Companies looking to push into the gene therapy (CGT) sector are navigating a more selective funding landscape amid a wider downturn in venture capital investment.
According to a report by GlobalData, venture capital deals dropped by around 61% from 2021 to 2025, and the number of CGT deals dropped by 66% in the same period.
The report identifies that half of CGT venture capital activity occurs in Series B, the stage at which companies usually shift from platform validation to clinical studies. This less risky strategy reflects a broader trend in the pharma industry this year of going for derisked targets, such as obesity drugs and antibody-drug conjugates (ADC).
Not only has the frequency reduced, but CGT deals are lower than those seen in other modalities. The average value of CGT venture capital deals is just $60m in 2025, so far, as per GlobalData, while Kailera Therapeutics raised $600m to fund a Phase III trial of its promising weight loss drug.
Venture capital activity for the CGT sector reached peak activity in 2021. At the time, there was significant buzz for the modality’s development. While there are many approved CGT therapies in key markets such as the US and Europe, commercial challenges have meant some companies have turned away from the space.
In November, Galapagos wound down its cell therapy division after failing to sell the unit. Japanese pharma Takeda also abandoned its cell therapy research, pivoting instead towards small molecules, biologics and antibody-drug conjugates (ADCs).
There is still interest in the space from biopharma, though they are generally looking to incorporate CGT technologies into their pipelines through acquisitions rather than in-house development.
Irena Maragkou, senior healthcare researcher at GlobalData, said: “Such acquisitions are becoming increasingly modality-driven and focused on platforms, scalable manufacturing systems, and specialised capabilities that can support portfolio-wide CGT expansion efforts. However, big pharma continues to demonstrate willingness to pay a premium for some late-stage or clinically validated assets when they align with long-term strategic objectives and portfolios.”
Eli Lilly has been particularly active in the past few months, spending $475m on a licensing deal with MeiraGTx to develop an ophthalmology gene therapy. This was not the big pharma company’s only deal in ophthalmology gene therapies, with the company having laid out more than $260m to acquire Adverum Biotechnologies in October. In May 2025, the drugmaker also earmarked $1.3bn to buy Rznomics, a company developing RNA-based gene therapies for sensorineural hearing loss.
While oncology-focused CGT deals remain heavily skewed toward early R&D and gene-modified cell therapies, transactions for non-oncology CGT assets have become more mature and diversified.
Maragkou concluded: “As therapeutic CGT approvals increase, and the CGT market is expected to grow at a rate of 34.2% by 2031, companies must simultaneously prepare for sector-specific challenges such as regulatory complexity and manufacturing scalability. Therefore, biotech companies need to be strategic in investing in differentiated technologies and build execution capabilities to deliver clinical and commercial impact.”
