EQRx, a high-profile startup that attempted to build a new pharmaceutical business model, will lay off a large portion of its staff and discard much of its drug pipeline in a large-scale reset announced Monday.
Launched by veteran biotech venture capitalist Alexis Borisy, EQRx started up in early 2020 with grand plans to reimagine how prescription drugs are developed and priced. The company claimed it could invent or license similar, but more effective competitors to top-selling specialty medicines, such as those for cancer, and sell them for less — a vision EQRx executives used to raise more than $2 billion in funding.
EQRx made some progress, licensing several cancer drugs from Chinese companies and advancing them into late-stage clinical testing. But its near-term plans were thrown into disarray by the Food and Drug Administration, which set out stricter approval standards for drugs developed and tested in China.
EQRx pivoted last November, disclosing intentions to adopt “market-based” pricing for its two lead drugs for lung cancer, called aumolertinib and sugemalimab. Seeing a longer path to market than it originally envisioned, the company then laid off 18% of its staff in February to cut down on spending.
The restructuring revealed Monday is much broader. EQRx will cut 170 positions, including some that were left unfilled following previous departures. The layoffs, coupled with those in February, will result in a company about one-third the size it was at the end of last year.
EQRx also plans to seek a marketing partner for aumolertinib, which is in a Phase 3 trial, and is terminating licensing agreements for sugemalimab and two other drugs. In addition, the company will stop development of early-stage drug programs that don’t have “clear potential for differentiation,” it said in a statement.
“Going forward, EQRx will leverage its significant scale of capital and team of experienced ‘drug hunters’ towards developing clinically differentiated, high-value medicines,” said EQRx CEO Melanie Nallicheri in the statement.
The company’s main focus will be a drug called lerociclib, which works like several other cancer medicines approved in the U.S. and is being studied by EQRx for endometrial and breast cancer.
The pipeline cull and layoffs will result in at least $125 million in annualized cost savings, sharply reducing an operating expense bill that totaled $356 million last year.
EQRx had a total of $1.3 billion in cash, cash equivalents and investments on hand at the end of March, and expects to spend about $275 million or less next year. It will reserve $25 million to fund several early-stage immune-inflammatory research programs that it’s placing in a newly created subsidiary that it could spin out as an independent company in the future.