*

Venture capital investment in gene therapies fell to $1.4

billion in 2024 from 2021 peak of $8.2 billion

*

Total global biopharma venture funding rose to $27 billion

in

2024 from $23.2 billion in 2023

*

Manufacturing, commercial hurdles limit demand for some

gene

therapies

By Deena Beasley

March 21 (Reuters) - Gene therapy, with its offer of a

possible cure for rare diseases like sickle cell, is losing

early investors to higher-reward sectors like obesity and

cancer, as sales for some of the new treatments fall short.

In the last year, some drugmakers have pulled back from the

sector, including Pfizer ( PFE ), which recently stopped selling

its gene therapy for hemophilia priced at $3.5 million per

patient. Bluebird Bio ( BLUE ), a gene therapy pioneer once worth nearly

$10 billion, was sold to private equity firms for $30 million

last month.

In 2024, developers of gene therapies and gene-editing

products raised less than $1.4 billion across 39 venture rounds,

according to a data analysis from DealForma for Reuters. In

2023, they raised $3.5 billion in 60 deals, which was down 57%

from the sector's peak of $8.2 billion across 122 deals in 2021.

"There needs to be better ways, cheaper ways to make

some of these complex products," in order for investor interest

in gene therapy to return, said Subin Baral, Ernst & Young

global life sciences deal leader.

Companies like Novartis say they are continuing

gene therapy research. More than 95% of infants born in the U.S.

with a rare neuromuscular disorder called spinal muscular

atrophy are now treated with its Zolgensma gene therapy and it

is being developed for older children.

Vertex Pharmaceuticals ( VRTX ) continues to see patients

with sickle cell disease start the process to receive its

Casgevy therapy, said Chief Operating Officer Stuart Arbuckle.

He said the treatment, which had 2024 sales of just $10

million, was pursued because the company believed gene editing

offered the best solution for people living with the

debilitating disease.

Gene therapy - the one-time process of inserting a modified

gene to compensate for a faulty gene or change how a patient's

cells produce proteins - is a complex procedure in which

patients often have to be hospitalized, with insurance coverage

not always clear.

The U.S. Food and Drug Administration has supported the

breakthrough treatments, which have multimillion-dollar prices.

Peter Marks, director of the FDA's Center for Biologics

Evaluation and Research, told Reuters he is confident "speed

bumps" including scientific challenges, manufacturing

difficulties and real-world application of gene therapies will

be worked out.

"We need to have a streamlined regulatory process... Combine

that with manufacturing improvements to have a package of things

to bring down cost so they are no longer cost prohibitive,"

Marks said earlier this month. "My hope is that we have a group

that is going to be here through the next years working on

this."

Safety issues are also a concern even after approval.

Sarepta Therapeutics ( SRPT ) said this week a 16-year-old boy

died from acute liver failure months after receiving the

company's gene therapy for a rare muscular dystrophy.

Weight-loss drugs, meanwhile, are forecast to see annual

sales of $150 billion in coming years as new, highly-effective

medicines have sparked outsized demand. Obesity therapeutics

attracted $1.75 billion in venture capital last year, nearly

triple 2023's total of $630 million.

Overall, global biopharma venture funding rose to $27

billion in 2024 from $23.2 billion in 2023. Cancer remained the

top sector at $10.3 billion, according to DealForma.

ECONOMICS AND POLICY DIFFICULTIES

Unlike traditional drugs that can be made in large

quantities for mass distribution, gene therapies are more

individualized, requiring specialized equipment and cell

processing materials.

"People believe in the promise of gene therapy," said Priya

Chandran, biopharmaceuticals sector leader at Boston Consulting

Group. "Investment is dropping because the overall economics and

policy landscape has been problematic."

The Alliance for Regenerative Medicine, the industry trade

group for the cell and gene therapy sector, said it expects

investment to be reinvigorated as new trial data emerges.

"The biggest biopharma companies continue to invest as the

gene therapy pipeline evolves to tackle diseases with larger

patient populations," said ARM spokesman Stephen Majors.

When Pfizer ( PFE ) last month stopped selling Beqvez, its gene

therapy for hemophilia B, it said demand was weak. The company

in 2023 had already backed away from early-stage gene therapy

research, and last year abandoned efforts on a gene treatment

for muscular dystrophy after disappointing results from a

late-stage trial.

Bluebird sells three gene therapies in the U.S., including

Lyfgenia for sickle cell disease, which competes with Vertex and

CRISPR Therapeutics' Casgevy.

Pfizer ( PFE ) and Bluebird did not immediately respond to requests

for comment.

Evidence that expensive gene therapies can provide a

sustained benefit and will be accepted by patients, doctors and

insurers has become more critical as major pharmaceutical

companies face the looming loss of market exclusivity for

top-selling medicines.

Morgan Stanley estimated that around $175 billion of 2025

U.S. large-cap biopharma revenue - 35% of the total - will go

off patent by the end of the decade.

Companies "are trying to invest fast enough so that they can

restock their pipelines and hopefully fill the gap," said EY's

Baral. "These are capital allocation choices."