Gene therapy, despite its potential to cure rare diseases like sickle cell disease, is experiencing a decline in early investor interest, as higher-reward sectors such as obesity and cancer attract more capital. This shift comes as sales for some of the novel gene therapies have fallen short of expectations.
Over the past year, several pharmaceutical companies have scaled back their involvement in the gene therapy sector. Notably, Pfizer recently ceased the sale of its hemophilia gene therapy, priced at $3.5 million per patient, citing weak demand. Bluebird Bio, a pioneering gene therapy company once valued near $10 billion, was acquired by private equity firms for a mere $30 million last month, highlighting the significant downturn in investor confidence.
Data analysis from DealForma for Reuters reveals a substantial decrease in venture capital funding for gene therapies and gene-editing products. In 2024, these developers raised less than $1.4 billion across 39 venture rounds, a stark contrast to the $3.5 billion raised in 60 deals in 2023. This represents a 57% drop from the sector’s peak in 2021, when $8.2 billion was invested across 122 deals.
Subin Baral, Ernst & Young global life sciences deal leader, suggests that a return of investor interest hinges on the development of “better ways, cheaper ways to make some of these complex products.” Despite the overall funding dip, some major players like Novartis report continued commitment to gene therapy research. Their Zolgensma gene therapy, used to treat spinal muscular atrophy, now reaches over 95% of affected infants in the U.S., with ongoing development for older children.
Vertex Pharmaceuticals remains optimistic about its Casgevy gene-editing therapy for sickle cell disease, according to Chief Operating Officer Stuart Arbuckle. While the treatment generated only $10 million in sales in 2024, Vertex believes gene editing offers the most promising long-term solution for this debilitating condition.
Gene therapy, a complex, often one-time procedure involving the insertion of modified genes, presents unique challenges. Patients frequently require hospitalization, and insurance coverage can be uncertain. While the U.S. Food and Drug Administration has been supportive of these breakthrough treatments, which often carry multi-million-dollar price tags, economic and policy difficulties are hindering widespread adoption and investor enthusiasm.
Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, remains confident that “speed bumps” related to scientific challenges, manufacturing complexities, and real-world application will be overcome. He emphasized the need for a “streamlined regulatory process” combined with “manufacturing improvements” to reduce costs and make these therapies more accessible. Safety concerns also persist, as evidenced by Sarepta Therapeutics’ recent report of a patient death following their gene therapy for muscular dystrophy.
Meanwhile, the landscape of pharmaceutical investment is shifting towards areas with potentially higher and faster returns. Weight-loss drugs, with forecasts of $150 billion in annual sales, have generated significant investor excitement, attracting $1.75 billion in venture capital last year, nearly tripling the $630 million invested in 2023. Overall, global biopharma venture funding saw an increase to $27 billion in 2024 from $23.2 billion in 2023, with cancer remaining the top investment sector at $10.3 billion.
Priya Chandran, biopharmaceuticals sector leader at Boston Consulting Group, notes that while “people believe in the promise of gene therapy,” the “overall economics and policy landscape has been problematic,” contributing to the investment drop. Unlike traditional drugs, gene therapies are often individualized, requiring specialized manufacturing processes and materials, adding to their cost.
The Alliance for Regenerative Medicine, the industry trade group, anticipates a potential resurgence in investment as new clinical trial data emerges. Stephen Majors, an ARM spokesman, pointed out that “the biggest biopharma companies continue to invest as the gene therapy pipeline evolves to tackle diseases with larger patient populations.”
Pfizer’s recent decision to halt sales of its hemophilia B gene therapy, Beqvez, due to weak demand, underscores the current challenges. The company had previously reduced its early-stage gene therapy research and abandoned a muscular dystrophy gene therapy program after disappointing late-stage trial results. Bluebird Bio, despite selling three gene therapies in the U.S., including a competitor to Vertex’s Casgevy for sickle cell disease, faced a significant devaluation leading to its acquisition.
As major pharmaceutical companies face the impending loss of patent exclusivity for blockbuster drugs, the need to replenish their pipelines with innovative therapies is critical. Evidence demonstrating the sustained benefit, cost-effectiveness, and acceptance by patients, doctors, and insurers will be crucial for the long-term success and renewed investor confidence in the gene therapy sector. EY’s Baral aptly summarized the current situation as “capital allocation choices” driven by the pursuit of promising returns.
https://www.reuters.com/business/healthcare-pharmaceuticals/gene-therapy-loses-luster-investors-eye-quicker-returns-weight-loss-drugs-2025-03-21/
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