EQRx wants to do for the pharmaceutical
industry what Southwest did for air travel, says its president Melanie
Nallicheri. “They didn’t reinvent the airplane,” she says, but “they
reassembled the experience, lowered the cost.”
That’s the philosophy of the new Cambridge,
Massachusetts-based drug company started by biotech entrepreneur Alexis Borisy
and some of his former colleagues at cancer diagnostics company Foundation
Medicine, including Nallicheri. Their startup EQRX came out of stealth on
Sunday with $200 million in funding from Andreessen Horowitz, ARCH Venture
Partners and GV, and an ambitious goal to develop ten new medications in the
next ten years. They plan to do this by focusing exclusively on known
biological targets and relying heavily on technology.
“We want to get great new medicines to people
and society in a sustainable method,” says Borisy, CEO at EQRx and a former
partner at biotech investor Third Rock Ventures, says. “In a lot of ways, this
is a very simple but perhaps very provocative idea.”
Biological targets are at the heart of drug
development; they are the proteins, nucleic acids and other microscopic bits
that drugs bind to in order to become activated within the body. Some pharma
companies search for new biological targets and then develop drugs based on
those findings. EQRx says it will cut costs and accelerate development by
focusing only on diseases that already have known targets.
Borisy says each drug they create will still
cost several hundred million dollars to develop, but by going after known
targets with cutting-edge technology including artificial intelligence “our
probability of success will be much much higher.” The company intends to offer
new medications for less than the price of traditional pharmaceutical
companies, and market directly to payers and providers instead of
consumers.
The company wouldn’t provide details on what
diseases it will target first, only that they will focus on small molecule and
biologic drugs.
Borisy, a chemist turned serial biotech
entrepreneur, has a proven track record. He previously cofounded Foundation
Medicine, which was acquired by Roche for more than $3 billion, as well as
Blueprint Medicines, which won its first FDA approval last week for
a drug that treats a rare gastrointestinal cancer. He was also a cofounder of
Tango Therapeutics and Relay Therapeutics, which have raised $55 million and
$520 million respectively.
Several investors who had previously backed
Borisy’s ventures or worked closely with him are behind the new company,
including Section 32 (founded by Google Ventures founder Bill Maris), GV, ARCH
Venture Partners and Andreessen Horowitz.
“The goal to bring ten new products to the
market over the next ten years, while also decreasing the costs of these
therapies by more than half, could have a very meaningful and long-term impact
on our healthcare system,” says Mike Pellini, managing partner at Section 32,
and a previous CEO of Foundation Medicine.
American drug pricing, always a contentious
topic, has reached a fever pitch. Patients are “really feeling
economic pressure when they get sick,” says Peter Bach, director of the Drug
Pricing Lab at Memorial Sloan Kettering and a cofounder of the company
alongside Borisy, Nallicheri and former Roche chief medical officer Sandra Horning.
In a 2019 testimony before
the Senate Finance committee, Bach discussed how drug prices significantly
increase as they wind through the supply chain to the benefit of everyone
except patients.
If the EQRx model works, the lower price tag
could help drive down drug prices across the industry. “I’ve yet to see an area
in terms of consumer choice that has not benefited from radical price
competition,” says Jacob Sherkow, a professor of bioscience patent law at New
York Law School. “We want competition in the biopharmaceutical space for the
advantage of patients.”
Just because the drugs are cheaper, however,
doesn’t mean they will be preferred. As Matt Herper points out at STAT,
the idea of “fast follow” drugs has been around for decades, but some
physicians are reluctant to stray from mainstay medications. On the other hand,
most of these drugs match the price of their competitors and don’t undercut
them, as Borisy is proposing.
Pharmaceutical companies are notoriously
litigious, but Borisy believes his company will be safe from patent
infringement lawsuits. “Patents have become much narrower,” he says, “and you
really can’t protect, in most cases, a biological target.”
He does expect that some of the major
pharmaceutical companies will be unhappy with EQRx’s pricing. But, he says, “I
thought that’s what capitalism is supposed to be.”
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