Lonza experiences CGT headwinds but hails pipeline for bounce back

Lonza says a slowdown in funding and clinical trial issues in 2022 led to slower cell and gene therapy (CGT) sales growth compared to 2021.

Contract development manufacturing organization (CDMO) Lonza reported sales of 6.2 billion CHF ($6.7 billion) in Q4 2022, a 15.1% sales increase on 2021. Its biologics division sales grew by 21.7% compared to 2021 and the firm’s CGT business sales increased by 13.6%.

Lonza’s chief financial officer (CFO) Philippe Deecke attributed the smaller sales growth of its CGT division to “product failures and delays to customer programs.” He added on a conference call the CDMO is experiencing “some softness in the cell and gene market coming from the slowdown in funding.”

Investments in the CGT space decreased by 44% from 2021.

However, Deecke remained positive and told shareholders “despite these short-term challenges, the business remains attractive and [a] positive margin was maintained.”

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The slowdown in funding for Phase I compounds [explains] some of the headwinds we have seen this year and we anticipate seeing early in 2023,” CEO Pierre-Alain Ruffieux added, though the CDMO still maintains there will be “positive development” in its CGT business unit.

He explained some of the short-term disruption is due to the CGT pipeline mainly [being] made [up] of Phase I [and] Phase II compound. So basically, they have a tendency not to be successful.” Yet, with a high volume of potential therapies in the pipeline, Lonza maintains the CGT division will not experience long-term suffering.

“Our normal CDMO business is 70% phase [III and] commercial, and 30% clinical.” FOr CGT, “it’s exactly the opposite,” Ruffieux added. “So, we don’t see long-term disruption, but clearly, we have seen some slowdown in the uptake of new projects.”

The earnings call also reflected on another CGT highlight for Lonza in Bluebird Bio’s US approvals of  Zynteglo (betibeglogene autotemcel, or beti-cel) and Skysona (eli-cel), both of which are manufactured at the CDMO’s Houston, Texas site.