Good day. Biotech startup Phenomic AI and drugmaker Boehringer Ingelheim have agreed to a more than $500 million deal aimed at using artificial intelligence to pierce certain tumors’ resistance to cancer drugs.

Cancer cells can devise ways to resist treatments—but sometimes they have help. Stroma, a network of macromolecules and cells that can surround cancer cells, can also shield tumors from both drugs and the immune system.

Stroma helps tumors grow and metastasize, said Girish Aakalu, chief executive of Toronto-based Phenomic. “It is the stroma that provides protection for the most deadly cancers,” he said.

These include pancreatic, colorectal and breast cancers. Scientists have tried to find therapies to destroy stroma, believing that removing this defense would open the door to better treatments.

But the difficulty of pinpointing stromal targets for drugs has held them back. There are many kinds of stromal cells, and figuring out which are the truly bad actors has been challenging until recently, Aakalu said. Researchers previously didn’t have tools up to the task, he said.

Phenomic, launched in 2020 with seed financing from CTI Life Sciences Fund and others, says its platform can overcome that obstacle. Using AI and machine learning, Phenomic says it can process various data types, such as from imaging and RNA sequencing, to find specific targets for drugs.

Phenomic is building its own pipeline, with its first drug expected to enter clinical trials in 2025. Through this deal with Boehringer—its first collaboration with a big pharmaceutical company—Phenomic seeks to uncover new stromal drug targets.

Under the agreement, Boehringer Ingelheim has the option to license targets. All told, Phenomic could earn more than $500 million in success-based payments, plus royalties on the sale of drugs developed in collaboration with Boehringer.

And now on to the news ...

Corporate innovation. Startup Ajax Health’s model for spurring corporate innovation is gaining traction with investors and large medical-technology companies. 

• Menlo Park, Calif.-based Ajax creates turnkey innovation platforms for commercial-stage medtech players, and it has teamed with investment firm KKR and medtech company Hologic to launch Maverix Medical, a startup formed to advance diagnostics and medical devices to treat lung cancer.
   
• Maverix is independent but intends to work with Hologic to bring lung-cancer products to market, said Ali Satvat, a KKR partner and co-head of the firm’s Americas health care unit and global head of health care strategic growth.
   
• Large companies often struggle to innovate while startups are better at inventing products than bringing them to market. Ajax aims to pair the agility of startups with the commercial infrastructure of larger businesses.

There are five tech companies valued at over $1 trillion. In healthcare, the closest contender is Eli Lilly. This year it became the first big pharmaceutical to surpass a market capitalization of $500 billion thanks to the popularity of its obesity and diabetes medications and, to a lesser extent, its experimental Alzheimer’s drug. But hanging over Lilly and rival Novo Nordisk is a reality that puts the brakes on big pharma’s ascent: the patent cliff, The Wall Street Journal reports. 

Cigna and Humana are in talks for a combination that would create a new powerhouse in the health-insurance industry, WSJ reports. The companies are discussing a stock-and-cash deal that could be finalized by the end of the year, assuming the talks don’t fall apart, according to people familiar with the matter.

• While the structure and terms under discussion couldn’t be learned, a merger of the managed-care providers would be huge, and give rise to a company worth some $140 billion given Cigna’s market value Wednesday morning of about $83 billion and Humana’s of roughly $62 billion.

Cybersecurity company BlueVoyant has bought Conquest Cyber, a startup focused on the government and defense sectors, its fifth acquisition since 2020, WSJ Pro reports. BlueVoyant Chief Executive James Rosenthal said his company also closed a Series E funding round of more than $140 million, which facilitated the acquisition. Private-equity firm Liberty Strategic Capital and cybersecurity investor Istari led the round.

• BlueVoyant provides tools and services for threat detection and response, securing supply chains and protecting brands online. 

People

Sausalito, Calif.-based healthcare investment firm Revelation Partners added Andrew Olson as partner, chief financial officer and chief operating officer. He was previously CFO at SVB Capital.

RepeatMD, a Houston-based mobile e-commerce, rewards and financing platform for aesthetic and wellness practices, secured $50 million in Series A funding, including $10 million in debt, co-led by Centana Growth Partners and Full In Partners.

Arrivo BioVentures, a Morrisville, N.C.-based startup developing treatments for major depressive disorder and severe acute pancreatitis, collected nearly $45.3 million in Series B funding. Orlando Health Ventures led the round, with Managing Director Bobby Helmedag joining the company’s board.

Aro Biotherapeutics, a Philadelphia-based developer of genetic medicines, scored a $41.5 million Series B round led by Cowen Healthcare Investments.

Cradle, a biotech startup that uses generative AI to help scientists design and engineer proteins, raised $24 million in Series A funding led by Index Ventures.

PayGround, a Gilbert, Ariz.-based healthcare payments platform, landed $19.7 million in Series A funding led by SixThirty.

Mytos, a London-based automated human cell manufacturing startup, completed a $19 million Series A round led by Buckley Ventures.

Biolexis Therapeutics, an American Fork, Utah-based drug development startup with several metabolic drug candidates in its pipeline, closed a $10 million Series A round led by Clarke Capital Partners. 

Local Infusion, a Nashville, Tenn.-based infusion therapy startup, picked up $10 million in Series A financing led by Blisce.

• U.S. suicides reached a record high last year

• Why you are more likely to get sick this winter, in charts

• FDA looking into all approved CAR-T therapies on risk of cancer in white blood cells

• How your dog or cat could help speed up your health tests

• FDA warns on safety issue with Philips CPAP devices

• Cleaner healthcare: hospital emissions mitigation (Bipartisan Policy Center)
   
• Story of biotech optimism in a tough market (Life Sci VC)
   
• Egypt wiped out hepatitis C. Now it is trying to help the rest of Africa. (New York Times)
   
• Hypnosis could work wonders on IBS (The Atlantic)
   
• Medicaid ‘unwinding’ makes other public assistance harder to get (KFF Health 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, Angus Loten and Marc Vartabedian.

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