Magazine Article | July 1, 2019

Tackling Cell & Gene Therapy Financing & Manufacturing Challenges

Source: Life Science Leader

By Erin Harris, Editor-In-Chief, Cell & Gene
Follow Me On Twitter @ErinHarris_1

As interest in cell and gene therapies reaches an all-time high, companies in this space are endeavoring to maintain that allure — especially from investors — while also navigating complex and unique manufacturing challenges.

Janet Lambert
Janet Lambert, CEO of The Alliance for Regenerative Medicine (ARM), notes that the high up-front costs of these products is an additional issue confounding the industry. "To ensure patients can access these life-changing treatments, it is important for stakeholders to develop innovative payment models which can address the value these products can provide. These models include annuities, which allow payers (i.e., public or private) and developers to create and market the therapies over time, as well as pay-for-performance models. Many developers are already in conversations with public and private payers about how these and other innovative payment models can be implemented," she says.

The investment and business outlooks for cell and gene therapies were thoroughly discussed at ARM's 2019 Cell & Gene Therapy Investor Day held March 21 in New York. One of the event's three panels was titled The Investment Outlook for the Cell and Gene Space and included the following participants:

  • Elona Baum, Managing Director DEFTA Partners
  • Matthew Gline, CFO Roivant Sciences
  • Dennis Purcell Founder and Senior Advisor, Aisling Capital
  • Patrick Rivers, Principal Aquilo Capital Management

The panel was moderated by Dr. Reni Benjamin, managing director, biotechnology equity research at Raymond James & Associates. The following is his summary of some answers the panelists gave regarding how cell and gene companies should prepare for investor interest.


Some executives feel as though they must always be "on;" CEOs feel they must be the quintessential salespeople by projecting the best possible image of their company and their product. Obviously, you need to believe in your technology, but you shouldn't overhype your stance.

As such, be aware of your competitive landscape, and be aware of both the pros and cons of your technology. Present not only the unique aspects of the technology but also provide transparency about the challenges you face. Provide the plans for overcoming those challenges. Investors, especially those that have been in the business for a while, appreciate transparency.


Each of the investors prefers to partner with management teams that don't "stick to the script." Ascertaining clinical data, understanding the competitive landscape, and learning how to manage the process going forward are critical components to showing investors you're able to adapt to what's happening in the marketplace.


Some investors pay strong attention to platform companies. Companies that license one or two drugs from the university are obviously important. But investors sometimes prefer to invest in platform companies that have a particular platform, manufacturing process, type of virus or construct, etc. Platform companies are differentiated from others in the space, and it's due to their ability to create repeatable assets — in other words, companies that can churn more products into the pipeline.


One of the panelists explained that, if possible, they prefer when the company already has a partnership in place. If you have a pre-existing partnership, investors see that as added validation from somebody who has signed a confidentiality agreement by taking the deep dive and putting money behind their choice.


This is a major, key conclusion. In our business, markets change, sentiment changes, you run into clinical and/or regulatory roadblocks — all of which impact valuation. The key takeaway here is that when you have investors who are either interested in your space or interested in you, you should seriously consider raising that capital.


In the gene therapy space especially, investors are willing to accommodate wiggle room. In gene therapy, typically, we’re focused on monogenic diseases — diseases where there’s a mutation in one gene and the concept of replacing that gene has really taken hold, and we’ve been able to see that robustly translated from preclinical to clinical. The blanket statement is that we would love to see clinical validation.


The investors noted that while they prefer to be first-to-market, there is room to breathe here. In my opinion, this is more specific to the gene therapy space because of the one-and-done approach that’s being developed. The thinking right now is it doesn’t make much sense to have multiple players in this type of indication. And they are typically orphan diseases, so they are much smaller indications, unlike the tenth cardiovascular drug that’s available. Also, unlike certain cell therapies, these are cures, whereas other patients may relapse and come back to a different type of cell therapy or a cell therapy from a different manufacturer.


The cell and gene market’s recent hike in interest is likely being helped by the fact that these therapies are now being developed to treat a broader range of patients. For instance, commercial gene and gene-modified cell therapies are no longer being considered exclusively for rare/orphan indications or hematological malignancies. “We are already seeing more therapies being developed for diseases with large patient populations — including cardiovascular indications, diabetes, and solid tumors,” says Lambert. “It’s likely we will see products aimed at these diseases begin to enter the market within the next few years.”


Addressing manufacturing challenges is key. One of the major themes throughout all the panels during the Investor Day was the need to address manufacturing challenges, which will become particularly important as industry enters larger clinical trials and as additional products come to market for indications with larger patient populations. Many companies are looking to address this with a combination of in-house and outsourced approaches. There are many cell and gene therapy players and few manufacturers, which causes bottlenecks in terms of time and cost. Therefore, players are building — or seriously considering building — in-house manufacturing facilities.

One major manufacturing issue is supply. Developers need to provide a larger supply of these therapies as the number of clinical trials and approved therapies increase and as more patients are treated. This can include the supply of viral vectors for gene therapies or appropriate cell lines for cell therapies. Other manufacturing issues can include the time needed to manufacture a therapy in the case of autologous therapies, as well as differences in manufacturing requirement regulations among countries.

Developers are looking to outsource manufacturing equipment, as well as ancillary and starting materials (such as viral vectors and cell lines), and in some cases the entire production, storage, and distribution of the product. The process of developing internationally harmonized CMC (chemistry, manufacturing, and controls) standards that recognize the unique aspects of these therapies also will be an important part of this process.


Last year was a landmark year for investment in regenerative medicine overall and across technology types, outpacing even 2015, which had previously been the high point for investment in this space due to the growing interest of large pharma companies partnering with or acquiring companies’ active cell and gene therapies.

According to Lambert, the regenerative medicine sector has matured considerably over the past few years. With several cell and gene therapies already on the market in several countries, and numerous additional approvals expected in the next two to three years, stakeholders across the sector — including therapeutic developers, investors, payers, and policymakers — have a good understanding of the remaining challenges. There is a lot of interest right now in addressing those challenges, particularly regarding financing and manufacturing, but doing so is going to require innovative thinking on all sides of the equation.