Pharma and biotech firms are acquiring gene editing startups to create new growth opportunities

Gene editing technology has shown immense potential in curing life-threatening diseases and building climate-resistant crops over the last few years. With many startups innovating in the space and developing new gene-edited therapies and crops, the interest in the space has increased significantly among venture capital, pharmaceuticals, and agriculture-focused firms. This is evident from the growing number of venture capital dollars flowing into the sector and the various mergers and acquisition deal happening in the global market.

While the current macroeconomic factors have had an impact on the growth of the gene editing space and startups, with venture capital dollars not so easy to come by in 2022, as it was in 2021, the interest in gene editing technology among pharma and biotech firms remains persistent. In 2022, several mergers and acquisition deals took place in the gene editing space, including major buyouts from leading pharma and biotech firms around the world. For instance,

In August 2022, Bayer, one of the leading pharma and biotech player around the world, announced that the firm had acquired a major stake in CoverCress, the United States-based gene-edited cover crop startup. Over the last few years, Bayer has been transforming its pipeline by acquiring gene and cell therapy startups to create new growth opportunities. The acquisition of CoverCress is part of the firm’s strategy to further expand its capabilities in the agtech space.
This acquisition will allow Bayer, which has a Crop Science Division headquartered in Creve Coeur, to help farmers become more sustainable through products that can impact climate change. Notably, the solution offered by CoverCress combines grain production with the environmental benefits of a cover crop without displacing other harvests.
CoverCress, which is derived from pennycress – a native North American plant – coupled with gene editing technology, offers multiple users. For instance, the grain extracted from CoverCress can be turned into a renewable diesel having a lower carbon-intensive score. Furthermore, it can also be used as a protein meal for animal feed. Both of these use cases of CoverCress can drive additional revenue for the farmers while offering them environmental benefits.

As of August 2022, Bayer holds a 65% stake in CoverCress, while the other 35% is owned by Bunge and Chevron U.S.A. The combined expertise of Bayer, Bunge, and Chevron will further assist CoverCress to commercialize its winter oilseed into a rotational cash cover crop. Along with its interest in agtech space, Bayer has also acquired other cell and gene therapy-focused startups over the years. This has allowed the firm to develop life-saving therapies for patients. Notably, many other pharmaceutical firms are showing interest in the gene therapy space to cure life-threatening diseases, and this has resulted in more mergers and acquisition deals. For instance,

In September 2022, Rocket Pharmaceuticals announced that the firm had acquired Renovacor in an all-stock merger deal, which infused US$38 million into the latter's cash reserves. Notably, Renovacor aims to deliver the BAG3 gene which can assist in restoring the range of functions that the protein has in the heart. When tested on mice, gene therapy prevented the onset of cardiac impairment.

Through this acquisition, Rocket Pharmaceuticals is looking to further advance its research and ambitions in heart disease gene therapy. Notably, the firm is planning to start the Phase I trial in 2023.

Furthermore, as the global macroeconomic conditions stabilize, it is expected that more venture capital dollars to flow into the global biotech market, including gene editing space.