U-turn confirms that the US cut-price oncology model is dead

The cracks in the EQRX edifice started to appear a few months ago, and today the business model came crashing down. The company, launched on the back of a promise to “radically lower” US drug prices, today ditched plans to have its lead anti-PD-L1 asset, sugemalimab, approved for a major US indication.

Not only that, the group also moved to prioritise development of two small molecules instead of sugemalimab. Notably, if these do reach the US, they will be priced in line with other marketed drugs rather than at a steep discount.

EQRX’s original idea – that by using China-generated data, a me-too PD-(L)1 inhibitor could be approved in the US for a major use like NSCLC, but at a reduced price – was already on life support. That was the result of a US adcom, which in February slammed Lilly/Innovent’s sintilimab, saying this drug’s NSCLC trial, conducted in China, was not generalisable to a US population.

There had been hopes that the issues, which resulted in a highly predictable complete response letter, were specific to sintilimab, but it was not to be. In September EQRX prioritised ex-US filings while insisting that it was engaging the FDA in discussions over sugemalimab. Today those US plans were formally abandoned.

China study

Sugemalimab’s first US use was to have been front-line NSCLC, as part of a chemo combo based on the Gemstone-302 study. While that trial was technically a success, crucially it had been conducted solely in China, and compared the combo against chemo alone, rather than against a US standard-of-care anti-PD-(L)1 drug.

EQRX now says it expects to file sugemalimab this year in the UK and in 2023 in the EU, in NSCLC. In the US its hopes turn to extranodal NK/T-cell lymphoma – an important but smaller use than NSCLC. It seems likely that an indication that is not, like NSCLC, a major US use would not be subject to the same regulatory problems regarding China-generated data, but neither will it offer a similar scope for pricing disruption.

On an analyst call today EQRX admitted that this was “not where we wanted to be”, but said it had to focus on getting a drug to market. The only way to achieve this in a setting like NSCLC, according to the FDA precedent, is to generate US data versus standard of care, but the cost of running such trials wipes out the possibility of pricing at a significant discount.

Recently the company was still mulling the possibility of undertaking sugemalimab studies head to head against other approved checkpoint inhibitors, but this too is now unviable. Instead, two small molecules respectively targeting EGFR and CDK4/6, aumolertinib and lerociclib, become its US leads, and if launched these will carry market-based pricing.

These two drugs seem unlikely to be filed in the US before 2027. Aumolertinib needs to complete a three-arm NSCLC trial from which no interim readouts will be allowed; lerociclib is in phase 2 in breast cancer, and a pivotal trial, in endometrial cancer, will not start until next year.

As far as PD-(L)1 blockade is concerned, the sugemalimab situation will be watched by other latecomers to the US market, though it is notable that most now target relatively niche indications.

It is important to note that EQRX, whose stock lost 14% this morning, is not U-turning in a desperate bid to save cash – the group ended the third quarter with $1.5bn in the bank. But it said it had to face reality, even if that reality, based on advice from the FDA, was not in the best interests of patients.