In its latest survey of the CGT landscape, released in late September, ARM sees both positive and negative developments on both sides of the ledger for the industry.

One of the biggest challenges for the industry is "investment headwinds" that have continued throughout the year, following two successive record years of financing flowing into the sector, the group reports.

"2022 is on track for a significant retrenchment. The biotechnology sector's equity performance is down, with the strongest punishment doled out to small, early-stage cell and gene therapy companies. Inflationary conditions and expectations have been particularly unkind to the sector. Initial public offerings have nearly dried up, after hitting a record in 2021," states the report.

Initial public offerings for the first half of 2022 saw a significant decline from prior years with only two completed. Based on current patterns, 2022 is likely to land between $9.8B and $13.5B in total annual investment, the sector performance from 2019 and 2018, respectively, according to ARM, which noted that small, early-stage companies are particularly impacted by inflation expectations "because they are furthest from generating profits."

Nonetheless, while off its 2021 peak, ARM said that venture capital financing for the sector "remains robust and is the single largest driver of sector investment" reflecting continued excitement around scientific breakthroughs and opportunities to change the treatment paradigm across a range of rare and prevalent diseases.

"While external conditions ebb and flow, the sector's progress -- in clinical milestones, regulatory developments, and patient impact -- steadily advances," states the report.

2022 has already been a record year for the approval of new gene therapies to treat rare diseases ARM notes, with two chimeric antigen receptor T-cell (CAR T) therapies for blood cancers now approved by the U.S. Food and Drug Administration (FDA) as earlier-line treatments. The industry group said that with the approval of new CAR T therapies this year in the U.S. and Europe now means there are a total of six CAR Ts available to patients in both geographies.

At the same time, however, ARM warned that Europe's "standing in developers, clinical trials, and investment continues to stagnate as growth flows to other regions." In particular, the group has called on the European Commission to exempt advanced therapies from genetically modified organism (GMO) legislation, which it contends hurts Europe's ability to launch clinical trials and delays patient access to transformative medicines.

Advanced therapy medicinal products (ATMPs), such as gene therapies that consist of or contain GMOs must comply with the European Union's (EU) legislation before a clinical trial can commence. However, ARM makes the case that complying with the GMO requirements, which are complex and vary significantly across EU member states, is leading to delays to clinical trials.

In the latest CGT report, the lobbying group said it "remains heavily engaged" with EU policymakers "on joint clinical assessments, the forthcoming revision of the pharmaceuticals legislation, and other policy initiatives that are crucial for the region to remain a leader."