This article originally appeared in our sister publication the Boston Business Journal.
Armed with one of the largest-ever Series A rounds, a new Cambridge startup is looking to upend the drug industry’s approach to pricing by creating competitor treatments that are “radically” cheaper.
EQRx plans to develop drugs that hit the same bodily targets as existing products on the market, but at a “small fraction” of the cost, according to serial biotech entrepreneur and EQRx CEO Alexis Borisy. As a result, the startup is eschewing the popular drug industry goal of making $1 billion or more from a single product, known as blockbusters.
“Our products are not going to be $2 billion, $3 billion, $5 billion, $10 billion products, because we're pricing them so much lower. Our products will be a few hundred million dollars,” Borisy told the Business Journal.
The company’s founders include Borisy, former Foundation Medicine executive Melanie Nallicheri, former Genentech/Roche executive Sandra Horning and Peter Bach, the director of Memorial Sloan Kettering's Center for Health Policy and Outcomes. The company raised $200 million.
The startup — which has less than 20 employees but big plans to grow — isn’t putting all of its cards on the table, but Nallicheri, who is also serving as EQRx’s chief operating officer, said it will most likely direct focus on cancer, immune system disorders and rare diseases.
While home to some of the biggest medical advancements in the last decade, existing drugs on the market for these diseases or the cost associated with the disease put pressure on the entire healthcare system from patients to insurers, she said.
Developing a disrupter
The founders began sketching out the idea for EQRx — which name references the company’s desire to create equitably priced treatments — first while vacationing on Cape Cod, then at the kitchen tables and porches of their Belmont and Lincoln, Mass. homes.
The idea is that EQRx will use technology and new methodologies to create a more efficient, more successful method of developing drugs that will hit the targets already pinpointed by other products. EQRx believes its competitor drugs could potentially be more effective than existing products on the market, thanks to novel blends of molecules.
Down the line, EQRx plans to use its system to create innovative therapies that hit currently unproven targets within the human body.
The executives declined to state which specific tools EQRx is using outside of saying data science is a core component of the company’s drug development system. But executives estimated it would significantly ramp up the industry average of one in every 10 drug candidates making it to market to a ratio closer to two in every three.
That’s key, as EQRx executives admit they will need more than a couple of products worth a few hundred million dollars to pay back investors. Borisy added that the company’s $200 million Series A financing is a “small drop in the bucket” of what EQRx will need to raise to bring its vision to life.
That’s why EQRx has laid out specific product goals: bringing its first drug to the market in five years, reaching 10 products within 10 years and having dozens launched within 15 years.
“There are so many unknowns that we face as we chart this. We know that it can be done, so it must be done. We’ve just got to hack the system,” he said. “We can tell it all we want, but ultimately, we have to deliver.”
'An ambitious fight to pick'
EQRx is bound to ruffle some features — Borisy said the status-quo in the drug industry is to price drugs at the maximum of what the market will bear — but investors like GV, Arch Venture Partners, and Pear Therapeutics backer Arboretum Ventures flocked to the startup.
“Revolutionizing the biopharmaceutical industry is an ambitious fight to pick. But the most effective revolutionaries break out from the inside, where they can see the cracks in the foundation,” Jorge Conde, general partner at EQRx investor a16z, said in a statement.
One name missing from EQRx’s list of financial backers? Borisy’s former firm Third Rock Ventures.
“Part of the reason I left the firm was to do some things that we’re going to be truly disruptive… I left because I wanted to do some things in some very, very different ways.”
