EQRx, the well-funded biotechnology company that once sought to reimagine prescription drug pricing, plans to reduce its workforce by 18% in a restructuring that comes several months after it announced a U-turn in strategy.
The company’s board of directors approved the plan on Sunday, aiming to conserve cash and improve “operational efficiencies.” The job cuts will involve layoffs as well as not filling positions after staff departures, according to a company filing with the Securities and Exchange Commission. After the workforce reduction, EQRx expects to have approximately 300 employees.
“Our focus remains on being disciplined with our cash while executing on our priorities and preserving runway into 2028,” Melanie Nallicheri, EQRx’s CEO, said in a company statement Thursday.
EQRx joins a lengthening list of at least three dozen drugmakers that have trimmed staff so far this year, including other high-profile biotechs like Fate Therapeutics, Editas Medicine and Celularity. While the reasons they’ve offered are varied, drug companies continue to face a turbulent market, as well as more limited financing options than in recent years. The shake-out comes after a boom in company formation and initial public offerings in 2020 and 2021 that swelled the ranks of biotech as well as drove valuations to new heights.
In EQRx’s case, the restructuring is part of efforts to lower its operating expenses below $275 million this year, compared to the $356 million it spent in 2022. The company holds about $1.4 billion in cash, which it expects will allow it to fund operations through 2028.
The length of that runway is important, as EQRx recently nixed plans to seek U.S. approval of its lead cancer drug after the Food and Drug Administration made clear that it wanted to see data from another Phase 3 trial. EQRx no longer plans to file the drug in the U.S. for lung cancer, saying in November that it sees “no commercially viable" path.
Another drug it’s developing for lung cancer could have data necessary for EQRx to seek an approval by 2027.
Originally, EQRx planned to pursue a “fast follow” strategy, licensing competitors to existing blockbuster drugs from Chinese companies and quickly securing their approval in the U.S. The company envisioned launching the drugs at “radically lower” prices in a bid to bring price competition to brand-name top-sellers.
But the FDA disrupted those plans by adopting a more critical view of drugs primarily developed and tested in China and requiring companies like EQRx to generate more data from international, or U.S.-based trials. EQRx now plans to adopt “market-based pricing” for the drug due to have data in 2027, called aumolertinib, and another named lerociclib.
EQRx shares, which traded near $10 a piece in December 2021, are now worth about $2.20 each.