EQRx, a startup that's taking on Big Pharma by making drugs cheaper, just raised $500 million

  • EQRx, a company developing new drugs that'll compete with some of the highest-priced drugs on the market at a lower price, is moving faster than it expected.
  • A year in, the startup just raised a fresh $500 million from investors including GV, Andreessen Horowitz, and Arch Venture Partners, as well as from private equity funds, health plans and health systems. 
  • It aims to get have its first treatment approved in the next "handful of years" and has brought on four cancer drugs that are in later stages of development. 
  • For more stories like this, sign up here for Business Insider's daily healthcare newsletter.

EQRx, a startup that wants to develop new drugs that work similarly to pills and infusions that are already on the market, just raised more money to attain its goal more quickly.

In the past, drugmakers that have taken EQRx's approach have been derided for manufacturing "me-too" treatments at high costs. But EQRx wants to make drugs that rival Big Pharma's costliest offerings, and then sell them at lower prices.

A year in, the startup is substantially ahead of schedule, CEO Alexis Borisy told Business Insider. The company has brought on four cancer drugs that are in late-stage trials, with the aim of having its first drug approved in a "handful of years," Borisy said. Initially, the plan was to have its first approval within the first five years. 

Read more: Meet EQRx, a startup that just raised $200 million to take on Big Pharma by making drugs cheaper

The startup on Monday said that it had raised a fresh $500 million from investors including GV, Andreessen Horowitz, and Arch Venture Partners, as well as from private equity funds, health plans and health systems. In total, EQRx has raised about $750 million. Borisy declined to disclose a valuation for the company. 

Borisy declined to name the health plans and health systems that had invested, noting that some wanted to be publicly named while others didn't.

"We felt that the main point here that we want to describe is that it's a spectacular shareholder base of the company," Borisy said. 

EQRx plans to strike up partnerships with health systems and other organizations that ultimately pay for prescription drugs, potentially including some of the backers of the latest round. The plan is to talk more about that work once it's official. 

Speeding up the timeline

The approach got a lot of attention in 2020 when EQRX launched the Sunday before the J.P. Morgan Healthcare Conference, a major annual event for the healthcare industry.

Its founding team included some big names in biotech, among them:

  • Borisy, a former Third Rock Ventures venture capitalist
  • Former Foundation Medicine executive Melanie Nallicheri, who's EQRx's president and chief operating officer
  • Dr. Peter Bach, the director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center and an outspoken critic of pharmaceutical-drug prices;
  • Dr. Sandra Horning, a former executive at Genentech

In the last year, EQRx realized it could get its hands on drugs that were later in development at "compelling" economic terms, Borisy said. That's sped up the startup's timeline to getting its first drug approved. 

Now, Borisy expects the company will have multiple drugs approved in its first five years, ideally beating the goal set out in 2020 of having 10 drugs approved in the first 10 years. 

The company has grown a lot in its first year, from 16 employees by January 2020 to more than 100 a year later. Borisy said he expects to more than double the size of the company in 2021. 

EQRx's plan is to develop entirely new drugs that rival some of the highest-priced drugs in the world, get them approved, and charge much lower prices for them. 

Borisy sees having the additional capital and the later-stage drug candidates as ultimately helping EQRx do that successfully. The bigger it can be, the lower the price it can charge to governments and health plans in the US and globally. 

"The whole business feeds forward on itself the more you scale it," Borisy said. 

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