Cancer drug developer Revolution Medicines is acquiring EQRx, a company that fell short in its ambition to develop and commercialize drugs that are affordable for patients and sustainable for health systems. EQRx has cancer drug candidates, but Revolution isn’t interested in any of them. Revolution struck the deal to access EQRx’s more than $1 billion in cash, bolstering its own balance sheet.
The merger agreement announced Tuesday is an all-stock transaction. The exact stock ratio won’t be set until this fall. While 20% is based on Revolution’s stock price at the time of the deal signing, the remaining 80% of the ratio will be based on its stock price at a time closer to the EQRx shareholder vote, which is planned for early November. By that point, shareholders will have had the opportunity to review key clinical data that Revolution is on track to report for its cancer drugs at two major medical conferences this fall.
Speaking during a conference call Tuesday, Revolution CEO Mark Goldsmith said the acquisition brings additional financial support to the company’s drug candidates. Revolution is able to advance those programs without a development or marketing partnership that would affect the company’s rights to those drugs in the U.S. Furthermore, Revolution can be more discerning about potential deals for rights to those drugs in the rest of the world.
“What we’ve effectively done in this deal is we’ve secured access to $1 billion by achieving a commitment by EQRx to participate in this transaction,” Goldsmith said. “We’ve secured it now, but it largely gets priced later. So from our perspective, we get the benefits of both—secure access to a large amount of capital that’s rarely available on the marketplace today, but to do so at a price that reflects people’s understanding and view of RevMed after those very important clinical updates.”
Redwood City, California-based Revolution is part of a growing field of companies aiming to address cancers driven by KRAS, part of the RAS gene family. When mutated, KRAS contributes to uncontrolled cell growth that drives a cancer. KRAS mutations were long thought to be undruggable. Amgen proved otherwise, winning approval of the KRAS G12 inhibitor Lumakras in 2021. Last year, Mirati Therapeutics followed , winning approval for its KRAS G12 inhibitor, Krazati. Revolution aims to show its programs could offer advantages over those drugs and others in development.
Revolution drug candidate RMC-6236 is designed to block multiple RAS variants. On Tuesday, the company said an update on the drug’s activity against non-small cell lung cancer or pancreatic cancer will be presented on Oct. 22 during the European Society for Medical Oncology Congress. Supporting data will be presented at the 2023 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics (“Triple Meeting”), also in October.
During the Tuesday conference call, Revolution executives did not tip their hands about the forthcoming data. But they noted that based on the encouraging data so far, the company is planning for pivotal clinical tests of RMC-6236 as a single agent. Those studies could begin in 2024.
Revolution is also set to report at the Triple Meeting initial clinical findings for RMC-6291, a KRAS G12C inhibitor. These data will include preliminary evidence of differentiation from the first generation of KRAS G12C-blocking drugs. Planning is underway for a Phase 1/1b study to evaluate the combination of that drug and RMC-6236, potentially starting in early 2024. The company will also continue to evaluate the drug as a single-agent therapy.
Progress continues for a third Revolution drug candidate, RMC-9805. This molecule addresses mutated KRAS G12D. Revolution said study site activation is ongoing for a Phase 1/1b clinical trial.
EQRx launched in 2020, the product of serial entrepreneur Alexis Borisy. The company licensed drug candidates from other companies, such as the cancer immunotherapy sugemalimab from China-based C-Stone Therapeutics. The FDA dashed EQRx’s hopes that this drug could offer patients a lower-cost cancer immunotherapy. Sugemalimab’s data came from clinical trials conducted in China, and the FDA told EQRx it needed data from another clinical trial that compared the drug to an approved drug from the same class.
Rather than run another Phase 3 study for sugemalimab, EQRx said it would halt its plans to develop the drug for the U.S. market. The company said it would turn its focus to two small molecule drugs in clinical development for multiple types of cancer. But in a further blow to EQRx’s low drug price strategy, the company said it would adopt market-based pricing for those drugs “in order to deliver on outcomes for patients and maximize value for shareholders.” In May, EQRx announced a restructuring that cut its workforce and trimmed its drug pipeline even more. Those moves set in motion the exploration of strategic alternatives culminating in the Revolution acquisition agreement.
EQRx’s drugs will not join the Revolution pipeline. Goldsmith said EQRx will wind down those programs and return the intellectual property to its partners, who will determine what to do with the assets.
The boards of directors of Revolution and EQRx have already approved the acquisition. In addition to the approval of EQRx shareholders, Revolution shareholders also need to sign off on the deal. The companies expect to close the transaction in November, soon after those shareholder votes.
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