A pharmacy technician fills a prescription inside a Walmart store in Trevose, Pa.
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In the earliest days of Amazon, Jeff Bezos reportedly held meetings with his team in a local Barnes & Noble.
At this week’s JPMorgan Healthcare Conference, the industry’s largest investing event of the year, venture capitalist Alexis Borisy aims to make a similar run at an industry where he’s spent his entire career.
Borisy, along with a team of biopharma veterans and critics, announced today they’ve founded a new company whose goal is to dramatically undercut the price of new medicines.They’re calling it EQRx, and it’s starting with $200 million in series A financing from investors across biotech and Silicon Valley: Alphabet’s venture firm, GV; ARCH Venture Partners; a16z; and others.
In doing so, Borisy is bound to ruffle the feathers of an industry in which he’s helped build dozens of companies as an investor most recently at Third Rock Ventures, an industry defending itself for its high price tags by saying they’re the necessary cost of innovation. Borisy says he’s okay with that.
“Yes, innovation needs to be rewarded; that’s what I’ve spent my adult life doing, and I’m motivated by it – I’m a capitalist,” Borisy said by phone ahead of the announcement. “But while a great new drug does need to be rewarded with a meaningful price, it doesn’t have to be as high as where we’ve gotten to.”
EQRx will focus on medicines still protected by patents; Borisy and his team aren’t planning to develop generic drugs or biosimilars (he calls the company’s future drugs “equivalars”). He wouldn’t name specific drugs they plan to undercut, but said the company will take aim at products introduced over about the last five years, or which will hit the market in the next five. The goal is to get 10 drugs approved over the next decade.
And their planned prices? A fraction of those of competitor medicines, Borisy said — about one-third to one-fifth of price tags now. He said it’s possible because the industry’s sky-high prices have left a lot of fat in the system. Cutting inefficiencies and focusing on areas where the biology is proven, Borisy said, will lead to a success rate of closer to one in two or three, versus the industry’s current one in 10. And bringing lots of these “equivalars” to market, he said, will achieve the needed scale to be profitable.
“As in other businesses, where Jet Blue changed how you buy plane tickets and interact with airline companies, and Amazon changed the retail experience, there are those opportunities in how you create drugs, do clinical development and interface with electronic health systems,” Borisy said. “We believe we can approach an order of magnitude lower cost… such that, even if we are pricing at a small fraction of where things are today, we will be as profitable if not more profitable” than other companies in the industry.
Borisy will be EQRx’s CEO, and will be joined by Melanie Nallicheri, formerly of Foundation Medicine; Robert Forrester, of Verastem; Susan Hager, also of Foundation Medicine; Peter Bach, an outspoken drug pricing critic from Memorial Sloan Kettering Cancer Center; and Sandra Horning, formerly of Roche.
Borisy himself is no stranger to high drug prices: He serves on the board of Blueprint Medicines, the maker of a
He declined to comment specifically on that drug’s price or the decision-making behind it, but noted more broadly that individual companies are now incentivized to price medicines as high as they can.
“It’s a tragedy of the commons,” Borisy said. “For every individual company, it makes total sense for what they’re doing and their fiduciary responsibility to their shareholders.”
And he said he’s fully prepared for some uncomfortable encounters in the halls San Francisco’s Westin St. Francis hotel, at the industry’s largest investing conference this week.
“Sometimes disruptive change is uncomfortable,” Borisy said. “But it’s still the right thing to do.”