Deal-making for cell and gene therapy companies: Insights from One Nucleus’ panel event

Cell and gene therapies (CGTs) continue to hold considerable promise for the future of medicine, providing unprecedented therapeutic potential for the treatment of even the most intractable diseases. Deal-making in this space continues to rise with, according to a recent IQVIA report: (i) the number of CGT deals increasing by 48% over the last decade; and (ii) associated venture capital activity surpassing $3 billion last year. Despite such promise, the intrinsically complex nature of CGTs presents unique challenges for M&A, VC and licensing transactions in this area.

On Wednesday 5 June 2024, Bristows had the pleasure of hosting One Nucleus’ BioWednesday event in which a panel of industry experts opined on their experience with CGT deal-making. Moderated by Claire Smith, Partner at Bristows, the expert panel comprised:

• Graeme Fielder, COO, AviadoBio
• Jodie Albutt, VP Intellectual Property, Quell Therapeutics 
• Nuno Alves, Associate Director Business Development, Astellas Pharma  
• Pedro Correa de Sampaio, CEO, Neobe Therapeutics

Panellists recounted their respective involvement within the ever-evolving CGT landscape, providing invaluable insight into, amongst other compelling topics: (i) top priorities for those looking to invest in (or acquire) CGT businesses and lessons learnt through successfully achieving funding in the CGT space; (ii) the myriad of difficulties associated with CGT manufacturing; and (iii) navigating the intricate IP issues in CGT deals. 

Investor considerations

In part due to the current general economic macroenvironment, but also as a consequence of the intricacies of CGT development / commercialisation, the panellists unanimously agreed that VC investors’ risk appetite has decreased in recent times. Graeme Fielder (AviadoBio) emphasised the importance that VC investors place on seeing robust pre-clinical and clinical data to be confident that the CGT investee company will meet any requisite milestones. 

Pedro Correa de Sampaio (Neobe) echoed this sentiment and explained how Neobe, having recently announced a successful funding round, abated such investor concerns by generating a significant amount of proof of concept data for the company’s novel solution for removing highly fibrotic stroma of solid tumours.

Interestingly, the panel also noted the weight that investors now place on the calibre of the investee company’s core team and whether they can demonstrate the necessary experience to overcome the inevitable hurdles that are commonplace in this field. 

CGT manufacturing issues

The panellists provided further insight into the value placed by investors on the manufacturing capabilities of CGT companies. They drew particular attention to the need for early-stage CGT companies to be cognisant of manufacturing issues from the outset and have a considered manufacturing plan to potentially improve funding prospects (we reported on strategic manufacturing considerations for CGT companies in this article earlier this year (published as part of the 11^th edition of our annual Biotech Review of the Year). 

Jodie Albutt (Quell) and Nuno Alves (Astellas) outlined the significance of CGT companies having a clear strategy pertaining to manufacturing know-how. The difference between successful and unsuccessful outcomes in the CGT manufacturing process can depend on even the slightest manufacturing adjustments. These adjustments can often be so minor that it would not be possible to successfully file for a process patent, so protecting this know-how is imperative for the business’ commercial prospects. Albutt suggested that to appropriately manage this issue in the context of collaborations and partnerships: (i) the parties should endeavour to discuss know-how sensitivities at the earliest possible stage during negotiations; and (ii) due consideration should be given to balancing what information the counterparty may need at the start of the collaboration, as compared to throughout the lifetime of the collaboration agreement.

Deal structures

There was an engaging discussion about deal structures for CGT collaborations, with the panellists currently seeing a healthy mix in the market of both platform (i.e., discovery) deals and asset deals. Often CGT partnering transactions have the hallmarks of both types of deals. The parties must think carefully about navigating wider IP issues in the context of these partnerships (e.g., dealing with ownership of IP and data generated during the collaboration and deciding on which party will file and prosecute the IP). There is certainly no magic solution when it comes to allocating ownership of new IP arising under these collaborations. Common approaches include making the distinction between new platform IP and product-specific IP (which is not as straightforward in practice as it may sound), or allocating ownership by inventorship – but ultimately these are blunt instruments for what are highly bespoke arrangements where the nuances are important. Parties may also include provisions in their agreements that may change the IP ownership position as the collaboration progresses, based on relevant achieved milestones (e.g., using options). Particularly on the latter point, a clear takeaway was that such provisions depend on a variety of factors, including the type of IP being generated and whether such IP is or becomes fundamental to one party or the other, so there is definitely not a “one size fits all” approach.

Route to market

Finally, the session finished up with the panellists sharing their observations about the route to market for CGTs. Given their non-traditional regulatory pathways and the high-cost of CGT treatments, it is clear that regulatory matters and the likelihood of securing reimbursement are key issues that CGT companies have to grapple with at a very early stage, and are important considerations to bear in mind when negotiating deals in this space. Also, reimbursement issues will have a major influence on a CGT company’s IP strategy, as the geographical protection needed for the IP will be linked to those countries that are likely to be in a position to pay for a CGT therapy. 

Concluding remarks

The CGT industry shows no signs of slowing down with increased investment activity, accelerating developments in novel technologies and at its core, the enticing prospect of not only treating, but curing, a wide range of diseases. However, in order to realise the true potential of these transformative therapies, CGT companies must navigate and overcome the legal, commercial and practical challenges involved in deal-making in this area.