Gene editing sector investment struggles: What’s driving the slowdown?

After a major spike during the COVID-19 pandemic years, cell and gene therapy investment has since slowed down considerably. The figures now look pale in comparison to the $19.9 billion made in 2020 and the $22.7 billion made in 2021, with levels falling to $12.6 billion in 2022 and $11.7 billion in 2023. This has led to many gene therapy companies in particular needing to cut programs or lay off workers to save money. In this article, we explore what is behind the investment slowdown and detail the unfortunate consequences of this.

What’s behind the dip in investment in the gene therapy sector?

As promising as gene therapies are, one of the main issues for investors is that these types of treatments come with a lot of risk and, even if they are successful, it takes a long time for them to produce monetary rewards, as they require much longer than other types of therapies to advance through the clinic before eventually reaching the market. 

“We’re largely seeing investments shifting to things that are de-risked,” said Jon Norris, managing director at HSBC Innovation Banking, in a statement to Biopharma Dive. “Cell and gene therapy is becoming an area we know better, because there are products that have advanced through development, but it still doesn’t compare to the number of approvals and drugs commercially available in small molecules or biologics.”

Manufacturing bottlenecks are also a major factor putting off investors. Manufacturing gene therapies generally involves a long process that can take weeks to complete, as a patient’s cells are collected, multiplied, and modified in a laboratory. Even in vivo treatments, which are simpler, contain multiple steps involving engineered viruses and synthetic genetic materials. 

This makes gene therapies very difficult to manufacture at scale. As an example, only a few dozen patients have begun the process of receiving treatment with the gene therapies Casgevy and Lyfgenia, which were approved in December, reflecting the long manufacturing and infusion times needed for each.

Furthermore, once gene therapies reach the market, their extortionate price tags put them out of reach to many people who need them – despite gene editing companies’ argument that the prices are justified due to the fact that they are one-time therapies that will save patients money in the long-term and the rarity of the diseases that they are used to treat means that the cost needs to be high because uptake will be lower than other drugs. 

So, although a patient might consider opting for gene therapy if they have a disease with limited treatment options, such a therapy might be less appealing to someone with a condition that is manageable with approved medicines, like hemophilia. The consequence of this is that gene therapies actually might not bring in as much money as other novel treatments, which once again invites more risk when it comes to gene therapy investment.

It’s worth noting that as a general trend, platform technologies, which include CRISPR gene editing, mRNA delivery, synthetic biology, and artificial intelligence (AI) drug discovery, have fallen out of favor – again due to the fact that investors prefer de-risked products that can quickly fill pipelines and generate revenues. 

Unfortunate consequences: Gene editing biotechs hit by layoffs  

As a result of the decrease in investment in the gene therapy sector, multiple companies have been forced to make major layoffs in order to survive. 

Layoffs at Tome Biosciences

A pertinent example of this is Tome Biosciences. The company launched in December 2023 with one of the year’s biggest private biotech rounds, raising $213 million in funding, with the ambitious aim of ushering in a new era of genomic medicines using its programmable genomic integration platform – a technology licensed from the Massachusetts Institute of Technology (MIT) that is capable of inserting DNA sequences of any size into any programmed genomic location. 

Shortly after its launch, Tome acquired DNA editing company Replace Therapeutics for $65 million in cash and milestone payments. It also partnered with RNA-focused Genevant Sciences in a $114 million deal to develop a gene editing treatment for a rare liver disorder. Furthermore, in May, the company shared preclinical data at the American Society of Gene & Cell Therapy annual meeting, revealing that its lead programs would be a gene therapy for phenylketonuria and a cell therapy for renal autoimmune diseases.

However, despite the initial fundraising and deal-making, and the promise of its technology, Tome is now reported to be in very troubled waters. This was first reported by Stat News in August, whereby the publication stated that one person with knowledge of the situation told it that Tome was seeking a buyer, while another source told it that the company was still considering several options to keep running. Ultimately, a few days later, Tome ended up laying off 131 staff members – virtually all of its workforce – according to a Massachusetts Worker Adjustment and Retraining Notification (WARN) report.

In a statement to Fierce Biotech, a Tome spokesperson alluded to a lack of gene therapy investment as being the reason for its struggles: “Despite our clear scientific progress, investor sentiment has shifted dramatically across the gene editing space, particularly for preclinical companies. Given this, the company is operating at reduced capacity, maintaining core expertise, and we are in ongoing confidential conversations with multiple parties to explore strategic options.”

SalioGen and Bluebird Bio cut jobs amid gene therapy slowdown

Tome is not the only one that has been affected by the slowdown in gene therapy investment. Based on information from someone familiar with the situation and employee posts on social media, Stat News also reported in October that SalioGen Therapeutics, a company that raised $135 million to develop a new gene-editing technology, had instituted widespread layoffs and is scaling back its ambitions. 

Even the well-established bluebird bio had to lay off 25% of its workforce in September in an overhaul intended to reduce the company’s cash operating expenses by around 20% and to help the company break even on quarterly cash flows in the second half of 2025. This decision came just nine months after bluebird received U.S. Food and Drug Administration (FDA) approval for its sickle cell disease gene therapy product Lyfgenia.

All is not lost: Possible indications that gene therapy sector could recover 

Despite a drop in investment in recent times, gene therapies still garner a lot of attention because of the promise of what they can do, with the back-to-back approvals of Casgevy and Lyfgenia reinforcing this sentiment. 

Although many gene therapy companies have struggled recently, others are pressing forward. For example, just last month, AviadoBio announced an exclusive option and license agreement with Astellas for its gene therapy candidate, AVB-101, in a deal worth $2.2 billion. And, Dyno Therapeutics, a genetic technologies company applying AI to enable in vivo gene delivery, announced its second research collaboration with Roche to develop next-generation adeno-associated virus (AAV) vectors for gene therapies targeting neurological diseases, with the company standing to earn more than $1.05 billion in upfront and milestone payments.

On top of that, there are indications that a recovery might be in the offing for the cell and gene therapy sector as a whole. This is according to data presented last month at the 2024 Cell & Gene Meeting on the Mesa by the Alliance for Regenerative Medicine (ARM), which showed that investments reached $10.9 billion in the first half of this year. Although far below the pandemic peak, the figures mean that it is at least outpacing 2019’s $9.8 billion total.

Tim Hunt, chief executive officer (CEO) of the ARM, said in a statement at the time: “It’s a little bit of a tale of haves and have-nots in our sector. 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 venture capitals (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,” Hunt said.

In a comment to Biopharma Dive, Bruce Levine, a cell and gene therapy pioneer at the University of Pennsylvania, said: “That’s the nature of a therapy that, currently, through the cost of goods and services, is expensive to manufacture, but delivers long-term, durable benefit in patients who have failed all other available therapies.” 

Although he may have been referring to cell therapies, his statement can easily be applied to gene therapies too, as they continue to offer hope to patients suffering from diseases inflicting pain on their everyday lives. And that hope, coupled with a few more approvals, might just be enough to keep gene therapy investment flowing, enabling the sector to reach its full potential.