Investors prefer quicker returns from weight-loss drugs

Gene therapy is seeing a decline in interest from investors as they shift focus to more profitable sectors like weight-loss and cancer drugs. Some companies in the gene therapy space, like Pfizer, have reduced their involvement after disappointing sales. For example, Pfizer recently ceased sales of its hemophilia gene therapy, which cost $3.5 million per patient. Another company, Bluebird Bio, was sold for $30 million, a significant drop from its previous valuation of nearly $10 billion. Last year, funding for gene therapy developers fell sharply, raising only $1.4 billion across 39 deals, compared to $3.5 billion in 2023. This number is down 57% from the peak of $8.2 billion in 2021. Experts suggest that gene therapy must become cheaper and easier to produce to regain investor confidence. Despite the financial challenges, some companies are still committed to gene therapy research. Novartis continues to advance its Zolgensma therapy for spinal muscular atrophy, while Vertex Pharmaceuticals remains dedicated to its treatment for sickle cell disease. Gene therapy's complicated nature requires specialized processes, and insurance coverage can be inconsistent. The U.S. FDA is working on improving the regulatory process for gene therapies, which face numerous scientific and manufacturing challenges. Concerns about safety have also arisen, highlighted by a recent death linked to a gene therapy treatment from Sarepta Therapeutics. In contrast, weight-loss drugs are gaining attention due to their expected $150 billion market potential. Investment in obesity treatments skyrocketed to nearly $1.75 billion in the previous year, showing the shifting priorities of investors. The biopharmaceutical industry as a whole also saw an increase in funding, reaching $27 billion in 2024. Challenges with the economics of gene therapy are a significant issue. Unlike traditional drugs, gene therapies require personalized treatment and specialized equipment. Although there is still belief in their potential, the overall economic landscape is creating barriers to investment. However, some industry groups are hopeful that new data from ongoing trials will inspire renewed investment. As major pharmaceutical companies look ahead, they are facing the loss of patent protections on many of their top-selling drugs. This creates urgency for them to invest in new treatments, including gene therapies. Investors are watching closely for proof that these expensive gene treatments can deliver long-term benefits.