As industry leaders gather at the annual event in Phoenix, the cell and gene therapy space remains in a state of flux, with M&A activity and regulatory support signaling momentum while commercialization challenges continue to hinder broader investor interest.
Cell and gene therapy’s pinnacle event coincides with signs of recovery for investment in the space that mirrors signals of financial strife, painting an overall picture that may rightfully confound would-be investors.
This year, Big Pharma has been active on the M&A front in cell and gene therapy (CGT), with AbbVie setting down $2.1 billion for Capstan Therapeutics’ novel CAR T therapies, Eli Lilly dropping $1.3 billion on gene editing outfit Verve Therapeutics and AstraZeneca’s up to $1 billion purchase of cell therapy player EsoBiotech.
These positive signs come as companies struggle to ensure they have enough capital to progress their assets. In the first half of the year, for example, early gene therapy darling bluebird bio was forced into a go-private buyout with two global investment firms that valued the biotech at just $50 million after it failed to gain sufficient market traction on its three approved products. And just last week, Takeda announced that it will officially exit the cell therapy space as it reassesses its pipeline priorities.
This will be a key topic of conversation at Meeting on the Mesa, taking place Oct. 6 to 8 in Phoenix, Arizona, experts told BioSpace, with a number of presentations focused on securing investment, as well as exploring pathways to the successful commercialization of products.
According to Stephen Majors, vice president of global communications and investor relations at the Alliance for Regenerative Medicine (ARM), which organizes Meeting on the Mesa, the space is not in dire straits as often portrayed.
“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. “That sentiment hasn’t necessarily caught up with a lot of the positive things that have occurred.”
Broader Therapeutic Range
One positive aspect of the recent CGT acquisitions has been the range of assets acquired, Geulah Livshits, senior research analyst at Chardan, told BioSpace. The sector has witnessed the acquisition of companies at different stages of clinical development, from those conducting mid-stage clinical trials—such as Verve Therapeutics—to companies just moving out of preclinical studies, such as Capstan.
This differs from the last few years, Livshits said, as “investor enthusiasm had been focused on later-stage programs—with a line of sight to regulatory approval and a path to commercial success. So, we’ve seen strong stock performance on clinical data sets, regulatory alignment and other catalysts of that nature within the past couple of years.”
This has been partly driven by Big Pharma companies having sufficient cash reserves to make additions to their portfolios, Livshits said.
The sector is also beginning to mature, which means that more companies can present more data on the studies they are running, Majors noted. With a number of CGTs now approved for rare diseases, the next stage for the sector’s development will be expanding indications into broader patient populations, including wet macular degeneration, oncology and autoimmune disorders, he added.
In fact, Meeting on the Mesa will feature a patient speaking about her experience taking a CAR T therapy as part of a clinical trial for an autoimmune disease “and the amazing improvements that she’s seen,” Majors shared.
“That’s something that I think is really going to burst onto the scene in the next couple of years, as we’re going to see this technology move into some prevalent diseases that are affecting more and more people.”
Non-Traditional Financing Models
For the CGT space to continue to grow its pipeline and reach more patients, companies will need to find a way to secure access to capital, which is why Meeting on the Mesa aims to bring companies and investors together, Majors said.
Though there has been a positive uptick in acquisitions this year, this has not been reflected in an increase of venture capital. In fact, venture capital flow into U.S. biotechs has now reached its lowest point in Crunchbase history at 8% of U.S. startup investment—a considerable drop from the high point of 2020 when it represented nearly 20%. This has seen the overall pipeline for CGT therapies contract over the last few years, Livshits noted.
For Audrey Greenberg, Mayo Venture Partner and chair of a discussion on non-traditional means of raising capital at the event, this means CGT companies need to be flexible in seeking out funding from varied sources—blending public, state, strategic and non-dilutive sources of capital.
“The CGT sector is moving faster than traditional financing models can support,” Greenberg told BioSpace by email. “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.”
Within these non-traditional pathways, Greenberg highlighted three buckets: Federal and state programmatic capital that is milestone-based; family offices, sovereigns and strategic partnerships that can anchor platforms or infrastructure; and non-dilutive mechanisms that fund specific workstreams and de-risk value inflection points before raising equity.
“If the last [funding] cycle was about growth at any cost, this one is about disciplined milestones and blended capital. CGT companies that treat governments and states as customers, not only as grantors, will survive the funding drought and be ready for the next public window,” she concluded.
Path to Commercial Success
Improving investor sentiment and drawing venture capital back into the space could be achieved by the emergence of commercially successful CGT companies over the next few years, Livshits said. Currently, there are still questions that need to be answered for many investors, such as the marketability of gene therapies, she explained.
“For the rarer diseases, is the market size enough to support a commercialization?” Livshits said. “Is there going to be a return on investment? And for the larger indications, like the cardiovascular space, is there enough demand for a one-time gene editing therapy within this very large market? We tend to think so.”
According to Majors, the globalization of cell and gene therapy will be a key focus of the meeting. Beyond ensuring access to treatments for patients in the U.S., ARM CEO Timothy Hunt will lead a session on strategies to improve access to CGT in Europe and in developing countries, as the sector looks to expand across the world.
Within the U.S., there are signs the FDA is looking to specifically support the CGT sector. Livshits noted that signals from the agency “look fairly favorable,” particularly as “leadership at the FDA has talked about addressing the root cause of disease—many CGTs do that.”
In line with this, the regulator last month released three draft recommendations aimed at streamlining the development of cell and gene therapies.
Majors said many of these positive factors are beginning to come together, and in the next few years, he predicted, “We’ll start to see more and more products come online and have commercial success.”
