Good day. A shortage of manufacturing capacity for gene therapy is creating opportunity for venture investors and startups.

The market for gene therapy, in which a healthy gene is delivered into diseased cells, has expanded as biotech companies have developed gene treatments for a growing number of rare diseases. In coming years the industry’s growth will accelerate as biotechs also develop gene therapies for more-common diseases, according to LEK Consulting.

Expansion in the industry has led to a manufacturing bottleneck, according to LEK. The relatively few contract-manufacturing companies able to produce gene therapies for biotech clients are largely booked up, according to the firm.

Forge Biologics, which launched with $40 million in venture funding last year, has just raised $120 million in a new financing, led by RA Capital Management, to expand its ability to provide manufacturing services for gene-therapy companies.

Columbus, Ohio-based Forge works with large drugmakers and also several startups, co-founder and Chief Executive Timothy Miller said. Through subsidiaries, Forge also develops its own gene therapies.

Forge investors could be in line for a fast exit. A few other contract manufacturers have been snapped up recently, including Brammer Bio, a maker of viral vectors for gene and cell therapy that merged with Thermo Fisher Scientific Inc. in 2019 in a $1.7 billion deal. 

And now on to the news...

Psychedelic investment. A new venture firm is adding to a recent surge of investment in startups betting on the potential of psychedelics to help people with mental illnesses, WSJ Pro’s Isaac Taylor and Brian Gormley report. 

• Venture funding for psychedelics is soaring, drawing investors such as Peter Thiel to the sector, which barely existed a few years ago. Psychedelic-medicine startups raised $1 million in 2017, and last year that figure increased to $346 million, according to market tracker CB Insights. 
   
• Proponents say new strategies are needed to help millions of people who get insufficient relief from existing medicines for conditions such as depression, anxiety and addiction. Nearly one in five U.S. adults lives with a mental illness, according to the National Institute of Mental Health.
   
• Iter Investments, a firm launched by an attorney who works with cannabis and psychedelics businesses, has sprung up to finance startups in these sectors, and has recently completed its first two deals.

Humana Inc. agreed to take full control of home-health provider Kindred at Home by buying out two investors that currently own the majority of the company, deepening its exposure to care services delivered outside traditional settings, WSJ reports. 

• Humana said Tuesday that it would pay $5.7 billion to acquire the 60% interest in Kindred from the private-equity arm of TPG and Welsh, Carson, Anderson & Stowe, another private-equity firm.
   
• The health-insurance company said it owns 40% of Kindred, a business it described as the nation’s largest home-health and hospice provider, with 43,000 caregivers working in 40 states.
   
• Demand for home-based health care has been rising as the U.S. population has aged, and some forecasters have predicted the need for aides who carry out such work will exceed supply in coming years.  

Funds

Dynamk Capital, a growth-equity and venture firm focused on life science industrials, held the final closing of its first fund, Dynamk Life Sciences Fund LP, bringing the firm’s total assets under management to $65 million.

People

Tagnos, which makes logistics automation software for hospitals, named Sheila Minton as its new president and chief executive, succeeding founder Neeraj Bhavani. The company also appointed Adam Tolk as chief commercial officer. Los Angeles-based Tagnos is backed by investors including Benhamou Global Ventures, Morpheus Ventures and Zebra Ventures.

Ophthalmic pharmaceutical company Orasis Pharmaceuticals appointed Paul Smith as president and chief operating officer. He was previously vice president and business unit head for U.S. Eye Care pharmaceutical portfolio at Novartis. In September 2020, Israel-based Orasis raised a $30 million Series C round led by Bluestem Capital and Visionary Ventures.

Alladapt Immunotherapeutics Inc., a developer of therapeutics to treat food allergies, appointed Michael Holfinger as chief technical officer. He was previously vice president of chemistry manufacturing and controls at Pliant Pharmaceuticals. In February 2020, Menlo Park, Calif.-based Alladapt raised a $60 million Series C round led by Gurnet Point Capital.

RNA technology provider GreenLight Biosciences Inc. named Amin Khan as its chief scientific officer, human health. Mr. Khan joins the company from GlaxoSmithKline’s vaccines business. Founded in 2008, GreenLight has raised $230 million to date from investors including Morningside, Baird Capital, Fall Line Capital, S2G Ventures and Prelude Ventures.

Exits

Pfizer Inc. acquired Amplyx Pharmaceuticals Inc., a developer of therapies for diseases that affect people with compromised immune systems, for an undisclosed amount. San Diego-based Amplyx was backed by investors including Pfizer, Sofinnova Investments, New Enterprise Associates, RiverVest Venture Partners, 3x5 Partners and BioMed Ventures.

In-home medical care provider DispatchHealth Holdings Inc. acquired mobile imaging provider Professional Portable X-Ray for an undisclosed amount. Last month, DispatchHealth raised a $200 million Series D round from Tiger Global Management, Alta Partners, Echo Health Ventures, Humana, Oak HC/FT and Questa Capital.

KRY, a Stockholm-based digital healthcare provider, raised more than $300 million in Series D funding. CPP Investments and Fidelity Management & Research led the round, which included participation from existing investors Ontario Teachers’ Pension Plan, Index Ventures, Accel, Creandum and Project A.

Exscientia, a U.K.-based artificial intelligence-driven drug discovery company, closed a $225 million Series D round. SoftBank Vision Fund 2 led the investment, with additional contributions from Novo Holdings, funds managed by BlackRock, Mubadala Investment Co., Farallon Capital, Casdin Capital, GT Healthcare Capital, Marshall Wace, Bristol-Myers Squibb and others. In addition to the Series D funding, SoftBank is providing an additional $300 million equity commitment that can be drawn at the company’s discretion.

Arch Oncology Inc., a Brisbane, Calif.-based developer of therapies for the treatment of solid tumors and hematologic malignancies, completed a $105 million Series C round led by Eventide Asset Management, Cowen Healthcare Investments and 3x5 Partners. New investors Adage Capital Management, Point72 Asset Management, Avego Healthcare Capital and FMB Research also participated in the funding, along with existing backers Roche Venture Fund, RiverVest Venture Partners and Lightchain Capital. Eventide’s Joy Ghosh, Cowen Healthcare’s Eric Pham and 3x5’s Joe Biller will join Arch Oncology’s board.

Boundless Bio, a San Diego-based cancer therapeutics startup, secured $105 million in Series B financing. RA Capital Management and Nextech Invest co-led the round, which included additional support from Fidelity Management & Research Co., Redmile Group, Wellington Management, Surveyor Capital, PFM Health Sciences, Logos Capital, ARCH Venture Partners, City Hill Ventures, Vertex Ventures HC, GT Healthcare Capital Partners, Boxer Capital and Alexandria Venture Investments. Jakob Loven, partner at Nextech Invest, will join the board.

Caresyntax, a Boston-based digital surgery platform, landed $100 million in Series C funding. Lead investor PFM Health Sciences was joined by Optum Ventures, Intel Capital, Lauxera Capital Partners, Vesalius Biocapital Partners, Arno Capital, Rezayat Investments, IPF Partners and others in the round.

Kaia Health, a New York-based startup creating treatments for a range of disorders including back pain, chronic obstructive pulmonary disease and osteoarthritis, scored $75 million in Series C funding from investors including Optum Ventures, Eurazeo, 3VC, Balderton Capital, Heartcore Capital and Symphony Ventures.

CareRev, a healthcare labor marketplace platform, closed a $50 million Series A round. Transformation Capital led the investment, with participation from Industry Ventures, Gaingels and others.

Ultivue Inc., a Cambridge, Mass.-based high-definition biological imaging startup, snagged $50 million in Series D financing. New investors including Ally Bridge Group, Pura Vida Investments and Tao Capital Partners were joined by previous backers ARCH Ventures, Northpond Ventures and Applied Ventures in the round.

Ergatta, a Brooklyn, N.Y.-based gamified at-home fitness startup, fetched $30 million in Series A funding. Advance Venture Partners led the round, with participation from investors including Greycroft, Fifth Wall and Gaingels.

1upHealth, a Boston-based electronic health data platform, raised a $25 million Series B round. F-Prime Capital led the funding, which included participation from existing investors Jackson Square Ventures, Eniac Ventures and Social Leverage.

Sesame Inc., a New York-based direct-pay healthcare marketplace, added $24 million in funding. New investors Giant Ventures, Industry Ventures and Coefficient Capital joined returning backers General Catalyst, Entree Capital and Atreides Management in the round.

Glytec, a Waltham, Mass.-based provider of insulin management software, secured $12 million in equity from Savitr Capital and $9 million in debt from Silicon Valley Bank.

Outcomes4Me Inc., a Cambridge, Mass.-based app and platform for navigating cancer treatment and care, grabbed $12 million in Series A financing. Northpond Ventures led the investment, with Director Andrea Jackson joining the company’s board. Investors including Sierra Ventures, Asset Management Ventures and IRA Capital also contributed to the round.

• Vaccines appear to be slowing spread of Covid-19 infections 
   
• At-home Covid-19 tests might cost too much for regular use 
   
• Brazil Covid-19 variant tears through South America in warning to world

• U.S. ups funding for Moderna Covid-19 vaccine (Endpoints News) 
   
• You don’t have to suffer to benefit from Covid vaccination, but some prefer it (Kaiser Health News)
   
• Illumina pledges $60 million in genomic sequencing expertise to help launch global outbreak-tracking network (Fierce Biotech)
   
• Glowing tumor-munching cells show the promise of a new approach to CAR-T cancer therapy (STAT News)

This newsletter was compiled by Brian Gormley 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.

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