Revolution to Buy EQRx in All-Stock Deal, Add $1B in Cash to Balance Sheet
Pictured: Businessmen shaking hands/iStock, AmnajKhetsamtip
Revolution Medicines will acquire troubled Massachusetts-based biotech EQRx in an all-stock transaction that will add over $1 billion in net cash to its balance sheet, the California-based oncology company announced Tuesday.
The companies expect to close the deal in November, after which EQRx’s research programs will be terminated and all associated intellectual properties will be returned to its partners. Instead, Revolution will use the $1 billion haul to support its three priority RAS assets.
The first of these is RMC-6236, which is designed to inhibit multiple forms of the RAS protein, including those bearing cancerous mutations as well as wildtype isoforms that interact with oncogenic variants. Revolution is planning to launch a pivotal trial for RMC-6236 in 2024. The two other priority assets are RMC-6291 an RMC-9805, which target the KRASG12C and KRASG12D mutations, respectively.
All three RAS assets were produced from Revolution’s proprietary tri-complex technology platform, which generate inhibitors that selectively target what the company calls RAS(ON), referring to the active, GTP-bound forms of the RAS protein. The RAS(ON) inhibitors work by forming complexes with surrounding proteins, which prevents the binding of RAS with other proteins, in turn disrupting oncogenic signaling cascades.
Revolution’s portfolio of RAS(ON) inhibitors “has the opportunity to address one of the largest unmet needs in oncology,” EQRx CEO Melanie Nallicheri said in a statement. “Deploying our significant capital not only enhances this important vision, it also provides a compelling opportunity for our stockholders to participate in the upside potential of both near-term and long-term value catalysts.”
After completing the merger with Revolution, troubled EQRx will stop trading on the Nasdaq.
EQRx started its run strong, launching in July 2020 with $200 million in Series A backing, which at the time was used to advance a “market-based solution to rising drug costs,” according to former CEO Alexis Borisy.
This was a lofty goal and the company tried to achieve it by rethinking the drug discovery pipeline and by taking advantage of “advances in science and technology” to produce medicines at much lower prices, according to a press announcement at the time of EQRx’s launch. In August 2021, EQRx made its Nasdaq debut after merging with CM Life Sciences III in a deal that added $1.8 billion to its cash reserves.
Over a year later, however, the company hit a rough patch in the development of sugemalimab, an investigational antibody being developed for non-small cell lung cancer. At the time, EQRx saw “no commercially viable path” for sugemalimab and was forced to pivot to its two other drug candidates aumolertinib and lerociclib, for which it was planning to employ market-based pricing.
The company’s troubles continued and in February 2023 it reduced its headcount by 18% in an attempt to build more efficient operations and “streamline expenses,” according to an SEC filing. A few months later, in May 2023, EQRx gave up on aumolertinib and set in motion a massive business reset which saw around 50% of its staff lose their jobs.