Applied Genetic Technologies Corp (AGTC) 2016 Q4 法說會逐字稿

Good afternoon, and welcome to the AGTC fourth-quarter and FY16 financial results conference call. Today's call is being recorded. For introductions and opening remarks, I'd like to turn the call over to Larry Bullock, Chief Financial Officer of AGTC. Please go ahead.

Good afternoon, and thank you for joining us today.

Before we get started, I would like to remind everyone that during this conference call, we will make forward-looking statements, including statements about our financial results, our future business strategies and operations, and our product development and regulatory progress. Actual results could differ materially from those discussed in the forward-looking statements, due to a number of important factors including uncertainty inherent in the clinical development and regulatory process, and other risks described in our risk factor section of our annual report on Form 10-K for the fiscal year ended June 30, 2016.

I would now like to turn the call over to Sue Washer, President and Chief Executive Officer.

Thank you, Larry, and welcome to all who have joined us on the call today. Jeff Chulay, our Chief Medical Officer, is also joining Larry and me on the call. Today we will provide a Company update including recent developments, and the progress of our current and pending clinical trials. I will then turn the call back to Larry to review our fourth quarter and FY16 year-end financial results. Following Larry's remarks, we will take your questions

Since our last conference call, we have continued to make progress across clinical programs, and have remained focused on advancing novel gene-based therapies to improve the lives of patients afflicted by rare, inherited opthalmic genetic diseases. In June, we announced at the European Commission granted orphan drug designation to our investigational gene therapy product candidate for the treatment of X-linked retinitis pigmentosa, or XLRP, on which we are collaborating with Biogen.

XLRP is an inherited condition caused by mutations in the RPGR gene that result in progressive vision loss, beginning with night blindness in young boys, followed by progressive constriction of the field of vision, and eventual blindness by middle age. As a reminder, we have also been granted Orphan Drug designation by the European Commission and the FDA for the use of our gene therapy product candidates for the treatment of X-linked retinoschisis or XLRS, and achromatopsia caused by mutations in both the CNGB3 and CNGA3 genes.

In June, we hosted our second annual Research Day in New York City. We were joined by two of our scientific collaborators who discussed a range of opthalmic clinical endpoints, how they are measured, and how results in AGTC's clinical development programs could be reported. For those of you that weren't able to attend, I invite you to listen to a replay of the event which is available on the investor page of our website. Last month, we were pleased to announce that Anne VanLent has joined our Board of Directors, and was elected Chair of our Audit Committee. Anne has significant experience leading and advising healthcare companies in all stages of development, and we look forward to her contributions as we continue to advance our product candidates.

Now I will provide an update on the status of our lead clinical development programs, potential treatments for XLRS and achromatopsia. The first of our lead programs is the potential treatment for XLRS, which is characterized by abnormal splitting of the layers of the retina resorting in poor visual function in young boys, and can result in legal blindness in adult men. Additionally, approximately 40% of patients are at risk of retinal hemorrhage or retinal detachment.

This program, another on which we are collaborating with Biogen, is currently in an ongoing Phase 1/2 clinical trial which anticipates enrollment of up to 27 patients. We now have six clinical sites participating in this study, all of which are world-renowned centers specializing in inherited retinal diseases. To date, we have enrolled a total of eight patients, six in the lowest dose level group, and two in the middle dose level group.

The primary endpoint of this clinical trial is safety, and data to date has shown that our XLRS product candidate has been generally well-tolerated. We did observe mild to moderate ocular inflammation in the majority of patients, which resolved either without treatment, or after treatment with topical or oral corticosteroids. Enrollment in this study has been slower than planned.

Delays resulted from patients not meeting one or more eligibility criteria, a protocol amendment to allow use of prophylactic steroids that required further institutional review board approvals at each site, and the necessity to retest the study agent for a process component. We believe we have resolved these factors in order to meet our future enrollment goals, and we are executing on a plan to complete the trial expeditiously.

To help mitigate this lower than had planned enrollment, we have increased the number of clinical trial sites from the original three, to a total of six today. We also have signed a contract with a seventh site, and are in the process of evaluating additional sites to help continue to accelerate screening and enrollment. On a parallel front, we are also working with patient advocacy groups and academic centers to maximize outreach to XLRS patients and their families, and so increase study awareness. With the assistance from these groups, we have completed screening of over 100 patients, eight of whom are enrolled and approximately 20 of whom meet the eligibility requirements for the expansion group, which will provide additional safety data at the maximum tolerated dose.

We continue our patient outreach, and currently have multiple new patients in the screening process. These efforts will not only help with enrollment in this study, but will lay the foundation to build the patient community, develop our patient advocacy program, and prepare us for future trials.

As mentioned, we have seen mild to moderate ocular inflammation in the majority of enrolled patients, and therefore we amended the protocol to provide for standard prophylactic steroids, compared to the original protocol that allowed for treatment with steroids only after inflammation was seen. The principal investigators and our data and safety monitoring board have reviewed the data to date, approved the protocol amendment, and are in full agreement to move the trial forward. Overall, the study agent was generally well tolerated, and no patients have dropped out of the trial.

Vendor errors in testing of a study agent for the process component also resulted in delays in enrolling patients. The proper test was completed and the material met all specifications. As part of a best practices approach to mitigating future risk, we now have several backup vendors for our product testing, and we have also brought QC testing capabilities online at our Florida headquarters. We are measuring a wide range of secondary endpoints that might provide early indications of potential efficacy, and will help us design a subsequent trial.

We have not yet observed any significant improvements in secondary endpoints in the six patients treated at the lowest dose level, a common occurrence in first-in-man dose escalation studies. We are still in the process of completing the dose escalation phase of this trial, and moving forward, we will provide you quarterly updates on patient enrollment. We look forward to reporting on the higher dose groups when we have sufficient data to draw a meaningful conclusion.

We have now completed the planned enrollment in a natural history study in individuals affected by XLRS. We are in the process of analyzing the results, and submitting them for presentation at appropriate scientific meetings and in publications. We presented interim data from this study at both our 2015 and 2016 Research Days. The results of Phase 1/2 clinical trial and the natural history study will guide us in finalizing the design of a pivotal Phase 3 clinical trial for X-linked retinoschisis.

Moving to our next clinical indication, AGTC is also developing products for achromatopsia resulting from mutations in both the CNGB3 and CNGA3 genes, which together account for approximately 75% of the total achromatopsia patient population. Individuals with achromatopsia have markedly reduced visual function, extreme light sensitivity, and complete loss of color discrimination.

The Phase 1/2 clinical trial for the achromatopsia B3 product candidate is enrolling patients at four clinical sites, and an additional site is performing advanced optical testing on every patient. As with our XLRS trial, all of the achromatopsia B3 sites are world-renowned centers specializing in inherited retinal diseases. We plan to enroll a total of 24 patients in this study. To date, we have enrolled two patients, which is a lower number of patients than we had planned to report at this point in the study.

We experienced the same problem with our vendor with respect to testing the study agent as I previously described for the XLRS study agent, and this resulted in a delay to the initiation of enrollment. As a first-in-man study our internal and external teams are following the first two patients carefully over time to meet our primary objective of patient safety, before proceeding with further study enrollment involving a larger number of patients. Moving forward, we will provide you quarterly updates on patient enrollment, and we will release results when we have sufficient data to draw a meaningful conclusion.

We have now completed planned enrollment in a natural history study in persons affected by achromatopsia caused by CNGB3 mutations. We are in the process of analyzing the results and submitting them for presentation at appropriate scientific meetings and in publications. We presented interim data from this study at both our 2015 and 2016 Research Days. Completion of the Phase 1/2 clinical study and the natural history study will guide us in finalizing the design of a pivotal Phase 3 clinical trial.

For our achromatopsia A3 product candidate, we expect to submit the IND by the end of this year. All pre-clinical IND-enabling studies are complete. We finished manufacture of the study agent, and all study agent characterization tests are ongoing. Once the IND has cleared the FDA, as well as the individual site review boards, we anticipate enrolling 24 achromatopsia A3 patients in a Phase 1/2 clinical trial. The study design will be similar to the design of the achromatopsia B3 study.

We are also conducting a natural history study in patients with achromatopsia A3 at the Hadassah Ein Kerem Medical Center in Israel, and the Bascom Palmer Eye Institute at the University of Miami to document the progression of the disease, as we have for our previous programs.

I will now provide an update on our pre-clinical program to develop a potential treatment for XLRP, and a summary of our other research efforts. In our XLRP program, which as mentioned earlier is one of the programs in our collaboration with Biogen, we are currently conducting IND-enabling toxicology studies in two relevant disease models, a naturally occurring dog model, and a mouse knock-out model. A dose range finding study of our XLRP product candidate in dog demonstrated expression of the RPGR protein in photo receptors, an improvement in structural and functional parameters associated with disease progression in this model. We expect to file an IND for XLRP in 2017.

We are also conducting natural history study in patients with XLRP caused by RPGR mutations at the Scheie Eye Institute at the University of Pennsylvania. This study will document the progression of the disease in the absence of treatment, and provide important information about the best methods for measuring visual function and other parameters in these patients whose disease course is different, and thus differentiated from XLRS and achromatopsia disease courses. This information will guide us in the design of subsequent clinical trials, in which our product candidate will be tested for safety and efficacy.

As we have previously communicated, we are also developing treatments for three additional indications in collaboration with Biogen that are in the discovery phase, and we are continuing to evaluate other ophthalmology indications to select those most appropriate for addition to our longer-term product development pipeline. As an example, in January of this year, we announced a research effort in blue-cone monochromacy or BCM.

We have several areas of basic research ongoing. In May, we announced a new initiative of the area of otology, where will we use our capabilities to develop potential gene therapy products that can address genetic causes of hearing loss. We have formed a scientific advisory board job to help guide our target selections, and we will announce product candidates when we begin formal development of each indication.

We continue to advance the capabilities of our manufacturing system by developing internal capacity, implementing advanced technologies for product characterization, and continuing to increase [volumetric] productivity. Over the past year, we have progressed our partnerships with 4D Molecular Therapeutics, and Symphonix to identify novel potent cell-specific capsids and potent cell-specific promoters.

In summary, this year we have increased our discovery capabilities to further enhance our ability to develop next-generation products. As we expand our pipeline, we continue to recruit the specialized talent, and develop the dedicated facilities required to advance these programs. We have increased our research personnel from 25 to 39 employees as of June 30, 2016, and we are continuing our growth into 2017. We have also expanded our facilities to approximately 21,000 square feet of laboratory and office space this year, from approximately 7,000 square feet last year, with plans to add an additional 3,000 square feet in 2017.

Our new process development and pilot manufacturing facility is now operational, which will enable us to decrease our dependence on contract manufacturers, and to further develop our internal manufacturing capabilities. To that end, we recently began the design phase of construction for a CGMP facility at our headquarters, in preparation for moving products forward into later stages of development. AGTC made solid progress during FY16 through execution of key clinical and business objectives.

In July of 2015, we announced our strategic collaboration with Biogen to develop gene therapies in opthalmology, which included an upfront payment of $124 million, and a $5 million milestone payment as an enrollment milestone for XLRS. To facilitate the collaboration, and to continue to attract top-tier talent, we opened a second office in Cambridge, Massachusetts. As of June 30, we have 55 employees at our Florida in Cambridge offices, compared to 35 at the end of June 30, 2015.

AGTC now has six main ophthalmology development programs across five targets, XLRS, XLRP, achromatopsia, BCM and wet AMD. In addition, we have non-opthalmology efforts such as our adrenoleukodystrophy program on which we collaborate with Biogen, research efforts in multiple additional opthalmic indications, and our recently announced initiative to develop an otology portfolio. I will now turn the call back to Larry, who will briefly review our fourth quarter and FY16 financials.

Thank you, Sue. Total revenue for the three months ended June 30, 2016 was $12.1 million, compared to $713,000 generated during the same period in 2015. Revenue recorded during the three months ended June 30, 2016 resulted primarily from the amortization of upfront fees received under our collaboration with Biogen.

Research and development expense for the three months ended June 30, 2016 increased by $701,000, compared to $6.8 million the same period in 2015. The year-over-year increase was primarily a result of higher employee-related and share-based compensation costs attributable to the hiring of additional employees to support the Company's increased level of research and development activity.

General and administrative expense for the three months ended June 30, 2016 increased by $182,000 to $2.9 million, compared to the same period in 2015. The increase was a result of higher employee-related costs, share-based competition expense, and other operating costs that were directly attributable to the Company's continued expansion, partially offset by lower legal and professional fees. For the three months ended June 30, 2016, the Company recorded net income of $2.7 million, compared to a net loss of $7.96 million in the same period of 2015.

Total revenue for the fiscal year ended June 30, 2016 was $47.4 million, compared to $2.4 million generated during the same period in 2015. The increase was largely driven by revenue generated from the collaboration with Biogen, primarily comprised of the amortization of upfront fees, and $5 million of milestone payment that was received or earned during the fiscal year following achievement of an XLRS patient enrollment-based milestone under the terms of that collaboration agreement.

Research and development expense for the fiscal year ended June 30, 2016 increased $20.7 million to $38.9 million, compared to the same period in 2015, driven largely by the $12 million of incremental sub license fees associated with the collaboration arrangement with Biogen. Also contributing to the higher research and development expense were increased fees associated with licenses and milestones that were largely driven by new collaborative arrangements entered into with external partners, combined with higher milestone payments to our research partners associated with the continued clinical development of our product candidates.

In addition, employee-related and share-based compensation costs also increased year-over-year, due primarily to the hiring of additional employees to support this increased level of research and development activity. General and administrative expense for the fiscal year ended June 30, 2016 increased by $1.8 million to $10.6 million, compared to the same period in 2015. The increase was primarily driven by the hiring of additional employees, which resulted in higher share-based compensation and other employee-related costs. Other administrative expenses were also higher compared to 2015, due primarily to our ongoing expansion, and the increased costs of operating as a publicly traded Company. The impact of these incremental costs was partially offset by the decreased legal and professional fees.

During the fiscal year ended June 30, 2016, the Company reported a net loss of $1.4 million, compared to a loss of $24.3 million during the same period in 2015. At June 30, 2016, the Company's cash, cash equivalents, and investments amounted to $172.7 million. We believe that our existing cash, cash equivalents and investments as of June 30, 2016 will be sufficient to enable us to advance planned preclinical studies and clinical trials for our lead product candidates for at least two years. The Company expects that as of June 30, 2017, its cash, cash equivalents and investments will be between $100 million and $120 million.

With that I will close my remarks. We thank you for your interest and the support of the work we are doing here at AGTC. And operator, you may now open the line for questions.

(Operator Instructions)

Jim Birchenough, Wells Fargo.

Hi, this is actually [Yanan Zhu] in for Jim. A question, first of all, on the XLRS data, specifically on the secondary endpoints in the low dose cohort, could you remind us whether this dose is expected to be effective according to the pre-clinical data in mice? And also on the secondary endpoint evaluated, I think I see -- we can see [visual] acuity, ERG, OCT. Could you also verify whether visual field is one of the endpoint tested? And perhaps, if you can comment on the ERG in any additional -- any additional color on ERG as an endpoint, because that as endpoint -- I think is an endpoint that gives some encouraging data in mice? Thanks.

So Yanan, thank you for that question. It's a very comprehensive of -- a lot of questions and built into that. And I'm going to turn that question over to Jeff, so that he can walk through the questions that you've asked.

Thanks.

Thank you. So exactly, there were number of questions. So one of the questions, was what are the endpoints? So they're -- we have a large number of different potential efficacy endpoints, and we have done preliminary analysis on some of the subjects, for all of the endpoints that you mentioned.

Some of the subjects have not had sufficient follow-up to draw meaningful conclusions about the endpoints. Specifically, the ERG, we are monitoring -- or evaluating ERG at infrequent intervals, and so we don't have a sufficient body of data in the low dose cohort to draw any meaningful conclusions about potential changes in ERG. The limited data that we do have, we have not seen any evidence of a significant change in the ERG.

In terms of the question related to predicting efficacy from animal models. The animal model in the knock-out mouse model is - has a different phenotype, and the anatomy of the eye is different, it's a much smaller eye. And so, it's difficult to know, before we actually do the clinical trials, whether or not the starting dose would be effective.

We started with a dose that we know is able to get expression of the transgene in a macula of an non-human primate eye. And so, there was -- we anticipated there was a potential that we could see efficacy at this level. However, we are only in the lowest of multiple doses, as in a dose escalation study. So we, I think, we would be premature to draw any firm conclusions, other than the fact that nothing has showed a significant improvement to date.

And the endpoint of the visual field, is that one of the --?

So visual fields are included in the endpoints that we are evaluating.

Got it. I guess, there is -- it's hard to know whether in these patient, their RS1 expression at this point in the macula?

So the question about RS1 expression, we cannot measure RS1 directly in individual patients. Obviously in a non-human primate study, we were able to, at necropsy in the animals, we were able to section the eye, and look at the retina, and show we got expression at doses that are similar to the doses that we're using in the clinical trial. But we don't have direct evidence in patients, because we can't do retinal biopsies as part of the clinical trial.

Right, got it. And last question, and then I will jump back into the queue. The prophylactic steroid used, that's obviously is for the ocular inflammation that's observed. But is it thought that such inflammation could impact or interfere with the efficacy? And is that one of the reasons why it is implemented? Thanks.

So I'm not aware of any evidence that would suggest that ocular inflammation would necessarily interfere with efficacy. However, we did see as you know, in our non-clinical studies a dose related inflammation. Until we started the clinical trial, we didn't know how frequent this was going to occur in patients. We originally wrote the protocol to allow for institution of topical or oral steroids if inflammation developed. Because we saw that inflammation was occurring frequently, we amended the protocol to implement the prophylactic use of steroids going forward.

Thank you.

Matthew Luchini, BMO Capital.

Hi. Thank you so much for taking the questions. A couple sort of semi follow-ups to the ones that were asked previously. First, I was just wondering, is there any -- going to the information that's been seen so far, is there anything about the vector or some other part of a product that would suggest that we'll see greater, more severe inflammation as we move to higher doses? And relatedly, are we seeing the same type of inflammation in the achromatopsia study?

Also, as we think about secondary endpoints, you've talked about not seeing anything so far in the low dose. Are you in a position to provide any color on the two patients that are in the mid-dose in the XLRS study?

And then finally, I was wondering, given that there's been whole series of vendor errors, and now obviously the implication is with things being corrected, the rate of enrollment should accelerate, obviously from what we've seen. So should we be -- is it realistic for us to be thinking that we'll be getting these data in 2017, or is there potential that we're looking at something even longer term than that? Thanks.

So Matt, thank you for those questions, and they really do drill down into some important items. And I'll take the last one first, and then shoot it over to Jeff to answer the more clinically-minded questions.

I think it would be inappropriate to characterize it, as a series of vendor errors. It was really one vendor error on one assay that was discovered during a quality review. And then, that test was repeated with the correct assay, and all material from both the XLRS and achromatopsia trial met all specifications. So it was a single incident when it comes to the vendor error in testing.

And then, I'll move over to Jeff to comment on inflammation as regards to, is it related to any specific part of the vector to dose to any other markers. Jeff?

Thank you, Sue. So in terms of the vector, we've done a literature review and determined that ocular inflammation occurs with intravitreal or sub-retinal injection of vectors regard -- across different animal species, with different disease models, and with different capsids. There's no evidence that the specific vector we're using, would be associated with any more or less ocular inflammation than other vectors.

In terms of whether or not we will see an increase in the intensity of the ocular inflammation as we increase the dose, as I mentioned there was a dose-related ocular inflammation seen in the non-human primate study. In the two subjects in the mid-dose, we don't have any evidence to date that the intensity of the ocular inflammation is greater in those individuals, than it was in the individuals -- in the six individuals in the low dose. So again, I think that it would not be surprising, if we see an increase in intensity of ocular inflammation as we increase the dose, but to date with the limited data available, that has not been an issue that we've observed.

Okay. Are you able to comment at all on the other part of the question, which was benefit in any of the secondary endpoints from the patients that are in the mid-dose group? Is it too soon to tell?

I think it is too soon to tell, whether or not we're going -- we don't really have any data that we're able to talk about in the mid-dose two patients.

Okay. One last one, before I get back in the queue, and that's within the context of the XLRS study, I'm sure by now -- or I'm sure Biogen is aware of everything that's been going on. Can you talk a little bit about maybe their reaction, or if there's been any change in tone or tenor from them, given these delays?

So Biogen is very much aware of everything that happens within the programs that we collaborate with them on. So we have regular steering committee meetings, regular sub team meetings that are divided into clinical, CMC, research. And so, they get data on all of the programs in a very frequent way, and discuss all of the occurrences in those research programs with us very thoroughly. And they're -- they are, and remain on board with us moving these programs forward.

I think that we all understand that this is an orphan indication. It's a first-in-man study in an orphan indication where there's been no previous treatment. And so, these kinds of issues can be observed, and that you work through them, and you move forward. And we've been very encouraged by the commitment of everyone on the team, investigators, patients as well as Biogen in moving through, and moving expeditiously to complete these trials.

Okay, thank you very much. I'll get back in the queue.

David Nierengarten, Wedbush Securities.

Hey, thanks for taking the question. So on the 10-K, you guys say that you've screened over 100 patients, and obviously enrolled 8, and 20 are eligible. Does that screening success rate change your ideas about market size or addressable market in terms of XLRS?

And then similarly, with achromatopsia, are there patients you've screened who aren't eligible, or has it changed your ideas about the addressable patient population? Thanks.

Thanks, David. That's a very good, and a very important question, and it's certainly one that we've thought about. I'm sure that everyone is aware that in first-in-man orphan trials, that the entry and eligibility criteria are quite tight.

We want to assure patient safety, and we want to assure consistency of patients in order to give us the best chance of getting a clean set of data to evaluate the promise of the product. Going forward through development, and then even further into commercialization, those very tight criteria do tend to open up. And so, we are not at this point concerned about that screening ratio. We think it's quite common when you're dealing with first-in-man orphan indications. And so, we still remain very confident of the commercial potential for the product.

In achromatopsia, we have a situation where in that indication, we actually have a number of patients that have been screened, and that are already fully eligible for the trial. We screened 55 patients, 2 are enrolled, 12 adults are eligible for the trial, and 25 children are eligible for the trial.

So a larger number of achromatopsia patients actually met those very tight entry criteria. As you may remember, David, achromatopsia patients are much more homogeneous than XLRS patients, so we're not surprised by this differentiation.

And so, the natural follow-up question is, given that couple of the delays here with the vendors, I guess, it goes back to the earlier question. How much do you expect the reacceleration of enrollment then, now that that's taken care of, and you have these patients in the queue?

So yes, we do feel that we have addressed all the factors that caused the slower than planned enrollment, and we have plans to move both trials forward, as expeditiously as possible.

Got it. Thanks.

Mara Goldstein, Cantor Fitzgerald.

Thanks very much for taking the question. If I could just go back to the ocular inflammation for a minute. I know that you said that you are addressing through protocol, the prophylactic use of inflammation. But can you just discuss with us what constituted mild versus moderate, and how patients would be able to use drops prophylactically in the trial?

So Mara, thank you for that question. I think it's important to understand what the in layman's terms, what that inflammation means, and how we're addressing it. So I'm going to turn it over to Jeff to talk about.

Thank you, Sue, and thank you Mara for the question. So we grade the ocular inflammation using a standard grading scheme that's been published by academic investigators, that goes from one plus up to four plus, depending on the number of cells that are seen either the, in the anterior chamber and in the vitreous. And the intensity of the number of cells has been graded as mild or moderate based on this grading scheme.

In terms of how the patients experience this, many of them don't have symptoms, it's just discovered during the eye exam. Some of them may have complaints of visual abnormalities such as floaters. And all of them, whether they're symptomatic or not, have responded, either gotten better with no treatment in some individuals, or after treatment with topical or oral steroids. So we are comfortable that we have a good plan to manage this condition in these individuals.

Are there any, just from a screening perspective, are there any condition, which were not included in screening criteria, which you might use as an exclusion criteria at this point, just to limit the background noise from inflammation?

So we have looked at a number of factors, and have not identified anything that would lead us to exclude individuals. We've looked at the immune response to both the AAV capsid and the RS1 protein by both T-cell and antibody responses. And again, we have limited data, but in the limited data to date, we don't see that there's a relationship between either the baseline, or the post-treatment level of the immune response to either the AAV capsid or the RS1 protein.

It does not seem to be related. We have not identified any other factors, and we have not modified the inclusion/exclusion criteria at this time. So I think that our approach instead has been to add the prophylactic steroids to get ahead of this, and prevent the appearance of the inflammation.

Okay. And if I could just ask -- switching gears for a second, on the otology program. It just wasn't in the release -- and I apologize, I missed the first couple minutes of the call -- are there any, to the benchmarks or the expectations around that program that we should be thinking about, in the upcoming fiscal year?

So what we have stated is that we've formed the scientific advisory board. We've had our first meeting. We are going through a number of potential targets in the otology area, and we will announce the specific indications, as we move those targets into formal development.

Okay. Thank you.

Stephen Willey, Stifel.

Yes, thanks for taking my question. Was just, so I guess, just going back to XLRS enrollments. I think you talked a little bit about the screen failure rate. But I guess is there anything from an eligibility criteria perspective that seems to be driving the -- a disproportionate amount of the screen failures at this point?

And I guess, when you extrapolate your commentary regarding the number of patients who are meeting the criteria for expansion. I think the expansion enrollment is little bit different than in the context of the age and visual acuity, so I just wondering if you can also frame up that as well? Thanks.

Stephen, thank you for that question, and I'll go ahead and field it. We have a number of entry criteria, that range as you say from age to visual acuity, to what other eye diseases people have, to -- there's just -- you can look it up on clinicaltrials.gov. It's a rather long list.

And there is not any one of these eligibility criteria that has caused the majority of the failure rate. And in addition to that, we've actually had several patients that have met all the eligibility criteria, but due to their personal schedules of vacation, of school, of work, have declined enrollment at this time in the study, just due to their personal lives. I think that this is a fairly common occurrence, when you're working in a rare orphan disease like this.

So it's really not, there's not one single culprit, and we continue to move forward. And as we've said, we've brought on more sites. We have a number of patients now going through screening, and really feel like we have a solid plan in place to move the programs forward.

Not just for XLRS, but for the B3 program, our A3 program, and our XLRP programs. So we've got a number of programs that we're moving forward, having learned a lot along the way, and now feel that we have a path.

Okay. And then, I guess, just with respect to timing. I believe the prior guidance was for some clinical data in, for both B3 and XLRS within a year. And I think you've gone out of your way to say that we're not going to be getting any XLRS data this year.

But I don't think there's a similar statement made for B3. So just wondering if there's a possibility we get some B3 data, or is that just a function of a meaningful conclusion approach?

So I think what, we are releasing limited data, right now on XLRS, on those six patients in the lowest dose, that it was generally well-tolerated, but we're not seeing significant signs of efficacy. We're -- and then, we're saying that we're going to provide enrollment data to you on a quarterly basis, so you can judge the execution going forward. But we are still saying that we're not going to release results, until we have a significant enough data points, on a significant number of patients, to be able to make meaningful conclusions. And that goes for both trials.

Okay. Thanks for taking my questions.

(Operator Instructions)

Jim Birchenough, Wells Fargo.

Hi, this is Yanan again. Thank you for taking the follow-up. Just trying to understand the language in -- regarding the ACHM B3 study. It is said in the news release, that you will continue to monitor the first two patients, in order to meet the primary endpoint on safety, before proceeding with additional patients.

Is that part of a standard protocol requirement, that if you have to complete the first lower dose cohort safety, really before proceeding to the higher dose, or is this about something else? Thanks.

So thank you, Yanan, for that question. And I'll certainly start the answer, and then give it over to Jeff to provide some more color. But it is our standard practice when we do these first-in-man studies in diseases where there's never been any treatment. So there's very limited amount of historic information to fall back on. And so, just as we did in our Alpha-1 trial, our LCA trial, and the XLRS trial, we're dosing a couple patients. And then carefully following them, to make sure that we understand the course, that we have a solid idea on safety, before we expand the protocol and dose a larger number of patients.

It's not strictly required in the protocol. It's allowed in the protocol. And so, we've always taken advantage in these orphan first-in-man trials, of being able to follow a smaller number of patients, before we expand it. Jeff, did you have anything further to add about standard practice in these first-in-man trials?

Yes, Sue. Again, I just wanted to emphasize that we are -- that this is standard within the protocol, and within what we've done in previous trials that we've been conducting in other diseases. We -- the most important thing is the safety of the patients. And so, we carefully evaluate the response in individual subjects on a patient by patient basis, before deciding to go forward to enrolling the next patients.

It includes that we will have a reviews at specified points by the data and safety monitoring committee. So enrollment in these studies is slower than it might be in some other studies, but it's all designed to ensure patient safety.

Got it. Just to be -- just to clarify, this low-dose cohort was designed to enroll three patients. And is it the plan to only do two, and then move on -- move onto the next dose when safety is cleared?

No, that is not the plan. The plan all along, has been to enroll three patients at the low-dose, before having a data safety monitoring committee review to go to the next dose. So we have -- as of the end of August, we've enrolled two subjects, which is what we're reporting on in our current annual report of this meeting, in our 10-K. But we will be enrolling the third patient in this low-dose group before we have the DSMC review

Got it. Thank you, Jeff.

Ladies and gentlemen, that does conclude our Q&A portion for today's call. I would now like to turn the call back over to Sue Washer for any closing remarks.

Well, thank you. In closing, we remain positive about the potential for our technology, and the progress we have made this year on both clinical and technology development fronts. As we expand our pipeline, we continue to employ what we believe is a careful, rational approach to the selection and development of our product candidates.

Additionally, we have been encouraged by the commitment level of our investigators, our patients, and the internal and external teams, all of whom are dedicated to moving our trials forward. On the behalf of patients who currently have no treatment options, we will continue to advance through the product development path, as expeditiously as possible.

We look forward to assessing clinical data from our XLRS and our achromatopsia B3 studies. We look forward to bringing an additional two product candidates to the clinic, potential treatments for achromatopsia A3 and XLRP, and advancing our early stage research programs.

Thank you again for participating in today's call, and for all of your insightful questions. I would like to thank the incredible efforts of the AGTC team, the investigators in our trials, and most importantly, the patients, without whom none of these efforts would have been possible. We look forward to seeing many of you at future conferences.