Aiming to create innovative drugs at radically affordable prices
CEO: Alexis Borisy
Based: Virtual biotech
Clinical focus: EQRx is creating biologics and small molecules that can be priced at affordable levels.
The scoop: This is not a wannabe Teva or Sandoz. EQRx wants to create equivalent medicines to leading drugs on the market while also gearing up to develop first-class medicines in the future, all at a price that is much more affordable to healthcare systems around the world. The idea is to eventually create a whole new pricing model for life science companies.
What makes EQRx fierce: This biotech is nothing like any of our previous Fierce 15 winners: They are not as yet looking for major innovation in the R&D space, but instead, are looking to innovate in R&D through pricing.
Drug prices are too high: It’s a simple sentence but one that drags heavily on patients it hits. It’s a global problem but more acute in the U.S. than in any other developed country. According to a poll conducted by the Kaiser Family Foundation last year, 24% of American adults and 23% of senior citizens report difficulty in affording their prescription medications.
Americans spent $1,220 per person annually in 2017 on pharmaceutical medications, according to the latest data from the Organization for Economic Cooperation and Development, by far the most of any developed nation in the world.
Alexis Borisy, a biotech builder for years and EQRx’s CEO and chair, says he is a capitalist, and doesn’t believe in manipulating markets or putting up barriers to drug rollouts—such as with health technology assessors common in other countries. Instead, the idea is to revamp drug affordability from within the life science industry. EQRx is the start of that process.
“This fundamentally is a transformative company,” Borisy said. “It is a purpose-built disruptor, created at enormous scale, and focused on innovation, with a large amount of that focused on business innovation of changing how things are done in our industry.
“So, why do this now, and why does it matter? The prices we charge for new medicines have gone up, up and up; why? Because we can. They have increased in a dramatic way, while at the same time, through technological innovation and boring small efficiencies in engineering, drugs can now be radically more cost-effective.”
Borisy says that when he started out in the industry in the mid-1990s, a new cancer drug would be around $20,000 a year in 2020 dollars; today, it would be around $200,000, or as much as $400,000.
That $20,000 was still priced as an advance on the standard of care of the day, just as drugs are today, but we are not seeing cancer patients treated tens times better. Yet, the industry is expecting payors to stump up that cash as if they were.
Borisy, who has helmed a number of biotechs, says the average cost of getting a drug through R&D to approval, when you remove failures and marketing and all the other costs, the “sheer R&D element” all in averages out as $375 million. He says he has hit the figure, and been close to it, a few times over the years at his previous biotechs, and so it tracks pretty well.
The industry tends to quote R&D costs per drug at $1.5 billion to as much as $6 billion—but that factors in failures, which are many and frequent. Most companies also spend similar, if not more money, on marketing approved drugs as they do on R&D.
So EQRx is looking to try a new way. The initial plan has seen it in-license several drugs, including from G1 Therapeutics and Hansoh—with the latter's EGFR inhibitor almonertinib already approved in China.
Borisy says the company has to start somewhere, as they are still developing their own drugs, so the idea is to take meds like almonertinib and offer radical discounts.
It also plans in-house development of biologics and small molecule drugs, which will be so-called “fast followers,” with the first 50 or so closely following (but still differentiated from) many major drugs in the cancer and autoimmune space.
“We know how the drugs work and how the biology works here,” Borisy explained. “We know what we need to show clinically, and we can be ruthlessly efficient in that path-follower mode.” This also removes the risk inherent in R&D, as failure is less likely if you follow behind what has already been done—while cutting costs along the way.
The savings can be passed along to the payor or consumer. But, Borisy says, this is not a philanthropic exercise. “EQRx will still be profitable,” he says, but profitable through efficiencies.
Down the line, the company aims to develop first-in-class medicines, but at affordable prices, and in effect saturate the market with cheaper medicines, forcing the rest of the industry to match the price tags. The biotech will not be increasing list prices each year on its drugs, Borisy says—something the industry does routinely, often in percentages way above inflation.
But lower prices doesn't mean EQRx won't be aiming high: “If we were going into the checkpoint inhibitor space, as an example, I would not want us to be just the sixth or seventh PD-1 or PD-L1,” Borisy says. “I want to be as good, if not better, than the leading drug in that space,” but sell it for much less than the likes of Merck & Co.'s Keytruda and Bristol Myers Squibb's Opdivo.
Borisy says COVID has also made EQRx and its business model more important than ever. Coronavirus antibodies and vaccines have gone from zero to phase 3 in six months, with tens of thousands of people recruited for trials, data collated and published, all at a radical speed using the new tech advances Borisy spoke of.
The pandemic has shown how biopharma can step up in a crisis. So why not do it in peacetime? “The world economy is also in the doldrums, and deficit spending is the name of the game. There is little money, so a business model like ours only becomes more attractive,” Borisy says.
Investors: EQRx launched in January 2020 with a $200 million series A financing led by GV, ARCH Venture Partners, Andreessen Horowitz, and Casdin Capital, Section 32, Nextech and Arboretum Ventures, and others.