US-based biotech EQRx Inc., (Nasdaq: EQRX) has disclosed in its Q4 2022 financial report a significant shift in strategy. The company, which aimed to disrupt high drug prices in the US market with cheaply sourced innovative drugs, has decided to abandon these plans. Consequently, EQRx will terminate the development of three products sourced from China-based firms: CStone Pharmaceuticals’ (HKG: 2616) checkpoint inhibitors sugemalimab and nofazinlimab, and Lynk Pharmaceuticals’ JAK1 inhibitor EQ121 (LNK-207).
Termination of Development and Financial Implications
EQRx acquired the rights to develop these drugs in 2020, paying CStone USD 150 million upfront and committing to up to USD 1.5 billion in milestone payments. The deal with Lynk Pharma included potential milestone payouts of USD 172 million. CStone has confirmed that the termination will not affect the upfront and milestone payments already received from EQRx. Sugemalimab, approved for four indications in China, is under marketing review in Europe and the UK for first-line treatment of non-small cell lung cancer (NSCLC).
Restructuring and Focus on Lerociclib
As part of the strategic shakeup, EQRx is cutting 170 staff positions and concentrating all internal development efforts on lerociclib, a CDK 4/6 inhibitor in-licensed from G1 Therapeutics, currently in Phase III trials for first-line advanced endometrial cancer.
Rights Retention and Partnership Seeking for Aumolertinib
EQRx retains rights outside Greater China to aumolertinib, a third-generation EGFR inhibitor in-licensed from Jiangsu Hansoh Pharmaceutical. The company is now seeking partners to take up development rights for this molecule, which is in a Phase III trial comparing it head-to-head against AstraZeneca’s Tagrisso (osimertinib) in first-line EGFR-mutated NSCLC.
EQRx’s Original Strategy and Current Financial Position
Established in 2019 with a strategy to disrupt the US market by offering modern, innovative medicines at lower prices, EQRx had backing of USD 750 million over two finance rounds. China-sourced molecules were a key part of this strategy. However, the company indicated in 2022 that it would recalibrate its approach following discussions with the US FDA on the development of sugemalimab and aumolertinib. The regulator required a full Phase III multi-regional clinical trial including US sites for sugemalimab to be considered for market approval, rather than a small-scale bridging study.
EQRx remains well-funded with USD 1.3 billion in cash holdings, and the staff cuts are expected to save the company USD 125 million annually.-Fineline Info & Tech
