Pouring One Out for EQRx

Happy August. Fair warning that the Curve will probably be shorter in the days to come. It’s not that I’m scaling back. It’s just that the news is going to slow. I know those are famous last words, but with Congress until after Labor Day, earnings almost done, and shoulder season for conferences, I expect there will be less to wax poetic about.

(That said, I do have some waxing to do today in the wake of the acquisition of EQRx.)

(And yes: the end of the month is going to be bonkers.)

It’s official: EQRx will soon be no more. EQRx, or what’s left of it, will be bought in an all-stock deal by Revolution Medicines.

I’m not great at following all-stock transactions, but it looks like Revolution will pay just under $1.1 billion for EQRx, a modest premium to what EQRx was trading for yesterday. In return, Revolution will mostly get the billion-plus in cash that EQRx has on its books.

That’s the bloodless summary of what probably happens next. The deal is slated to close in November.

But EQRx deserves a more elaborate requiem. The company was launched in January 2020 -- less than four years ago -- with an elegant, if difficult-to-execute proposition: develop me-too drugs quickly and sell them cheaply, building a catalog of inexpensive, branded products.

It was a long-shot concept, but EQRx had raised enough money and was run by serious enough people that the company’s launch was covered from everyone from the Boston Globe to the Financial Times to the Wall Street Journal.

By the end of its first year, EQRx had pivoted. Rather than talking about creating a stable of home-grown molecules, it had licensed three cancer meds. The most advanced programs came from Chinese partners and reflected a slightly different approach, bringing drugs to market that others had developed on the cheap.

But that strategy, too, came undone. By EQRx’s second birthday, the FDA expressed reservations about clinical trials conducted solely in China, blowing up EQRx’s approach. By the time the company turned three years old in January, it had formally given up on the idea of inexpensive medicines fueled by efficient development. And, today, the coup de grace.

The most agonizing part of the story is that EQRx’s fundamental hypotheses were never really tested. How easy is it to develop fast-follow me-too drugs? We don’t know. Is there a market for cheap branded drugs? No idea. Is there an alternative model for working with payers and providers? ¯\_(ツ)_/¯

After all, it’s not that EQRx failed, per se, in any of those endeavors. They just never saw their initial vision through, ensuring that those unanswered questions will be the company’s legacy.

• Let me start by congratulating my erstwhile colleague, Michael Pratt, who is joining John O’Brien at NPC as the chief communications officer. NPC also nabbed ICER’s Jon Campell, who will serve NPC as chief scientific officer. Looking forward to following that crew as they guide NPC to its next iteration.

• I’ll probably pull together an Arc on this later this week, but there is a great piece that looks at what the minimum discount could be for the first 10 medicines to get price-controlled under the IRA. The conclusion to the Journal of Managed Care and Specialty Pharmacy article is a little interesting, but the underlying math might be more important: for 6 of the 10 meds that everyone thinks will make CMS’ list, the existing net price would be statutorily acceptable as a price-controlled price.

• Good stuff from PhRMA chief Steve Ubl, who came back from ASCO excited about the science but worried about drug-pricing policy. It feels like if there is going to be IRA-related bleeding, it’s going to be first and worst in oncology.

• Global Blood Therapeutics CEO Ted Love makes a damn good argument in favor of biopharma mergers in this STAT First Opinion: without selling to a larger company (Pfizer), his firm would never have had the resources to bring a sickle-cell disease treatment to parts of the developing world where the burden is enormous.

• The average Medicare Part D premium should fall next year by about 2% for a couple of IRA-related reasons.

• If you want a reason to be skeptical about Congress’ ability to pass your favorite piece of health-related legislation (insulin, PBMs, etc.), peep this Washington Post piece about all of the must-do health items Congress must address when everyone gets back from break. It feels like there’s not a lot of room for other topics …

• Democratic Senators have asked the CEO of Perrigo, the company marketing the first OTC birth control pill, to “release an affordable retail price for Opill.”

• Bloomberg Law looks at one way companies can opt out of price controls: leaving all federal health programs. That feels like a pretty radical approach, but Bloomberg’s coverage is a reminder that anything IRA-related, even if it’s far-fetched, will find an audience.