The Cell and gene Therapy (CGT) industry is experiencing rapid growth. It offers groundbreaking treatments that have the potential to improve patient outcomes across a range of diseases significantly.

Unlike traditional pharmaceuticals, CGT products leverage genetic modification, cell reprogramming, and regenerative medicine to target the root causes of diseases rather than just managing symptoms. As a result, these therapies present an unprecedented opportunity to revolutionize healthcare.

However, CGT companies face unique risks and complexities that demand a specialized approach to due diligence. CGT products’ development, manufacturing, and commercialization require rigorous scientific validation, stringent regulatory approvals, and robust supply chain management.

Investors, acquirers, and strategic partners must navigate scientific, regulatory, manufacturing, and financial challenges to ensure a successful investment or partnership.

This article provides a comprehensive guide to evaluating CGT companies, outlining key risk areas, due diligence best practices, and red flags to watch for. By understanding the critical factors involved, stakeholders can make informed decisions and contribute to the successful advancement of this transformative field.

1. Key Due Diligence Risk Areas

1.1 Scientific & Technological Risks

Cell and gene therapy companies are built on cutting-edge science that often lacks long-term validation. The rapid pace of innovation means that technologies that appear promising in early studies may not translate into effective or scalable therapies.

Investors and stakeholders must assess the technology’s robustness, potential for scalability, and the depth of scientific validation supporting its use.

Platform Viability & Scalability

• Is the technology scientifically validated beyond preclinical studies?
• Can the platform be scaled efficiently, or are there barriers to commercialization?

Clinical & Preclinical Data Review

• Are clinical trials designed to demonstrate long-term safety, durability, and efficacy?
• Does the company have a well-defined patient follow-up strategy to meet regulatory requirements?

Intellectual Property (IP) Risks

• Are patents strong and defensible?
• Does the company have Freedom-to-Operate (FTO) without infringing on existing IP?

🚩 Red Flags:

• Unproven scalability or high dependence on academic research without validation
• Weak clinical trial design, inconsistent endpoints, or inadequate follow-up
• Pending litigation or IP disputes that could limit commercialization

1.2 Regulatory & Compliance Considerations

Regulatory compliance is one of the most critical aspects of CGT due diligence, as these therapies must meet stringent standards set by agencies like the FDA, EMA, and MHRA.

Regulatory approvals require extensive clinical and manufacturing data, and any deviations from best practices can result in costly delays or denials.

Companies with proactive regulatory engagement and a well-defined approval strategy are better positioned for long-term success.

Regulatory Pathway & FDA Interactions

• Has the company obtained RMAT, PRIME, or Fast Track designation?
• What is the status of FDA/EMA engagements, and has the feedback been positive?

Good Manufacturing Practices (GMP) Readiness

• Are facilities compliant with GMP, GCP, and GLP?
• Have there been FDA 483 observations, warning letters, or CAPA issues?

Quality & Compliance Culture

• Does the company have a robust Quality Management System (QMS)?
• Are SOPs well-documented and adhered to?

🚩 Red Flags:

• Regulatory filings with delays or deficiencies
• Unclear or inconsistent engagement with health authorities
• Manufacturing quality issues or regulatory non-compliance

1.3 Manufacturing & Supply Chain Risks

Manufacturing is one of the most significant hurdles in CGT, as these therapies often involve complex biological processes that differ from traditional pharmaceutical production.

Ensuring consistency, scalability, and compliance with Good Manufacturing Practices (GMP) is essential. Companies that struggle with process optimization, supply chain security, or regulatory readiness may face significant delays or quality issues.

CMC & Scalability Challenges

• Are manufacturing processes scalable and reproducible?
• Are vector production and raw materials secured for commercial-scale manufacturing?

Supply Chain Dependencies

• Are there single-source suppliers for critical raw materials?
• Are contingency plans in place to address potential shortages?

Product Stability & Logistics

• Have cryopreservation and transportation processes been validated?
• Is there data supporting long-term stability and distribution feasibility?

🚩 Red Flags:

• Lack of redundancy in supply chains
• Poor CMC documentation leading to batch failures
• Weak logistical planning for global distribution

1.4 Financial & Commercial Viability

CGT therapies are often high-cost treatments that require careful financial planning. Unlike traditional pharmaceuticals, pricing and reimbursement for CGT products involve long-term patient benefits, risk-sharing models, and complex market access strategies.

Investors must evaluate financial sustainability, pricing models, and the company’s ability to secure partnerships with payers.

Market Access & Reimbursement Strategy

• Does the company have a clear reimbursement plan for high-cost therapies?
• Have they engaged with payers and health systems?

Investment & Financial Health

• Is the cash runway sufficient for late-stage trials and commercialization?
• Are there concerns about funding dilution or regulatory risks?

Strategic Partnerships

• Do licensing agreements create long-term financial constraints?
• Are partnerships aligned with the company’s growth trajectory?

🚩 Red Flags:

• Lack of reimbursement clarity for expensive treatments
• Unsustainable burn rate or over-reliance on external funding
• Opaque licensing agreements that limit financial flexibility

2. Key Considerations for CGT Due Diligence

Successful due diligence in CGT requires a comprehensive evaluation approach tailored to the unique complexities of these therapies. Here are key factors to consider:

Regulatory & Compliance Readiness: Ensure alignment with global regulatory requirements, including FDA, EMA, and MHRA guidelines.

Scientific & Technical Feasibility: Assess preclinical and clinical data rigorously, ensuring robustness and reproducibility.

Manufacturing & Scalability: Evaluate the company’s ability to scale production while maintaining quality and compliance with GMP.

Supply Chain Resilience: Assess the strength of the supply chain, ensuring redundancy and contingency planning for critical materials.

Financial Sustainability & Market Access: Analyze the company’s financial health, reimbursement strategy, and long-term viability.

Partnerships & Commercial Viability: Ensure licensing agreements, strategic collaborations, and commercialization plans are aligned with sustainable growth.

Due diligence in Cell and Gene Therapy (CGT) transactions requires a deep understanding of regulatory, manufacturing, and financial risks.

Unlike traditional pharmaceuticals, CGT products demand a highly specialized approach to evaluating scientific feasibility, regulatory readiness, and commercialization potential. A robust due diligence process should focus on:

Regulatory & CMC Compliance – Ensuring adherence to global regulatory frameworks, including FDA, EMA, and MHRA requirements.

Manufacturing Scalability & Supply Chain Readiness – Assessing the company’s ability to scale production while maintaining quality and compliance with GMP.

Financial Sustainability & Market Access – Evaluating reimbursement strategies, financial viability, and commercial feasibility.

Given CGT investments’ high risks and complexity, having the right expertise is critical to making informed decisions and mitigating costly pitfalls.

At Compliance Architects (CA), we can help guide investors, acquirers, and strategic partners through the due diligence process.

We leverage our industry expertise in regulatory strategy, manufacturing quality, and risk assessment to ensure confident and well-informed decision-making.

Whether you are evaluating a potential investment, acquisition, or partnership in the CGT space, CA can help you navigate the complexities and uncover critical risks before they become costly.

Let’s discuss how we can support your due diligence efforts and ensure a successful path forward.

Want to learn more? Contact us below.