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EQRx, a New Biotech Company, Raises $200 million.

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Elizabeth Warren just got a new favorite company.  And it wasn’t founded by Martin Shkreli (pictured above).

A new biotechnology firm called EQRx announced it raised $200 million to become the “JetBlue” of the drug development business.  The company, founded by industry veteran Alexis Borisy, plans to develop drugs for oncology, immuno-inflammatory, and genetic conditions.

The Kicker: EQRx is going to price their drugs at 1/3 to 1/5 the cost of the competition.

How? EQRx is going to play copy-cat.  They believe they can lower the risk of clinical trials by studying existing therapeutics or those that are about to hit the market.  EQRx will then tweak the biological mechanism and go through their own set of clinical trials to develop what they call “equivalars.” 

It will be a delicate balance between making sure the biological mechanisms are both 1) similar enough to work in clinical trials 2) different enough to not violate the patent protection of the existing drugs.  

  • The Takeaway: It’s no secret the cost of healthcare in the U.S. is exorbitantly expensive.  An extreme example: Zolgensma, a genetic therapy for spinal muscular atrophy, costs $2.1 million for a single dose.  That fact has drawn significant consumer and political backlash.  

Potential Drawbacks: The U.S. is the most innovative healthcare system in the world and American drug companies develop (by far) the greatest number of new therapies.  Some industry experts worry that if the EQRx model is successful, it may dissuade other drug companies from taking the risk to develop new drugs because the economic returns would be lower.

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