Good day. Venture-backed Tessera Therapeutics is joining with Regeneron Pharmaceuticals to advance a gene-editing therapy, yet another instance of top drugmakers’ interest in teaming up with biotech companies to get access to novel genetic medicines.

The potential to snip diseases at their genetic roots has drawn the interest of pharmaceuticals. In 2023, the Food and Drug Administration approved Casgevy, the first Crispr gene-editing therapy. The drug, which treats sickle-cell disease, is the fruit of a collaboration between Vertex Pharmaceuticals and Crispr Therapeutics.

Tessera and Regeneron are working on the startup’s most advanced drug, a treatment for a alpha-1 antitrypsin deficiency, or AATD, a shortfall in a protein that helps protect the lungs from inflammation and irritants. The disease can damage the lungs and lead to chronic obstructive pulmonary disease, and can also cause improperly shaped alpha-1 antitrypsin proteins to aggregate in the liver, leading to cirrhosis.

Tessera’s treatment is designed to correct the gene mutation underlying the disease. Dr. Michael Severino, the biotech’s chief executive, said he expects the therapy to enter clinical trials soon.

Tessera’s partnership with Regeneron provides not only capital, but a partner that can help advance the drug through clinical trials and to the market. The two companies have agreed to share development costs and future profits from the drug equally, they said. Tessera will receive $150 million, including an upfront cash payment and equity investment, and could gain up to $125 million in near- and mid-term development milestone payments.

Tessera was launched in 2018 by Flagship Pioneering, and hopes its drug will not just treat AATD, but squelch it. “That’s certainly our goal,” Severino said.

And now on to the news...

Coders love this AI startup. Can it last? Silicon Valley insiders have started calling Cursor, the AI coding tool, the fastest-growing product of all time. Even though the company’s valuation soared from $2.5 billion in January to $29.3 billion today, it loses money, according to people familiar with its finances. And the tool relies heavily on the underlying artificial-intelligence models of companies such as OpenAI and Anthropic, which are actively competing for the same software engineering users who have made Cursor a runaway hit. That has put the startup’s staying power in question and at the heart of a raging debate in Silicon Valley. Millions of users love it, but they aren’t sure it will last. So far, an army of coders who love it have silenced many skeptics.

OpenAI Chief Executive Sam Altman told employees Monday that the company was declaring a “code red” effort to improve the quality of ChatGPT and delaying other products as a result, according to an internal memo viewed by The Wall Street Journal. Altman said OpenAI had more work to do on the day-to-day experience of its chatbot, including improving personalization features for users, increasing its speed and reliability, and allowing it to answer a wider range of questions.

Australian secondary funder SecondQuarter Ventures is aiming to tap what it estimates is $2.6 billion in demand from local tech founders and investors over the next three years. Sydney-based SecondQuarter has been meeting with institutional investors and family offices in recent weeks to raise its third fund since its founding in 2020. While buying stakes from existing startup investors seeking liquidity is well established in the U.S., SecondQuarter says it is the only dedicated venture secondary fund in Australia and New Zealand.

The Trump administration has agreed to inject up to $150 million into a startup trying to develop more advanced semiconductor manufacturing techniques in the U.S., its latest bid to support strategically important domestic industries with government incentives. Under the arrangement, the Commerce Department would give the incentives to xLight, a startup trying to improve the critical chip-making process known as extreme ultraviolet lithography, the agency said in a Monday release. In return, the government would get an equity stake that would likely make it xLight’s largest shareholder.

Funds

Early-stage investor Entrée Capital has raised $300 million across two new funds, bringing the firm’s total assets under management to $1.5 billion.

People

Agentless cloud security provider Orca Security appointed Gera Dorfman as chief product officer. He most recently served as vice president of network security products at Check Point Software Technologies.

Black Forest Labs, an AI research lab for visual intelligence, scored $300 million in Series B funding led by Anjney Midha (AMP) and Salesforce Ventures at a post-money valuation of $3.25 billion. The company has offices in Germany and San Francisco.

Quantum Systems, a Germany-based startup developing intelligent unmanned systems, raised a €180 million Series C extension round led by Balderton Capital, bringing the company’s valuation up to more than €3 billion.

Tutor Intelligence, a Watertown, Mass.-based startup providing an AI-powered fleet of warehouse robot workers, closed a $34 million Series A round led by Union Square Ventures.

Gravis Robotics, a Switzerland-based earthmoving autonomy platform, snagged a $23 million investment co-led by IQ Capital and Zacua Ventures.

Moonshot Space, an Israel-based developer of an electromagnetic acceleration system for space logistics and hypersonic testing, emerged from stealth with $12 million in funding led by Angular Ventures.

Jeeva AI, a San Francisco-based agentic sales platform, picked up a $9 million investment from JLL Spark, Sapphire Ventures, Alt Capital, Launch Capital and others.

Reditus Space, an Atlanta-based commercial returnable satellite developer, secured $7.1 million in seed funding from investors including Y Combinator, Antler and Aera VC.

LizzyAI, a New York-headquartered startup automating job candidate interviews, was seeded with a $5 million investment led by New Enterprise Associates.

Minitap, an AI-powered mobile development platform, landed $4.1 million in seed funding co-led by Moxxie Ventures and Mercuri.

Neuracore, a London-based infrastructure platform for robot learning, closed a $3 million pre-seed round led by Earlybird.

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• New Growth Investment Lifts Sokin’s Valuation to $300 Million

• The race to AGI-pill the pope (The Verge)
   
• An AI model trained on prison phone calls now looks for planned crimes in those calls (MIT Technology Review)

This newsletter was compiled by Matthew Strozier and Zachary Cole.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley and Marc Vartabedian.