Cell and Gene Therapy Sector Shows Mixed Signals Amid Ongoing Challenges and Opportunities

The cell and gene therapy (CGT) sector is experiencing a period of flux, with recent developments pointing to both challenges and opportunities. As industry leaders gather for the annual Meeting on the Mesa in Phoenix, Arizona, the landscape of CGT is marked by increased M&A activity and regulatory support, contrasted with persistent commercialization hurdles and investor hesitancy.

Big Pharma Acquisitions Signal Renewed Interest

Recent months have seen a surge in CGT-related acquisitions by major pharmaceutical companies. AbbVie's $2.1 billion deal for Capstan Therapeutics' novel CAR T therapies, Eli Lilly's $1.3 billion investment in gene editing firm Verve Therapeutics, and AstraZeneca's potential $1 billion purchase of cell therapy company EsoBiotech highlight renewed interest in the sector.

Stephen Majors, vice president of global communications and investor relations at the Alliance for Regenerative Medicine (ARM), suggests that negative sentiment about the sector may be misaligned with recent positive developments. "I do think that the sentiment about the sector has perhaps gotten overly negative, and is not in line with the current situation," Majors told BioSpace.

Funding Challenges Persist Amid Broader Pipeline Contraction

Despite the uptick in acquisitions, the CGT sector continues to face significant funding challenges. Venture capital flow into U.S. biotechs has reached its lowest point in Crunchbase history, representing just 8% of U.S. startup investment—a sharp decline from nearly 20% in 2020. This funding drought has led to a contraction in the overall CGT pipeline in recent years.

The struggle for capital has forced companies to explore alternative financing models. Audrey Greenberg, Mayo Venture Partner, emphasizes the need for flexibility in funding sources. "The CGT sector is moving faster than traditional financing models can support," Greenberg explained. "Companies face long timelines, high burn rates, and scientific uncertainty, which often don't fit neatly into standard venture or public market cycles. That's why non-traditional funding pathways are becoming essential."

Regulatory Support and Expanding Therapeutic Range

The U.S. Food and Drug Administration (FDA) has shown increased support for the CGT sector, recently releasing three draft recommendations aimed at streamlining the development of cell and gene therapies. This regulatory backing, coupled with the expansion of CGT applications into broader patient populations, including wet macular degeneration, oncology, and autoimmune disorders, signals potential growth areas for the industry.

Geulah Livshits, senior research analyst at Chardan, notes that recent acquisitions have targeted companies at various stages of clinical development, from mid-stage trials to those just emerging from preclinical studies. This broader range of interest suggests a maturing sector with increasing opportunities for data presentation and potential breakthroughs in treating more prevalent diseases.

As the CGT sector navigates these mixed signals, the focus remains on overcoming commercialization challenges, securing sustainable funding, and demonstrating clinical efficacy across a wider range of indications. The outcomes of these efforts will likely shape the future trajectory of this innovative and potentially transformative field of medicine.