Gene therapy space is revving up with a fresh string of deals

Despite the numerous difficulties in the drug development and commercialization process, gene therapy products and technology have recently been one of the most significant drivers in deal-making within the biotechnology and life sciences sector. The number of agreements for gene therapy has reached its peak in the previous five years. Deal activity is likely to remain high as companies compete for a foothold in this attractive sector in light of recent clinical and regulatory advancements.

Gene therapy remains a topic of interest to biopharmaceutical dealmakers despite safety worries and opposition from drug regulators, as seen by a recent flurry of activity

Eli Lilly has committed $55 million upfront and $685 million in milestone payments to Capsida Biotherapeutics for access to their adeno-associated virus (AAV) engineering platform. The agreement is with Prevail, which Eli Lilly acquired in 2021 for approximately $1 billion to develop a gene therapy unit. Capsida, which already has collaborations with AbbVie and CRISPR Therapeutics, will handle discovery, while Prevail will handle early development.
Although AAV9 is currently the preferred vector for gene therapies that must penetrate the blood-brain barrier, there is still room for improvement. A vector should, in theory, focus on particular tissues to maximise therapeutic benefit while avoiding off-target consequences, however, such a tool has proved problematic.
Eli Lilly announced its acquisition of Akouos in mid-October. The acquisition expands Lilly's efforts in genetic medicines to include Akouos's portfolio of potential first-in-class adeno-associated viral gene therapies for the treatment of inner ear conditions, including sensorineural hearing loss. The deal might be worth more than $600 million.
With an initial focus on inherited retinal diseases (IRDs), Applied Genetic Technologies, a clinical-stage biotechnology company dedicated to the development and commercialization of adeno-associated virus (AAV)-based gene therapies, announced that it has entered into a definitive agreement with a newly formed portfolio company of Syncona Limited (LON: SYNC), a top healthcare company specialising in rare and debilitating diseases (CVRs) in 2022.
Astellas has stated that it will invest $50 million to purchase 15% of Taysha Gene Therapies, Inc. in addition to obtaining licences for two of its adeno-associated virus (AAV) gene therapy programmes for massive axonal neuropathy and Rett syndrome (GAN).

Deals could be seen as a boon for gene therapy future

These agreements can pave a brighter future for gene therapy technology in the coming days despite subsequent difficulties in the field of drug development. The Food and Drug Administration recently tightens up the scrutiny programs of clinical trials. The new round of agreements could be viewed as a rise of hope for gene therapies targeting rare disorders. An onslaught of these deals in such a short timeframe can bring a much-needed sentiment shift to a sector that has been in investor's risky box for much of 2022.

Clouds still hang over the technology

Reduced deal prices

These agreements do not necessarily imply that the field of gene therapy is out of the risky box. The deals that recently happened have reduced deal prices. The reason could be increased competition, a decline in the biotechnology stock market, and difficult funding. As a result, certain gene therapy developers might be considering lower-cost proposals.

Newest acquisitions focussed on de-risky programs

The most recent deals might also be a sign that investors are more interested in programmes that have been somewhat less risky and specific to a particular disease area given the hiccups the gene therapy sector has seen.