the Proxy Statement is incorporated herein by reference. ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSThe information regarding security ownership of certain beneficial owners and management and related stockholder matters included in the Proxy Statementis incorporated herein by reference. 118Table of ContentsWe have two equity compensation plans under which awards are currently authorized for issuance, our 2013 Equity and Incentive Plan and our 2013Employee Stock Purchase Plan. In connection with the consummation of our initial public offering in April 2014, our board of directors terminated any newofferings under our 2001 Stock Option Plan and our 2011 Stock Incentive Plan. Each of our 2013 Equity and Incentive Plan, our 2013 Employee StockPurchase Plan, our 2001 Stock Option Plan and our 2011 Stock Incentive Plan was approved by our stockholders prior to our initial public offering in 2014.The following table provides information regarding securities authorized for issuance as of June 30, 2019 under our equity compensation plans. Plan category Number of securities to beissued upon exercise ofoutstanding options,warrants and rights, andvesting of outstandingrestricted stock units Weighted-average exerciseprice of outstanding options,warrants and rights Number of securitiesremaining available forfuture issuance under equitycompensation plans(excluding securities reflectedin column (a)) (a) (b) (c) Equity compensation plans approvedby security holders 3,585,351 $9.19 1,373,325(1) Equity compensation plans notapproved by security holders — $— — Total 3,585,351 $9.19 1,373,325 (1) Includes 1,244,754 shares issuable under our 2013 Equity and Incentive Plan, which may be issued in the form of options, restricted stock,unrestricted stock, performance share awards or other equity-based awards, and 128,571 shares issuable under our 2013 Employee Stock PurchasePlan. This number includes the automatic increase in shares added to our 2013 Equity and Incentive Plan by its terms, added July 1 of each fiscal yearand calculated as a 4% increase of the number of shares of our common stock issued and outstanding on the immediately preceding June 30 or suchlesser number of shares of our common stock as determined by our compensation committee. ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS INDEPENDENCEThe information regarding certain relationships and related transactions, and director independence included in the Proxy Statement is incorporated hereinby reference. ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information regarding principal accounting fees and services included in the Proxy Statement is incorporated herein by reference.PART IV ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)Documents filed as a part of this Report: (1)Financial Statements—See Index to Financial Statements and Financial Statement Schedule at Item 8 on page 87 of this Annual Report onForm 10-K. (2)Financial Statement Schedules—See Index to Financial Statements and Financial Statement Schedule at Item 8 on page 87 of this AnnualReport on Form 10-K. All other schedules are omitted because they are not applicable or not required. 119Table of Contents (3)Index to Exhibits. Exhibitnumber Description 3.1 Fifth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s CurrentReport on Form 8-K filed with the SEC on April 1, 2014) 3.2 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filedwith the SEC on April 1, 2014) 4.1 Specimen certificate evidencing shares of common stock (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statementon Form S-1 (File No. 333-193309)) 10.1 Lease Agreement made as of April 10, 2015, by and between Alachua Foundation Park Holding Company, LLC and Applied GeneticTechnologies Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year endingJune 30, 2015 (File No. 001-36370)) 10.2*^ Employment Agreement dated as of August 29, 2019 between Applied Genetic Technologies Corporation and Mark S. Shearman 10.3*^ Employment Agreement dated as of August 29, 2019 between Applied Genetic Technologies Corporation and Stephen W. Potter 10.4* Employment Agreement dated as of September 26, 2014 between Applied Genetic Technologies Corporation and Susan B. Washer(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, event date September 26, 2014, filed on October 2,2014 (File No. 001-36370)) 10.5† Collaboration and License Agreement dated as of July 1, 2015 by and between Biogen MA Inc., and Applied Genetic TechnologiesCorporation (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ending June 30, 2018(File No. 001-36370)) 10.6 Common Stock Purchase Agreement dated as of July 1, 2015 by and between Biogen MA Inc., and Applied Genetic TechnologiesCorporation (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ending June 30, 2015(File No. 001-36370)) 10.7† Manufacturing License and Technology Transfer Agreement dated as of July 1, 2015 by and between Biogen MA Inc., and Applied GeneticTechnologies Corporation (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ending June 30, 2018 (File No. 001-36370)) 10.8† Second Amendment to Non-exclusive License Agreement, made and effective as of June 29, 2015, by and between The UAB ResearchFoundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.10 to the Company’s Annual Reporton Form 10-K for the year ending June 30, 2015 (File No. 001-36370)) 10.9† Omnibus Amendment to Standard Exclusive License Agreement with Sublicensing Terms, made and effective as of July 1, 2015, by andbetween the University of Florida Research Foundation, Inc., the University of Florida Board of Trustees, John Hopkins University andApplied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for theyear ending June 30, 2015 (File No. 001-36370)) 120Table of ContentsExhibitnumber Description 10.10† Omnibus Amendment to Standard Exclusive License Agreement with Know How and Standard Non-Exclusive License Agreement, madeand effective as of June 30, 2015, by and between the University of Florida Research Foundation, Inc. and Applied Genetic TechnologiesCorporation (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ending June 30, 2015(File No. 001-36370)) 10.11 Lease Agreement made as of September 19, 2011, by and between Thomson-Davis Enterprises, LLC and Applied Genetic TechnologiesCorporation (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.12† Exclusive License Agreement with Sublicensing Terms, effective as of September 25, 2001, by and between the University of FloridaResearch Foundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.2 to the Company’sRegistration Statement on Form S-1 (File No. 333-193309)) 10.13† Restated Amendment to License Agreement made and, effective as of January 31, 2005, by and between the University of FloridaResearch Foundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.3 to the Company’sRegistration Statement on Form S-1 (File No. 333-193309)) 10.14† First Amendment After Restated Amendment to License Agreement, made and effective as of November 28, 2007, by and between theUniversity of Florida Research Foundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.4to the Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.15† Standard Exclusive License Agreement with Sublicensing Terms, effective as of October 7, 2003, by and between the University ofFlorida Research Foundation, Inc., Johns Hopkins University and Applied Genetic Technologies Corporation (incorporated by reference toExhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.16† First Amendment to Standard Exclusive License Agreement with Sublicensing Terms, made as of November 2004, by and between theUniversity of Florida Research Foundation, Inc., Johns Hopkins University and Applied Genetic Technologies Corporation (incorporatedby reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.17† Second Amendment to Standard Exclusive License Agreement with Sublicensing Terms, made as of February 25, 2009, by and amongApplied Genetic Technologies Corporation, the University of Florida Research Foundation, Inc. and Johns Hopkins University(incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.18† Non-Exclusive License Agreement with Sublicensing Terms, made as of January 19, 2006, by and between The UAB ResearchFoundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.8 to the Company’s RegistrationStatement on Form S-1 (File No. 333-193309)) 10.19† Standard Non-Exclusive License Agreement, effective as of September 18, 2012, by and between the University of Florida ResearchFoundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.10 to the Registrant’sRegistration Statement on Form S-1 (File No. 333-193309)) 10.20† Standard Exclusive License Agreement with Know How, effective as of November 5, 2012, by and between the University of FloridaResearch Foundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit 10.11 to the Company’sRegistration Statement on Form S-1 (File No. 333-193309)) 121Table of ContentsExhibitnumber Description 10.21 Amended and Restated Investor Rights Agreement, dated as of November 15, 2012 (incorporated by reference to Exhibit 10.12 to theCompany’s Registration Statement on Form S-1 (File No. 333-193309)) 10.22* Applied Genetic Technologies Corporation 2001 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.13 to theCompany’s Registration Statement on Form S-1 (File No. 333-193309)) 10.23* Applied Genetic Technologies Corporation 2011 Stock Incentive Plan, as amended, and forms of Incentive Stock Option Agreement andNonstatutory Stock Option Agreement thereunder (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement onForm S-1 (File No. 333-193309)) 10.24* Applied Genetic Technologies Corporation 2013 Equity And Incentive Plan (incorporated by reference to Exhibit 10.15 to the Company’sRegistration Statement on Form S-1 (File No. 333-193309)) 10.25* Applied Genetic Technologies Corporation 2013 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.16 to theCompany’s Registration Statement on Form S-1 (File No. 333-193309)) 10.26 Form of Indemnification Agreement for Directors Associated with an Investment Fund (incorporated by reference to Exhibit 10.23 to theCompany’s Registration Statement on Form S-1 (File No. 333-193309)) 10.27 Form of Indemnification Agreement for Directors Not Associated with an Investment Fund (incorporated by reference to Exhibit 10.24 tothe Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.28† Second Amendment After Restated Amendment to License Agreement, made and effective as of January 10, 2014, by and between theUniversity of Florida Research Foundation, Inc. and Applied Genetic Technologies Corporation (incorporated by reference to Exhibit10.25 to the Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.29† Fourth Amendment to Standard Exclusive License Agreement with Sublicensing Terms, made as of December 17, 2013 by and betweenthe University of Florida Research Foundation, Inc., Johns Hopkins University and Applied Genetic Technologies Corporation(incorporated by reference to Exhibit 10.26 to the Company’s Registration Statement on Form S-1 (File No. 333-193309)) 10.30† First Amendment to Non-Exclusive License, made as of March 28, 2014, by and between the UAB Research Foundation, Inc. and AppliedGenetic Technologies Corporation (incorporated by reference to Exhibit 10.27 to the Company’s Registration Statement on Form S-1(File No. 333-197385)) 10.31* Employment Letter Agreement dated as of July 26, 2017 between Applied Genetic Technologies Corporation and William A. Sullivan(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 2, 2017) 10.32* Employment Letter Agreement dated as of July 29, 2019 between Applied Genetic Technologies Corporation and Matthew Feinsod(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 2, 2019) 10.33*^ Employment Letter Agreement dated as of June 12, 2019 between Applied Genetic Technologies Corporation and Theresa Heah 10.34*^ Employment Agreement dated as of August 29, 2019 between Applied Genetic Technologies Corporation and Brian Krex 23.1^ Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 23.2^ Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 122Table of ContentsExhibitnumber Description 31.1^ Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2^ Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1^ Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002101.INS^ XBRL Instance Document10.SCH^ XBRL Taxonomy Extension Schema Document101.CAL^ XBRL Taxonomy Extension Calculation Linkbase Document101.DEF^ XBRL Taxonomy Extension Definition Linkbase Document101.LAB^ XBRL Taxonomy Extension Label Linkbase Document101.PRE^ XBRL Taxonomy Extension Presentation Linkbase Document *Management contract or compensatory plan or arrangement^Filed herewith†We have omitted portions of this exhibit, for which confidential treatment has been granted. ITEM 16.FORM 10-K SUMMARYNone. 123Table of ContentsSCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS Additions In thousands Beginningof Period Charge(Benefit) toExpenses To (from)OtherAccounts Deductions End ofPeriod Deferred Tax Valuation Allowance Year 2019 $42,214 $7,564 $— $— $49,778 Year 2018 $40,303 $1,911 $— $— $42,214 Year 2017 $37,412 $2,891 $— $— $40,303 124Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized. APPLIED GENETIC TECHNOLOGIES CORPORATIONBy: /s/ Susan B. Washer Susan B. Washer President and Chief Executive OfficerDate: September 26, 2019Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of theCompany and in the capacities and on the dates indicated. Signature Title Date/s/ Susan B. WasherSusan B. Washer Chief Executive Officer, President and Director (PrincipalExecutive Officer) September 26, 2019/s/ William A. SullivanWilliam A. Sullivan Chief Financial Officer (Principal Financial and AccountingOfficer) September 26, 2019/s/ Scott KoenigScott Koenig Director September 26, 2019/s/ William AliskiWilliam Aliski Director September 26, 2019/s/ Ed HurwitzEd Hurwitz Director September 26, 2019/s/ Ivana Magovcevic-LiebischIvana Magovcevic-Liebisch Director September 26, 2019/s/ Anne VanLentAnne VanLent Director September 26, 2019/s/ James RosenJames Rosen Director September 26, 2019 125Exhibit 10.2EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 29th day of August, 2019 by and between Applied GeneticTechnologies Corporation, a Delaware corporation, including its successors and assigns, (the “Employer” or “Company”), and Mark S. Shearman(“Executive”).NOW, THEREFORE, in consideration of the promises and the respective undertakings of Employer and Executive set forth below, Employer andExecutive hereby agree as follows:1. Employment. Employer hereby employs Executive, and Executive hereby accepts such employment and agrees to perform services for Employer,for the period and on the other terms and subject to the conditions set forth in this Agreement. Employee’s Start Date shall be and shall be considered theEffective Date of this Agreement.2. Employment at Will. Executive is employed “at-will” which means that Executive’s employment is not for any defined term and may beterminated by either Executive or the Company at any time, with or without cause, for any or no reason, subject to the notice provisions herein.3. Position and Duties.3.1 Service with Employer. Employer hereby employs Executive in an executive capacity with the title of Chief Scientific Officer andExecutive hereby accepts such employment and undertakes and agrees to serve in such capacity. Executive shall have such powers, perform such duties andfulfill such responsibilities as are typically associated with such position in other similarly situated companies and shall report directly to the Company’sPresident and Chief Executive Officer,3.2 Performance of Duties. Executive agrees to: (i) devote substantially all of Executive’s business time, attention and efforts to the businessand affairs of Employer while employed; and (ii) adhere to all Employer’s written employment policies and procedures as shall be in force from time totime.3.3 Outside Activities. During the Term, Executive shall not: (i) except as set forth below, accept other employment; (ii) except as set forthbelow, render or perform services for compensation to any Person (as hereinafter defined) other than Employer; (iii) serve as an officer or on the board ofdirectors (or similar governing body) of any entity other than Employer, whether or not for compensation; or (iv) engage in any other business, enterprise oractivity that will require any effort on the part of Executive that, in the sole discretion of Employer, could reasonably be expected to materially detract fromthe ability of Executive to perform Executive’s duties to Employer pursuant to this Agreement; provided, however, Executive may engage in the activitiesset forth in Schedule A hereto or described in clause (iii) or (iv) above if prior to engaging in such activity, Executive has disclosed such activity to theBoard and received written approval to engage in such activity from the Board. Executive may engage in personal investments without disclosure to orwritten approval from the Board provided Executive is not required or expected to serve as a board member, advisor or consultant and Executive shall, atany time, own beneficiallyless than 2% of the outstanding securities of any issuer and such personal investment shall not otherwise interfere with Executive’s performance of dutieshereunder and/or the provisions of Executive’s written agreements with Employer.3.4 Executive Representations. Executive represents that Executive is not subject to any restrictive covenant, confidentiality agreement, orany other agreement that would prevent Executive from accepting employment with Employer, and based on the information provided to Employer byExecutive, Employer accepts such representation.4. Compensation.4.1 Base Salary. Employer shall pay to Executive a base salary for all services to be rendered by Executive under this Agreement (the “BaseSalary”), which Base Salary shall be paid in accordance with Employer’s normal payroll schedule, procedures and policies (which schedule, procedures andpolicies may be modified from time to time) and subject to applicable deductions as required by law. Employer shall review Executive’s salary on an annualbasis and may, in its discretion, consider and declare from time to time increases in the Base Salary that it pays Executive. Any and all increases inExecutive’s salary pursuant to this section shall cause the level of Base Salary to be increased by the amount of each such increase for purposes of thisAgreement. The increased level of Base Salary as provided in this section shall become the level of Base Salary for the remainder of the term of thisAgreement unless there is a further increase in Base Salary as provided herein. Notwithstanding the foregoing, the Base Salary of Executive may bedecreased provided it is done so in proportion to decreases in Base Salary of the entire executive team of the Company.4.2 Annual Bonus. The Executive will be eligible to participate in the Employer’s annual cash incentive compensation plan on substantiallythe same terms as other executive officers. Company-wide and individual performance objectives (“MBOs”) will be established by the CompensationCommittee. Target incentives do not constitute a promise of payment and the Executive’s actual bonus, if any, will depend in part on the Employer’sperformance and the Compensation Committee’s discretion in assessing the Executive’s individual performance in relation to his or her MBOs and theoverall performance and status of the Company. To qualify for the incentive bonus, the Executive must remain employed with the Company through thedate that the incentive bonus is paid in accordance with the Employer’s normal practice.4.3 Participation in Benefit Plans. Executive shall be entitled to participate in all employee benefit plans or programs offered to other seniorexecutives from time to time (to the extent that Executive meets the requirements for each such plan or program), including participation in any healthinsurance plan, disability insurance plan, dental plan, eye care plan, 401(k) plan, life insurance plan, or other similar plans (all such benefits, the “BenefitPlans”). Some or all of the benefits may be provided by Employer’s leasing agent TriNet (or its successor(s) or assign(s).4.4 Expenses. Employer shall reimburse Executive for all ordinary and necessary business expenses reasonably incurred by him in theperformance of Executive’s duties under this Agreement, subject to the presentment and approval of appropriate itemized expense statements, receipts,vouchers or other supporting documentation in accordance with Employer’s normal policies for expense verification in effect from time to time. 24.5 Paid Time Off. Executive shall be entitled to paid time off pursuant to Employer’s standard paid time off policies in the same manner asthe Company’s other Senior Executives. Unused paid time off may be carried over from year to year, but in no case may more than 45 days (360 hours) ofunused paid time off be accrued.4.6 Total Compensation. Executive shall not receive any other compensation or benefits other than as provided in Sections 4.1 through 4.5hereof.5. Payments Upon Termination.5.1 Voluntary Resignation without Good Reason. Executive may terminate Executive’s employment by providing Employer with 30 days’advance written notice. If Executive terminates Executive’s employment (other than for Good Reason (either prior to or within 12 months following aChange in Control) or by reason of Disability, each as defined below) (i) Employer shall pay to Executive the Accrued Obligations (as defined below), (ii)Executive’s participation in the Benefit Plans shall terminate as of the Termination Date, and (iii) Employer shall have no other obligations to Executiveunder this Agreement, other than those provided in this Section 5.1.(a) For purposes of this Agreement, “Accrued Obligations” means: (i) Executive’s earned and unpaid Base Salary through theTermination Date; (ii) reimbursement for any reimbursable business expenses incurred by Executive through the Termination Date inaccordance with Section 4.4; and (iii) Executive’s accrued but unused paid time off as of the Termination Date. The amounts payable pursuantto clauses (i) and (iii) hereof shall be paid no later than sixty (60) days following Executive’s Termination Date.(b) For purposes of this Agreement, “Termination Date” means: the effective date of Executive’s “separation from service” as definedin Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).5.2 Termination by Employer For Cause. If Executive is terminated for Cause: (i) Employer shall pay to Executive the Accrued Obligations,(ii) Executive’s participation in the Benefit Plans shall terminate as of the Termination Date, and (iii) Employer shall have no further obligations toExecutive under this Agreement, other than those provided in this Section 5.2. For purposes of this Agreement, “Cause” means: (a) Executive’s failure tosubstantially perform Executive’s duties with the Company (if Executive has not cured such failure to substantially perform, if curable, within thirty(30) days after Executive’s receipt of written notice thereof from the Board that specifies the conduct constituting Cause under this clause (a)); (b)Executive’s willful misconduct, or gross negligence in the performance of Executive’s duties hereunder; (c) the conviction of Executive for, or the enteringby Executive of a guilty plea or plea of no contest with respect to, any crime that constitutes a felony or involves fraud, dishonesty or moral turpitude;(d) Executive’s commission of an act of fraud, embezzlement or misappropriation against the Company; (e) Executive’s material breach of the fiduciaryduty owed by Executive to the 3Company; (f) Executive’s engaging in any improper conduct that has or is likely to have an adverse economic or reputational impact on the Company; or(g) Executive’s material breach of this Agreement.5.3 Termination by Employer Without Cause or by Executive for Good Reason. If Executive’s employment is terminated (a) by Employerwithout Cause (other than upon Disability or death) or (b) by Executive for Good Reason either prior to a Change in Control or within twelve (12) monthsfollowing a Change in Control: (i) Employer shall pay to Executive the Accrued Obligations, (ii) Executive shall be entitled to receive the SeveranceBenefits (as defined below in Section 5.5 and subject to the conditions described therein and in Section 5.6), and (iii) Employer shall have no furtherobligations to Executive under this Agreement, other than those provided in this Section 5.3. For purposes of this Agreement, “Good Reason” means theoccurrence of any of the following events (without Executive’s consent):(a) a material adverse change in Executive’s functions, duties, or responsibilities with the Company which change would causeExecutive’s position to become one of materially lesser responsibility, importance, or scope;(b) a relocation of the Executive’s principal workplace to a location more than 50 miles from the location of such workplaceimmediately prior to the Change in Control without the Executive’s express written consent;(c) a material diminution in the Executive’s compensation or benefits without the express written consent of the Executive, other thanan across-the-board reduction in compensation levels that applies to all senior executives generally; or(d) a material breach of this Agreement by the Company.Notwithstanding the foregoing, no such event shall constitute “Good Reason” unless (a) Executive shall have given written notice of such event to theCompany within ninety (90) days after the initial occurrence thereof, (b) the Company shall have failed to cure the condition constituting Good Reasonwithin thirty (30) days following the delivery of such notice (or such longer cure period as may be agreed upon by the parties), and (c) Executive terminatesemployment within thirty (30) days after expiration of such cure period.5.4 Termination by Employer due to Executive’s Death or Disability. If Executive’s employment is terminated by reason of death orDisability (as defined below): (i) Employer shall pay to Executive the Accrued Obligations, (ii) Executive’s participation in the Benefit Plans shall terminateas of the Termination Date (except to the extent Executive is eligible for continued disability benefits under the applicable Employer plan), and(iii) Employer shall have no further obligations to Executive under this Agreement, other than those provided in this Section 5.4. For purposes of thisAgreement, “Disability” means Executive being determined to be totally disabled by the Social Security Administration or Executive’s inability to engage inany substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can beexpected to last for a continuous period of not less than twelve months. 45.5 Severance Benefits. “Severance Benefits” means:(a) The payment to Executive of the Severance Amount in a lump sum immediately following the Termination Date.(b) For this purpose, “Severance Amount” means:(i) In the event that Executive’s employment is terminated without Cause or by the Executive for Good Reason, in each case,within twelve (12) months following a Change in Control, an amount equal to the sum of (A) the product of 1.0 multiplied byExecutive’s annual Base Salary plus (B), the product of 1.0 multiplied by the Executive’s target bonus in effect immediately prior to theDate of Termination.(ii) In the event that Executive’s employment is terminated without Cause (other than within twelve (12) months of a Change inControl), an amount equal to the sum of (A) the product of 0.75 multiplied by Executive’s annual Base Salary plus (B), the product ofthe Executive’s target bonus in effect immediately prior to the Date of Termination multiplied by a fraction equal to the quotient of thenumber of days during such year on which the Executive was employed by the Company, divided by 365.(c) The continuation of Executive’s participation in the Company’s medical, dental, and vision benefit plans at the same premium costto Executive as charged to Executive immediately prior to the Termination Date for a period of (i) in the event that the Executive’semployment is terminated without Cause or by the Executive for Good Reason, in each case, within twelve (12) months following a Change inControl, twelve (12) months immediately following the Termination Date or (ii) in the event that the Executive’s employment is terminatedwithout Cause (other than within twelve (12) months of a Change in Control) nine (9) months immediately following the Termination Date (ineach case, the “Continuation Period”), or if earlier, until Executive obtains other employment which provides the same type of benefit;provided, however, that (i) it is understood and agreed that such continued medical, dental and vision benefits may at the election of theCompany be provided by Executive electing the continuation of such coverage pursuant to COBRA with the Company reimbursing Executivefor COBRA premiums to the extent required so that Executive’s premium cost for the coverage in effect for Executive prior to the TerminationDate is substantially the same as immediately prior to the Termination Date, and (ii) if the Company determines, in its reasonable judgment,that providing medical, dental, and/or vision benefits in accordance with the preceding provisions of this Section 5.5(c) would result in aviolation of applicable law, the imposition of any penalties under applicable law, or adverse tax consequences for participants covered by theCompany’s medical, dental, and/or vision plans, the Company may terminate such 5coverage (or reimbursement) with respect to Executive and instead pay to Executive taxable cash payments at the same time and in the sameamounts as the Company would have paid as premiums (or as COBRA premium reimbursements) to provide such coverage.(d) Acceleration of vesting as follows:(i) In the event that Executive’s employment is terminated by Employer without Cause or by Executive for Good Reason, ineach case, within twelve (12) months following a Change in Control: each stock option, restricted stock unit, restricted stock award orother stock-based compensatory award granted by the Company to Executive that is outstanding as of the Termination Date and is notfully vested as of the date of the Termination Date (each an “Award”), shall become fully vested as of the date Executive provides theCompany with the Irrevocable Release provided for in this Section 5.5 within the period prescribed therein.(ii) In the case of any Award the vesting of which is contingent in whole or in part upon the attainment of any Company ormarket performance condition that has not yet been satisfied, such condition shall be deemed to have been satisfied as of the date oftermination at the level that would result in vesting of 100% of the number of shares stated as the target award.(e) For purposes of this Agreement, “Change of Control” means, and shall be deemed to have occurred, if:(i) any Person, excluding (i) employee benefit plans of the Company or any of its Affiliates, is or becomes the “beneficialowner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, which Rules shall apply for purposes of this clause (a) whether ornot the Company is subject to the Exchange Act), directly or indirectly, of Company securities representing more than fifty percent(50%) of the combined voting power of the Company’s then outstanding securities (“Voting Power”);(ii) the Company consummates a merger, consolidation, share exchange, division or other reorganization or transaction of theCompany (a “Fundamental Transaction”) with any other corporation, other than a Fundamental Transaction that results in the votingsecurities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by beingconverted into voting securities of the surviving entity) at least fifty percent (50%) of the combined Voting Power immediately aftersuch Fundamental Transaction of (i) the Company’s outstanding securities, (ii) the surviving entity’s outstanding securities, or (iii) inthe case of a division, the outstanding securities of each entity resulting from the division; 6(iii) the stockholders of the Company approve a plan of complete liquidation or winding-up of the Company or theconsummation of the sale or disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets;or(iv) during any period of 24 consecutive months, individuals who at the beginning of such period constituted the Board(including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved bya vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of such period or whoseappointment, election or nomination was previously so approved or recommended) cease for any reason to constitute at least a majorityof the Board.5.6 Required Delivery of Irrevocable Release; Compliance with Section 6 Obligations. Notwithstanding the provisions of Section 5.5, as acondition to entitlement to the Severance Benefits, Executive must provide to the Company an Irrevocable Release and Noncompete Affirmation not laterthan the sixtieth day after the Date of Termination; provided however that if the sixty day period begins in one calendar year and ends in a subsequentcalendar year, any payment to be made or benefit to be provided upon receipt of the Irrevocable Release and Noncompete Affirmation shall not be made orprovided until the subsequent year. In the event Executive fails to provide an Irrevocable Release and Noncompete Affirmation to the Company within suchsixty day period, the Company will immediately cease to pay or provide any further Severance Benefits, no accelerated vesting of stock options or otherawards pursuant to Section 5.5(d) shall occur, and Executive shall be obligated to immediately repay to the Company all previously paid or providedSeverance Benefits. “Irrevocable Release and Noncompete Affirmation” means a confidential separation agreement, release of claims and affirmation ofnoncompete, in form and substance substantially similar to the attached Exhibit A that has been executed by Executive, delivered to the Company, andbecome irrevocable by Executive. In addition, in the event that Executive breaches the obligations under Section 6 of this Agreement at any time during theContinuation Period, Executive will cease to be entitled to any further Severance Benefits. 76. Promises and Covenants Regarding Confidential Information and Goodwill; Inventions and Assignment; Restrictive Covenants.6.1 Confidential Information and Goodwill. In consideration of Executive’s promises and covenants contained in this Agreement, includingExecutive’s promise and covenant not to disclose Confidential Information, Employer will provide Executive with Confidential Information. In furtherconsideration of Executive’s promises and covenants contained in this Agreement, including Executive’s promise and covenant to utilize the Goodwillexclusively for the benefit of Employer, Employer will allow Executive to receive Confidential Information concerning the Company’s customers, labs,vendors and employees and, to the extent required to fulfill Executive’s duties, the Company will permit Executive to represent the Company on its behalfwith such persons. To the extent that Executive’s duties involve sales or customer relations, the Company will permit Executive to utilize the Goodwill inExecutive’s sales efforts and will provide sales support to Executive similar to that which it provides to its sales representatives.6.2 Duties. While employed by Company, Executive shall perform the duties required of Executive hereunder and shall devote Executive’sbest efforts and exclusive business time, energy and skill to performing such duties; not make any disparaging remarks regarding Company to any personwith whom Company has business relations, including any employee or vendor of Company; use the Goodwill solely for the benefit of Company; and notinterfere in such Goodwill, either during or following Executive’s employment with Company.6.3 Delivery of Company Property. Executive recognizes that all documents, magnetic media and other tangible items which containConfidential Information are the property of Company exclusively. Upon request by Company or termination of Executive’s employment with Company,Executive shall promptly return to Company all Confidential Information and Company Property within Executive’s possession and control, and shallrefrain from taking any Confidential Information or Company Property or allowing any Confidential Information or Company Property to be taken fromCompany; and immediately return to Company all information pertaining to Company or Company Property in Executive’s possession.6.4 Promise and Covenant Not to Disclose. The parties acknowledge that Company is the sole and exclusive owner of ConfidentialInformation, and that Company has legitimate business interests in protecting Confidential Information. The parties further acknowledge that Company hasinvested, and continues to invest, considerable amounts of time and money in obtaining, developing, and preserving the confidentiality of ConfidentialInformation and that, by reason of the trust relationship arising between Executive and Company, Executive owes Company a fiduciary duty to preserve andprotect Confidential Information from all unauthorized disclosure and unauthorized use. Executive shall not, directly or indirectly, disclose ConfidentialInformation to any third party (except to Executive’s attorneys, the Company’s personnel, other persons designated in writing by the Company, or except asotherwise provided by law) or use Confidential Information for any purpose other than for the direct benefit of Company while in Company’s employ andthereafter.6.5 Inventions and Assignment. Executive agrees that he will promptly disclose to the Company any and all Company Inventions and thatExecutive hereby irrevocably assigns to the Company all ownership rights in and to any and all Company Inventions. During Executive’s 8employment or at any time thereafter, upon request of the Company, Executive will sign, execute and deliver any and all documents or instruments,including, without limitation, patent applications, declarations, invention assignments and copyright assignments, and will take any other action which theCompany shall deem necessary to perfect in the Company trademark, copyright or patent rights with respect to Inventions, or to otherwise protect theCompany’s trade secrets and proprietary interests. The term “Inventions” means discoveries; developments; trade secrets; processes; formulas; data; lists;software programs; graphics; artwork; logos, and all other works of authorship, ideas, concepts, know-how, designs, and techniques, whether or not any ofthe foregoing is or are patentable, copyrightable, or registrable under any intellectual property laws or industrial property laws in the United States. The term“Company Inventions” means all Inventions that (a) relate to the business or proposed business of the Company or any of its predecessors or that arediscovered, developed, created, conceived, reduced to practice, made, learned or written by Executive, either alone or jointly with others, in the course ofExecutive’s employment; (b) utilize, incorporate or otherwise relate to Confidential Information; or (c) are discovered, developed, created, conceived,reduced to practice, made, or written by him using property or equipment of the Company or any of its predecessors. Executive agrees to promptly and fullycommunicate in writing to the Company (to such department or officer of the Company and in accordance with such procedures as the Company may directfrom time to time) any and all Company Inventions. Executive acknowledges and agrees that any work of authorship by Executive or others comprisingCompany Inventions shall be deemed to be a “work made for hire,” as that term is defined in the United States Copyright Act (17 U.S.C. § 101 (2000)). Tothe extent that any such work of authorship may not be deemed to be a work made for hire, Executive hereby irrevocably assigns any ownership rightsExecutive may have in and to such work to the Company. This Agreement does not apply to any Inventions Executive made before Executive’s employmentwith the Company. To clearly establish Executive’s rights, Executive has listed on Exhibit B any Inventions, whether or not patentable or copyrightable andwhether or not reduced to practice, made by him prior to Executive’s employment with the Company that are owned by Executive (“Prior Inventions”),together with the approximate dates of their creation. If no such list is attached, Executive represents that there are no Prior Inventions.6.6 Other Promises and Covenants. In consideration for the benefits specifically provided for in this Section 6.6 and that may otherwise beprovided pursuant to this Agreement, including but not limited to the benefits payable pursuant to Section 5.5, Executive hereby promises and covenants asfollows.(a) In consideration of payment to Executive of $500.00, less applicable withholdings, Executive agrees that during Executive’semployment with Company and, unless this Section 6.6(a) is waived by the Company in writing, for a period of one year followingtermination of employment for any reason other than the Company’s termination of Executive’s employment without Cause (the“Non-Competition Period”), Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assist othersin any of the following activities (except on behalf of Company):(i) (whether as principal, agent, partner or otherwise) engage in, own, manage, operate, control, finance, invest in, participate in,or otherwise carry on, or be employed by, associated with, or in any manner 9connected with, lend such Executive’s name to, lend Executive’s credit to, or render services or advice to a Competing Businessanywhere in the Geographic Area; or(ii) provide or develop any products, technology or services that are the same or Substantially Similar to the products,technology and services provided or developed by the Company or any of its Affiliates.(b) Unless Section 6.6(a) is waived by the Company in writing, as mutually-agreed upon consideration for the post-employmentrestriction described herein, the Company will pay Executive $10,000.00 within one month of Executive’s date of termination.Notwithstanding the foregoing, in the event that Executive has breached his or her fiduciary duty to the Company or has unlawfully taken,physically or electronically, property belong to the Company, then the Non-Competition Period shall be extended for an additional period ofone year.(c) During Executive’s employment with Company and for a period of two years following termination of employment for any reason(the “Non-Solicitation Period”), Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assistothers in any of the following activities:(i) induce or attempt to induce any customer, agent, supplier, licensee, or business relation of the Company or any of itsAffiliates to cease doing business with the Company or any of its Affiliates, or in any way interfere with the relationship between anycustomer, supplier, licensee, or business relation of the Company or any of its Affiliates; or(ii) on behalf of a Competing Business, solicit or attempt to solicit the business or patronage of any Person who is a customer oragent of the Company or any of its Affiliates, whether or not Executive had personal contact with such Person.(iii) solicit, encourage, or take any other action which is intended to induce any employee, independent contractor or agent ofthe Company or any of its Affiliates to terminate Executive’s employment or other business relationship with the Company or suchAffiliate;(iv) in any way interfere in any manner with the employment or other business relationship between the Company and/or any ofits Affiliates, on the one hand, and any employee, independent contractor or agent of the Company or such Affiliate, on the other hand;or(v) employ, or otherwise engage as an employee, independent contractor or otherwise, any individual who was an employee,independent contractor, agent or was otherwise affiliated with the Company or any of its Affiliates from the period beginning one yearprior to the date on which Executive became employed and continuing through the expiration of the Non-Solicitation Period. 10provided, however, that nothing set forth in this Section 6 shall prohibit Executive from owning, as a passive investment, not in excess of five percent (5%)in the aggregate of any class of capital stock of any corporation if such stock is publicly traded and listed on any national or regional stock exchange orreported on the Nasdaq Stock Market.6.7 Definitions. For purposes hereof:(a) “Affiliate” means, with respect to any Entity, any Entity that, directly or indirectly through one or more intermediaries, controls, iscontrolled by or under common control with, such Entity.(b) “Agreement” means this Employment Agreement.(c) “Company Business” means (i) any business related to providing services related to, manufacturing, selling or distributing genetherapy products using adeno-associated virus technology for the treatment of inherited and acquired diseases or conducting research ordevelopment with regard thereto; and (ii) any other business that the Company is actively engaged in researching, developing or marketing atthe time of the termination of Executive’s employment, provided that this clause (ii) shall only apply if Executive is involved with theresearch, development, or marketing of that other business.(d) “Company Property” means all physical materials, documents, information, keys, computer software and hardware, includinglaptop computers and mobile or handheld scheduling computers, manuals, data bases, product samples, tapes, magnetic media, technical notesand any other equipment or items which Company provides for or to Executive or which otherwise belongs to the Company, and thosedocuments and items which Executive may develop or help develop while in Company’s employ, whether or not developed during regularworking hours or on Company’s premises. The term “Company Property” shall include the original of such materials, any copies thereof, anynotes derived from such materials, and any derivative work of such materials.(e) “Competing Business” means any other Entity engaged in the Company Business, other than the Company and its Affiliates.(f) “Confidential Information” means the trade secrets and other information of Company, including but not limited to (i) the customerlists, customer contact information, customer purchase information, pricing information, strategic and marketing plans, compilations ofcustomer information, names of employees, contracts with third parties, training, financial and marketing books, sales projections, internalemployer databases, reports, manuals and information including information related to Company, its Affiliates or its customers, includingthose documents and items which any employee may develop or help develop while 11in the employ of the Company or any of its Affiliates, whether or not developed during regular working hours or on the premises of theCompany or such Affiliate; (ii) the identity, skills, personnel file information, performance appraisals and compensation of job applicants,employees, contractors, and consultants; (iii) specialized training; (iv) source code, scripts, user screens, reports or any other informationpertaining to the internal information technology or network of the Company and/or its Affiliates; and (v) information related to inventionsowned by the Company or any of its Affiliates or licensed from third parties; and unless the context requires otherwise, the term “ConfidentialInformation” includes the original of such materials, any copies thereof, any notes derived from such materials, and any derivative work ofsuch materials. The term “Confidential Information” does not include (1) information that was or becomes generally available publicly otherthan through disclosure by Executive, or (2) is required to be disclosed to any governmental agency or self-regulatory body or is otherwiserequired to be disclosed by law. Unless the context requires otherwise, the term “Confidential Information” shall include the original of suchmaterials, any copies thereof, any notes derived from such materials, and any derivative work of such materials.(g) “Entity” means and includes any person, partnership, association, corporation, limited liability company, trust, unincorporatedorganization or any other business entity or enterprise.(h) “Geographic Area” means those states in which the Company or any of its subsidiaries conducts business or in which its productsare being sold or marketed at the time of the termination of Executive’s employment.(i) “Goodwill” means the value of the relationships between the Company and its agents, customers, vendors, labs, and employees.(j) “Substantially Similar” means substantially similar in function or capability or otherwise competitive to the products or servicesbeing developed, manufactured or sold by the Company during and/or at the end of Executive’s employment, or are marketed to substantiallythe same type of user or customer as that to which the products and services of the Company are marketed or proposed to be marketed.6.8 Acknowledgements Regarding Other Promises and Covenants. With regard to the promises and covenants set forth herein, Executiveacknowledges and agrees that:(a) the restrictions are ancillary to an otherwise enforceable agreement including the provisions of this Agreement regarding thedisclosure, ownership and use of the Confidential Information and Goodwill of Company;(b) the limitations as to time, geographical area, and scope of activity to be restricted are reasonable and acceptable to Executive, anddo not impose any greater restraint than is reasonably necessary to protect the Goodwill and other legitimate business interests of Company; 12(c) the performance by Executive, and the enforcement by Company, of such promises and covenants will cause no undue hardship onExecutive;(d) the time periods covered by the promises and covenants will not include any period(s) of violation of, or any period(s) of timerequired for litigation brought by Company to enforce any such promise or covenant, it being understood that the extension of time provided inthis paragraph may not exceed two (2) years.6.9 Duty to Give Notice of Agreement. During employment by Company and the period of any post-employment obligation applicablehereunder, Executive shall provide written notice to any prospective employer of Executive’s obligations under this Agreement, and shall provide a truecopy hereof to such prospective employer at the outset of any communications about employment.6.10 Independent Elements. The parties acknowledge that the promises and covenants contained in Section 6 above are essentialindependent elements of this Agreement and that, but for Executive agreeing to comply with them, Company would not employ Executive. Accordingly, theexistence or assertion of any claim by Executive against Company, whether based on this Agreement or otherwise, shall not operate as a defense toCompany’s enforcement of the promises and covenants in Section 6. An alleged or actual breach of the Agreement by Company will not be a defense toenforcement of any such promise or covenant, or other obligations of Executive to Company. The promises and covenants in Section 6 will remain in fullforce and effect whether Executive is terminated by Company or voluntarily resigns.6.11 Remedies for Breach of Agreement. Executive acknowledges that Executive’s breach of any promise or covenant contained inSection 6 will result in irreparable injury to Company and that Company’s remedies at law for such a breach will be inadequate. Accordingly, Executiveagrees and consents that Company, in addition to all other remedies available at law and in equity, shall be entitled to both preliminary and permanentinjunctions to prevent and/or halt a breach or threatened breach by Executive of any such promise or covenant, and Executive waives the requirement of theposting of any bond in connection with such injunctive relief. Executive further acknowledges and agrees that the promises and covenants contained inSection 6 are enforceable, reasonable, and valid.7. Miscellaneous.7.1 Governing Law; Arbitration(a) This Agreement is made under and shall be governed by and construed in accordance with the laws of Florida, without regard to itsconflicts of law principles.(b) With respect to claims by the Company against Executive related to Executive’s threatened or actual breach of Section 6 of thisAgreement, each Party hereby irrevocably agrees that all actions or proceedings concerning such disputes 13may be brought by the Company in (a) the United States District Court for the Northern District of Florida; or (b) in any court of the State ofFlorida sitting in Alachua County, provided that the United States District Court lacks subject matter jurisdiction over such action orproceeding. Executive consents to jurisdiction of and venue in the courts in the State of Florida set forth in this Section, and hereby waives tothe maximum extent permitted by applicable law any objection which Executive may have based on improper venue or forum nonconveniens.(c) Except to the extent provided for in subsection (b) above, the Company and Executive agree that any claim, dispute or controversyarising under or in connection with this Agreement, or otherwise in connection with Executive’s employment by the Company or terminationof his employment (including, without limitation, any such claim, dispute or controversy arising under any federal, state or local statute,regulation or ordinance or any of the Company’s employee benefit plans, policies or programs) shall be resolved solely and exclusively bybinding, confidential, arbitration. The arbitration shall be held in Gainesville, Florida (or at such other location as shall be mutually agreed bythe parties). The arbitration shall be conducted in accordance with the Commercial Rules of the American Arbitration Association (the“AAA”) in effect at the time of the arbitration, including the Expedited Procedures. All fees and expenses of the arbitration, including atranscript if either requests, shall be borne equally by the parties. Each party is responsible for the fees and expenses of its own attorneys,experts, witnesses, and preparation and presentation of proofs and post-hearing briefs (unless the party prevails on a claim for which attorney’sfees are recoverable under law). In rendering a decision, the arbitrator shall apply all legal principles and standards that would govern if thedispute were being heard in court. This includes the availability of all remedies that the parties could obtain in court. In addition, all statutes oflimitation and defenses that would be applicable in court, will apply to the arbitration proceeding. The decision of the arbitrator shall be setforth in writing, and be binding and conclusive on all parties. Any action to enforce or vacate the arbitrator’s award shall be governed by theFederal Arbitration Act, if applicable, and otherwise by applicable state law. If either the Company or Executive improperly pursues anyclaim, dispute or controversy against the other in a proceeding other than the arbitration provided for herein, the responding party shall beentitled to dismissal or injunctive relief regarding such action and recovery of all costs, losses and attorney’s fees related to such action.7.2 Entire Agreement. This Agreement and the documents referenced herein contain the entire agreement of the parties relating to theemployment of Executive by Employer and the ancillary matters discussed herein and supersedes all prior agreements, negotiations and understandings withrespect to such matters, including, without limitation, any term sheet between the parties hereto with respect to such matters, and the parties hereto havemade no agreements, representations or warranties relating to such employment or ancillary matters which are not set forth herein. 147.3 Withholding Taxes. Employer may withhold from any compensation and Benefits payable under this Agreement all federal, state, city orother taxes as shall be required pursuant to any law or governmental regulation or ruling.7.4 Golden Parachute Limit. Notwithstanding any other provision of this Agreement, in the event that any portion of the Severance Benefitsor any other payment or benefit received or to be received by Executive (whether pursuant to the terms of this Agreement or any other plan, arrangement oragreement) (collectively, the “Total Benefits”) would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, asamended (the “Code”) (the “Excise Tax”), the Total Benefits shall be reduced to the extent necessary so that no portion of the Total Benefits is subject tothe Excise Tax; provided, however, that no such reduction in the Total Benefits shall be made if by not making such reduction, Executive’s RetainedAmount (as hereinafter defined) would be greater than Executive’s Retained Amount if the Total Benefits are so reduced. All determinations required to bemade under this Section 7.4 shall be made by tax counsel selected by the Company and reasonably acceptable to Executive (“Tax Counsel”), whichdeterminations shall be conclusive and binding on Executive and the Company absent manifest error. All fees and expenses of Tax Counsel shall be bornesolely by the Company. Prior to any reduction in Executive’s Total Benefits pursuant to this Section 7.4, Tax Counsel shall provide Executive and theCompany with a report setting forth its calculations and containing related supporting information. In the event any such reduction is required, the TotalBenefits shall be reduced in the following order: (i) the Severance Amount (in reverse order of payment), (iii) any portion of the Total Benefits that are notsubject to Section 409A of the Code (other than Total Benefits resulting from any accelerated vesting of equity awards), (iv) other Total Benefits that aresubject to Section 409A of the Code in reverse order of payment, and (v) Total Benefits that are not subject to Section 409A and arise from any acceleratedvesting of any equity awards. “Retained Amount” shall mean the present value (as determined in accordance with sections 280G(b)(2)(A)(ii) and 280G(d)(4)of the Code) of the Total Benefits net of all federal, state and local taxes imposed on Executive with respect thereto.7.5 Compliance With Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code (includingthe exceptions thereto), to the extent applicable, and shall be interpreted and administered accordingly. If any provision contained in this Agreementconflicts with the requirements of Section 409A of the Code (or the exemptions intended to apply under this Agreement), this Agreement shall be deemed tobe reformed to comply with the requirements of Section 409A of the Code (or applicable exemptions thereto). Notwithstanding anything to the contraryherein, for purposes of determining Executive’s entitlement to the Severance Benefits under Section 5 hereof, (a) Executive’s employment shall not bedeemed to have terminated unless and until Executive incurs a “separation from service” as defined in Section 409A of the Code, and (b) the effective dateof any termination or resignation of employment (or any similar term) shall be the effective date of Executive’s separation from service. Reimbursement ofany expenses provided for in this Agreement shall be made in accordance with the Company’s policies (as applicable) with respect thereto as in effect fromtime to time (but in no event later than the end of calendar year following the year such expenses were incurred) and in no event shall (i) the amount ofexpenses eligible for reimbursement hereunder during a taxable year affect the expenses eligible for reimbursement in any other taxable year or (ii) the rightto reimbursement be subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary herein, if a payment or benefit underthis Agreement is 15due to a “separation from service” for purposes of the rules under Treas. Reg. § 1.409A-3(i)(2) (payments to specified employees upon a separation fromservice) and Executive is determined to be a “specified employee” (as determined under Treas. Reg. § 1.409A-1(i)), such payment shall, to the extentnecessary to comply with the requirements of Section 409A of the Code, be made on the later of (x) the date specified by the foregoing provisions of thisAgreement or (y) the date that is six (6) months after the date of Executive’s separation from service (or, if earlier, the date of Executive’s death). Anyinstallment payments that are delayed pursuant to the provisions of this section shall be accumulated and paid in a lump sum on the first day of the seventhmonth following Executive’s separation from service (or, if earlier, upon Executive’s death) and the remaining installment payments shall begin on suchdate in accordance with the schedule provided in this Agreement. To the extent permitted by Section 409A, each payment hereunder shall be deemed to be aseparate payment for purposes of Section 409A of the Code.7.6 Amendments. No amendment or modification of the terms of this Agreement shall be valid unless made in writing and signed by bothExecutive and Employer.7.7 Severability; Reformation. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effectiveand valid under applicable Law but if any provision of this Agreement is held to be invalid, illegal or unenforceable under any applicable Law or rule, thevalidity, legality and enforceability of the other provisions of this Agreement will not be affected or impaired thereby. If any provision of this Agreement isfound invalid, illegal or unenforceable because it is too broad in scope, too lengthy in duration or violates any Law or regulation, it shall be reformed bylimiting its scope, limiting its duration or construing it to avoid such violation (as the case may be) while giving the greatest effect to the intent of the partiesas is legally permissible.7.8 No Waiver. No waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signedby the party against whom such waiver is sought to be enforced, and any such waiver shall be effective only in the specific instance and for the specificpurpose for which given.7.9 Assignment; No Third Party Beneficiary. This Agreement is a personal service contract, and shall not be assignable by Executive. ThisAgreement shall be assignable by Employer to any successor to the business of Employer, without the written consent of Executive; provided, however, thatthe assignee or transferee is the successor to all or substantially all of the business assets of Employer and such assignee or transferee expressly assumes allthe obligations, duties, and liabilities of Employer set forth in this Agreement. Any purported assignment of this Agreement in violation of this Section 7.9shall be null and void. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permittedassigns, and no other Person shall have any right, benefit or obligation hereunder.7.10 Counterparts; Facsimile Signatures. This Agreement may be executed in separate counterparts, each of which will be an original and allof which taken together shall constitute one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart. Afacsimile signature by any party on a counterpart of this Agreement shall be binding and effective for all purposes. Such party shall subsequently deliver tothe other party an original, executed copy of this Agreement; provided, however, that a failure of such party to deliver an original, executed copy shall notinvalidate Executive’s or its signature. 167.11 Notices. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any suchnotice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via areputable nationwide overnight courier service, in each case addressed as follows: If to the Company, to: AGTC14193 NW 119th TerraceAlachua, FL 32615Attention: Director of Human ResourcesAttention: General CounselIf to the Executive, to: Mark S. Shearman**************or to such other address as either the Company or the Executive may have furnished to the other in writing in accordance herewith). Any such notice,instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receiptrequested, postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice,instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be deemed to have beenduly delivered unless and until it actually is received by the party for whom it is intended.7.12 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning orinterpretation of this Agreement.7.13 Cumulative Remedies. The rights and remedies of the parties hereunder are cumulative and not exclusive of any rights or remedies anyparty hereto may otherwise have.7.14 Expenses Relating to this Agreement. Each party shall pay its or Executive’s own expenses incident to the negotiation, preparation andexecution of this Agreement.7.15 Acknowledgement. Executive acknowledges that Executive has been advised to and has been given the opportunity to consult withlegal counsel for the purposes of reviewing this Agreement, including the non-competition and non-solicitation covenants contained herein. Executivefurther acknowledges that he or she has been given 10 business days to consider the terms of this Agreement. If Executive executes this Agreement prior tothe end of the 10 business day period, he or she agrees and acknowledges that such execution was a knowing and voluntary waiver of his or her right toconsider this Agreement for the full 10 business day period. 17IN WITNESS WHEREOF, Executive and Employer have executed this Employment Agreement as of the date set forth in the first paragraph. APPLIED GENETIC TECHNOLOGIESCORPORATIONBy: /s/ Susan B. Washer Name: Susan B. Washer Title: President and CEODate: August 29, 2019EXECUTIVE /s/ Mark S. ShearmanName: Mark S. ShearmanDate: August 26, 2019 18Schedule A - Permitted Outside ActivitiesPursuant to Section 3.3 of the Employment Agreement, Executive has disclosed and the Board has approved his participation in the following outsideactivities: 19Exhibit AGENERAL RELEASE AND WAIVER OF ALL CLAIMS(INCLUDING OLDER WORKER BENEFITS PROTECTION ACT CLAIMS ANDAFFIRMATION OF NONCOMPETE)For good and valuable consideration, including without limitation the compensation and benefits set forth in the Employment Agreement dated ,2019 (the “Agreement”) between the undersigned and Applied Genetic Technologies Corporation (the “Company”), to which this General Release andWaiver of All Claims is attached, the terms of which Agreement shall survive this General Release and Waiver of Claims, the undersigned, on behalf of andfor himself or herself and his or her heirs, administrators, executors, representatives, estates, attorneys, insurers, successors and assigns (hereafter referred toseparately and collectively as the “Releasor”), hereby voluntarily releases and forever discharges the Company, and its subsidiaries (direct and indirect),affiliates, related companies, divisions, predecessor and successor companies, and each of its and their present, former, and future shareholders, officers,directors, employees, agents, representatives, attorneys, insurers and assigns (collectively as “Releasees”), jointly and individually, from any and all actions,causes of action, claims, suits, charges, complaints, contracts, covenants, agreements, promises, debts, accounts, damages, losses, sums of money,obligations, demands, and judgments all of any kind whatsoever, known or unknown, at law or in equity, in tort, contract, by statute, or on any other basis,for contractual, compensatory, punitive or other damages, expenses (including attorney’s fees and cost), reimbursements, or costs of any kind, which theundersigned employee ever had, now has, or may have, from the beginning of the world to the date of this Release, known or unknown, in law or equity,whether statutory or common law, whether federal, state, local or otherwise, including but not limited to any and all claims arising out of or in any wayrelated to the undersigned’s engagement by the Company (including the hiring or termination of that engagement), or any related matters including, but notlimited to claims, if any arising under the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefits Protection Act; theCivil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Family and Medical Leave Act of 1993, as amended; the ImmigrationReform and Control Act of 1986; the Americans with Disabilities Act of 1990, as amended; the Employee Retirement Income Security Act (ERISA), asamended; the Florida Civil Rights Act, FLA. STAT. Sections 760.01 - 760.11; FLA STAT. Sections 448.01 et seq.; Mass. Gen. L. c. 151B, section 1 et seq.;Mass. Gen. L. c. 149, section 1 et seq.; Mass. Gen. L. c. 151, section 1A et seq.; and federal, state or local common law, laws, statutes, ordinances orregulations. Notwithstanding the foregoing, nothing contained in this General Release and Waiver of Claims shall be construed to bar any claim by theundersigned to enforce the terms of the Agreement.Releasor represents and acknowledges the following: (a)that Releasor understands the various claims Releasor could have asserted under federal or state law, including but not limited to the AgeDiscrimination in Employment Act and other similar laws; 20 (b)that Releasor has read this General Release carefully and understands all of its provisions; (c)that Releasor understands that Releasor has the right to and is advised to consult an attorney concerning this General Release and in particularthe waiver of rights Releasor might have under the laws described herein and that to the extent, if any, that Releasor desired, Releasor availedhimself or herself of this right; (d)that Releasor has been provided at least forty-five (45) days to consider whether to sign this General Release and that to the extent Releasorhas signed this General Release before the expiration of such forty-five (45) day period Releasor has done so knowingly and willingly; (e)that Releasor enters into this General Release and waives any claims knowingly and willingly; andthat this General Release shall become effective seven (7) business days after it is signed. Releasor may revoke this General Release within seven(7) business days after it is signed by delivering a written notice of rescission to Scott Koenig, Chair of AGTC, c/o Macrogenics, Inc., 1500 East Gude Drive,Rockville, MD 20850. To be effective, the notice of rescission must be hand delivered, or postmarked within the seven (7) business day period and sent bycertified mail, return receipt requested, to the referenced address.A. Executive acknowledges that Executive remains bound by Executive’s obligations set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6(a), 6.6(c), 6.7, 6.8,6.9, 6.10 and 6.11 of the Agreement. Executive confirms that for a period of one year following the termination of Executive’s employment with theCompany, Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assist others in any of the followingactivities (except on behalf of Company): (i)(whether as principal, agent, partner or otherwise) engage in, own, manage, operate, control, finance, invest in, participate in, or otherwisecarry on, or be employed by, associated with, or in any manner connected with, lend such Executive’s name to, lend Executive’s credit to, orrender services or advice to a Competing Business anywhere in the Geographic Area; or (ii)provide or develop any products, technology or services that are the same or Substantially Similar to the products, technology and servicesprovided or developed by the Company or any of its Affiliates.The capitalized terms herein have the meanings set forth in section 6.7 of the Agreement.Executive agrees that Executive will not disparage or encourage or induce others to disparage any of the Company, its subsidiaries and affiliates, togetherwith all of their respective past and present directors and officers and each of their successors and assigns. Nothing herein is intended to or shall preventExecutive from providing limiting testimony in response to a valid subpoena, court 21order, regulatory request or other judicial, administrative or legal process or otherwise as required by law.Signed and sealed this day of , 20 . Signed: Name (print): Mark S. Shearman 22EXHIBIT BLIST OF PRIOR INVENTIONS Title Date Brief Description No Inventions.Additional sheets attached. Date: Signature /s/ Mark S. ShearmanName Mark S. ShearmanExhibit 10.3EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 29th day of August, 2019 by and between Applied GeneticTechnologies Corporation, a Delaware corporation, including its successors and assigns, (the “Employer” or “Company”), and Stephen W. Potter(“Executive”).NOW, THEREFORE, in consideration of the promises and the respective undertakings of Employer and Executive set forth below, Employer andExecutive hereby agree as follows:1. Employment. Employer hereby employs Executive, and Executive hereby accepts such employment and agrees to perform services for Employer,for the period and on the other terms and subject to the conditions set forth in this Agreement. Employee’s Start Date shall be and shall be considered theEffective Date of this Agreement.2. Employment at Will. Executive is employed “at-will” which means that Executive’s employment is not for any defined term and may beterminated by either Executive or the Company at any time, with or without cause, for any or no reason, subject to the notice provisions herein.3. Position and Duties.3.1 Service with Employer. Employer hereby employs Executive in an executive capacity with the title of Chief Business Officer andExecutive hereby accepts such employment and undertakes and agrees to serve in such capacity. Executive shall have such powers, perform such duties andfulfill such responsibilities as are typically associated with such position in other similarly situated companies and shall report directly to the Company’sPresident and Chief Executive Officer,3.2 Performance of Duties. Executive agrees to: (i) devote substantially all of Executive’s business time, attention and efforts to the businessand affairs of Employer while employed; and (ii) adhere to all Employer’s written employment policies and procedures as shall be in force from time totime.3.3 Outside Activities. During the Term, Executive shall not: (i) except as set forth below, accept other employment; (ii) except as set forthbelow, render or perform services for compensation to any Person (as hereinafter defined) other than Employer; (iii) serve as an officer or on the board ofdirectors (or similar governing body) of any entity other than Employer, whether or not for compensation; or (iv) engage in any other business, enterprise oractivity that will require any effort on the part of Executive that, in the sole discretion of Employer, could reasonably be expected to materially detract fromthe ability of Executive to perform Executive’s duties to Employer pursuant to this Agreement; provided, however, Executive may engage in the activitiesset forth in Schedule A hereto or described in clause (iii) or (iv) above if prior to engaging in such activity, Executive has disclosed such activity to theBoard and received written approval to engage in such activity from the Board. Executive may engage in personal investments without disclosure to orwritten approval from the Board provided Executive is not required or expected to serve as a board member, advisor or consultant and Executive shall, atany time, own beneficiallyless than 2% of the outstanding securities of any issuer and such personal investment shall not otherwise interfere with Executive’s performance of dutieshereunder and/or the provisions of Executive’s written agreements with Employer.3.4 Executive Representations. Executive represents that Executive is not subject to any restrictive covenant, confidentiality agreement, orany other agreement that would prevent Executive from accepting employment with Employer, and based on the information provided to Employer byExecutive, Employer accepts such representation.4. Compensation.4.1 Base Salary. Employer shall pay to Executive a base salary for all services to be rendered by Executive under this Agreement (the “BaseSalary”), which Base Salary shall be paid in accordance with Employer’s normal payroll schedule, procedures and policies (which schedule, procedures andpolicies may be modified from time to time) and subject to applicable deductions as required by law. Employer shall review Executive’s salary on an annualbasis and may, in its discretion, consider and declare from time to time increases in the Base Salary that it pays Executive. Any and all increases inExecutive’s salary pursuant to this section shall cause the level of Base Salary to be increased by the amount of each such increase for purposes of thisAgreement. The increased level of Base Salary as provided in this section shall become the level of Base Salary for the remainder of the term of thisAgreement unless there is a further increase in Base Salary as provided herein. Notwithstanding the foregoing, the Base Salary of Executive may bedecreased provided it is done so in proportion to decreases in Base Salary of the entire executive team of the Company.4.2 Annual Bonus. The Executive will be eligible to participate in the Employer’s annual cash incentive compensation plan on substantiallythe same terms as other executive officers. Company-wide and individual performance objectives (“MBOs”) will be established by the CompensationCommittee. Target incentives do not constitute a promise of payment and the Executive’s actual bonus, if any, will depend in part on the Employer’sperformance and the Compensation Committee’s discretion in assessing the Executive’s individual performance in relation to his or her MBOs and theoverall performance and status of the Company. To qualify for the incentive bonus, the Executive must remain employed with the Company through thedate that the incentive bonus is paid in accordance with the Employer’s normal practice.4.3 Participation in Benefit Plans. Executive shall be entitled to participate in all employee benefit plans or programs offered to other seniorexecutives from time to time (to the extent that Executive meets the requirements for each such plan or program), including participation in any healthinsurance plan, disability insurance plan, dental plan, eye care plan, 401(k) plan, life insurance plan, or other similar plans (all such benefits, the “BenefitPlans”). Some or all of the benefits may be provided by Employer’s leasing agent TriNet (or its successor(s) or assign(s).4.4 Expenses. Employer shall reimburse Executive for all ordinary and necessary business expenses reasonably incurred by him in theperformance of Executive’s duties under this Agreement, subject to the presentment and approval of appropriate itemized expense statements, receipts,vouchers or other supporting documentation in accordance with Employer’s normal policies for expense verification in effect from time to time. 24.5 Paid Time Off. Executive shall be entitled to paid time off pursuant to Employer’s standard paid time off policies in the same manner asthe Company’s other Senior Executives. Unused paid time off may be carried over from year to year, but in no case may more than 45 days (360 hours) ofunused paid time off be accrued.4.6 Total Compensation. Executive shall not receive any other compensation or benefits other than as provided in Sections 4.1 through 4.5hereof.5. Payments Upon Termination.5.1 Voluntary Resignation without Good Reason. Executive may terminate Executive’s employment by providing Employer with 30 days’advance written notice. If Executive terminates Executive’s employment (other than for Good Reason (either prior to or within 12 months following aChange in Control) or by reason of Disability, each as defined below) (i) Employer shall pay to Executive the Accrued Obligations (as defined below), (ii)Executive’s participation in the Benefit Plans shall terminate as of the Termination Date, and (iii) Employer shall have no other obligations to Executiveunder this Agreement, other than those provided in this Section 5.1.(a) For purposes of this Agreement, “Accrued Obligations” means: (i) Executive’s earned and unpaid Base Salary through theTermination Date; (ii) reimbursement for any reimbursable business expenses incurred by Executive through the Termination Date inaccordance with Section 4.4; and (iii) Executive’s accrued but unused paid time off as of the Termination Date. The amounts payable pursuantto clauses (i) and (iii) hereof shall be paid no later than sixty (60) days following Executive’s Termination Date.(b) For purposes of this Agreement, “Termination Date” means: the effective date of Executive’s “separation from service” as definedin Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).5.2 Termination by Employer For Cause. If Executive is terminated for Cause: (i) Employer shall pay to Executive the Accrued Obligations,(ii) Executive’s participation in the Benefit Plans shall terminate as of the Termination Date, and (iii) Employer shall have no further obligations toExecutive under this Agreement, other than those provided in this Section 5.2. For purposes of this Agreement, “Cause” means: (a) Executive’s failure tosubstantially perform Executive’s duties with the Company (if Executive has not cured such failure to substantially perform, if curable, within thirty(30) days after Executive’s receipt of written notice thereof from the Board that specifies the conduct constituting Cause under this clause (a)); (b)Executive’s willful misconduct, or gross negligence in the performance of Executive’s duties hereunder; (c) the conviction of Executive for, or the enteringby Executive of a guilty plea or plea of no contest with respect to, any crime that constitutes a felony or involves fraud, dishonesty or moral turpitude;(d) Executive’s commission of an act of fraud, embezzlement or misappropriation against the Company; (e) Executive’s material breach of the fiduciaryduty owed by Executive to the 3Company; (f) Executive’s engaging in any improper conduct that has or is likely to have an adverse economic or reputational impact on the Company; or(g) Executive’s material breach of this Agreement.5.3 Termination by Employer Without Cause or by Executive for Good Reason. If Executive’s employment is terminated (a) by Employerwithout Cause (other than upon Disability or death) or (b) by Executive for Good Reason either prior to a Change in Control or within twelve (12) monthsfollowing a Change in Control: (i) Employer shall pay to Executive the Accrued Obligations, (ii) Executive shall be entitled to receive the SeveranceBenefits (as defined below in Section 5.5 and subject to the conditions described therein and in Section 5.6), and (iii) Employer shall have no furtherobligations to Executive under this Agreement, other than those provided in this Section 5.3. For purposes of this Agreement, “Good Reason” means theoccurrence of any of the following events (without Executive’s consent):(a) a material adverse change in Executive’s functions, duties, or responsibilities with the Company which change would causeExecutive’s position to become one of materially lesser responsibility, importance, or scope;(b) a relocation of the Executive’s principal workplace to a location more than 50 miles from the location of such workplaceimmediately prior to the Change in Control without the Executive’s express written consent;(c) a material diminution in the Executive’s compensation or benefits without the express written consent of the Executive, other thanan across-the-board reduction in compensation levels that applies to all senior executives generally; or(d) a material breach of this Agreement by the Company.Notwithstanding the foregoing, no such event shall constitute “Good Reason” unless (a) Executive shall have given written notice of such event to theCompany within ninety (90) days after the initial occurrence thereof, (b) the Company shall have failed to cure the condition constituting Good Reasonwithin thirty (30) days following the delivery of such notice (or such longer cure period as may be agreed upon by the parties), and (c) Executive terminatesemployment within thirty (30) days after expiration of such cure period.5.4 Termination by Employer due to Executive’s Death or Disability. If Executive’s employment is terminated by reason of death orDisability (as defined below): (i) Employer shall pay to Executive the Accrued Obligations, (ii) Executive’s participation in the Benefit Plans shall terminateas of the Termination Date (except to the extent Executive is eligible for continued disability benefits under the applicable Employer plan), and(iii) Employer shall have no further obligations to Executive under this Agreement, other than those provided in this Section 5.4. For purposes of thisAgreement, “Disability” means Executive being determined to be totally disabled by the Social Security Administration or Executive’s inability to engage inany substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can beexpected to last for a continuous period of not less than twelve months. 45.5 Severance Benefits. “Severance Benefits” means:(a) The payment to Executive of the Severance Amount in a lump sum immediately following the Termination Date.(b) For this purpose, “Severance Amount” means:(i) In the event that Executive’s employment is terminated without Cause or by the Executive for Good Reason, in each case,within twelve (12) months following a Change in Control, an amount equal to the sum of (A) the product of 1.0 multiplied byExecutive’s annual Base Salary plus (B), the product of 1.0 multiplied by the Executive’s target bonus in effect immediately prior to theDate of Termination.(ii) In the event that Executive’s employment is terminated without Cause (other than within twelve (12) months of a Change inControl), an amount equal to the sum of (A) the product of 0.75 multiplied by Executive’s annual Base Salary plus (B), the product ofthe Executive’s target bonus in effect immediately prior to the Date of Termination multiplied by a fraction equal to the quotient of thenumber of days during such year on which the Executive was employed by the Company, divided by 365.(c) The continuation of Executive’s participation in the Company’s medical, dental, and vision benefit plans at the same premium costto Executive as charged to Executive immediately prior to the Termination Date for a period of (i) in the event that the Executive’semployment is terminated without Cause or by the Executive for Good Reason, in each case, within twelve (12) months following a Change inControl, twelve (12) months immediately following the Termination Date or (ii) in the event that the Executive’s employment is terminatedwithout Cause (other than within twelve (12) months of a Change in Control) nine (9) months immediately following the Termination Date (ineach case, the “Continuation Period”), or if earlier, until Executive obtains other employment which provides the same type of benefit;provided, however, that (i) it is understood and agreed that such continued medical, dental and vision benefits may at the election of theCompany be provided by Executive electing the continuation of such coverage pursuant to COBRA with the Company reimbursing Executivefor COBRA premiums to the extent required so that Executive’s premium cost for the coverage in effect for Executive prior to the TerminationDate is substantially the same as immediately prior to the Termination Date, and (ii) if the Company determines, in its reasonable judgment,that providing medical, dental, and/or vision benefits in accordance with the preceding provisions of this Section 5.5(c) would result in aviolation of applicable law, the imposition of any penalties under applicable law, or adverse tax consequences for participants covered by theCompany’s medical, dental, and/or vision plans, the Company may terminate such 5coverage (or reimbursement) with respect to Executive and instead pay to Executive taxable cash payments at the same time and in the sameamounts as the Company would have paid as premiums (or as COBRA premium reimbursements) to provide such coverage.(d) Acceleration of vesting as follows:(i) In the event that Executive’s employment is terminated by Employer without Cause or by Executive for Good Reason, ineach case, within twelve (12) months following a Change in Control: each stock option, restricted stock unit, restricted stock award orother stock-based compensatory award granted by the Company to Executive that is outstanding as of the Termination Date and is notfully vested as of the date of the Termination Date (each an “Award”), shall become fully vested as of the date Executive provides theCompany with the Irrevocable Release provided for in this Section 5.5 within the period prescribed therein.(ii) In the case of any Award the vesting of which is contingent in whole or in part upon the attainment of any Company ormarket performance condition that has not yet been satisfied, such condition shall be deemed to have been satisfied as of the date oftermination at the level that would result in vesting of 100% of the number of shares stated as the target award.(e) For purposes of this Agreement, “Change of Control” means, and shall be deemed to have occurred, if:(i) any Person, excluding (i) employee benefit plans of the Company or any of its Affiliates, is or becomes the “beneficialowner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, which Rules shall apply for purposes of this clause (a) whether ornot the Company is subject to the Exchange Act), directly or indirectly, of Company securities representing more than fifty percent(50%) of the combined voting power of the Company’s then outstanding securities (“Voting Power”);(ii) the Company consummates a merger, consolidation, share exchange, division or other reorganization or transaction of theCompany (a “Fundamental Transaction”) with any other corporation, other than a Fundamental Transaction that results in the votingsecurities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by beingconverted into voting securities of the surviving entity) at least fifty percent (50%) of the combined Voting Power immediately aftersuch Fundamental Transaction of (i) the Company’s outstanding securities, (ii) the surviving entity’s outstanding securities, or (iii) inthe case of a division, the outstanding securities of each entity resulting from the division; 6(iii) the stockholders of the Company approve a plan of complete liquidation or winding-up of the Company or theconsummation of the sale or disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets;or(iv) during any period of 24 consecutive months, individuals who at the beginning of such period constituted the Board(including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved bya vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of such period or whoseappointment, election or nomination was previously so approved or recommended) cease for any reason to constitute at least a majorityof the Board.5.6 Required Delivery of Irrevocable Release; Compliance with Section 6 Obligations. Notwithstanding the provisions of Section 5.5, as acondition to entitlement to the Severance Benefits, Executive must provide to the Company an Irrevocable Release and Noncompete Affirmation not laterthan the sixtieth day after the Date of Termination; provided however that if the sixty day period begins in one calendar year and ends in a subsequentcalendar year, any payment to be made or benefit to be provided upon receipt of the Irrevocable Release and Noncompete Affirmation shall not be made orprovided until the subsequent year. In the event Executive fails to provide an Irrevocable Release and Noncompete Affirmation to the Company within suchsixty day period, the Company will immediately cease to pay or provide any further Severance Benefits, no accelerated vesting of stock options or otherawards pursuant to Section 5.5(d) shall occur, and Executive shall be obligated to immediately repay to the Company all previously paid or providedSeverance Benefits. “Irrevocable Release and Noncompete Affirmation” means a confidential separation agreement, release of claims and affirmation ofnoncompete, in form and substance substantially similar to the attached Exhibit A that has been executed by Executive, delivered to the Company, andbecome irrevocable by Executive. In addition, in the event that Executive breaches the obligations under Section 6 of this Agreement at any time during theContinuation Period, Executive will cease to be entitled to any further Severance Benefits. 76. Promises and Covenants Regarding Confidential Information and Goodwill; Inventions and Assignment; Restrictive Covenants.6.1 Confidential Information and Goodwill. In consideration of Executive’s promises and covenants contained in this Agreement, includingExecutive’s promise and covenant not to disclose Confidential Information, Employer will provide Executive with Confidential Information. In furtherconsideration of Executive’s promises and covenants contained in this Agreement, including Executive’s promise and covenant to utilize the Goodwillexclusively for the benefit of Employer, Employer will allow Executive to receive Confidential Information concerning the Company’s customers, labs,vendors and employees and, to the extent required to fulfill Executive’s duties, the Company will permit Executive to represent the Company on its behalfwith such persons. To the extent that Executive’s duties involve sales or customer relations, the Company will permit Executive to utilize the Goodwill inExecutive’s sales efforts and will provide sales support to Executive similar to that which it provides to its sales representatives.6.2 Duties. While employed by Company, Executive shall perform the duties required of Executive hereunder and shall devote Executive’sbest efforts and exclusive business time, energy and skill to performing such duties; not make any disparaging remarks regarding Company to any personwith whom Company has business relations, including any employee or vendor of Company; use the Goodwill solely for the benefit of Company; and notinterfere in such Goodwill, either during or following Executive’s employment with Company.6.3 Delivery of Company Property. Executive recognizes that all documents, magnetic media and other tangible items which containConfidential Information are the property of Company exclusively. Upon request by Company or termination of Executive’s employment with Company,Executive shall promptly return to Company all Confidential Information and Company Property within Executive’s possession and control, and shallrefrain from taking any Confidential Information or Company Property or allowing any Confidential Information or Company Property to be taken fromCompany; and immediately return to Company all information pertaining to Company or Company Property in Executive’s possession.6.4 Promise and Covenant Not to Disclose. The parties acknowledge that Company is the sole and exclusive owner of ConfidentialInformation, and that Company has legitimate business interests in protecting Confidential Information. The parties further acknowledge that Company hasinvested, and continues to invest, considerable amounts of time and money in obtaining, developing, and preserving the confidentiality of ConfidentialInformation and that, by reason of the trust relationship arising between Executive and Company, Executive owes Company a fiduciary duty to preserve andprotect Confidential Information from all unauthorized disclosure and unauthorized use. Executive shall not, directly or indirectly, disclose ConfidentialInformation to any third party (except to Executive’s attorneys, the Company’s personnel, other persons designated in writing by the Company, or except asotherwise provided by law) or use Confidential Information for any purpose other than for the direct benefit of Company while in Company’s employ andthereafter.6.5 Inventions and Assignment. Executive agrees that he will promptly disclose to the Company any and all Company Inventions and thatExecutive hereby irrevocably assigns to the Company all ownership rights in and to any and all Company Inventions. During Executive’s 8employment or at any time thereafter, upon request of the Company, Executive will sign, execute and deliver any and all documents or instruments,including, without limitation, patent applications, declarations, invention assignments and copyright assignments, and will take any other action which theCompany shall deem necessary to perfect in the Company trademark, copyright or patent rights with respect to Inventions, or to otherwise protect theCompany’s trade secrets and proprietary interests. The term “Inventions” means discoveries; developments; trade secrets; processes; formulas; data; lists;software programs; graphics; artwork; logos, and all other works of authorship, ideas, concepts, know-how, designs, and techniques, whether or not any ofthe foregoing is or are patentable, copyrightable, or registrable under any intellectual property laws or industrial property laws in the United States. The term“Company Inventions” means all Inventions that (a) relate to the business or proposed business of the Company or any of its predecessors or that arediscovered, developed, created, conceived, reduced to practice, made, learned or written by Executive, either alone or jointly with others, in the course ofExecutive’s employment; (b) utilize, incorporate or otherwise relate to Confidential Information; or (c) are discovered, developed, created, conceived,reduced to practice, made, or written by him using property or equipment of the Company or any of its predecessors. Executive agrees to promptly and fullycommunicate in writing to the Company (to such department or officer of the Company and in accordance with such procedures as the Company may directfrom time to time) any and all Company Inventions. Executive acknowledges and agrees that any work of authorship by Executive or others comprisingCompany Inventions shall be deemed to be a “work made for hire,” as that term is defined in the United States Copyright Act (17 U.S.C. § 101 (2000)). Tothe extent that any such work of authorship may not be deemed to be a work made for hire, Executive hereby irrevocably assigns any ownership rightsExecutive may have in and to such work to the Company. This Agreement does not apply to any Inventions Executive made before Executive’s employmentwith the Company. To clearly establish Executive’s rights, Executive has listed on Exhibit B any Inventions, whether or not patentable or copyrightable andwhether or not reduced to practice, made by him prior to Executive’s employment with the Company that are owned by Executive (“Prior Inventions”),together with the approximate dates of their creation. If no such list is attached, Executive represents that there are no Prior Inventions.6.6 Other Promises and Covenants. In consideration for the benefits specifically provided for in this Section 6.6 and that may otherwise beprovided pursuant to this Agreement, including but not limited to the benefits payable pursuant to Section 5.5, Executive hereby promises and covenants asfollows.(a) In consideration of payment to Executive of $500.00, less applicable withholdings, Executive agrees that during Executive’semployment with Company and, unless this Section 6.6(a) is waived by the Company in writing, for a period of one year followingtermination of employment for any reason other than the Company’s termination of Executive’s employment without Cause (the“Non-Competition Period”), Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assist othersin any of the following activities (except on behalf of Company):(i) (whether as principal, agent, partner or otherwise) engage in, own, manage, operate, control, finance, invest in, participate in,or otherwise carry on, or be employed by, associated with, or in any manner 9connected with, lend such Executive’s name to, lend Executive’s credit to, or render services or advice to a Competing Businessanywhere in the Geographic Area; or(ii) provide or develop any products, technology or services that are the same or Substantially Similar to the products,technology and services provided or developed by the Company or any of its Affiliates.(b) Unless Section 6.6(a) is waived by the Company in writing, as mutually-agreed upon consideration for the post-employmentrestriction described herein, the Company will pay Executive $10,000.00 within one month of Executive’s date of termination.Notwithstanding the foregoing, in the event that Executive has breached his or her fiduciary duty to the Company or has unlawfully taken,physically or electronically, property belong to the Company, then the Non-Competition Period shall be extended for an additional period ofone year.(c) During Executive’s employment with Company and for a period of two years following termination of employment for any reason(the “Non-Solicitation Period”), Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assistothers in any of the following activities:(i) induce or attempt to induce any customer, agent, supplier, licensee, or business relation of the Company or any of itsAffiliates to cease doing business with the Company or any of its Affiliates, or in any way interfere with the relationship between anycustomer, supplier, licensee, or business relation of the Company or any of its Affiliates; or(ii) on behalf of a Competing Business, solicit or attempt to solicit the business or patronage of any Person who is a customer oragent of the Company or any of its Affiliates, whether or not Executive had personal contact with such Person.(iii) solicit, encourage, or take any other action which is intended to induce any employee, independent contractor or agent ofthe Company or any of its Affiliates to terminate Executive’s employment or other business relationship with the Company or suchAffiliate;(iv) in any way interfere in any manner with the employment or other business relationship between the Company and/or any ofits Affiliates, on the one hand, and any employee, independent contractor or agent of the Company or such Affiliate, on the other hand;or(v) employ, or otherwise engage as an employee, independent contractor or otherwise, any individual who was an employee,independent contractor, agent or was otherwise affiliated with the Company or any of its Affiliates from the period beginning one yearprior to the date on which Executive became employed and continuing through the expiration of the Non-Solicitation Period. 10provided, however, that nothing set forth in this Section 6 shall prohibit Executive from owning, as a passive investment, not in excess of five percent (5%)in the aggregate of any class of capital stock of any corporation if such stock is publicly traded and listed on any national or regional stock exchange orreported on the Nasdaq Stock Market.6.7 Definitions. For purposes hereof:(a) “Affiliate” means, with respect to any Entity, any Entity that, directly or indirectly through one or more intermediaries, controls, iscontrolled by or under common control with, such Entity.(b) “Agreement” means this Employment Agreement.(c) “Company Business” means (i) any business related to providing services related to, manufacturing, selling or distributing genetherapy products using adeno-associated virus technology for the treatment of inherited and acquired diseases or conducting research ordevelopment with regard thereto; and (ii) any other business that the Company is actively engaged in researching, developing or marketing atthe time of the termination of Executive’s employment, provided that this clause (ii) shall only apply if Executive is involved with theresearch, development, or marketing of that other business.(d) “Company Property” means all physical materials, documents, information, keys, computer software and hardware, includinglaptop computers and mobile or handheld scheduling computers, manuals, data bases, product samples, tapes, magnetic media, technical notesand any other equipment or items which Company provides for or to Executive or which otherwise belongs to the Company, and thosedocuments and items which Executive may develop or help develop while in Company’s employ, whether or not developed during regularworking hours or on Company’s premises. The term “Company Property” shall include the original of such materials, any copies thereof, anynotes derived from such materials, and any derivative work of such materials.(e) “Competing Business” means any other Entity engaged in the Company Business, other than the Company and its Affiliates.(f) “Confidential Information” means the trade secrets and other information of Company, including but not limited to (i) the customerlists, customer contact information, customer purchase information, pricing information, strategic and marketing plans, compilations ofcustomer information, names of employees, contracts with third parties, training, financial and marketing books, sales projections, internalemployer databases, reports, manuals and information including information related to Company, its Affiliates or its customers, includingthose documents and items which any employee may develop or help develop while 11in the employ of the Company or any of its Affiliates, whether or not developed during regular working hours or on the premises of theCompany or such Affiliate; (ii) the identity, skills, personnel file information, performance appraisals and compensation of job applicants,employees, contractors, and consultants; (iii) specialized training; (iv) source code, scripts, user screens, reports or any other informationpertaining to the internal information technology or network of the Company and/or its Affiliates; and (v) information related to inventionsowned by the Company or any of its Affiliates or licensed from third parties; and unless the context requires otherwise, the term “ConfidentialInformation” includes the original of such materials, any copies thereof, any notes derived from such materials, and any derivative work ofsuch materials. The term “Confidential Information” does not include (1) information that was or becomes generally available publicly otherthan through disclosure by Executive, or (2) is required to be disclosed to any governmental agency or self-regulatory body or is otherwiserequired to be disclosed by law. Unless the context requires otherwise, the term “Confidential Information” shall include the original of suchmaterials, any copies thereof, any notes derived from such materials, and any derivative work of such materials.(g) “Entity” means and includes any person, partnership, association, corporation, limited liability company, trust, unincorporatedorganization or any other business entity or enterprise.(h) “Geographic Area” means those states in which the Company or any of its subsidiaries conducts business or in which its productsare being sold or marketed at the time of the termination of Executive’s employment.(i) “Goodwill” means the value of the relationships between the Company and its agents, customers, vendors, labs, and employees.(j) “Substantially Similar” means substantially similar in function or capability or otherwise competitive to the products or servicesbeing developed, manufactured or sold by the Company during and/or at the end of Executive’s employment, or are marketed to substantiallythe same type of user or customer as that to which the products and services of the Company are marketed or proposed to be marketed.6.8 Acknowledgements Regarding Other Promises and Covenants. With regard to the promises and covenants set forth herein, Executiveacknowledges and agrees that:(a) the restrictions are ancillary to an otherwise enforceable agreement including the provisions of this Agreement regarding thedisclosure, ownership and use of the Confidential Information and Goodwill of Company;(b) the limitations as to time, geographical area, and scope of activity to be restricted are reasonable and acceptable to Executive, anddo not impose any greater restraint than is reasonably necessary to protect the Goodwill and other legitimate business interests of Company; 12(c) the performance by Executive, and the enforcement by Company, of such promises and covenants will cause no undue hardship onExecutive;(d) the time periods covered by the promises and covenants will not include any period(s) of violation of, or any period(s) of timerequired for litigation brought by Company to enforce any such promise or covenant, it being understood that the extension of time provided inthis paragraph may not exceed two (2) years.6.9 Duty to Give Notice of Agreement. During employment by Company and the period of any post-employment obligation applicablehereunder, Executive shall provide written notice to any prospective employer of Executive’s obligations under this Agreement, and shall provide a truecopy hereof to such prospective employer at the outset of any communications about employment.6.10 Independent Elements. The parties acknowledge that the promises and covenants contained in Section 6 above are essentialindependent elements of this Agreement and that, but for Executive agreeing to comply with them, Company would not employ Executive. Accordingly, theexistence or assertion of any claim by Executive against Company, whether based on this Agreement or otherwise, shall not operate as a defense toCompany’s enforcement of the promises and covenants in Section 6. An alleged or actual breach of the Agreement by Company will not be a defense toenforcement of any such promise or covenant, or other obligations of Executive to Company. The promises and covenants in Section 6 will remain in fullforce and effect whether Executive is terminated by Company or voluntarily resigns.6.11 Remedies for Breach of Agreement. Executive acknowledges that Executive’s breach of any promise or covenant contained inSection 6 will result in irreparable injury to Company and that Company’s remedies at law for such a breach will be inadequate. Accordingly, Executiveagrees and consents that Company, in addition to all other remedies available at law and in equity, shall be entitled to both preliminary and permanentinjunctions to prevent and/or halt a breach or threatened breach by Executive of any such promise or covenant, and Executive waives the requirement of theposting of any bond in connection with such injunctive relief. Executive further acknowledges and agrees that the promises and covenants contained inSection 6 are enforceable, reasonable, and valid.7. Miscellaneous.7.1 Governing Law; Arbitration(a) This Agreement is made under and shall be governed by and construed in accordance with the laws of Florida, without regard to itsconflicts of law principles.(b) With respect to claims by the Company against Executive related to Executive’s threatened or actual breach of Section 6 of thisAgreement, each Party hereby irrevocably agrees that all actions or proceedings concerning such disputes 13may be brought by the Company in (a) the United States District Court for the Northern District of Florida; or (b) in any court of the State ofFlorida sitting in Alachua County, provided that the United States District Court lacks subject matter jurisdiction over such action orproceeding. Executive consents to jurisdiction of and venue in the courts in the State of Florida set forth in this Section, and hereby waives tothe maximum extent permitted by applicable law any objection which Executive may have based on improper venue or forum nonconveniens.(c) Except to the extent provided for in subsection (b) above, the Company and Executive agree that any claim, dispute or controversyarising under or in connection with this Agreement, or otherwise in connection with Executive’s employment by the Company or terminationof his employment (including, without limitation, any such claim, dispute or controversy arising under any federal, state or local statute,regulation or ordinance or any of the Company’s employee benefit plans, policies or programs) shall be resolved solely and exclusively bybinding, confidential, arbitration. The arbitration shall be held in Gainesville, Florida (or at such other location as shall be mutually agreed bythe parties). The arbitration shall be conducted in accordance with the Commercial Rules of the American Arbitration Association (the“AAA”) in effect at the time of the arbitration, including the Expedited Procedures. All fees and expenses of the arbitration, including atranscript if either requests, shall be borne equally by the parties. Each party is responsible for the fees and expenses of its own attorneys,experts, witnesses, and preparation and presentation of proofs and post-hearing briefs (unless the party prevails on a claim for which attorney’sfees are recoverable under law). In rendering a decision, the arbitrator shall apply all legal principles and standards that would govern if thedispute were being heard in court. This includes the availability of all remedies that the parties could obtain in court. In addition, all statutes oflimitation and defenses that would be applicable in court, will apply to the arbitration proceeding. The decision of the arbitrator shall be setforth in writing, and be binding and conclusive on all parties. Any action to enforce or vacate the arbitrator’s award shall be governed by theFederal Arbitration Act, if applicable, and otherwise by applicable state law. If either the Company or Executive improperly pursues anyclaim, dispute or controversy against the other in a proceeding other than the arbitration provided for herein, the responding party shall beentitled to dismissal or injunctive relief regarding such action and recovery of all costs, losses and attorney’s fees related to such action.7.2 Entire Agreement. This Agreement and the documents referenced herein contain the entire agreement of the parties relating to theemployment of Executive by Employer and the ancillary matters discussed herein and supersedes all prior agreements, negotiations and understandings withrespect to such matters, including, without limitation, any term sheet between the parties hereto with respect to such matters, and the parties hereto havemade no agreements, representations or warranties relating to such employment or ancillary matters which are not set forth herein. 147.3 Withholding Taxes. Employer may withhold from any compensation and Benefits payable under this Agreement all federal, state, city orother taxes as shall be required pursuant to any law or governmental regulation or ruling.7.4 Golden Parachute Limit. Notwithstanding any other provision of this Agreement, in the event that any portion of the Severance Benefitsor any other payment or benefit received or to be received by Executive (whether pursuant to the terms of this Agreement or any other plan, arrangement oragreement) (collectively, the “Total Benefits”) would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, asamended (the “Code”) (the “Excise Tax”), the Total Benefits shall be reduced to the extent necessary so that no portion of the Total Benefits is subject tothe Excise Tax; provided, however, that no such reduction in the Total Benefits shall be made if by not making such reduction, Executive’s RetainedAmount (as hereinafter defined) would be greater than Executive’s Retained Amount if the Total Benefits are so reduced. All determinations required to bemade under this Section 7.4 shall be made by tax counsel selected by the Company and reasonably acceptable to Executive (“Tax Counsel”), whichdeterminations shall be conclusive and binding on Executive and the Company absent manifest error. All fees and expenses of Tax Counsel shall be bornesolely by the Company. Prior to any reduction in Executive’s Total Benefits pursuant to this Section 7.4, Tax Counsel shall provide Executive and theCompany with a report setting forth its calculations and containing related supporting information. In the event any such reduction is required, the TotalBenefits shall be reduced in the following order: (i) the Severance Amount (in reverse order of payment), (iii) any portion of the Total Benefits that are notsubject to Section 409A of the Code (other than Total Benefits resulting from any accelerated vesting of equity awards), (iv) other Total Benefits that aresubject to Section 409A of the Code in reverse order of payment, and (v) Total Benefits that are not subject to Section 409A and arise from any acceleratedvesting of any equity awards. “Retained Amount” shall mean the present value (as determined in accordance with sections 280G(b)(2)(A)(ii) and 280G(d)(4)of the Code) of the Total Benefits net of all federal, state and local taxes imposed on Executive with respect thereto.7.5 Compliance With Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code (includingthe exceptions thereto), to the extent applicable, and shall be interpreted and administered accordingly. If any provision contained in this Agreementconflicts with the requirements of Section 409A of the Code (or the exemptions intended to apply under this Agreement), this Agreement shall be deemed tobe reformed to comply with the requirements of Section 409A of the Code (or applicable exemptions thereto). Notwithstanding anything to the contraryherein, for purposes of determining Executive’s entitlement to the Severance Benefits under Section 5 hereof, (a) Executive’s employment shall not bedeemed to have terminated unless and until Executive incurs a “separation from service” as defined in Section 409A of the Code, and (b) the effective dateof any termination or resignation of employment (or any similar term) shall be the effective date of Executive’s separation from service. Reimbursement ofany expenses provided for in this Agreement shall be made in accordance with the Company’s policies (as applicable) with respect thereto as in effect fromtime to time (but in no event later than the end of calendar year following the year such expenses were incurred) and in no event shall (i) the amount ofexpenses eligible for reimbursement hereunder during a taxable year affect the expenses eligible for reimbursement in any other taxable year or (ii) the rightto reimbursement be subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary herein, if a payment or benefit underthis Agreement is 15due to a “separation from service” for purposes of the rules under Treas. Reg. § 1.409A-3(i)(2) (payments to specified employees upon a separation fromservice) and Executive is determined to be a “specified employee” (as determined under Treas. Reg. § 1.409A-1(i)), such payment shall, to the extentnecessary to comply with the requirements of Section 409A of the Code, be made on the later of (x) the date specified by the foregoing provisions of thisAgreement or (y) the date that is six (6) months after the date of Executive’s separation from service (or, if earlier, the date of Executive’s death). Anyinstallment payments that are delayed pursuant to the provisions of this section shall be accumulated and paid in a lump sum on the first day of the seventhmonth following Executive’s separation from service (or, if earlier, upon Executive’s death) and the remaining installment payments shall begin on suchdate in accordance with the schedule provided in this Agreement. To the extent permitted by Section 409A, each payment hereunder shall be deemed to be aseparate payment for purposes of Section 409A of the Code.7.6 Amendments. No amendment or modification of the terms of this Agreement shall be valid unless made in writing and signed by bothExecutive and Employer.7.7 Severability; Reformation. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effectiveand valid under applicable Law but if any provision of this Agreement is held to be invalid, illegal or unenforceable under any applicable Law or rule, thevalidity, legality and enforceability of the other provisions of this Agreement will not be affected or impaired thereby. If any provision of this Agreement isfound invalid, illegal or unenforceable because it is too broad in scope, too lengthy in duration or violates any Law or regulation, it shall be reformed bylimiting its scope, limiting its duration or construing it to avoid such violation (as the case may be) while giving the greatest effect to the intent of the partiesas is legally permissible.7.8 No Waiver. No waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signedby the party against whom such waiver is sought to be enforced, and any such waiver shall be effective only in the specific instance and for the specificpurpose for which given.7.9 Assignment; No Third Party Beneficiary. This Agreement is a personal service contract, and shall not be assignable by Executive. ThisAgreement shall be assignable by Employer to any successor to the business of Employer, without the written consent of Executive; provided, however, thatthe assignee or transferee is the successor to all or substantially all of the business assets of Employer and such assignee or transferee expressly assumes allthe obligations, duties, and liabilities of Employer set forth in this Agreement. Any purported assignment of this Agreement in violation of this Section 7.9shall be null and void. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permittedassigns, and no other Person shall have any right, benefit or obligation hereunder.7.10 Counterparts; Facsimile Signatures. This Agreement may be executed in separate counterparts, each of which will be an original and allof which taken together shall constitute one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart. Afacsimile signature by any party on a counterpart of this Agreement shall be binding and effective for all purposes. Such party shall subsequently deliver tothe other party an original, executed copy of this Agreement; provided, however, that a failure of such party to deliver an original, executed copy shall notinvalidate Executive’s or its signature. 167.11 Notices. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any suchnotice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via areputable nationwide overnight courier service, in each case addressed as follows: If to the Company, to: AGTC 14193 NW 119th Terrace Alachua, FL 32615 Attention: Director of Human Resources Attention: General CounselIf to the Executive, to: Stephen W. Potter ******* *******or to such other address as either the Company or the Executive may have furnished to the other in writing in accordance herewith). Any such notice,instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receiptrequested, postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice,instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be deemed to have beenduly delivered unless and until it actually is received by the party for whom it is intended.7.12 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning orinterpretation of this Agreement.7.13 Cumulative Remedies. The rights and remedies of the parties hereunder are cumulative and not exclusive of any rights or remedies anyparty hereto may otherwise have.7.14 Expenses Relating to this Agreement. Each party shall pay its or Executive’s own expenses incident to the negotiation, preparation andexecution of this Agreement.7.15 Acknowledgement. Executive acknowledges that Executive has been advised to and has been given the opportunity to consult withlegal counsel for the purposes of reviewing this Agreement, including the non-competition and non-solicitation covenants contained herein. Executivefurther acknowledges that he or she has been given 10 business days to consider the terms of this Agreement. If Executive executes this Agreement prior tothe end of the 10 business day period, he or she agrees and acknowledges that such execution was a knowing and voluntary waiver of his or her right toconsider this Agreement for the full 10 business day period. 17IN WITNESS WHEREOF, Executive and Employer have executed this Employment Agreement as of the date set forth in the first paragraph. APPLIED GENETIC TECHNOLOGIES CORPORATIONBy: /s/ Susan B. Washer Name: Susan B. Washer Title: President and CEODate: August 29, 2019EXECUTIVE /s/ Stephen W. PotterName: Stephen W. PotterDate: August 26, 2019 18Schedule A - Permitted Outside ActivitiesPursuant to Section 3.3 of the Employment Agreement, Executive has disclosed and the Board has approved his participation in the following outsideactivities: 19Exhibit AGENERAL RELEASE AND WAIVER OF ALL CLAIMS(INCLUDING OLDER WORKER BENEFITS PROTECTION ACT CLAIMS ANDAFFIRMATION OF NONCOMPETE)For good and valuable consideration, including without limitation the compensation and benefits set forth in the Employment Agreement dated ,2019 (the “Agreement”) between the undersigned and Applied Genetic Technologies Corporation (the “Company”), to which this General Release andWaiver of All Claims is attached, the terms of which Agreement shall survive this General Release and Waiver of Claims, the undersigned, on behalf of andfor himself or herself and his or her heirs, administrators, executors, representatives, estates, attorneys, insurers, successors and assigns (hereafter referred toseparately and collectively as the “Releasor”), hereby voluntarily releases and forever discharges the Company, and its subsidiaries (direct and indirect),affiliates, related companies, divisions, predecessor and successor companies, and each of its and their present, former, and future shareholders, officers,directors, employees, agents, representatives, attorneys, insurers and assigns (collectively as “Releasees”), jointly and individually, from any and all actions,causes of action, claims, suits, charges, complaints, contracts, covenants, agreements, promises, debts, accounts, damages, losses, sums of money,obligations, demands, and judgments all of any kind whatsoever, known or unknown, at law or in equity, in tort, contract, by statute, or on any other basis,for contractual, compensatory, punitive or other damages, expenses (including attorney’s fees and cost), reimbursements, or costs of any kind, which theundersigned employee ever had, now has, or may have, from the beginning of the world to the date of this Release, known or unknown, in law or equity,whether statutory or common law, whether federal, state, local or otherwise, including but not limited to any and all claims arising out of or in any wayrelated to the undersigned’s engagement by the Company (including the hiring or termination of that engagement), or any related matters including, but notlimited to claims, if any arising under the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefits Protection Act; theCivil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Family and Medical Leave Act of 1993, as amended; the ImmigrationReform and Control Act of 1986; the Americans with Disabilities Act of 1990, as amended; the Employee Retirement Income Security Act (ERISA), asamended; the Florida Civil Rights Act, FLA. STAT. Sections 760.01 - 760.11; FLA STAT. Sections 448.01 et seq.; Mass. Gen. L. c. 151B, section 1 et seq.;Mass. Gen. L. c. 149, section 1 et seq.; Mass. Gen. L. c. 151, section 1A et seq.; and federal, state or local common law, laws, statutes, ordinances orregulations. Notwithstanding the foregoing, nothing contained in this General Release and Waiver of Claims shall be construed to bar any claim by theundersigned to enforce the terms of the Agreement.Releasor represents and acknowledges the following: (a)that Releasor understands the various claims Releasor could have asserted under federal or state law, including but not limited to the AgeDiscrimination in Employment Act and other similar laws; 20 (b)that Releasor has read this General Release carefully and understands all of its provisions; (c)that Releasor understands that Releasor has the right to and is advised to consult an attorney concerning this General Release and in particularthe waiver of rights Releasor might have under the laws described herein and that to the extent, if any, that Releasor desired, Releasor availedhimself or herself of this right; (d)that Releasor has been provided at least forty-five (45) days to consider whether to sign this General Release and that to the extent Releasorhas signed this General Release before the expiration of such forty-five (45) day period Releasor has done so knowingly and willingly; (e)that Releasor enters into this General Release and waives any claims knowingly and willingly; andthat this General Release shall become effective seven (7) business days after it is signed. Releasor may revoke this General Release within seven(7) business days after it is signed by delivering a written notice of rescission to Scott Koenig, Chair of AGTC, c/o Macrogenics, Inc., 1500 East Gude Drive,Rockville, MD 20850. To be effective, the notice of rescission must be hand delivered, or postmarked within the seven (7) business day period and sent bycertified mail, return receipt requested, to the referenced address.A. Executive acknowledges that Executive remains bound by Executive’s obligations set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6(a), 6.6(c), 6.7, 6.8,6.9, 6.10 and 6.11 of the Agreement. Executive confirms that for a period of one year following the termination of Executive’s employment with theCompany, Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assist others in any of the followingactivities (except on behalf of Company): (i)(whether as principal, agent, partner or otherwise) engage in, own, manage, operate, control, finance, invest in, participate in, or otherwisecarry on, or be employed by, associated with, or in any manner connected with, lend such Executive’s name to, lend Executive’s credit to, orrender services or advice to a Competing Business anywhere in the Geographic Area; or (ii)provide or develop any products, technology or services that are the same or Substantially Similar to the products, technology and servicesprovided or developed by the Company or any of its Affiliates.The capitalized terms herein have the meanings set forth in section 6.7 of the Agreement.Executive agrees that Executive will not disparage or encourage or induce others to disparage any of the Company, its subsidiaries and affiliates, togetherwith all of their respective past and present directors and officers and each of their successors and assigns. Nothing herein is intended to or shall preventExecutive from providing limiting testimony in response to a valid subpoena, court 21order, regulatory request or other judicial, administrative or legal process or otherwise as required by law.Signed and sealed this day of , 20 .Signed: __________________________Name (print): Stephen W. Potter 22EXHIBIT BLIST OF PRIOR INVENTIONS Title Date Brief Description No Inventions.Additional sheets attached. Date: Signature /s/ Stephen W. PotterName Stephen W. PotterExhibit 10.33 June 12, 2019Theresa Heah, MD, MBA**************Dear Theresa,Thank you for managing your way through the rather comprehensive interview process here at Applied Genetic Technologies Corporation (the “Company”or “AGTC”). Throughout that process, you have demonstrated the professional competence and collaborative spirit that we look for in every employee. As aresult, I am very pleased to offer you a position as our Chief Medical Officer. The terms of our offer are as follows:Start Date and Responsibilities:It is anticipated that your employment will commence at a time mutually agreed upon by you and the Company. As Chief Medical Officer you will beresponsible for (i) providing leadership to ensure establishment of the conditions essential for determining the safety, efficacy, medical usefulness, andmarketability of the company’s product candidates, (ii) oversee the creation, execution and reporting of clinical trial activities required to achieve approvalby FDA, European, and Japanese regulatory agencies of new and experimental products and technologies in accordance with Good Clinical Practices,(iii) working with the management team to establish strategic direction for the company, and (vi) providing such other duties as the Company mayreasonably designate. All your duties are to be performed and discharged, faithfully, diligently and to the best of your ability and in compliance with allapplicable laws and regulations.Compensation:As a full-time, exempt employee, you will receive an annualized salary of $467,000.00 to be paid in accordance with AGTC’s standard payroll practice.Currently, our payroll is paid on a semi-monthly basis.We are also pleased to offer you $109,000 as a sign-on bonus. Your bonus, paid with your 1st payroll disbursement, will be less applicable deductions,taxes, and other amounts required by federal and state laws. If you voluntarily terminate your employment with the Company or the Company terminatesyour employment with Cause at any time prior to one (1) year after the commencement of your employment with the Company (your “Hire Date”) you willbe obligated to repay to the Company, the entire amount of the signing bonus. If you voluntarily terminate your employment with the Company or theCompany terminates your employment with Cause at any time prior to two (2) years after the commencement of your employment with the Company (your“Hire Date”) you will be obligated to repay to the Company, 50% of the amount of the signing bonus. In furtherance of this condition and as a condition toyour employment with the Company, you will be required to execute a Promissory Note in favor of the Company in an amount equal to the signing bonus. In addition to your base salary, you will be eligible for an annual bonus targeted at 35 percent (35%) of your base salary. Bonus eligibility and amounts arediscretionary and determined based upon periodic assessments of operational and behavioral performance and the achievement of specific individual andcorporate objectives. Furthermore, please note that (i) you must be an employee at the time of the scheduled bonus payment to receive the bonus, and (ii) thedetermination of whether a bonus is paid in any given year is subject to the approval of the Compensation Committee of the Board of Directors.Stock Options:Effective as of the first day of your employment, the Company will grant you stock option to purchase 100,000 shares of AGTC common stock at apurchase price equal to the closing price of AGTC’s common stock on your start date. The option will be subject to the provisions of AGTC’s 2013 Equityand Incentive Plan and the Stock Option Award Agreement to be entered into by you and AGTC following the grant, which in relevant part will require thatsuch option (i) vests over a period of four years, with an initial one-year cliff; (ii) expires 10 years from the grant date; and (iii) may be exercised (as to thevested portion) for ninety (90) days following the termination of your employment.Working Remotely, Relocation and Reimbursement:We have agreed that you may maintain your current residence in New Jersey and perform most of your day-to-day responsibilities as a “remote employee”subject to the following conditions: (i)you may work from home for up to 2 days per week and will travel routinely for the remaining days to the Company’s offices in Alachua,Florida and Cambridge Massachusetts, or to other locations as necessary or appropriate in connection with the performance of your duties; (ii)as long as you remain a “remote employee” you will be subject to the Company’s Remote Employee Policy; and (iii)on or before your first 90 days, you will negotiate with the CEO on future requirements for travel to the Company’s offices in Alachua, Floridaand Cambridge Massachusetts, or to other locations as necessary or appropriate in connection with the performance of your duties.Benefits:You will be eligible to participate in AGTC’s employee benefits in the same manner provided generally to AGTC’s full-time employees, which includesoptions for health, dental, vision, disability and life insurance as well as a 401(k) savings plan (with a Company match of up to 4% of base salary).The Company’s benefit program is managed by our leasing agent Insperity. For your medical benefits there is an initial waiting period thirty days, at whichpoint elected benefits become effective. A package describing these benefits will be provided to you on or before your start date. Page 2 of 5The Company will reimburse you for all reasonable and necessary traveling expenses and other disbursements actually incurred by you for or on behalf ofthe Company in the performance of your duties during your employment. This includes qualified transportation reimbursement for a transit pass and/orqualified parking up to the allowable IRS monthly limit. As with other employees, you shall be required to submit to the Company every two weeks reportsof claims of such expenses and disbursements for approval and reimbursement by the Company.Paid Time Off:Initially, you will be entitled to twenty (20) days of Paid Time Off (“PTO”). The time will be accrued on a semi-monthly basis and may be used as soon as itis earned. You will receive one additional day per year for each full year of employment based on your anniversary date, up to a maximum of thirty(30) days. This time is for you to use as needed for vacation, family business, sick days or other necessary time away from work. Such leave may beaccumulated over three years but in no event shall your leave be accrued in excess of forty-five (45) days per year. If your employment terminates for anyreason whatsoever, you shall be entitled to receive, in addition to any unpaid salary, any unused PTO accrued to the date of your termination of employmentbut not to exceed forty-five (45) days.Termination:This letter agreement is not intended to, and it does not create any employment contract for any specified term or duration between you and the Company.Your employment with the Company is terminable at any time, by yourself upon two weeks written notice, or by the Company upon two weeks writtennotice or payment of salary in lieu thereof. Your employment may also be terminated for cause by the Company at any time without advance written notice.“Cause” is defined for purposes of your employment as including (but it is not limited to) any of the following: • Your failure to effectively carry out your duties and responsibilities, as evaluated and determined by the Company in its absolute discretion; • Violation of requirements of this letter, the Employee Manual, or any provision of an applicable code of conduct or ethics; • Conduct which, in the Company’s determination, causes embarrassment or loss of credibility to the Company, its employees, products orservices, or the position that you hold, or which causes the Board to lose confidence in you. • Conduct which, in the Company’s determination, violates the Nondisclosure, Inventions and Non- Competition Agreement, or which involvesdishonesty, moral turpitude, or misrepresentation.For purposes of this letter agreement, “Good Reason” shall mean: • Either before or after a Change in Control, a requirement that you either (i) perform the majority of your services to the Company in anylocation beyond a fifty (50) mile radius of Cambridge, Massachusetts; and/or (ii) relocate your residence beyond a fifty (50) mile radius ofHoboken, NJ; Page 3 of 5 • Upon the sale of all or substantially all of the stock or assets of the Company, whether by merger, acquisition or otherwise the successorcompany does not offer you a position with substantially equivalent responsibilities; and/or • Upon the sale of all or substantially all of the stock or assets of the Company, whether by merger, acquisition or otherwise, the successorcompany does not offer you a position with total compensation and benefits at least equivalent to those you received from the Companyimmediately prior to such sale.Assuming that you have effectively worked in your new position for a period of at least six months, then if your employment is terminated because either(A) the Company terminates your employment without Cause or (B) you terminate your employment for Good Reason (and provided that you execute anddo not revoke a Release and Settlement Agreement in the form reasonably acceptable to the Company and you), you will be entitled to receive an amountequal to nine (9) months’ of your then-base salary; to include base salary and bonus earned (less all applicable deductions), plus the Company’s payment ofthe Company portion of the premium for benefits that you continue pursuant to the Consolidated Omnibus Benefits Reconciliation Act of 1984, as amended,payable in a lump sum or as otherwise agreed to by you and the Company.Proprietary Information and Inventions:You will be required to sign a Proprietary Information, Inventions and Non-Competition and Non-Solicitation Agreement (“PIIA”) on or before your firstday of work. The PIIA obligates you not to disclose confidential or proprietary information you may learn during your employment with AGTC, to assign toAGTC rights in inventions or other intellectual property developed in the course of your employment and not to solicit employees or business away from, orengage in competition against, AGTC for a period of one year following any termination of your employment.Additional Company Policies:Upon joining AGTC as an employee, you will become subject to all of the Company’s policies and procedures, which will be presented to you during youronboarding process. These policies include AGTC’s Code of Ethics and its Insider Trading Policy. Any failure by you to abide by the Company’s internalpolicies shall be considered material misconduct.AGTC is a drug free workplace and therefore, you will also be required to submit to a drug screening prior to your start date. Authorization for this screeningwill be sent to you separately.Acknowledgement:This offer is contingent upon satisfactory completion of reference and background checks. In accepting this offer, you give us your assurance that you havenot relied on any agreements, promises or representations, express or implied, with respect to your employment that are not set forth expressly in this letter.You also acknowledge that the Company reserves the right to modify, amend or terminate the Company policies, plans and programs described in this letterat any time at its sole discretion. This letter sets forth the entire Page 4 of 5agreement and understanding between you and AGTC with respect to the subject matter hereof, will supersede all prior oral or written agreements relating tosuch matters. If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to AGTC the enclosed copy of this letter.This offer is valid through June 18, 2019.Again, it is with great pleasure that I offer you this position at AGTC. The Company is delighted with the prospect of your joining our team and hopes thatyou accept this offer. We have exciting and challenging work ahead of us . . . and I believe that you will be an excellent addition to our team!Sincerely,/s/ Susan B. WasherSusan WasherPresident and CEOConsented to and Agreed:/s/ Theresa HeahTheresa Heah Date Page 5 of 5Exhibit 10.34EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 29th day of August, 2019 by and between Applied GeneticTechnologies Corporation, a Delaware corporation, including its successors and assigns, (the “Employer” or “Company”), and Brian Krex (“Executive”).NOW, THEREFORE, in consideration of the promises and the respective undertakings of Employer and Executive set forth below, Employer andExecutive hereby agree as follows:1. Employment. Employer hereby employs Executive, and Executive hereby accepts such employment and agrees to perform services for Employer,for the period and on the other terms and subject to the conditions set forth in this Agreement. Employee’s Start Date shall be and shall be considered theEffective Date of this Agreement.2. Employment at Will. Executive is employed “at-will” which means that Executive’s employment is not for any defined term and may beterminated by either Executive or the Company at any time, with or without cause, for any or no reason, subject to the notice provisions herein.3. Position and Duties.3.1 Service with Employer. Employer hereby employs Executive in an executive capacity with the title of General Counsel and Executivehereby accepts such employment and undertakes and agrees to serve in such capacity. Executive shall have such powers, perform such duties and fulfill suchresponsibilities as are typically associated with such position in other similarly situated companies and shall report directly to the Company’s President andChief Executive Officer,3.2 Performance of Duties. Executive agrees to: (i) devote substantially all of Executive’s business time, attention and efforts to the businessand affairs of Employer while employed; and (ii) adhere to all Employer’s written employment policies and procedures as shall be in force from time totime.3.3 Outside Activities. During the Term, Executive shall not: (i) except as set forth below, accept other employment; (ii) except as set forthbelow, render or perform services for compensation to any Person (as hereinafter defined) other than Employer; (iii) serve as an officer or on the board ofdirectors (or similar governing body) of any entity other than Employer, whether or not for compensation; or (iv) engage in any other business, enterprise oractivity that will require any effort on the part of Executive that, in the sole discretion of Employer, could reasonably be expected to materially detract fromthe ability of Executive to perform Executive’s duties to Employer pursuant to this Agreement; provided, however, Executive may engage in the activitiesset forth in Schedule A hereto or described in clause (iii) or (iv) above if prior to engaging in such activity, Executive has disclosed such activity to theBoard and received written approval to engage in such activity from the Board. Executive may engage in personal investments without disclosure to orwritten approval from the Board provided Executive is not required or expected to serve as a board member, advisor or consultant and Executive shall, atany time, own beneficiallyless than 2% of the outstanding securities of any issuer and such personal investment shall not otherwise interfere with Executive’s performance of dutieshereunder and/or the provisions of Executive’s written agreements with Employer.3.4 Executive Representations. Executive represents that Executive is not subject to any restrictive covenant, confidentiality agreement, orany other agreement that would prevent Executive from accepting employment with Employer, and based on the information provided to Employer byExecutive, Employer accepts such representation.4. Compensation.4.1 Base Salary. Employer shall pay to Executive a base salary for all services to be rendered by Executive under this Agreement (the “BaseSalary”), which Base Salary shall be paid in accordance with Employer’s normal payroll schedule, procedures and policies (which schedule, procedures andpolicies may be modified from time to time) and subject to applicable deductions as required by law. Employer shall review Executive’s salary on an annualbasis and may, in its discretion, consider and declare from time to time increases in the Base Salary that it pays Executive. Any and all increases inExecutive’s salary pursuant to this section shall cause the level of Base Salary to be increased by the amount of each such increase for purposes of thisAgreement. The increased level of Base Salary as provided in this section shall become the level of Base Salary for the remainder of the term of thisAgreement unless there is a further increase in Base Salary as provided herein. Notwithstanding the foregoing, the Base Salary of Executive may bedecreased provided it is done so in proportion to decreases in Base Salary of the entire executive team of the Company.4.2 Annual Bonus. The Executive will be eligible to participate in the Employer’s annual cash incentive compensation plan on substantiallythe same terms as other executive officers. Company-wide and individual performance objectives (“MBOs”) will be established by the CompensationCommittee. Target incentives do not constitute a promise of payment and the Executive’s actual bonus, if any, will depend in part on the Employer’sperformance and the Compensation Committee’s discretion in assessing the Executive’s individual performance in relation to his or her MBOs and theoverall performance and status of the Company. To qualify for the incentive bonus, the Executive must remain employed with the Company through thedate that the incentive bonus is paid in accordance with the Employer’s normal practice.4.3 Participation in Benefit Plans. Executive shall be entitled to participate in all employee benefit plans or programs offered to other seniorexecutives from time to time (to the extent that Executive meets the requirements for each such plan or program), including participation in any healthinsurance plan, disability insurance plan, dental plan, eye care plan, 401(k) plan, life insurance plan, or other similar plans (all such benefits, the “BenefitPlans”). Some or all of the benefits may be provided by Employer’s leasing agent TriNet (or its successor(s) or assign(s).4.4 Expenses. Employer shall reimburse Executive for all ordinary and necessary business expenses reasonably incurred by him in theperformance of Executive’s duties under this Agreement, subject to the presentment and approval of appropriate itemized expense statements, receipts,vouchers or other supporting documentation in accordance with Employer’s normal policies for expense verification in effect from time to time. 24.5 Paid Time Off. Executive shall be entitled to paid time off pursuant to Employer’s standard paid time off policies in the same manner asthe Company’s other Senior Executives. Unused paid time off may be carried over from year to year, but in no case may more than 45 days (360 hours) ofunused paid time off be accrued.4.6 Total Compensation. Executive shall not receive any other compensation or benefits other than as provided in Sections 4.1 through 4.5hereof.5. Payments Upon Termination.5.1 Voluntary Resignation without Good Reason. Executive may terminate Executive’s employment by providing Employer with 30 days’advance written notice. If Executive terminates Executive’s employment (other than for Good Reason (either prior to or within 12 months following aChange in Control) or by reason of Disability, each as defined below) (i) Employer shall pay to Executive the Accrued Obligations (as defined below), (ii)Executive’s participation in the Benefit Plans shall terminate as of the Termination Date, and (iii) Employer shall have no other obligations to Executiveunder this Agreement, other than those provided in this Section 5.1.(a) For purposes of this Agreement, “Accrued Obligations” means: (i) Executive’s earned and unpaid Base Salary through theTermination Date; (ii) reimbursement for any reimbursable business expenses incurred by Executive through the Termination Date inaccordance with Section 4.4; and (iii) Executive’s accrued but unused paid time off as of the Termination Date. The amounts payable pursuantto clauses (i) and (iii) hereof shall be paid no later than sixty (60) days following Executive’s Termination Date.(b) For purposes of this Agreement, “Termination Date” means: the effective date of Executive’s “separation from service” as definedin Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).5.2 Termination by Employer For Cause. If Executive is terminated for Cause: (i) Employer shall pay to Executive the Accrued Obligations,(ii) Executive’s participation in the Benefit Plans shall terminate as of the Termination Date, and (iii) Employer shall have no further obligations toExecutive under this Agreement, other than those provided in this Section 5.2. For purposes of this Agreement, “Cause” means: (a) Executive’s failure tosubstantially perform Executive’s duties with the Company (if Executive has not cured such failure to substantially perform, if curable, within thirty(30) days after Executive’s receipt of written notice thereof from the Board that specifies the conduct constituting Cause under this clause (a)); (b)Executive’s willful misconduct, or gross negligence in the performance of Executive’s duties hereunder; (c) the conviction of Executive for, or the enteringby Executive of a guilty plea or plea of no contest with respect to, any crime that constitutes a felony or involves fraud, dishonesty or moral turpitude;(d) Executive’s commission of an act of fraud, embezzlement or misappropriation against the Company; (e) Executive’s material breach of the fiduciaryduty owed by Executive to the 3Company; (f) Executive’s engaging in any improper conduct that has or is likely to have an adverse economic or reputational impact on the Company; or(g) Executive’s material breach of this Agreement.5.3 Termination by Employer Without Cause or by Executive for Good Reason. If Executive’s employment is terminated (a) by Employerwithout Cause (other than upon Disability or death) or (b) by Executive for Good Reason either prior to a Change in Control or within twelve (12) monthsfollowing a Change in Control: (i) Employer shall pay to Executive the Accrued Obligations, (ii) Executive shall be entitled to receive the SeveranceBenefits (as defined below in Section 5.5 and subject to the conditions described therein and in Section 5.6), and (iii) Employer shall have no furtherobligations to Executive under this Agreement, other than those provided in this Section 5.3. For purposes of this Agreement, “Good Reason” means theoccurrence of any of the following events (without Executive’s consent):(a) a material adverse change in Executive’s functions, duties, or responsibilities with the Company which change would causeExecutive’s position to become one of materially lesser responsibility, importance, or scope;(b) a relocation of the Executive’s principal workplace to a location more than 50 miles from the location of such workplaceimmediately prior to the Change in Control without the Executive’s express written consent;(c) a material diminution in the Executive’s compensation or benefits without the express written consent of the Executive, other thanan across-the-board reduction in compensation levels that applies to all senior executives generally; or(d) a material breach of this Agreement by the Company.Notwithstanding the foregoing, no such event shall constitute “Good Reason” unless (a) Executive shall have given written notice of such event to theCompany within ninety (90) days after the initial occurrence thereof, (b) the Company shall have failed to cure the condition constituting Good Reasonwithin thirty (30) days following the delivery of such notice (or such longer cure period as may be agreed upon by the parties), and (c) Executive terminatesemployment within thirty (30) days after expiration of such cure period.5.4 Termination by Employer due to Executive’s Death or Disability. If Executive’s employment is terminated by reason of death orDisability (as defined below): (i) Employer shall pay to Executive the Accrued Obligations, (ii) Executive’s participation in the Benefit Plans shall terminateas of the Termination Date (except to the extent Executive is eligible for continued disability benefits under the applicable Employer plan), and(iii) Employer shall have no further obligations to Executive under this Agreement, other than those provided in this Section 5.4. For purposes of thisAgreement, “Disability” means Executive being determined to be totally disabled by the Social Security Administration or Executive’s inability to engage inany substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can beexpected to last for a continuous period of not less than twelve months. 45.5 Severance Benefits. “Severance Benefits” means:(a) The payment to Executive of the Severance Amount in a lump sum immediately following the Termination Date.(b) For this purpose, “Severance Amount” means:(i) In the event that Executive’s employment is terminated without Cause or by the Executive for Good Reason, in each case,within twelve (12) months following a Change in Control, an amount equal to the sum of (A) the product of 1.0 multiplied byExecutive’s annual Base Salary plus (B), the product of 1.0 multiplied by the Executive’s target bonus in effect immediately prior to theDate of Termination.(ii) In the event that Executive’s employment is terminated without Cause (other than within twelve (12) months of a Change inControl), an amount equal to the sum of (A) the product of 0.75 multiplied by Executive’s annual Base Salary plus (B), the product ofthe Executive’s target bonus in effect immediately prior to the Date of Termination multiplied by a fraction equal to the quotient of thenumber of days during such year on which the Executive was employed by the Company, divided by 365.(c) The continuation of Executive’s participation in the Company’s medical, dental, and vision benefit plans at the same premium costto Executive as charged to Executive immediately prior to the Termination Date for a period of (i) in the event that the Executive’semployment is terminated without Cause or by the Executive for Good Reason, in each case, within twelve (12) months following a Change inControl, twelve (12) months immediately following the Termination Date or (ii) in the event that the Executive’s employment is terminatedwithout Cause (other than within twelve (12) months of a Change in Control) nine (9) months immediately following the Termination Date (ineach case, the “Continuation Period”), or if earlier, until Executive obtains other employment which provides the same type of benefit;provided, however, that (i) it is understood and agreed that such continued medical, dental and vision benefits may at the election of theCompany be provided by Executive electing the continuation of such coverage pursuant to COBRA with the Company reimbursing Executivefor COBRA premiums to the extent required so that Executive’s premium cost for the coverage in effect for Executive prior to the TerminationDate is substantially the same as immediately prior to the Termination Date, and (ii) if the Company determines, in its reasonable judgment,that providing medical, dental, and/or vision benefits in accordance with the preceding provisions of this Section 5.5(c) would result in aviolation of applicable law, the imposition of any penalties under applicable law, or adverse tax consequences for participants covered by theCompany’s medical, dental, and/or vision plans, the Company may terminate such 5coverage (or reimbursement) with respect to Executive and instead pay to Executive taxable cash payments at the same time and in the sameamounts as the Company would have paid as premiums (or as COBRA premium reimbursements) to provide such coverage.(d) Acceleration of vesting as follows:(i) In the event that Executive’s employment is terminated by Employer without Cause or by Executive for Good Reason, ineach case, within twelve (12) months following a Change in Control: each stock option, restricted stock unit, restricted stock award orother stock-based compensatory award granted by the Company to Executive that is outstanding as of the Termination Date and is notfully vested as of the date of the Termination Date (each an “Award”), shall become fully vested as of the date Executive provides theCompany with the Irrevocable Release provided for in this Section 5.5 within the period prescribed therein.(ii) In the case of any Award the vesting of which is contingent in whole or in part upon the attainment of any Company ormarket performance condition that has not yet been satisfied, such condition shall be deemed to have been satisfied as of the date oftermination at the level that would result in vesting of 100% of the number of shares stated as the target award.(e) For purposes of this Agreement, “Change of Control” means, and shall be deemed to have occurred, if:(i) any Person, excluding (i) employee benefit plans of the Company or any of its Affiliates, is or becomes the “beneficialowner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, which Rules shall apply for purposes of this clause (a) whether ornot the Company is subject to the Exchange Act), directly or indirectly, of Company securities representing more than fifty percent(50%) of the combined voting power of the Company’s then outstanding securities (“Voting Power”);(ii) the Company consummates a merger, consolidation, share exchange, division or other reorganization or transaction of theCompany (a “Fundamental Transaction”) with any other corporation, other than a Fundamental Transaction that results in the votingsecurities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by beingconverted into voting securities of the surviving entity) at least fifty percent (50%) of the combined Voting Power immediately aftersuch Fundamental Transaction of (i) the Company’s outstanding securities, (ii) the surviving entity’s outstanding securities, or (iii) inthe case of a division, the outstanding securities of each entity resulting from the division; 6(iii) the stockholders of the Company approve a plan of complete liquidation or winding-up of the Company or theconsummation of the sale or disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets;or(iv) during any period of 24 consecutive months, individuals who at the beginning of such period constituted the Board(including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved bya vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of such period or whoseappointment, election or nomination was previously so approved or recommended) cease for any reason to constitute at least a majorityof the Board.5.6 Required Delivery of Irrevocable Release; Compliance with Section 6 Obligations. Notwithstanding the provisions of Section 5.5, as acondition to entitlement to the Severance Benefits, Executive must provide to the Company an Irrevocable Release and Noncompete Affirmation not laterthan the sixtieth day after the Date of Termination; provided however that if the sixty day period begins in one calendar year and ends in a subsequentcalendar year, any payment to be made or benefit to be provided upon receipt of the Irrevocable Release and Noncompete Affirmation shall not be made orprovided until the subsequent year. In the event Executive fails to provide an Irrevocable Release and Noncompete Affirmation to the Company within suchsixty day period, the Company will immediately cease to pay or provide any further Severance Benefits, no accelerated vesting of stock options or otherawards pursuant to Section 5.5(d) shall occur, and Executive shall be obligated to immediately repay to the Company all previously paid or providedSeverance Benefits. “Irrevocable Release and Noncompete Affirmation” means a confidential separation agreement, release of claims and affirmation ofnoncompete, in form and substance substantially similar to the attached Exhibit A that has been executed by Executive, delivered to the Company, andbecome irrevocable by Executive. In addition, in the event that Executive breaches the obligations under Section 6 of this Agreement at any time during theContinuation Period, Executive will cease to be entitled to any further Severance Benefits. 76. Promises and Covenants Regarding Confidential Information and Goodwill; Inventions and Assignment; Restrictive Covenants.6.1 Confidential Information and Goodwill. In consideration of Executive’s promises and covenants contained in this Agreement, includingExecutive’s promise and covenant not to disclose Confidential Information, Employer will provide Executive with Confidential Information. In furtherconsideration of Executive’s promises and covenants contained in this Agreement, including Executive’s promise and covenant to utilize the Goodwillexclusively for the benefit of Employer, Employer will allow Executive to receive Confidential Information concerning the Company’s customers, labs,vendors and employees and, to the extent required to fulfill Executive’s duties, the Company will permit Executive to represent the Company on its behalfwith such persons. To the extent that Executive’s duties involve sales or customer relations, the Company will permit Executive to utilize the Goodwill inExecutive’s sales efforts and will provide sales support to Executive similar to that which it provides to its sales representatives.6.2 Duties. While employed by Company, Executive shall perform the duties required of Executive hereunder and shall devote Executive’sbest efforts and exclusive business time, energy and skill to performing such duties; not make any disparaging remarks regarding Company to any personwith whom Company has business relations, including any employee or vendor of Company; use the Goodwill solely for the benefit of Company; and notinterfere in such Goodwill, either during or following Executive’s employment with Company.6.3 Delivery of Company Property. Executive recognizes that all documents, magnetic media and other tangible items which containConfidential Information are the property of Company exclusively. Upon request by Company or termination of Executive’s employment with Company,Executive shall promptly return to Company all Confidential Information and Company Property within Executive’s possession and control, and shallrefrain from taking any Confidential Information or Company Property or allowing any Confidential Information or Company Property to be taken fromCompany; and immediately return to Company all information pertaining to Company or Company Property in Executive’s possession.6.4 Promise and Covenant Not to Disclose. The parties acknowledge that Company is the sole and exclusive owner of ConfidentialInformation, and that Company has legitimate business interests in protecting Confidential Information. The parties further acknowledge that Company hasinvested, and continues to invest, considerable amounts of time and money in obtaining, developing, and preserving the confidentiality of ConfidentialInformation and that, by reason of the trust relationship arising between Executive and Company, Executive owes Company a fiduciary duty to preserve andprotect Confidential Information from all unauthorized disclosure and unauthorized use. Executive shall not, directly or indirectly, disclose ConfidentialInformation to any third party (except to Executive’s attorneys, the Company’s personnel, other persons designated in writing by the Company, or except asotherwise provided by law) or use Confidential Information for any purpose other than for the direct benefit of Company while in Company’s employ andthereafter.6.5 Inventions and Assignment. Executive agrees that he will promptly disclose to the Company any and all Company Inventions and thatExecutive hereby irrevocably assigns to the Company all ownership rights in and to any and all Company Inventions. During Executive’s 8employment or at any time thereafter, upon request of the Company, Executive will sign, execute and deliver any and all documents or instruments,including, without limitation, patent applications, declarations, invention assignments and copyright assignments, and will take any other action which theCompany shall deem necessary to perfect in the Company trademark, copyright or patent rights with respect to Inventions, or to otherwise protect theCompany’s trade secrets and proprietary interests. The term “Inventions” means discoveries; developments; trade secrets; processes; formulas; data; lists;software programs; graphics; artwork; logos, and all other works of authorship, ideas, concepts, know-how, designs, and techniques, whether or not any ofthe foregoing is or are patentable, copyrightable, or registrable under any intellectual property laws or industrial property laws in the United States. The term“Company Inventions” means all Inventions that (a) relate to the business or proposed business of the Company or any of its predecessors or that arediscovered, developed, created, conceived, reduced to practice, made, learned or written by Executive, either alone or jointly with others, in the course ofExecutive’s employment; (b) utilize, incorporate or otherwise relate to Confidential Information; or (c) are discovered, developed, created, conceived,reduced to practice, made, or written by him using property or equipment of the Company or any of its predecessors. Executive agrees to promptly and fullycommunicate in writing to the Company (to such department or officer of the Company and in accordance with such procedures as the Company may directfrom time to time) any and all Company Inventions. Executive acknowledges and agrees that any work of authorship by Executive or others comprisingCompany Inventions shall be deemed to be a “work made for hire,” as that term is defined in the United States Copyright Act (17 U.S.C. § 101 (2000)). Tothe extent that any such work of authorship may not be deemed to be a work made for hire, Executive hereby irrevocably assigns any ownership rightsExecutive may have in and to such work to the Company. This Agreement does not apply to any Inventions Executive made before Executive’s employmentwith the Company. To clearly establish Executive’s rights, Executive has listed on Exhibit B any Inventions, whether or not patentable or copyrightable andwhether or not reduced to practice, made by him prior to Executive’s employment with the Company that are owned by Executive (“Prior Inventions”),together with the approximate dates of their creation. If no such list is attached, Executive represents that there are no Prior Inventions.6.6 Other Promises and Covenants. In consideration for the benefits specifically provided for in this Section 6.6 and that may otherwise beprovided pursuant to this Agreement, including but not limited to the benefits payable pursuant to Section 5.5, Executive hereby promises and covenants asfollows.(a) In consideration of payment to Executive of $500.00, less applicable withholdings, Executive agrees that during Executive’semployment with Company and, unless this Section 6.6(a) is waived by the Company in writing, for a period of one year followingtermination of employment for any reason other than the Company’s termination of Executive’s employment without Cause (the“Non-Competition Period”), Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assist othersin any of the following activities (except on behalf of Company):(i) (whether as principal, agent, partner or otherwise) engage in, own, manage, operate, control, finance, invest in, participate in,or otherwise carry on, or be employed by, associated with, or in any manner 9connected with, lend such Executive’s name to, lend Executive’s credit to, or render services or advice to a Competing Businessanywhere in the Geographic Area; or(ii) provide or develop any products, technology or services that are the same or Substantially Similar to the products,technology and services provided or developed by the Company or any of its Affiliates.(b) Unless Section 6.6(a) is waived by the Company in writing, as mutually-agreed upon consideration for the post-employmentrestriction described herein, the Company will pay Executive $10,000.00 within one month of Executive’s date of termination.Notwithstanding the foregoing, in the event that Executive has breached his or her fiduciary duty to the Company or has unlawfully taken,physically or electronically, property belong to the Company, then the Non-Competition Period shall be extended for an additional period ofone year.(c) During Executive’s employment with Company and for a period of two years following termination of employment for any reason(the “Non-Solicitation Period”), Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assistothers in any of the following activities:(i) induce or attempt to induce any customer, agent, supplier, licensee, or business relation of the Company or any of itsAffiliates to cease doing business with the Company or any of its Affiliates, or in any way interfere with the relationship between anycustomer, supplier, licensee, or business relation of the Company or any of its Affiliates; or(ii) on behalf of a Competing Business, solicit or attempt to solicit the business or patronage of any Person who is a customer oragent of the Company or any of its Affiliates, whether or not Executive had personal contact with such Person.(iii) solicit, encourage, or take any other action which is intended to induce any employee, independent contractor or agent ofthe Company or any of its Affiliates to terminate Executive’s employment or other business relationship with the Company or suchAffiliate;(iv) in any way interfere in any manner with the employment or other business relationship between the Company and/or any ofits Affiliates, on the one hand, and any employee, independent contractor or agent of the Company or such Affiliate, on the other hand;or(v) employ, or otherwise engage as an employee, independent contractor or otherwise, any individual who was an employee,independent contractor, agent or was otherwise affiliated with the Company or any of its Affiliates from the period beginning one yearprior to the date on which Executive became employed and continuing through the expiration of the Non-Solicitation Period. 10provided, however, that nothing set forth in this Section 6 shall prohibit Executive from owning, as a passive investment, not in excess of five percent (5%)in the aggregate of any class of capital stock of any corporation if such stock is publicly traded and listed on any national or regional stock exchange orreported on the Nasdaq Stock Market.6.7 Definitions. For purposes hereof:(a) “Affiliate” means, with respect to any Entity, any Entity that, directly or indirectly through one or more intermediaries, controls, iscontrolled by or under common control with, such Entity.(b) “Agreement” means this Employment Agreement.(c) “Company Business” means (i) any business related to providing services related to, manufacturing, selling or distributing genetherapy products using adeno-associated virus technology for the treatment of inherited and acquired diseases or conducting research ordevelopment with regard thereto; and (ii) any other business that the Company is actively engaged in researching, developing or marketing atthe time of the termination of Executive’s employment, provided that this clause (ii) shall only apply if Executive is involved with theresearch, development, or marketing of that other business.(d) “Company Property” means all physical materials, documents, information, keys, computer software and hardware, includinglaptop computers and mobile or handheld scheduling computers, manuals, data bases, product samples, tapes, magnetic media, technical notesand any other equipment or items which Company provides for or to Executive or which otherwise belongs to the Company, and thosedocuments and items which Executive may develop or help develop while in Company’s employ, whether or not developed during regularworking hours or on Company’s premises. The term “Company Property” shall include the original of such materials, any copies thereof, anynotes derived from such materials, and any derivative work of such materials.(e) “Competing Business” means any other Entity engaged in the Company Business, other than the Company and its Affiliates.(f) “Confidential Information” means the trade secrets and other information of Company, including but not limited to (i) the customerlists, customer contact information, customer purchase information, pricing information, strategic and marketing plans, compilations ofcustomer information, names of employees, contracts with third parties, training, financial and marketing books, sales projections, internalemployer databases, reports, manuals and information including information related to Company, its Affiliates or its customers, includingthose documents and items which any employee may develop or help develop while 11in the employ of the Company or any of its Affiliates, whether or not developed during regular working hours or on the premises of theCompany or such Affiliate; (ii) the identity, skills, personnel file information, performance appraisals and compensation of job applicants,employees, contractors, and consultants; (iii) specialized training; (iv) source code, scripts, user screens, reports or any other informationpertaining to the internal information technology or network of the Company and/or its Affiliates; and (v) information related to inventionsowned by the Company or any of its Affiliates or licensed from third parties; and unless the context requires otherwise, the term “ConfidentialInformation” includes the original of such materials, any copies thereof, any notes derived from such materials, and any derivative work ofsuch materials. The term “Confidential Information” does not include (1) information that was or becomes generally available publicly otherthan through disclosure by Executive, or (2) is required to be disclosed to any governmental agency or self-regulatory body or is otherwiserequired to be disclosed by law. Unless the context requires otherwise, the term “Confidential Information” shall include the original of suchmaterials, any copies thereof, any notes derived from such materials, and any derivative work of such materials.(g) “Entity” means and includes any person, partnership, association, corporation, limited liability company, trust, unincorporatedorganization or any other business entity or enterprise.(h) “Geographic Area” means those states in which the Company or any of its subsidiaries conducts business or in which its productsare being sold or marketed at the time of the termination of Executive’s employment.(i) “Goodwill” means the value of the relationships between the Company and its agents, customers, vendors, labs, and employees.(j) “Substantially Similar” means substantially similar in function or capability or otherwise competitive to the products or servicesbeing developed, manufactured or sold by the Company during and/or at the end of Executive’s employment, or are marketed to substantiallythe same type of user or customer as that to which the products and services of the Company are marketed or proposed to be marketed.6.8 Acknowledgements Regarding Other Promises and Covenants. With regard to the promises and covenants set forth herein, Executiveacknowledges and agrees that:(a) the restrictions are ancillary to an otherwise enforceable agreement including the provisions of this Agreement regarding thedisclosure, ownership and use of the Confidential Information and Goodwill of Company;(b) the limitations as to time, geographical area, and scope of activity to be restricted are reasonable and acceptable to Executive, anddo not impose any greater restraint than is reasonably necessary to protect the Goodwill and other legitimate business interests of Company; 12(c) the performance by Executive, and the enforcement by Company, of such promises and covenants will cause no undue hardship onExecutive;(d) the time periods covered by the promises and covenants will not include any period(s) of violation of, or any period(s) of timerequired for litigation brought by Company to enforce any such promise or covenant, it being understood that the extension of time provided inthis paragraph may not exceed two (2) years.6.9 Duty to Give Notice of Agreement. During employment by Company and the period of any post-employment obligation applicablehereunder, Executive shall provide written notice to any prospective employer of Executive’s obligations under this Agreement, and shall provide a truecopy hereof to such prospective employer at the outset of any communications about employment.6.10 Independent Elements. The parties acknowledge that the promises and covenants contained in Section 6 above are essentialindependent elements of this Agreement and that, but for Executive agreeing to comply with them, Company would not employ Executive. Accordingly, theexistence or assertion of any claim by Executive against Company, whether based on this Agreement or otherwise, shall not operate as a defense toCompany’s enforcement of the promises and covenants in Section 6. An alleged or actual breach of the Agreement by Company will not be a defense toenforcement of any such promise or covenant, or other obligations of Executive to Company. The promises and covenants in Section 6 will remain in fullforce and effect whether Executive is terminated by Company or voluntarily resigns.6.11 Remedies for Breach of Agreement. Executive acknowledges that Executive’s breach of any promise or covenant contained inSection 6 will result in irreparable injury to Company and that Company’s remedies at law for such a breach will be inadequate. Accordingly, Executiveagrees and consents that Company, in addition to all other remedies available at law and in equity, shall be entitled to both preliminary and permanentinjunctions to prevent and/or halt a breach or threatened breach by Executive of any such promise or covenant, and Executive waives the requirement of theposting of any bond in connection with such injunctive relief. Executive further acknowledges and agrees that the promises and covenants contained inSection 6 are enforceable, reasonable, and valid.7. Miscellaneous.7.1 Governing Law; Arbitration(a) This Agreement is made under and shall be governed by and construed in accordance with the laws of Florida, without regard to itsconflicts of law principles.(b) With respect to claims by the Company against Executive related to Executive’s threatened or actual breach of Section 6 of thisAgreement, each Party hereby irrevocably agrees that all actions or proceedings concerning such disputes 13may be brought by the Company in (a) the United States District Court for the Northern District of Florida; or (b) in any court of the State ofFlorida sitting in Alachua County, provided that the United States District Court lacks subject matter jurisdiction over such action orproceeding. Executive consents to jurisdiction of and venue in the courts in the State of Florida set forth in this Section, and hereby waives tothe maximum extent permitted by applicable law any objection which Executive may have based on improper venue or forum nonconveniens.(c) Except to the extent provided for in subsection (b) above, the Company and Executive agree that any claim, dispute or controversyarising under or in connection with this Agreement, or otherwise in connection with Executive’s employment by the Company or terminationof his employment (including, without limitation, any such claim, dispute or controversy arising under any federal, state or local statute,regulation or ordinance or any of the Company’s employee benefit plans, policies or programs) shall be resolved solely and exclusively bybinding, confidential, arbitration. The arbitration shall be held in Gainesville, Florida (or at such other location as shall be mutually agreed bythe parties). The arbitration shall be conducted in accordance with the Commercial Rules of the American Arbitration Association (the“AAA”) in effect at the time of the arbitration, including the Expedited Procedures. All fees and expenses of the arbitration, including atranscript if either requests, shall be borne equally by the parties. Each party is responsible for the fees and expenses of its own attorneys,experts, witnesses, and preparation and presentation of proofs and post-hearing briefs (unless the party prevails on a claim for which attorney’sfees are recoverable under law). In rendering a decision, the arbitrator shall apply all legal principles and standards that would govern if thedispute were being heard in court. This includes the availability of all remedies that the parties could obtain in court. In addition, all statutes oflimitation and defenses that would be applicable in court, will apply to the arbitration proceeding. The decision of the arbitrator shall be setforth in writing, and be binding and conclusive on all parties. Any action to enforce or vacate the arbitrator’s award shall be governed by theFederal Arbitration Act, if applicable, and otherwise by applicable state law. If either the Company or Executive improperly pursues anyclaim, dispute or controversy against the other in a proceeding other than the arbitration provided for herein, the responding party shall beentitled to dismissal or injunctive relief regarding such action and recovery of all costs, losses and attorney’s fees related to such action.7.2 Entire Agreement. This Agreement and the documents referenced herein contain the entire agreement of the parties relating to theemployment of Executive by Employer and the ancillary matters discussed herein and supersedes all prior agreements, negotiations and understandings withrespect to such matters, including, without limitation, any term sheet between the parties hereto with respect to such matters, and the parties hereto havemade no agreements, representations or warranties relating to such employment or ancillary matters which are not set forth herein. 147.3 Withholding Taxes. Employer may withhold from any compensation and Benefits payable under this Agreement all federal, state, city orother taxes as shall be required pursuant to any law or governmental regulation or ruling.7.4 Golden Parachute Limit. Notwithstanding any other provision of this Agreement, in the event that any portion of the Severance Benefitsor any other payment or benefit received or to be received by Executive (whether pursuant to the terms of this Agreement or any other plan, arrangement oragreement) (collectively, the “Total Benefits”) would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, asamended (the “Code”) (the “Excise Tax”), the Total Benefits shall be reduced to the extent necessary so that no portion of the Total Benefits is subject tothe Excise Tax; provided, however, that no such reduction in the Total Benefits shall be made if by not making such reduction, Executive’s RetainedAmount (as hereinafter defined) would be greater than Executive’s Retained Amount if the Total Benefits are so reduced. All determinations required to bemade under this Section 7.4 shall be made by tax counsel selected by the Company and reasonably acceptable to Executive (“Tax Counsel”), whichdeterminations shall be conclusive and binding on Executive and the Company absent manifest error. All fees and expenses of Tax Counsel shall be bornesolely by the Company. Prior to any reduction in Executive’s Total Benefits pursuant to this Section 7.4, Tax Counsel shall provide Executive and theCompany with a report setting forth its calculations and containing related supporting information. In the event any such reduction is required, the TotalBenefits shall be reduced in the following order: (i) the Severance Amount (in reverse order of payment), (iii) any portion of the Total Benefits that are notsubject to Section 409A of the Code (other than Total Benefits resulting from any accelerated vesting of equity awards), (iv) other Total Benefits that aresubject to Section 409A of the Code in reverse order of payment, and (v) Total Benefits that are not subject to Section 409A and arise from any acceleratedvesting of any equity awards. “Retained Amount” shall mean the present value (as determined in accordance with sections 280G(b)(2)(A)(ii) and 280G(d)(4)of the Code) of the Total Benefits net of all federal, state and local taxes imposed on Executive with respect thereto.7.5 Compliance With Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code (includingthe exceptions thereto), to the extent applicable, and shall be interpreted and administered accordingly. If any provision contained in this Agreementconflicts with the requirements of Section 409A of the Code (or the exemptions intended to apply under this Agreement), this Agreement shall be deemed tobe reformed to comply with the requirements of Section 409A of the Code (or applicable exemptions thereto). Notwithstanding anything to the contraryherein, for purposes of determining Executive’s entitlement to the Severance Benefits under Section 5 hereof, (a) Executive’s employment shall not bedeemed to have terminated unless and until Executive incurs a “separation from service” as defined in Section 409A of the Code, and (b) the effective dateof any termination or resignation of employment (or any similar term) shall be the effective date of Executive’s separation from service. Reimbursement ofany expenses provided for in this Agreement shall be made in accordance with the Company’s policies (as applicable) with respect thereto as in effect fromtime to time (but in no event later than the end of calendar year following the year such expenses were incurred) and in no event shall (i) the amount ofexpenses eligible for reimbursement hereunder during a taxable year affect the expenses eligible for reimbursement in any other taxable year or (ii) the rightto reimbursement be subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary herein, if a payment or benefit underthis Agreement is 15due to a “separation from service” for purposes of the rules under Treas. Reg. § 1.409A-3(i)(2) (payments to specified employees upon a separation fromservice) and Executive is determined to be a “specified employee” (as determined under Treas. Reg. § 1.409A-1(i)), such payment shall, to the extentnecessary to comply with the requirements of Section 409A of the Code, be made on the later of (x) the date specified by the foregoing provisions of thisAgreement or (y) the date that is six (6) months after the date of Executive’s separation from service (or, if earlier, the date of Executive’s death). Anyinstallment payments that are delayed pursuant to the provisions of this section shall be accumulated and paid in a lump sum on the first day of the seventhmonth following Executive’s separation from service (or, if earlier, upon Executive’s death) and the remaining installment payments shall begin on suchdate in accordance with the schedule provided in this Agreement. To the extent permitted by Section 409A, each payment hereunder shall be deemed to be aseparate payment for purposes of Section 409A of the Code.7.6 Amendments. No amendment or modification of the terms of this Agreement shall be valid unless made in writing and signed by bothExecutive and Employer.7.7 Severability; Reformation. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effectiveand valid under applicable Law but if any provision of this Agreement is held to be invalid, illegal or unenforceable under any applicable Law or rule, thevalidity, legality and enforceability of the other provisions of this Agreement will not be affected or impaired thereby. If any provision of this Agreement isfound invalid, illegal or unenforceable because it is too broad in scope, too lengthy in duration or violates any Law or regulation, it shall be reformed bylimiting its scope, limiting its duration or construing it to avoid such violation (as the case may be) while giving the greatest effect to the intent of the partiesas is legally permissible.7.8 No Waiver. No waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signedby the party against whom such waiver is sought to be enforced, and any such waiver shall be effective only in the specific instance and for the specificpurpose for which given.7.9 Assignment; No Third Party Beneficiary. This Agreement is a personal service contract, and shall not be assignable by Executive. ThisAgreement shall be assignable by Employer to any successor to the business of Employer, without the written consent of Executive; provided, however, thatthe assignee or transferee is the successor to all or substantially all of the business assets of Employer and such assignee or transferee expressly assumes allthe obligations, duties, and liabilities of Employer set forth in this Agreement. Any purported assignment of this Agreement in violation of this Section 7.9shall be null and void. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permittedassigns, and no other Person shall have any right, benefit or obligation hereunder.7.10 Counterparts; Facsimile Signatures. This Agreement may be executed in separate counterparts, each of which will be an original and allof which taken together shall constitute one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart. Afacsimile signature by any party on a counterpart of this Agreement shall be binding and effective for all purposes. Such party shall subsequently deliver tothe other party an original, executed copy of this Agreement; provided, however, that a failure of such party to deliver an original, executed copy shall notinvalidate Executive’s or its signature. 167.11 Notices. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any suchnotice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via areputable nationwide overnight courier service, in each case addressed as follows: If to the Company, to: AGTC 14193 NW 119th Terrace Alachua, FL 32615 Attention: Director of Human Resources Attention: General Counsel If to the Executive, to: Brian Krex ******* *******or to such other address as either the Company or the Executive may have furnished to the other in writing in accordance herewith). Any such notice,instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receiptrequested, postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice,instruction or other communication hereunder using any other means, but no such notice, instruction or other communication shall be deemed to have beenduly delivered unless and until it actually is received by the party for whom it is intended.7.12 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning orinterpretation of this Agreement.7.13 Cumulative Remedies. The rights and remedies of the parties hereunder are cumulative and not exclusive of any rights or remedies anyparty hereto may otherwise have.7.14 Expenses Relating to this Agreement. Each party shall pay its or Executive’s own expenses incident to the negotiation, preparation andexecution of this Agreement.7.15 Acknowledgement. Executive acknowledges that Executive has been advised to and has been given the opportunity to consult withlegal counsel for the purposes of reviewing this Agreement, including the non-competition and non-solicitation covenants contained herein. Executivefurther acknowledges that he or she has been given 10 business days to consider the terms of this Agreement. If Executive executes this Agreement prior tothe end of the 10 business day period, he or she agrees and acknowledges that such execution was a knowing and voluntary waiver of his or her right toconsider this Agreement for the full 10 business day period. 17IN WITNESS WHEREOF, Executive and Employer have executed this Employment Agreement as of the date set forth in the first paragraph. APPLIED GENETIC TECHNOLOGIESCORPORATIONBy: /s/ Susan B. Washer Name: Susan B. Washer Title: President and CEODate: August 29, 2019EXECUTIVE /s/ Brian KrexName: Brian KrexDate: August 26, 2019 18Schedule A - Permitted Outside ActivitiesPursuant to Section 3.3 of the Employment Agreement, Executive has disclosed and the Board has approved his participation in the following outsideactivities: 19Exhibit AGENERAL RELEASE AND WAIVER OF ALL CLAIMS(INCLUDING OLDER WORKER BENEFITS PROTECTION ACT CLAIMS ANDAFFIRMATION OF NONCOMPETE)For good and valuable consideration, including without limitation the compensation and benefits set forth in the Employment Agreement dated ,2019 (the “Agreement”) between the undersigned and Applied Genetic Technologies Corporation (the “Company”), to which this General Release andWaiver of All Claims is attached, the terms of which Agreement shall survive this General Release and Waiver of Claims, the undersigned, on behalf of andfor himself or herself and his or her heirs, administrators, executors, representatives, estates, attorneys, insurers, successors and assigns (hereafter referred toseparately and collectively as the “Releasor”), hereby voluntarily releases and forever discharges the Company, and its subsidiaries (direct and indirect),affiliates, related companies, divisions, predecessor and successor companies, and each of its and their present, former, and future shareholders, officers,directors, employees, agents, representatives, attorneys, insurers and assigns (collectively as “Releasees”), jointly and individually, from any and all actions,causes of action, claims, suits, charges, complaints, contracts, covenants, agreements, promises, debts, accounts, damages, losses, sums of money,obligations, demands, and judgments all of any kind whatsoever, known or unknown, at law or in equity, in tort, contract, by statute, or on any other basis,for contractual, compensatory, punitive or other damages, expenses (including attorney’s fees and cost), reimbursements, or costs of any kind, which theundersigned employee ever had, now has, or may have, from the beginning of the world to the date of this Release, known or unknown, in law or equity,whether statutory or common law, whether federal, state, local or otherwise, including but not limited to any and all claims arising out of or in any wayrelated to the undersigned’s engagement by the Company (including the hiring or termination of that engagement), or any related matters including, but notlimited to claims, if any arising under the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefits Protection Act; theCivil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Family and Medical Leave Act of 1993, as amended; the ImmigrationReform and Control Act of 1986; the Americans with Disabilities Act of 1990, as amended; the Employee Retirement Income Security Act (ERISA), asamended; the Florida Civil Rights Act, FLA. STAT. Sections 760.01 - 760.11; FLA STAT. Sections 448.01 et seq.; Mass. Gen. L. c. 151B, section 1 et seq.;Mass. Gen. L. c. 149, section 1 et seq.; Mass. Gen. L. c. 151, section 1A et seq.; and federal, state or local common law, laws, statutes, ordinances orregulations. Notwithstanding the foregoing, nothing contained in this General Release and Waiver of Claims shall be construed to bar any claim by theundersigned to enforce the terms of the Agreement.Releasor represents and acknowledges the following: (a)that Releasor understands the various claims Releasor could have asserted under federal or state law, including but not limited to the AgeDiscrimination in Employment Act and other similar laws; 20 (b)that Releasor has read this General Release carefully and understands all of its provisions; (c)that Releasor understands that Releasor has the right to and is advised to consult an attorney concerning this General Release and in particularthe waiver of rights Releasor might have under the laws described herein and that to the extent, if any, that Releasor desired, Releasor availedhimself or herself of this right; (d)that Releasor has been provided at least forty-five (45) days to consider whether to sign this General Release and that to the extent Releasorhas signed this General Release before the expiration of such forty-five (45) day period Releasor has done so knowingly and willingly; (e)that Releasor enters into this General Release and waives any claims knowingly and willingly; andthat this General Release shall become effective seven (7) business days after it is signed. Releasor may revoke this General Release within seven(7) business days after it is signed by delivering a written notice of rescission to Scott Koenig, Chair of AGTC, c/o Macrogenics, Inc., 1500 East Gude Drive,Rockville, MD 20850. To be effective, the notice of rescission must be hand delivered, or postmarked within the seven (7) business day period and sent bycertified mail, return receipt requested, to the referenced address.A. Executive acknowledges that Executive remains bound by Executive’s obligations set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6(a), 6.6(c), 6.7, 6.8,6.9, 6.10 and 6.11 of the Agreement. Executive confirms that for a period of one year following the termination of Executive’s employment with theCompany, Executive shall not either directly or indirectly, on Executive’s own or another’s behalf, engage in or assist others in any of the followingactivities (except on behalf of Company): (i)(whether as principal, agent, partner or otherwise) engage in, own, manage, operate, control, finance, invest in, participate in, or otherwisecarry on, or be employed by, associated with, or in any manner connected with, lend such Executive’s name to, lend Executive’s credit to, orrender services or advice to a Competing Business anywhere in the Geographic Area; or (ii)provide or develop any products, technology or services that are the same or Substantially Similar to the products, technology and servicesprovided or developed by the Company or any of its Affiliates.The capitalized terms herein have the meanings set forth in section 6.7 of the Agreement.Executive agrees that Executive will not disparage or encourage or induce others to disparage any of the Company, its subsidiaries and affiliates, togetherwith all of their respective past and present directors and officers and each of their successors and assigns. Nothing herein is intended to or shall preventExecutive from providing limiting testimony in response to a valid subpoena, court 21order, regulatory request or other judicial, administrative or legal process or otherwise as required by law.Signed and sealed this day of , 20 .Signed: Name (print): Brian Krex 22EXHIBIT BLIST OF PRIOR INVENTIONS Title Date Brief Description No Inventions.Additional sheets attached. Date: Signature /s/ Brian Krex Name Brian KrexExhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-8 No. 333-198979) of Applied Genetic Technologies Corporation pertaining to the Applied GeneticTechnologies Corporation 2011 Stock Incentive Plan, 2013 Equity and Incentive Plan and the 2013 Employee Stock Purchase Plan, and (2)Registration Statement (Form S-3 No. 333-225286) of Applied Genetic Technologies Corporationof our report dated September 26, 2019, with respect to the financial statements and financial statement schedule of Applied Genetic TechnologiesCorporation included in this Annual Report (Form 10-K) of Applied Genetic Technologies Corporation for the year ended June 30, 2019./s/ Ernst & Young LLPTampa, FloridaSeptember 26, 2019Exhibit 23.2Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-8 No. 333-198979) of Applied Genetic Technologies Corporation pertaining to the Applied GeneticTechnologies Corporation 2011 Stock Incentive Plan, 2013 Equity and Incentive Plan and the 2013 Employee Stock Purchase Plan, and (2)Registration Statement (Form S-3 No. 333-225286) of Applied Genetic Technologies Corporationof our report dated September 10, 2018, with respect to the financial statements and schedule of Applied Genetic Technologies Corporation included in thisAnnual Report (Form 10-K) of Applied Genetic Technologies Corporation for the year ended June 30, 2018./s/ Ernst & Young LLPTampa, FloridaSeptember 10, 2018Exhibit 31.1CERTIFICATIONSI, Susan B. Washer, certify that: 1.I have reviewed this Annual Report on Form 10-K 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting. 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’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 reasonablylikely 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 internalcontrol over financial reporting. Date: September 26, 2019 By: /s/ Susan B. Washer Susan B. Washer Chief Executive Officer and President (Principal Executive Officer)Exhibit 31.2CERTIFICATIONSI, William A. Sullivan, certify that: 1.I have reviewed this Annual Report on Form 10-K 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting. 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’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 reasonablylikely 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 internalcontrol over financial reporting. Date: September 26, 2019 By: /s/ William A. Sullivan William A. Sullivan Chief Financial Officer (Principal Financial Officer)Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Applied Genetic Technologies Corporation (the “Company”) for the year ended June 30, 2019 asfiled 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 his or her 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 theCompany. Date: September 26, 2019 By: /s/ Susan B. Washer Susan B. Washer Chief Executive Officer and President (Principal Executive Officer) Date: September 26, 2019 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 signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Applied GeneticTechnologies Corporation and will be retained by Applied Genetic Technologies Corporation and furnished to the Securities and Exchange Commission orits staff upon request.

Continue reading text version or see original annual report in PDF format above