Countless biotechs are launched with promises of “game-changing” medicines. But a Cambridge startup that debuted Sunday is pledging something seldom heard from drug makers: dramatically lower prices.
With $200 million in venture capital at their disposal, the leaders of EQRx say they plan to create innovative patented prescription medications — not generics — that will be at least as good as those on the market and cost a third of the rival products.
The startup is headed by Alexis Borisy, a well-known former partner of the Boston venture capital firm Third Rock Ventures. He has made millions as a serial biotech entrepreneur and says he now wants to “reimagine how you make a new drug.”
A cofounder and paid adviser is none other than Dr. Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York and a prominent critic of jaw-dropping drug prices.
Bach, who plans to remain at Sloan Kettering and hasn’t treated patients since 2011, said EQRx is the first drug maker that he has helped to start, although he has consulted for a diagnostics firm. EQRx’s leadership team believes it can create medicines that cost two-thirds less than what competitors charge and still make money.
“It’s not implausible,’’ said Bach, a pulmonologist, whose compensation includes stock in EQRx. “In fact, it’s totally viable.”
There are many unanswered questions about the firm, which was unveiled a day before the J.P. Morgan Healthcare Conference in San Francisco, the biggest annual get-together of executives and investors in biopharma. The conference is expected to attract about 12,000 people from 155 countries.
Borisy didn’t specify the diseases the startup plans to treat, although he said in an interview that the focus will is likely to be cancer, autoimmune disorders, and not-so-rare genetic diseases such as cystic fibrosis.
Nor has he spelled out how the firm can make drugs at least as good as those on the market and charge far less. In general, he said, EQRx will take aim at previously identified biological targets and take advantage of advances in computational approaches to drug development.
“Technologically, we’re able to do things today that you couldn’t have done a couple of years ago, much less 10 years ago,” he said.
It’s not even certain what the EQ in EQRx stands for. Borisy said it could be for medicines that are equally good or better than those on the market. But, he said, it could also stand for equitable, or a company with high EQ, as in emotional intelligence.
What is clear is that Borisy and other members of the leadership team, several of whom have prospered in the drug business, say the costs of medicines are out of control, and they want to help rein them in — before the US government does.
Borisy, 48, is one of the best-known investors in biotech. Cutting a distinctive figure with his trademark fedora, he helped found Foundation Medicine, Blueprint Medicines, and Relay Therapeutics — all based in Cambridge — among other startups.
He has also done well for himself.
Filings with the Securities and Exchange Commission in 2018 indicated he owned more than $10 million in stock in Foundation Medicine alone. Meanwhile, Blueprint on Thursday won approval of its first product, a precision cancer drug called Ayvakit to treat an ultra-rare form of gastrointestinal cancer. (The drug hardly comes cheap: The list price for a 30-day supply is $32,000.)
Borisy left Third Rock about eight months ago. The top entry on his LinkedIn page last week listed him as the founder of a company that he didn’t identify, saying, “more to come when the time is right.”
Now, it appears, is the time.
“What we’re doing is perhaps in some ways a simple but very provocative proposal,” he said in an interview. “We’re going to be creating great new drugs, but in a sustainable manner. We’re going to be making them available in a radically more affordable way. This opportunity exists because prices have been going up, up and up at an order of magnitude faster than inflation.”
EQRx’s president and chief operating officer will be Melanie Nallicheri, former chief business officer of Foundation Medicine. Foundation creates genetic profiles of tumors to help guide patients to the best cancer drugs. Roche, the Swiss multinational, owned about 57 percent of Foundation’s common stock and bought the rest of the firm in 2018 for $2.4 billion.
Nallicheri said Americans are outraged by the skyrocketing prices of prescription medicines, and rightly so. She cited multiple sclerosis drugs, with price increases that far outstrip inflation. A study published in JAMA Neurology in August found that over a decade, out-of-pocket costs for multiple sclerosis drugs rose more than sevenfold for Medicare Part D beneficiaries.
“I don’t think anyone is arguing that innovation shouldn’t be rewarded,” Nallicheri said. “But we’ve gone so far beyond that that it’s not understandable anymore why we’ve landed where we landed.”
Reducing prescription drug prices is popular with voters and politicians of both parties — including President Trump, who has made it a central theme of his reelection campaign. But government intervention is anathema to drug makers
“If we don’t offer up a solution — and that’s what we’re doing with EQRx — then someone is going to offer a solution for us, and the likelihood of us liking it will be pretty low,” Nallicheri said.
Like Borisy, she didn’t specify what diseases the startup hopes to treat, but said the venture has to develop multiple medicines to succeed.
Steven Pearson, founder of the Institute for Clinical and Economic Review, a nonprofit watchdog group in Boston that assesses the value of medications, has spoken with members of the leadership team and agreed with that approach.
“If they said, ‘We only want to do one or two drugs,’ well you’re going to get squashed,” he said. “But if they create a platform to get multiple drugs going, then there’s a way the entire environment might shift.”
Pearson, whose studies of the clinical value and cost-effectiveness of drugs have drawn the ire of the pharmaceutical industry, said he had never seen a startup launch that focused on drug prices, and he hopes the company succeeds.
Another cofounder and adviser at EQRx is Dr. Sandra Horning, the recently retired executive vice president and chief medical officer for Genentech, the pioneering South San Francisco, Calif., biotech that became a subsidiary of Roche in 2009.
Investors include GV, ARCH Venture Partners, a16z, Casdin Capital, Section 32, Nextech, and Arboretum Ventures.
Jorge Conde, a general partner at a16z, a Silicon Valley venture capital firm, said in a blog that EQRx plans to launch its first medicine in five years and have 10 approved medicines within 10 years — which would probably set a land speed record in biotech.
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