Good day. Metagenomi Inc.’s $175 million financing this week illustrates the evolution of the market for gene-editing companies.

Gene editing is a means of making precise changes to the genetic code using an enzyme, such as Cas9, that cuts DNAs. Biotech companies are developing gene-editing treatments for diseases including genetic disorders and cancer.

But Cas9 isn’t always the best option for drugmakers, according to Metagenomi, which has amassed a trove of other gene-editing enzymes it has uncovered from nature, such as soil and animal and human bacterial samples.

Using a technique known as metagenomics, Metagenomi sequences the genomes of all organisms in a sample as it searches for gene-editing enzymes precisely suited to a specific task, such as developing a drug for a given disease. Then it uses its expertise to optimize these gene-editing tools, according to Chief Investment Officer Simon Harnest. 

In November the company struck a deal with Moderna Inc. to advance a series of gene-editing therapeutics. Metagenomi is also developing a pipeline of drugs for diseases such as hemophilia A and cancer. With this new financing, from PFM Health Sciences, Farallon Capital Management, and others, the company has now raised a total of $300 million.

And now on to the news...

Covid-19 testing. Venture capitalists are financing startups pursuing innovations in Covid-19 diagnostics as demand for testing rises along with a surge of cases caused by the Omicron variant. 

• New testing tools from venture-backed companies come as many people struggle to find rapid antigen tests.
   
• Soon after the pandemic struck, startups that had been offering a range of diagnostics, including LetsGetChecked and Everly Health Inc., added Covid-19 testing options to their services.
   
• At the same time, venture capitalists began betting on novel testing technologies, including new highly accurate tests that can be performed in the home or point of care.

Salamanders do it. So do starfish. And now scientists have shown that frogs can regenerate amputated limbs, once their stumps have been treated with a multidrug “cocktail,” The Wall Street Journal reports. The findings, published Wednesday in the journal Science Advances, represent a notable advance in the field of regenerative medicine, which aims to replace human tissues and organs to restore normal function.

Crypto-focused venture firm Dragonfly Capital is aiming to raise a $500 million fund, according to a regulatory filing. The pool of capital would be the largest raised so far by the young firm and comes as venture investors are raising ever-larger funds in a rush to back crypto startups, WSJ Pro’s Marc Vartabedian reports. San Francisco-based Dragonfly targets investments in crypto technologies, including decentralized finance, nonfungible tokens and platforms that offer creators ways to monetize their digital content. The latest fundraise would be a jump in size from the $225 million fund, Dragonfly Fund II, the firm raised last year.

Funds

Swiftarc Ventures launched a $75 million telehealth-focused fund, which has an initial emphasis on mental and behavioral health, obesity and pediatrics.

People

Healthcare and technology investor Section 32 added Carlos Solórzano as senior principal, where he will be based in the firm’s Los Altos, Calif. office. Mr. Solórzan was previously a senior associate at Pivotal bioVenture Partners.

Midwest-focused healthcare venture capital firm Venture Investors named Jenni Le to the role of associate. She was previously managing director at gener8tor Madison.

Digital-surgery company Activ Surgical Inc. appointed Manisha Shah-Bugaj as chief operating officer. Before joining the company, she was global general manager and vice president of gynecology at Olympus. Boston-based Activ Surgical is backed by investors including Artis Ventures, LRVHealth, DNS Capital, GreatPoint Ventures, Tao Capital Partners and Rising Tide Fund.

Hyalex Orthopaedics, which is developing transformational cartilage biomimetic products, named Carl Vause as its new president and chief executive, and appointed Michael Hawkins to the post of chief technical officer. Mr. Vause previously held positions at Conmed Orthopedic Solutions, Soft Robotics and Smith & Nephew. He replaces Mr. Hawkins, who had been serving as interim president. Lexington, Mass.-based Hyalex Orthopaedics’ investors include DSM Venturing, Canaan, Osage University Partners and Johnson & Johnson Innovation – JJDC Inc.

Virtual chronic care provider Vida Health appointed Patrick Carroll as chief medical officer. Mr. Carroll joins from Hims & Hers, where he was also chief medical officer. San Francisco-based Vida Health is backed by Ally Bridge Group, AME Cloud Ventures, Aspect Ventures, Canvas Ventures, NGP Capital and Workday Ventures.

Asher Biotherapeutics, a developer of precisely targeted immunotherapies for cancer, appointed Don O’Sullivan as chief business officer. He joins the company from Roche and Genentech. Last year, South San Francisco, Calif.-based Asher Biotherapeutics raised a $108 million Series B round from Wellington Management, RA Capital Management, Third Rock Ventures, Mission BioCapital and others.

Metagenomi, an Emeryville, Calif.-based gene editing startup, closed a $175 million Series B round led by PFM Health Sciences and Farallon Capital Management. Additional new investors Eventide Asset Management, Deep Track Capital, Frazier Life Sciences, Pura Vida Investments, Irving Investors, Millennium Management, Surveyor Capital, Marshall Wace, Novo Holdings and Bristol Myers Squibb also contributed to the funding, along with previous backers RA Capital Management, Leaps by Bayer and Humboldt Fund. Santhosh Palani, partner at PFM Health Sciences, joined the Metagenomi board.

Patient 21, a Berlin-based digital primary care platform, emerged from stealth with a $142 million investment. Target Global Management led the round, which included participation from Eight Roads, Piton Capital, Pico Capital and Kingsway Capital.

Leyden Laboratories BV, an Amsterdam-based startup developing intranasal products that protect against a broad range of respiratory viruses, completed a $140 million Series B round led by Casdin Capital and GV. Additional existing backers F-Prime Capital and Byers Capital also participated in the new funding, along with new investors SoftBank Vision Fund 2, Invus and Bluebird Ventures. Eli Casdin of Casdin Capital will join Leyden’s board.

Athletic Greens, which sells daily nutrition products including its AG1 nutrition drink, scored a $115 million investment, at a valuation of more than $1 billion. Alpha Wave Global led the round, which included participation from SC.Holdings, Bolt Ventures and others. Mark Vadon, founder of Zulily and Blue Nile, also invested in the round and joined the company’s board alongside Rick Gerson, chairman at Alpha Wave Global.

Distalmotion, a Switzerland-based surgical robot maker, secured $90 million in Series E financing. Led by Revival Healthcare Capital, the round included participation from 415 Capital and others. Revival Chairman Rick Anderson will join the Distalmotion board as chairman.

Kyverna Therapeutics Inc., an Emeryville, Calif.-based cell therapy company engineering a new class of treatments for serious autoimmune diseases, closed an oversubscribed $85 million Series B round. Northpond Ventures led the investment, with Director Shaan Gandhi joining the board. Additional investors in the funding included Westlake Village BioPartners, Vida Ventures, Gilead Sciences, RTW Investments, Insight Partners, LYFE Capital, Intellia Therapeutics and jVen Capital.

Cellino Biotech Inc., a Cambridge, Mass.-based stem-cell therapy startup, scored $80 million in Series A financing. Lead investors Leaps by Bayer, 8VC and Humboldt Fund were joined by Felicis Ventures, The Engine, Khosla Ventures and others in the round.

BenchSci, a Toronto-based startup using machine-learning applications for novel medicine development, nabbed 63 million Canadian dollars ($50 million) in Series C funding led by Inovia Capital and TCV.

Resilience, a French startup specializing in remote monitoring and therapeutic follow-up of cancer patients, landed €40 million ($45 million) in Series A funding. Cathay Innovation led the round, which saw participation from Singular, Exor Seeds, Picus Capital, Seaya Ventures, Vivalto Ventures and others. 

Atlas Health, a Seattle-based provider of philanthropic medical financial aid, picked up a $40 million Series A round. Felicis Ventures led the funding, which included support from GreatPoint Ventures, Tribe Capital, Global Founders Capital and MBX Capital.

Infermedica, a preliminary diagnosis and patient triage startup with offices in Poland and Denver, grabbed $30 million in Series B funding. One Peak Partners led the round, with additional support from Karma Ventures, European Bank for Reconstruction and Development, Heal Capital and Inovo Venture Partners.

Sollis Health, a New York-based medical concierge, snagged $30 million in Series A funding. Lead investors Torch Capital and Denali Growth Partners were joined by Strand Equity, Read Capital and others in the round.

• Abbott’s rapid Covid-19 tests boost quarterly sales growth
   
• Johnson & Johnson posts higher quarterly sales despite some pandemic-related pains
   
• Moderna starts testing Omicron vaccine in people
   
• This anti-tick vaccine could fight Lyme disease’s silent epidemic

• New cancer immunotherapy brings cautious hope for a field long awaiting a big breakthrough. (Endpoints News)
   
• Tumor growth dilemma offers clue to pancreatic cancer drug development. (Fierce Biotech) 
   
• Former FDA official on making the jump to health tech startups. (STAT News)

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

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.

Follow us on Twitter: @wsjvc, @ychernova, @BrianPGormley, @marcvarta.