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Gene therapy, once a promising frontier in medicine, is losing steam as early investors flock to higher-reward sectors like obesity and cancer treatment. Sales for some of the new therapies have fallen short of expectations, causing drugmakers to reconsider their involvement in the sector.
In the past year, several companies have pulled back from gene therapy. Pfizer, for example, recently stopped selling its $3.5 million-per-patient gene therapy for hemophilia, a sign of the challenges facing the industry. One of the sector’s pioneers, Bluebird Bio, which was once valued at nearly $10 billion, was sold to private equity firms for just $30 million last month.
Investment Decline and Changing Priorities
In 2024, gene therapy developers raised under $1.4 billion across 39 venture rounds, a significant drop from the $3.5 billion raised in 2023. This decline represents a 57% fall from the peak investment year of 2021, when the sector saw $8.2 billion across 122 deals. According to Subin Baral, Ernst & Young’s global life sciences deal leader, the sector will need “better ways” and “cheaper methods” to make these complex therapies in order to regain investor interest.
Although the industry has faced financial hurdles, some companies, like Novartis, are continuing their gene therapy research. Novartis’ Zolgensma, for example, has been a success for treating infants with spinal muscular atrophy (SMA), a rare neuromuscular disorder, with over 95% of babies born in the US with SMA now receiving the treatment.
Challenges and Costs of Gene Therapy
Gene therapy involves modifying a patient’s genes to compensate for faulty ones or to change how cells produce proteins. While this one-time treatment offers potential cures for rare diseases, the process is complex and often requires hospitalization. Additionally, insurance coverage for these expensive therapies is not always guaranteed, making access a significant challenge for many patients.
Gene therapies also come with high price tags. The treatments can cost millions of dollars, and concerns about safety remain. For instance, Sarepta Therapeutics recently reported that a 16-year-old boy died from acute liver failure after receiving their gene therapy for muscular dystrophy, drawing attention to the risks even after FDA approval.
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FDA’s Optimism Amid Industry Struggles
Despite these setbacks, the U.S. Food and Drug Administration (FDA) remains optimistic about the future of gene therapy. Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, expressed confidence that the industry will overcome its current hurdles, including scientific challenges and manufacturing difficulties. He emphasized the need for streamlined regulatory processes and improved manufacturing methods to bring down costs, making gene therapies more accessible.
Marks stated that he hopes for continued collaboration in the coming years to resolve these issues and make gene therapy more financially viable for both patients and drugmakers.
Shift Towards Obesity and Cancer Drugs
Meanwhile, the biotechnology sector is seeing a dramatic shift in focus. As demand for obesity treatments soars, companies and investors are increasingly prioritizing this area. Obesity drugs, which are forecast to generate annual sales of $150 billion in the coming years, have attracted significant investment. In 2024, venture capital for obesity therapeutics reached $1.75 billion, nearly three times more than in 2023.
At the same time, cancer treatments remain a dominant force in biopharma, with $10.3 billion in venture capital invested in oncology in 2024. These high-demand sectors, combined with the massive potential for financial returns, have drawn attention away from gene therapy.
