Gene Therapy: The Next Hot Subsector For Private Investors

8 May

By Max Klietmann, VP of Research, LSN

Investor interest in companies developing gene therapy products has risen quite dramatically in recent months. In fact, according to the LSN Company database, 20 companies in this space raised new capital in the last twelve months (approximately 50%), indicating strong investor interest. But why are investors suddenly interested in this space again? It all comes down to a wealth of new data surrounding this space, suggesting that gene therapy may be more clinically viable than previously thought.

Gene therapy boils down to using DNA as a therapeutic agent for a specific indication. The basic concept is to take a patient with a genetic disease, and replace the mutated or defective gene of a patient with a healthy, functional gene. Theoretically, this should solve the issue. However, historically, the data was dubious at best, and many investors lost faith in the technology. But this has changed substantially in recent time. Due to a growing body of positive data surrounding a number of gene therapy products, and market approval of a handful in recent months (especially for orphan indications), many investors that previously steered clear from this risky space are now chomping at the bit to make placements. Most interestingly, it is largely private investors willing to take a risk in this emerging field rather than big pharmas. In fact, there are many gene therapy programs actively being pursued by the big pharma players. However, if this space is as promising as the data suggests, it could be the next hot acquisition target for pharmaceutical companies seeking to expand their pipelines.

Keeping a watchful eye on this subsector and capitalization/development trends will be a strong indicator of things to come for the industry. We could be looking at a total industry game-changer.

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