Fueling the Future: A Primer on Cell and Gene Therapy Tools

THE COWEN INSIGHT

The fast-growing cell and gene therapy (C+GT) space relies on a supportive ecosystem of enabling tools. We view this market as attractive and overlooked despite a $45B+ TAM, robust growth potential, and insulation from the binary risk of clinical success. This primer details our industry-level investment thesis and includes takeaways gleaned through KOL calls and our proprietary end-user survey.


What’s proprietary and unique about this report?

Until now, a deep-dive into the investment thesis for cell and gene therapy (C+GT) tool companies has been lacking. In this primer we’ve:

  1. Compiled an analysis of the key value drivers and investment opportunities for this nascent industry
  2. Estimated a robust, underappreciated TAM of $45B+ for the sector
  3. Conducted a proprietary, first-of-its-kind end-user survey of C+GT developers to provide investors with an in-depth overview of the unique opportunities in the C+GT tools sector

In addition, we informed this report through an 8-person KOL survey and spoke one-on-one with four KOLs in C+GT and regulatory fields to assess the current unmet needs and future opportunities for growth.

What are cell and gene therapy tools?

Cell and gene therapy (C+GT) tools are the key enabling technologies that support the testing, scale up, and manufacture of C+GT products. Gene therapies deliver targeted genetic material to patients to treat or prevent disease. Cell therapies use patient or donor cells engineered to include specific properties to treat disease. Tool companies provide the necessary components — reagents, media, instrumentation, quality control testing, etc. — to enable the successful development, manufacture, and commercialization of these emerging therapeutics.

What is the market opportunity?

Traditional tool providers (including large, diversified tool companies) have often been slow to adapt their operations and product portfolios to serve the necessary (and often unique) components C+GT developers require for product development, manufacture, and distribution. Instead, new, specialized tools suppliers have emerged to fill the gap between what C+GT developers desire (and require), and what legacy pharmaceutical manufacturers and suppliers can provide.

What role will M&A play?

In recent months, large, diversified tools companies have deployed cash (in part generated by COVID-19 testing and vaccine products) to acquire unique, differentiated providers of antibodies, reagents, and other components used to develop, commercialize, and transport mRNA vaccines, monoclonal antibodies, complex biologics, and C+GT. Over the past decade, M&A multiples for media, bioprocessing, and reagent suppliers have trended directionally higher. We view C+GT tools companies as logical M&A targets for large tools providers seeking to tap into the fast growing, minimally penetrated C+GT (and biologics) markets.

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