How Vivek Ramaswamy shot his way to the presidency

How Vivek Ramaswamy shot his way to the presidency

In the campaign trail, when he explains why he is a different kind of presidential candidate, Vivek Ramaswamy calls himself a Harvard-trained “scientist” from the lifesaving world of biotechnology.

“I developed many drugs,” Mr. Ramaswamy, an entrepreneur and conservative author, told a gathering at a manufacturing firm in Davenport, Iowa, this month. “The thing I’m most proud of is a therapy for children, 40 of them each year are born with the genetic condition, who without treatment will die by age 3.”

The reality of Mr. Ramaswamy’s business career is more complex, the story of a financier and a prophet more than a scientist, who went on the run, publicized his vision, attracted investment and then made two huge payouts – totaling over $200 million More – before his 35th birthday.

Mr. Ramaswamy’s venture is known for its spectacular failure. As a 29-year-old man with bold ideas and Ivy League connections, he planned the largest initial public offering in the history of the biotechnology industry at the time—only to see the Alzheimer’s drug at its center fail two years later. And the company’s value tank.

But Mr. Ramaswamy, now 37, made a lot of money anyway. He took his first payout in 2015 after getting investors excited about his growing pharmaceutical empire. He made a second profit five years later when he sold the most promising pieces to a Japanese group.

The core company created by Mr. Ramaswamy has since helped bring five drugs to market, including treatments for uterine fibroids, prostate cancer and the rare genetic condition mentioned on the stump in Iowa. Company says 10 of its drugs are in late-stage clinical trials all are successfulAn impressive streak in a business where drugs typically fail.

Mr. Ramaswamy’s resilience was in part the result of the cleverness with which he built his web of biotechnology companies. But it also highlights his particular skill at generating hype, hope and risky speculation in an industry that relies on all three.

“It had a lot of power. Some of them didn’t. He’s kind of a music man,” said Kathleen Sebelius, a Democrat and former health secretary during the Obama administration, who advised two of Mr. Ramaswamy’s companies.

On his part, Mr. Ramaswamy said the criticism that he had promised so much was missing the point. Although he promoted the potential of the defunct Alzheimer’s drug, he now says he was really selling investors on a business model.

“The business model was to develop these drugs over a long period of time. This is the punchline, this is the most important point,” he said.

Mr. Ramaswamy’s wealth now becoming the basis for a long run for the Republican nomination includes a campaign jet, plush bus and $10.3 million of his own money and counting. In the campaign trial, he sells what he calls “woke-up” capitalism, skewers environmental, social and corporate governance programs and dismisses debates about racial privilege.

She said recently in Iowa, she is the child of Indian immigrants and was “privileged” to have “two parents at home whose focus was on education, achievement and core values.” This gave me the foundation to go to places like Harvard and Yale and become a scientist.

With a bachelor’s degree in biology from Harvard, Mr. Ramaswamy is not exactly a scientist; He made a name for himself in the hedge fund world and his graduate work was a law degree from Yale.

Along the way, he invested in biotech and became infatuated with the idea of ​​developing high-risk prescription drugs: scouring patents held by pharmaceutical giants, discovering drugs that had been abandoned for commercial reasons, not necessarily for lack of promise. Buy patents for a song and market them.

Mr. Ramaswamy made a name for himself in the hedge fund world and his graduate work was a law degree from Yale.Credit…forbes magazine

In 2014, Mr. Ramaswamy founded Roivant Sciences – incorporated in the tax haven of Bermuda and backed by around $100 million in funding from investors. QVTA hedge fund that hired Mr. Ramaswamy after college.

Using his contacts and his confidence, Mr. Ramaswamy formed a star-studded, bipartisan advisory board. A friend from Harvard helped him recruit Democrats, including Ms. Sebelius; Tom Daschle, former Senate Majority Leader; and Donald M. Berwick, former administrator of the Centers for Medicare and Medicaid Services.

Republicans included Olympia Snowe, a former senator from Maine, and Mark McClellan, a prominent former health regulator.

Ms. Sebelius said she was impressed by Mr. Ramaswamy’s promise to bring important medicines to market at affordable prices.

He said of their pitch, “It was an entrepreneurial approach to lowering drug prices.” “We shared a lot about mission and vision.”

But in speaking to a different crowd, Mr. Ramaswamy was clear about Roivant’s main objective.

“This will be the highest return on investment effort ever made in the pharmaceutical industry,” he claimed. a cover story in forbes,

The “Roi” in a company’s name stands for return on investment.

In late 2014, Roivant’s subsidiary, to be called Exovant, bought for an upfront price of $5 million — pocket change in the biotech industry — an Alzheimer’s drug that GlaxoSmithKline had abandoned after four failed clinical trials. .

Six months later, before any new clinical trials for the drug could begin, Mr. Ramaswamy took Exovent public for the first time, raising the company’s market value to nearly $3 billion.

Around that time, the company reported that it had only eight employees, including Mr. Ramaswamy’s mother and brother, both physicians.

Mr. Ramaswamy was a powerful salesman. He cited the Alzheimer’s drug, intepiridine, as a potential breakthrough that “could help millions”. “The potential opportunity to benefit patients is really tremendous,” he said on CNBC.

Patrick Machado, former director of Roivant and Exovant, described Mr. Ramaswamy as “brilliant and courageous”. Others said that Mr. Ramaswamy was over-promising.

Thanks to the public stock offering, Mr. Ramaswamy held a large and suddenly extraordinarily valuable stake in Exovant through its parent company Roivant, which was still privately held and controlled about 80 percent of Exovant. .

With the drug moving into an important clinical trial, he plans to raise more money to fuel his broader ambitions with Roivant.

In late 2015, Mr. Ramaswamy sold a portion of his Roivant shares to Viking Global Investors, an institutional investor that wanted to join. This sale was a major payday: On his 2015 tax return, Mr. Ramaswamy Claimed over $37 million in capital gains.

In an interview, Mr. Ramaswamy said he took out the cash only to make room for Viking, and not to hedge his bets ahead of clinical trials for Intepardine.

“We were forced to sell,” he said, “and in some ways it is a regret because the shares would have been worth more today if they had not been sold.”

In 2017, Mr. Ramaswamy pitched to Masayoshi Son, founder of Japanese conglomerate SoftBank, which runs the world’s largest tech investment fund. His presentation included mimicking the slides Mr. Sun is known for, according to a person familiar with Mr. Ramaswamy’s pitch who was not authorized to speak publicly, shooting an arrow up and to the right at the chart. Was shown to have happened.

In August 2017, SoftBank led $1.1 billion investment in Roivant. The investment was not about joining Exovant; SoftBank thought Intepiridine was unlikely to succeed, the person said. But SoftBank was looking to invest in Mr. Ramaswamy’s extensive pharmaceutical portfolio, according to two people with knowledge of the matter.

SoftBank declined to comment.

A few weeks later, a clinical trial of an Alzheimer’s drug failed. The stock price plummeted, losing 75 percent of its value in a single day. The stock declined further in the months that followed and never recovered before the company was dissolved earlier this year.

Mr Ramaswamy refused to disclose how much he had lost on paper due to the drug’s failure.

Thanks to the way he structured his biotechnology empire, he doesn’t hold a direct stake in Exovent. His personal stake was through Roivant, allowing Mr. Ramaswamy to weather the storm. QVT, the hedge fund where Mr. Ramaswamy once worked, also invested in Roivant, shielding it from most of the fallout. QVT did not respond to a request for comment.

But some investors lost real money on Exovent. A large public pension fund, the California State Teachers’ Retirement System, sold its stake months later when it was worth hundreds of thousands of dollars less than it was in the days before the disappointing clinical trial news. (The fund declined to comment.)

But for the many Exovent shareholders who lost money, many of whom were sophisticated institutional investors, the loss was akin to missing out on a high-risk, high-reward stock within a larger portfolio of safe bets.

With the failure of Intapirdin, Mr. Ramaswamy ran into the hard reality of biology, said Derek Lowe, a longtime pharmaceutical researcher and industry commentator. “The patients whose diseased cells you’re trying to cure really don’t care how hard you are,” he said.

“I think it’s unfair for people to think this is a wonder drug,” he said. (Mr. Lowe bet on Exovent’s stock and made about $10,000 from the drug’s failure, he said.)

Mr Ramaswamy has expressed regret over the years about the failure of his drug for Alzheimer’s, a disease that has long puzzled researchers. And the criticism that he profited while his investors suffered, he said.

“On a personal level, it bothers me a little bit,” he said. “Roivant’s business model was to see these drugs come to market, and we could make big cash out, and employees could make big cash out, but that was not the business model.”

But Mr. Ramaswamy finally redeems Roivanth.

In 2019, Roivant sold its stake in five of its most promising spinoff companies to Sumitomo, a giant Japanese conglomerate.

It turned out to be the biggest pay day for Sri Ramaswamy. His 2020 tax return included approximately $175 million in capital gains.

In recent years, Mr Ramaswamy has stepped back from Roivant, leaving his roles as chief executive in 2021 and chairman in February. He remains the sixth largest shareholder in the company, with his stake currently valued at over $500 million. (He hasn’t yet filed personal financial disclosures for his presidential run, but he did.) 20 years tax return issued And called on his competitors in the Republican race to do the same.)

Mr. Ramaswamy used to say that his business model would make drug prices cheaper, but this did not happen. One example is the product he has said he is most proud of, a one-time transplant for children with a rare and devastating immune disease. When RoVant spinoff company Enzivent, controlled by Sumitomo, wins regulatory approval in 2021, it set a sticker price of $2.7 million.

Sumitomo declined to comment.

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