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What happened

Shareholders of Applied Genetic Technologies (AGTC), a clinical-stage biotech focused on genetic ophthalmologic diseases, are having a rough day. The company's stock is being bludgeoned, down more than 32% as of 11:15 a.m. EDT in response to the company releasing its fiscal-fourth-quarter earnings results and providing updates on its ongoing clinical trials.

So what

The headlines numbers for Applied Genetic's fiscal fourth quarter were mixed. Revenue for the quarter came in at $12.1 million, which was received from fees related to the company's collaborations agreement with Biogen (BIIB 1.39%). That was a little bit shy of the $12.93 million in revenue that Wall Street was looking for.

Thankfully, the results looked much better on the bottom line. The company recorded a net income of $2.7 million, or $0.15 per share, for the quarter. That was much better than the $7.96 million loss that was reported in the year-ago period, and was far ahead of the $0.07 in per-share earnings that analysts had projected. 

Financial updates aside, the markets appear to be slamming shares today primarily in response to clinical updates.

In the company's XLRS (an inherited degenerative disease affecting the retina) phase 1/2 study, which it is running with its partner Biogen, only eight patients have been enrolled as of August. That's far shy of the total enrollment goal of 27 patients, and the company said that many potential study participants are being rejected due to the program's eligibility criteria. To speed up the study's enrollment, the company has announced plans to increase the number of clinical sites.

If that wasn't bad enough, the company is also reported that enrollment is behind schedule in the ACHMB3 phase 1/2 trial, too. So far only two patients has been enrolled in the inherited retinal diseases study, which the company is blaming on "vendor errors identified during testing of the study agent." Applied Genetic Technologies stated that it is working to speed up enrollment and will report quarterly update on their progress.

Now what

Since the XLRS and ACHMB3 programs are the company's most advanced, it's understandable that the markets are not taking the news of a delay well. However, I must admit that I'm surprised to see such a huge reaction to this news. Right now the company's market cap is sitting at just over $161 million, which is less than the $172.7 million in cash that it held at quarter-end. That hints that the market isn't assigning any value to the company's pipeline. 

While a delay in enrollment is obviously not good news, if you were a believer in this company's technology prior to today's fall, I see no reason you need to change your stance based solely on the market's reaction.