Just a year ago, genetic therapies--treatments that work by rewriting bits of genetic code in a patient's cells--were widely heralded as the next great champion of modern medicine. Then the champ hit an unexpected slump. Gene therapy took a standing eight-count last winter, after drug contenders sponsored by a host of biotechnology and drug companies failed to cure a single patient of disease. In a highly critical report issued last December, a review panel at the National Institutes of Health chided researchers and investors for rushing treatments into human clinical trials before fully understanding all the natural defenses that genetic medicines must conquer or evade if they are to work.

Somewhat chastened, geneticists are studying their failures and starting to develop a clearer picture of what they are up against. Many researchers are optimistic that the present retrenchment actually bodes well for the long-term success of genetic medicines. In laboratories and on Wall Street, there are signs that gene therapy is starting to stage a comeback.

The challenge facing genetic medicines is daunting. First, they must somehow deliver their genetic payload into enough cells to do some good. Retroviruses seemed well suited for this task, because these kinds of viruses normally infect cells by copying part of their DNA into the genetic code of a host cell. Most early trials of genetic medicines therefore co-opted retroviruses, replacing their harmful parts with genes intended to help treat a disease, such as cystic fibrosis or brain cancer.

But viral drugs can take effect only if they can slip past the multilayered defenses of the human immune system. First comes an onslaught of antibodies soon after any familiar virus is detected in the bloodstream. These antibodies quickly bind up the virus and can also cause side effects such as inflammation. Viral particles that make it to target cells face a second obstacle: a tough membrane shielding the cell's DNA from attackers. Finally, those retroviruses that are lucky enough to make it past the immune defenses and to infect cells do so in an unpredictable manner; they typically will insert the therapeutic gene at a random position in the cell's DNA. The new gene might interrupt an important sequence, actually harming the cell. Even in the best case, new genes often end up in dormant stretches of DNA where they do not get switched on frequently enough to make much of a difference to the patient.

Geneticists were humbled by these barriers, but they were not stumped. A second wave of enthusiasm for gene therapy is now well under way, thanks to recent advances that suggest new strategies. In September, RPR Gencell (a network of gene therapy research centers organized by the French company Rhone-Poulenc Rorer) published results in Nature Medicine describing its test of a retroviral gene therapy for lung cancer. The researchers injected the drug containing normal versions of p53--a gene that suppresses tumors--directly into nine patients' tumors. This technique avoided triggering a general immune response and exploited the rapid division of tumor cells. Tumors shrank significantly in three of the patients and stopped growing in three others; nevertheless, all nine patients died.

Results from two other groups recently suggested that it might be possible to design gene therapies that altogether avoid viruses and their many drawbacks. Workers at the University of Chicago and at Vical, a biotechnology firm in San Diego, rolled a gene for erythropoietin into a circular DNA package called a plasmid. Erythropoietin is a hormone that triggers the body to produce red blood cells. Another biotechnology company, Amgen, sells nearly $1 billion of its synthetic version each year to patients afflicted with anemia and other blood disorders.

In an article published October 1 in the Proceedings of the National Academy of Sciences, the Chicago group reported that simply injecting the naked DNA into the hindquarters of normal mice boosted their red blood cell counts by a third. Equally important, the counts remained higher up to 90 days after the injection, strongly indicating that the genes had taken hold (at least for a while) and begun producing hormone. "Our results suggest that intramuscular injection of currently available genes could be used to treat a variety of serum protein deficiency diseases," such as anemia, hemophilia and diabetes, says Jeffrey M. Leiden, director of the study at the University of Chicago.

Boosting blood-cell production does little good for patients whose blood cells are malformed, such as those of sickle cell anemics. The ultimate goal of gene therapy is not to compensate for genetic diseases but to erase them completely. Preliminary work published in the September 6 issue of Science offers a reason to hope that goal may be possible. A team led by Allyson Cole-Strauss and Kyonggeun Yoon of Thomas Jefferson University in Philadelphia experimented on cells containing a mutant gene that causes sickle cell anemia. To make their genetic drug, they combined DNA for the normal version of this gene with RNA for the same gene.

When they injected the drug into the diseased cells, the RNA/DNA particles homed in on the particular stretch of the genome that matched their codes and formed triple-stranded DNA that covered the mutation. The cells' normal DNA-repair machinery then apparently replaced the mutation with the normal code--thus permanently curing 10 to 20 percent of the cells. The researchers still have to demonstrate that this technique works in human cells and in human bodies.

While scientists and the public slowly allow optimism to creep back into discussions about gene therapy, investors and biotechnology companies are unabashedly bullish once more. By July, 216 clinical trials of gene therapies were planned or under way, according to the Pasteur Institutein Paris. "Biotech firms of every kind are scrambling to reposition themselves as genomics companies," says Joan E. Kureczka, an industry publicist.

Gene therapy may emerge a winner in this round, though the match will likely draw on for years to come. The longer the search and the larger the investment, however, the more expensive that treatments will be when they do arrive. The greatest challenges to the medical wonders promised by gene therapy may well turn out to be economic rather than scientific.