$200 million may seem like a lot for a Series A round of a pharmacy company, but it makes more sense when you hear the names behind it. EQRx was founded by serial entrepreneur Alexis Borisy, Foundation Medicine alum Melanie Nallicheri, Peter Bach Memorial Sloan Kettering and former Roche chief medical officer Sandra Horning. They have an ambitious goal: make 10 drugs in 10 years, and do it cheaper than any of their competition. As Borisy says, capitalism isn't supposed to be cozy.
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.”
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.
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.”
This story is written by associate editor at Forbes.com Leah Rosenbaum
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