Good day. In biotech investment circles, they are the ultimate contrarians: the venture capitalists who say now is the time to invest in vaccines.

During the pandemic, biotechs Moderna and BioNTech, with partner Pfizer, whisked Covid-19 vaccines to market with help from President Trump’s Operation Warp Speed. Shares of the three companies rocketed and Moderna and BioNTech shone as two of biotech’s greatest successes.

Under the second Trump administration, however, the Make America Healthy Again movement has looked for causes of chronic illnesses, targeting vaccines among other products. Health and Human Services Secretary Robert F. Kennedy Jr. is a longtime vaccine skeptic.

Given the pushback, some investors in vaccine startups—never many to begin with—have stepped back. But a clutch of die-hards remains: Near-term complexity, they say, doesn’t undermine long-term trends favoring the industry, including the need to protect against new pathogens, not to mention consistent interest from some top drug companies in acquiring new vaccines.

If some investors exit, those remaining will have their pick of the deals, possibly at lower valuations.

“We think it is an even better opportunity to invest in the space now,” said Giovanni Mariggi, co-founder and partner with Vicebio backer Medicxi.

Read the full story here.

And now on to the news...

Biotech buyout. Merck has reached a nearly $6 billion cash deal to buy the cancer biotech Terns Pharmaceuticals and its promising leukemia treatment.

• If it proves to work safely, the experimental drug would give Merck a boost as the company prepares for its top-selling drug, Keytruda, to lose patent protection. Under the terms, Merck would pay $53 a share for Terns, Merck said Wednesday. The deal is worth $5.7 billion including the cash that Terns has on hand.
   
• Terns, of Foster City, Calif., has been developing pills to treat cancer, as well as obesity and metabolic-liver diseases. Its crown jewel is a pill to treat a blood cancer known as chronic myeloid leukemia. Last year Terns reported encouraging study results for the medicine.
   
• Wall Street analysts said the drug could be an eventual blockbuster, with Truist Securities estimating as much as $2.3 billion in peak adjusted annual sales.

Gilead Sciences plans to acquire Ouro Medicines, a developer of autoimmune-disease therapies, for up to about $2.18 billion and develop the assets from the deal in a collaboration with Galapagos. Under the terms of the deal, Gilead would buy all of the outstanding equity of Ouro for about $1.68 billion in cash upfront, which is payable at closing, and up to $500 million in contingent milestone payments. Gilead also said it is in talks with Galapagos for a potential research-and-development collaboration for the assets it plans to purchase from Ouro. Under the partnership, Galapagos would pay half of the upfront consideration and half of any contingent milestone payments for Ouro, and would absorb substantially all of Ouro’s operating assets and employees.

OpenAI is backing a new artificial-intelligence startup that aims to build software allowing so-called AI agents to communicate and solve complex problems in industries such as finance and biotech. The San Francisco company, called Isara, was founded last June by two 23-year-old AI researchers, Eddie Zhang and Henry Gasztowtt. They have hired about a dozen other researchers from companies including Google, Meta Platforms and OpenAI to join them.

Correction: Nicole Fraenkel, a partner at Khosla Ventures, said physical AI could impact "the forklift in the factory, the drone, surgical robot, the robotic arm picking bags of peaches off of a conveyor belt.” The March 10 newsletter incorrectly quoted her as referring to "the drone surgical robot."

Funds

Alumni Ventures launched Women’s Fund 3 to invest in startups founded or led by women across sectors including space, cybersecurity, AI and healthtech.

People

Antibody discovery platform Protillion Biosciences appointed Robert Hollingsworth as chief scientific officer. He most recently served as CSO at Shoreline Therapeutics.

Qualified Health, a Palo Alto, Calif.-based startup providing a secure enterprise AI platform built for health systems, scored $125 million in Series B funding. New Enterprise Associates led the round, which included participation from Transformation Capital, GreatPoint Ventures, Cathay Innovation, Menlo Ventures and others. Mohamad Makhzoumi, co-CEO of NEA, will join the company’s board.

Endogenex, a Plymouth, Minn.-based startup developing a new treatment for type 2 diabetes, closed on $50 million in Series C extension funding led by Arboretum Ventures.

Stedi, a New York-based healthcare transaction clearinghouse, landed $50 million in Series C funding. Addition led the round, which saw contributions from Union Square Ventures and others.

Thesis Care, a New York-headquartered startup that combines AI agents with expert clinicians to take on clinical operations and care management work for healthcare organizations, secured $45 million in Series A funding. Oak HC/FT led the investment, which included participation from CRV and Black Opal Ventures.

Oryon Cell Therapies, a Belmont, Mass.-based startup developing autologous cell therapies for Parkinson's disease and other neurodegenerative disorders, emerged from stealth with a new $21 million tranche of its Series A financing from investors including Neuro.VC and Byers Capital. The company also said it appointed Ron Cohen as chief executive officer.

Clasp, a Boston-based startup that connects healthcare employers with students before graduation and ties loan repayment to employment, nabbed $20 million in Series B funding led by Crosslink Capital and Digitalis Ventures.

JAAQ, a London-based digital mental health and engagement platform, picked up a $17 million investment from Guinness Ventures and others.

Dimer Health, a Florham Park, N.J.-headquartered startup providing continuous medical oversight from hospital discharge through recovery, collected $13.5 million in Series A funding led by Team8 and Table Management.

Flourish Care, a Boston-based maternal healthcare platform, was seeded with a $5.7 million investment. Zeal Capital Partners led the round, which included participation from Create Health Ventures, Collide Capital, Slater Technology Fund and others.

Virchow Medical, a La Jolla, Calif.-based developer of biopsy technologies for oncology, completed a $4 million seed round. Cerberus Ventures led the investment, with Chenny Zhang joining the board.

• Autism-Therapy Firm That Was Paid $340,000 per Patient Is Barred From Medicaid
   
• Roche Halts Development of Drug Candidate for Muscle Diseases, Chugai Says
   
• Pfizer’s Lyme Vaccine Misses Mark in Study, Complicating Quest for Approval
   
• Peptides Are Everywhere. RFK Jr. Wants to Make Them Even Easier to Buy
   
• Novo Nordisk Says Experimental Diabetes and Obesity Drug Shows Positive Results

• Key adviser quits federal vaccine panel (New York Times)
   
• Communicating about vaccines in a politically contentious climate (New England Journal of Medicine)
   
• Biotech IPOs demystified (Life Sci VC)
   
• Maze tumbles despite positive data for kidney disease drug (BioPharma Dive)

This newsletter was compiled by Matthew Strozier, Zachary Cole and Brian Gormley. 

Share your tips, comments and questions: vcnews@wsj.com

The team: Matthew Strozier, Yuliya Chernova, and Brian Gormley.

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