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Once a booming field, bustling with innovation and money driving that innovation, the cell and gene therapy sector is now struggling to fuel therapeutic growth to bring medicines to patients. It doesn’t help that many of these drugs are very expensive, as they are costly to manufacture. However, as scientists want to take on efficacy and safety challenges that deter these therapies from making it past the clinic, alternative funding channels have sprouted up to speed things up. The European Cell & Gene Therapy Summit 2025, held in London this week, was a hotspot for scientists and investors alike to discuss critical issues faced by the industry. Labiotech was in conversation with the speakers of the event about the role that funding plays in propelling research and development (R&D) in cell and gene therapeutics. Funding at a low: cell and gene therapies struggle to attract investments Funding for biopharma R&D took a downturn this year, foiling optimism at the start of 2025 when venture capital appeared to have rebounded, giving hope to startups. However, with funding cuts and heightened investor cautiousness, there has been a slump in funding over the past few months. Many biotech startups failed to gain initial funding, which fell from a total of $2.6 billion in the first quarter to $900 million over the following three months, according to an HSBC report in Biopharma Drive in July. And the cell and gene therapy sector has taken a serious hit, although, this slowdown has been ongoing for the past few years. Last year’s funding figures pale in comparison to how things were in 2021 – a whopping 83 per cent drop in investment. The field has seen funding plummet from $8.2 billion across 122 deals in 2021 to $1.4 billion across just 39 venture rounds in 2024, according to a Reuters report. As promising as gene therapies are, one of the main issues for investors is that these types of treatments come with a lot of risk and, even if they are successful, it takes time for them to realize monetary rewards. This is because these candidates spend a much longer time in the clinic than any other therapies before hitting the market. Manufacturing bottlenecks are also responsible for putting off investors. Patient cells are collected, multiplied, and modified in a laboratory; this can take weeks to complete, contributing to a more laborious manufacturing process. Even in vivo treatments go through several steps in development involving engineered viruses and synthetic genetic materials. This makes gene therapies very difficult to manufacture at scale. And that’s not all. When many of these treatments do reach the market, their high costs make them inaccessible to many people who need them, despite many of these medicines being marketed as one-time therapies. Investors who don’t want to take on this risk steer clear of cell and gene therapy R&D. “The funding environment for cell and gene therapy companies has been undeniably challenging over the past two years, with investors becoming more selective and cautious,” said Angel Lucio, chief executive officer (CEO) of Spanish drug developer Tetraneuron. But what if you could beat these manufacturing hurdles? Despite it all, Lucio thinks that novel technologies are worth investing in, especially in the cell and gene therapy space. Overcoming cell and gene therapy limitations: is this the answer to more funding? “We see a renewed interest in differentiated science, adeno-associated viruses (AAVs) next-gen technological and chemistry, manufacturing, and controls (CMC) platforms, and indications with clear medical and commercial impact,” said Lucio. Indeed, AAV technology has raked in funding in recent times. This year, Barcelona-based Splice Bio bagged €118 million ($139.66 million) in a series B financing round, which has created AAVs that overcome the challenges faced by traditional AAV vectors, which can only carry genes up to 4.7 kilobases long. And so did Danish start-up Fuse Vectors, which pocketed $5.2 million in pre-seed funding to further advance its gene therapy technology. It wants to best current AAV processes that it claims are “bottlenecking the true potential of gene therapies.” Moreover, AAV manufacturing garnered a £1.4 million ($1.91 million) grant from the Innovate UK Transforming Medicines Manufacturing (TMM) Programme in a bid to cut manufacturing costs. Similarly, Tetraneuron has incurred “strong engagement from private investors who recognize the potential of applying gene therapy beyond rare diseases,” explained Lucio, whose company has secured over €3.5 million ($4.14 million) in non-dilutive funding. “We are about to close commitments for our bridge financing, which will take us through clinical trial application (CTA)-ready status in Europe, and we are now preparing a larger series A to enable our first-in-human trial in Alzheimer’s,” said Lucio. “Despite the macro headwinds, the combination of breakthrough science, a seasoned team, and a clear regulatory roadmap has allowed us to keep strong momentum with investors.” The Valencia-based neurodegenerative disease therapeutics company is utilizing the AAV9 vector and has come up with its lead program TET-101. It is designed to target mechanisms of neuronal plasticity and resilience, rather than just alleviating late-stage symptoms. “Unlike traditional symptomatic treatments, our therapy aims both to prevent further progression of Alzheimer’s disease and to recover lost synaptic function,” said Lucio. The candidate managed to recover memory and cognitive functions in animal models. Lucio added that Tetraneuron is one of the first companies bringing scalable gene therapy into prevalent neurodegenerative diseases such as Alzheimer’s – an area of immense unmet medical need. As Lucio believes that new technologies that challenge the limitations of existing therapies are in demand, Riyadh-based NanoPalm wants to “disrupt conventional medicine” too. Advancing drug delivery: NanoPalm’s technology designed to improve patient experience NanoPalm is bringing forth patterned lipid nanoparticles (pLNPs) – fat-based particles used to deliver drugs in the body – which are non-spherical and self-targeting in nature that reach organs like the lung, muscle, brain, and eyes, unlike traditional LNPs that skew to the liver when administered. Ali Alhasan, founder and CEO of NanoPalm, said: "They support multiple modalities ranging from oligonucleotide and peptides to small molecules, giving a clear application diversity advantage. Our innovative bioprinting-based manufacturing makes pLNPs more stable and faster to produce, enabling scalability and cost-effectiveness.” This is a step up from currently approved ex vivo therapies that require harvesting and reinfusing cells, creating hospital burdens, infection risks, complex logistics, and high costs. Alhasan pointed out that the patient experience is sub-optimal with the current approved cell and gene therapy. “What patients need are scalable enough therapies to be delivered broadly and equitably,” he added. NanoPalm's pLNPs are designed to have high gene stability, maintaining activity at 2 to 8 °C for over six months, “providing a clear cold chain advantage.” Meanwhile, as the drop in funding affects CAR-T therapies, which, like gene therapies, were once viewed as game-changers in healthcare, the only way forward is to fix the problems posed by current versions of the technology – and CAR-Ts have a fair share of these constraints, ranging from high manufacturing costs to severe side effects in patients. ImmunoKey’s $225,000 grant: alternative funding on the rise John Bridgeman, chief scientific officer (CSO) of the U.K.-based cell therapy developer ImmunoKey, was at the European Cell & Gene Therapy Summit 2025 and told Labiotech about how his newly launched startup aims to take on the tall task of overcoming the barriers to CAR-T therapies. The team have extensive experience from discovery, through preclinical, to manufacturing and clinical delivery,” said Bridgeman. “We used these experiences to identify barriers to current CAR-T therapy and to approach our development plan in a streamlined and ambitious manner.” Barely a year old, ImmunoKey has created a platform to address specific CAR-T limitations, antigen escape and on-target off-tumour toxicity. Antigen escape is a mechanism where cancer cells evade CAR T-cell therapy by downregulating the specific antigen that the CAR T-cells are programmed to recognize and attack. This makes the CAR T-cells ineffective, leading to cancer relapse. As for on-target off-tumour toxicity (OTOT), it is a serious side effect caused by CAR T-cell therapy where engineered CAR T-cells target and destroy healthy cells. ImmunoKey’s platform enables multi-antigen targeting while minimizing off-tumour toxicity. This way, T cells are allowed to stay on in the patient’s body for longer and function in the tumour microenvironment. Still in the very early stages of development, ImmunoKey’s technology holds promise, and investors think so too. It was awarded a $225,000 grant in July from ScaleReady, a joint venture focused on cell and gene therapies. Can crowdfunding shake things up for cell and gene therapies? While grants are not regarded as the main source of funding for most biopharmas, they are a step up from no funding at all. Alternative ways to gather funding are more sought after now, considering the murky financial environment. And so, crowdfunding portals are gaining popularity, like Neva West’s BioTech Funding Portal in the U.S. West explained how it works. “In the U.S, everyday people – not just wealthy investors – can invest in startups through regulation crowdfunding (RegCF),” she said. Through a registered RegCF portal, companies can raise up to $5 million a year from their ‘crowd,’ and unlike other kinds of crowdfunding, such as rewards or donations portals, RegCF is regulated by the Securities and Exchange Commission (SEC). Plus, all RegCF portals are members of FINRA, which is a self-regulatory organization in the U.S. “The BioTech Funding Portal is the only RegCF portal to focus solely on life sciences companies,” said West. While the portal does not focus solely on cell and gene therapy companies, West thinks that they are great candidates for crowdfunding investment. She added that the most important criteria for being a good candidate for crowdfunding is a solid business plan and an understanding of what it takes to reach non-accredited investors and to continue that relationship through the product development lifecycle. “When your investors could also be your patients or study participants, it creates unique opportunities to build trust and collaboration, and it is important to understand that at the outset,” said West. The funding portal has a patient-centric approach. “We lead with two questions: 1) Is this company addressing an unmet need? and 2) Has the affected community, such as a patient advocacy group or incubator program, endorsed it?” If the answer to these questions is yes, West explained that hey then delve into the business plan and check if the company meets the regulatory requirements for listing on a RegCF investment portal. Furthermore, transparency is at the heart of the legislation for this kind of crowdfunding. “All potential investors receive the same information, and any questions asked of the company must be answered publicly on the portal,” she said. Although similar in some ways to traditional funding, West believes that it could also go beyond what it can offer. Crowdfunding may provide up to $5 million dollars a year in capital, can reach thousands of investors, paves the way for startups to generate more clinical data themselves, giving them a stronger position when talking with large investors, and de-risks the asset by proving that there is an active market. “As traditional sources of clinical research and start-up funding continue to decline, I think anyone who has a vested interest in seeing these efforts continue should look at other ways to find money to support it. Crowdfunding is one way, and I think it has the potential to bring benefits well beyond the obvious monetary ones,” said West. Also, as the investment community asks for clearer evidence of clinical impact and commercial viability, particularly when dealing with cell and gene therapies, “a successful crowdfunding campaign is a strong market signal and one way to validate demand.” Even in Europe, crowdfunding portals like the Dutch platform Lendahand, Paris-based Villyz, and Crowdcube in Spain have cropped up, all of which are regulated under the European Crowdfunding Service Providers (ESCR). While there is a lot of work to do to improve manufacturing, mitigate R&D issues, and bring more affordable therapies to patients, key players in the industry want to take these challenges on. But how long it will take for them to do so during a time of economic instability, we will have to keep an eye on.