Investment in developers of cell and gene therapies has nosedived this year, a sharp drop-off that investors and analysts say reflect manufacturing and drug delivery challenges at a time when biotechnology companies with clear development paths are increasingly favored.So far this year, makers of cell and gene therapies have raised half of a billion dollars across 16 venture rounds, according to data from DealForma published by Nature. Even annualized, those numbers are well below the $8.2 billion in funding brought in by the 121 deals DealForma counted during the sectors peak in 2021. Last year, cell and gene therapy developers raised $3.5 billion across 65 deals.Were largely seeing investments shifting to things that are de-risked, said Jon Norris, a managing director at HSBC Innovation Banking. Cell and gene therapy is becoming an area we know better, because there are products that have advanced through development, but it still doesn't compare to the number of approvals and drugs commercially available in small molecules or biologics.Overall, biotech venture investment has ticked higher over the first half of 2024, according to a mid-year report from HSBC Innovation Banking. Yet, regardless of technology or research field, biotechs still face a challenging financing environment.Developers of cell and gene therapies face additional hurdles, however, given that the kind of capital required to advance these therapies is different from small molecule drugs or biologics, said Peter Sletteland, a managing director for Silicon Valley Banks life science and healthcare practice. You typically need to spend significant investment in manufacturing.Still, he added, cell and gene therapies garner a lot of attention because of the promise of what they could do.Six CAR-T cell therapies have been approved by U.S. regulators to treat cancer and, in some indications, their benefits can be dramatic. But hopes of replicating that success with so-called allogeneic therapies, which use donor cells rather than individual patients, has been harder to come by than initially envisioned by investors. And uptake of some of the approved CAR-T therapies has been slow, especially as companies work through manufacturing bottlenecks.In gene therapy, sickle cell treatments Casgevy and Lyfgenia secured milestone approvals from U.S. regulators late last year. But only a few dozen patients have begun the process to receive treatment, reflecting the long manufacturing and infusion times needed for each.Adoption has also been slow for the hemophilia gene therapies Hemgenix and Roctavian, while other gene therapy developers like Pfizer have hit clinical setbacks.Patient perception of gene therapy is a crucial barometer. “The therapy has to be worth it, but the question is, are there treatment alternatives?“ said Chris Bardon, co-managing partner at MPM BioImpact.For diseases that have limited treatment options, it may be easy for a patient to consider an intensive cell or gene therapy treatment, which can require arduous chemotherapy preconditioning. But such treatments may by less appealing to people with conditions that are manageable with approved medicines, such as is the case in hemophilia.“It has been a challenge for investors,“ Bardon said.The challenge of developing and selling cell and gene therapies, though, isnt enough to deter investors and drugmakers entirely.In cell therapy, for instance, theres buzz around the potential to target hard-to-treat autoimmune disorders, said Bruce Levine, a cell and gene therapy pioneer at the University of Pennsylvania who co-founded Tmunity Therapeutics and Capstan Therapeutics with colleague Carl June.That's the nature of a therapy that, currently, through the cost of goods and services, is expensive to manufacture, but delivers long-term, durable benefit in patients who have failed all other available therapies, Levine said. '