Tim Hunt, CEO of the Alliance for Regenerative Medicine, said Monday at the 2024 Cell & Gene Meeting on the Mesa that investments reached $10.9 billion in the first half of this year—outpacing 2019’s $9.8 billion total—but far below the pandemic peak.
While the cell and gene therapy industry has been hit with investment headwinds since the high levels seen in 2020 and 2021, there are indications that a recovery might be in the offing, according to data presented Monday at the 2024 Cell & Gene Meeting on the Mesa by the Alliance for Regenerative Medicine.
Investments of $10.9 billion in the first half of this year are already ahead of 2019’s $9.8 billion total, Tim Hunt, CEO of the Alliance for Regenerative Medicine (ARM), which hosts the annual conference, said in his welcome remarks kicking off the three-day meeting.
Still, both numbers pale in comparison to the $19.9 billion and $22.7 billion in investments made in 2020 and 2021, respectively, with levels falling to $12.6 billion in 2022 and $11.7 billion in 2023.
For the cell and gene therapy sector, it’s been a “very challenging” two to three years, Hunt said. “It’s been uniquely challenging for smaller organizations that are preclinical. It’s been challenging for platform companies. It’s just not been an easy environment.”
Hunt pointed out that that the nearly $11 billion raised in the first half of 2024—which has “nearly eclipsed” all of 2023—primarily went to “later-stage companies” with advanced clinical trials and human data.
“It’s a little bit of a tale of haves and have-nots in our sector,” Hunt said. “There is money out there. I think people know that. The problem is a lot of it is locked up and it’s not flowing in through VCs to early startups. There’s been a dearth of IPOs.”
However, ARM is hopeful “that the gears will start to unlock a little bit more as we see interest rates come down and other things stabilizing,” according to Hunt.
A New Normal, Cell Therapies on the Rise
In a panel session on investing in cell and gene therapy at Meeting on the Mesa, David Lederman, managing director of capital markets at investment bank Chardan, agreed the sector is starting to see a little bit of a “thaw.”
Jason Russell, managing director and global head of biotechnology at Morgan Stanley, made the case that the Federal Reserves’ interest rate cut in September “certainly has downstream implications for more risk-oriented assets and access to capital” in the cell and gene therapy space.
“We’re definitely in recovery mode. Things feel a lot better than they did say in 2022 and 2023. Capital formation for later stage assets is really going well,” Russell said. “We’re making our way back to what’s hopefully a normal functioning market that can help support innovators and capital in this sector.” This mirrors trends seen in the broader biotech industry.
Still, Mizuho Securities analyst Jared Holz told BioSpace last month that if industry observers were expecting a sudden gold rush of fundraising and IPOs as a result of the Federal Reserve’s recent rate cut, that’s unlikely to happen.
“I don’t see the floodgates opening necessarily, because the last time that we were kicking out 50 or more IPOs a year, the broader sector was negatively impacted by that,” Holz said. “Be careful what you wish for. Too many IPOs in this space I think is actually a very, very meaningful negative for publicly traded equities.”
At Meeting on the Mesa this week, Russell acknowledged that many IPOs is arguably “unhealthy” and “not conducive to a really well-functioning, long term market.” So far, he said, there have been 15 biotech IPOs in 2024, including Kyverna Therapeutics’ upsized $319 million IPO in February to support its pipeline of anti-CD19 CAR T therapy candidates.
Scott Gottlieb, former FDA commissioner and partner at venture capital firm New Enterprise Associates, in a fireside chat at the conference said that the work around autoimmune diseases and CAR T therapies is “hugely exciting” to investors and could be at an inflection point.
“In the next couple of years, I do think that some of the work with CAR T in the autoimmune indications looks so transformative that that’s going to capture a lot of popular attention,” Gottlieb said.
Jefferies analyst Kelly Shi in a Monday deep dive analysis for investors wrote that in 2024 more than 20 CAR T programs have entered autoimmune trials with data readouts showing that CAR T therapies “could achieve clinical benefits across multiple autoimmune indications” as “preliminary data from leading programs have shown evidence of B-cell depletion and immune reset, supporting durable drug-free potential of cell therapies.”
The bottom line, according to Shi: “CD19 CART’s potential to achieve drug-free remission remains an intact hypothesis to support clinical development for this drug class.”
Overall, Hunt sees 2024 as the “breakthrough year for cell therapies” due to major advances. This has translated into sizable fundraises this year for cell therapy companies, including Capstan Therapeutics’ oversubscribed $175 million Series B financing in March and ArsenalBio’s $325 million Series C funding round last month, he said.
