JPM: JetBlue, but for biopharma: Borisy's EQRx nabs $200M, takes aim at drug prices

SAN FRANCISCO—It's not news: Over time, biopharma companies have raised the price of new medicines ever higher—simply because they can, says veteran biotech investor Alexis Borisy. Now, he’s throwing a wrench in the system with a new kind of biotech company, one that will “reshape the industry” by introducing new medicines at “radically lower” prices. 

The company, EQRx, will create “equally good or better drugs” than those available today and sell them for cheaper. And, announcing its launch just ahead of the J.P. Morgan Healthcare Conference 2020, it’s raised $200 million to get started. 

Dubbed equivalars, these new medicines will be based on an understanding of how diseases unfold and how drugs work against biological targets to treat those diseases. Although they will be designed after existing drugs or those coming to market soon, the equivalars will not infringe other companies’ intellectual property and will be protected by their own patents, Borisy, EQRx CEO and chairman, told FierceBiotech. 

“We are not taking biological target risk,” he said. 

What that means is EQRx won’t be innovating the cell or gene therapies of tomorrow. It might eventually enter those arenas, but for now, EQRx is focusing on current drug development approaches “we know the most about,” Borisy said, including small molecules, biologics and antibodies, with a “significant focus” in cancer, immuno-inflammatory disease and “not-so-rare genetic diseases."

It’s the right time to do this, thanks to the computational and machine-learning technology available today, he said. 

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The goal is to bring market-based competition and pricing elasticity into the pharma market, much like budget airlines did in their industry: “With JetBlue and Southwest, the legacy carriers had to merge and figure out ways to be more efficient,” Borisy said. 

If all goes to plan, the equivalars will help the market settle on lower prices. If a drug developer is selling its drug at a reasonable price, EQRx’s copy will be following a more established medicine to market and should end up with just “modest share,” Borisy said. But if the company is selling its drug at too high a price, the equivalar should take over its market share. 

It’ll be years before EQRx will prove its approach can work. And one piece of the puzzle it doesn’t have full control over is health systems and payers, which must choose to switch to the cheaper copy. EQRx’s series A investors, which include GV, ARCH Venture Partners and a16z, have bet $200 million on that vision. That belief must continue if EQRx plans to return to the VC well. 

"If we believe the market is going to reprice, the long-term vision for EQRx is ultimately bullish. Other players will merge, acquire each other and take out some inefficiencies there,” Borisy said. 

EQRx hopes to go after 50 targets in the next decade. Those programs may not all result in approved and marketed drugs, but it’s important for EQRx’s efforts to be at scale, he said. Creating a handful of cheaper drugs isn’t going to move the needle. 

“We’re working closely in strategic collaboration with the healthcare system—integrated delivery networks and payers or governmental systems that are very worried as they look out over the next decade of what’s happening with some of these expensive drugs,” Borisy said. “It’s not really about one drug here or there. It’s about having a significant number of drugs. It’s one of the reasons this company has to be built at scale.” 

Building EQRx with Borisy will be Melanie Nallicheri, a biopharma vet who was most recently chief business officer at Foundation Medicine, the first biotech Borisy founded as a partner at Third Rock Ventures. They’re joined by Robert Forrester, former CEO of Verastem Oncology, and co-founders Sandra Horning, M.D., who left her post as chief medical officer at Roche last month, and Peter Bach, M.D., of Memorial Sloan Kettering Cancer Center.