Gene therapy sector seeks more durable financing model

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Gene therapy financing challenges

Highlights

Cell and gene therapy deal and licensing values in 2024 are running at about half the 2025 level, reflecting rising investor caution over funding and pricing models.
Big Pharma's share of sector deals has dropped from over 50% to around one-third in two years, with Pfizer and BioMarin retreating from gene therapies amid tough commercialization challenges.
Alternative financing, including Royalty Pharma acquiring about $2 billion of royalty receipts annually, is increasing as companies seek upfront cash and greater flexibility amid traditional funding constraints.

Commercial pressures reshape gene therapy funding

As reported by the Financial Times, cell and gene therapy companies are facing investor caution because one-time treatments do not generate the recurring revenue profile or manufacturing scale of traditional medicines. The model is especially difficult for rare disease programmes, where patient pools are small, development costs are high and clinical success rates remain limited.

Pricing adds another layer of risk for developers and backers. Outcome-based payment models can leave biotech groups exposed to rebates when the lifetime durability of treatments is still unproven, while biotech data group Sleuth says the value of deals and licensing agreements this year is running at about half the 2025 level.

Large drugmakers are also becoming more selective. The article says Big Pharma's share of sector deals has fallen from more than half two years ago to around one-third, even though groups such as Eli Lilly remain active, while Pfizer and BioMarin have stepped away from gene therapies after difficult commercialisation paths.

Public market investors are showing similar caution. Bluebird Bio, now Genetix Therapeutics, lost significant value after disputes with European health authorities over pricing and was acquired by private equity last year for a small fraction of its former roughly $10 billion valuation peak.

Alternative capital and broader patient use offer path forward

More flexible financing structures are emerging as one response to the sector's business strain. When venture capital and private investment in public equity are included, total funding flowing into the sector is rising, and companies are also monetising future royalty streams upfront to secure cash.

Royalty Pharma, listed in the U.S., has acquired about $2 billion a year in royalty receipts across a portfolio that includes cell and gene therapies. That approach offers developers another funding route while reducing reliance on traditional partnership structures alone.

Longer term, the industry's prospects may improve if companies target less rare conditions with larger patient populations and adopt more shared production platforms that standardise parts of manufacturing. Wider use could also force insurers and state-backed health systems to negotiate more workable pricing frameworks, with government support in the U.S. already helping states pursue more affordable gene therapy arrangements.

As noted in our earlier article, cybersecurity funding rose in Q3 2026 as larger late-stage rounds lifted totals despite fewer deals.

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