How Vivek Ramaswamy Made the Fortune Fueling His Presidential Run

During the campaign, Vivek Ramaswamy called himself a Harvard-trained “scientist” from the world of life-saving biotechnology, explaining why he is a different type of presidential candidate. there is

“I’ve developed a lot of drugs,” Ramaswamy, an entrepreneur and conservative author, said at a rally this month at a construction company in Davenport, Iowa. “What I am most proud of is the treatment we have for our children. Every year, 40 children are born with a genetic condition that, if left untreated, will die by the age of three.”

The reality of Mr. Ramaswamy’s business career is more complex, being more of a financier than a scientist, going bargain hunting, promoting his vision, attracting investments, and making two huge payouts totaling over $200 million. This is the story of a prospector who cashed in — before his 35th birthday.

Mr. Ramaswamy’s enterprise is best known for its spectacular failure. With his bold ideas and Ivy League connections, the 29-year-old planned what was then the largest initial public offering in biotech history. However, the Alzheimer’s disease drug that was the center of it failed two years later, and I witnessed the company’s failure as well. value tank.

But Ramaswamy, now 37, made his fortune anyway. He fueled investor excitement about his growing pharmaceutical empire and received his first dividend in 2015. He made his second profit five years later when he sold his most promising product to a Japanese conglomerate.

Since then, Ramaswamy’s core company has been involved in bringing five drugs to market, including treatments for the rare genetic diseases he mentioned: uterine fibroids, prostate cancer, and an Iowa stump. The company announced that it recently completed 10 late-stage clinical trials of its drug. all succeededperformed admirably in a business where drugs often fail.

Ramaswamy’s resilience was, in part, the result of the clever way he built his network of biotech companies. But it also underscores his particular skill at generating hype, hope, and dangerous speculation in an industry that feeds on all three.

“A lot of it had substance. said Kathleen Sebelius.

Mr Ramaswamy said the criticism that he promised too much was off the mark. He now says he touted the potential for a doomed Alzheimer’s drug, but was actually pitching the business model to investors.

“The business model was to develop these drugs long-term. That’s the punchline and the most important point,” he said.

Mr. Ramaswamy’s wealth is now undertaking a big campaign for the Republican nomination that includes a campaign jet, a luxury bus and $10.3 million in personal property. During the election trials, he pitched what he called “anti-awakening” capitalism, skewered environmental, social and corporate governance programs, and dismissed arguments about racial privilege.

The child of Indian immigrants, he recently said in Iowa that the “privilege” was having two parents at home with an emphasis on education, grades and practical values. It gave me the foundation to go on to Harvard, Yale and other universities and become a scientist. “

With a BA in Biology from Harvard University, Mr. Ramaswamy is not really a scientist. He made a name for himself in the hedge fund world and graduated with a law degree from Yale University.

Along the way, he became obsessed with the idea of ​​investing in biotechnology and developing high-risk prescription drugs. It looked at patents held by major pharmaceutical companies, looking for drugs that were abandoned for business reasons, not necessarily because they had no future. Buy a patent for your song and put it on the market.

Ramaswamy has made a name for himself in the hedge fund world and has a law degree from Yale…forbes magazine

In 2014, Ramaswamy founded Roivant Sciences. Roivant Sciences was founded in Bermuda’s tax haven and has nearly $100 million in funding from investors including: QVTthe hedge fund that hired Ramaswamy after college.

Ramaswamy used his connections and confidence to set up a star-studded, bipartisan advisory board. A friend at Harvard helped recruit Democrats, including Mr. Sebelius. Tom Daschle, former Senate Majority Leader. Donald M. Berwick is a former administrator of the Centers for Medicare and Medicaid Services.

Republicans included former Senator Olympia Snowe of Maine and prominent former health regulator Mark McClellan.

Sebelius said he was shaken by Ramaswamy’s promises to bring important medicines to market at affordable prices.

“It was an entrepreneurial perspective on how to lower drug prices,” she said of his pitch. “We shared a lot of our mission and vision.”

But in pitching to a different audience, Ramaswamy was candid about Roivant’s main purpose.

“This will be the best return on investment ever made in the pharmaceutical industry,” he boasted. Forbes magazine cover story.

The “Roi” in the company name stands for return on investment.

In late 2014, a subsidiary of Roivant (later called Axovant) bought an Alzheimer’s drug GlaxoSmithKline abandoned after failing four clinical trials with an upfront payment of $5 million, the biotech industry’s pennies. bottom.

Six months later, before starting new clinical trials for the drug, Ramaswamy premiered Axovant, giving the company a market value of nearly $3 billion.

At the time, the company reportedly had only eight employees, including Ramaswamy’s mother and brother, both of whom are doctors.

Mr. Ramaswamy was a capable salesman. He picked up the Alzheimer’s drug, intepirdine, as a breakthrough that “could help millions of people.” “The potential opportunity to deliver value to patients is really huge,” he told CNBC.

Former director of Roivant and Axovant, Patrick Machado, described Ramaswamy as “a bright and bold man.” Some said Ramaswamy promised too much.

Thanks to the public offering, Mr. Ramaswamy had a large and suddenly very valuable stake in Axovant through its parent company Roivant, which was still private and controlled about 80 percent of Axovant.

As the drug headed into pivotal clinical trials, he began raising more money to fund his wider ambitions with Roivant.

In late 2015, Ramaswamy sold a portion of Roivant’s stake to institutional investor Viking Global Investors, which wanted to invest. The sale turned out to be a big payday. Mr Ramaswamy said in his 2015 tax return: Claimed over $37 million in capital gains.

Ramaswami said in an interview that he gave up the cash only to make room for Viking, not to hedge his bets ahead of the intepirdine clinical trial.

“We have had to sell it, which is kind of a shame because it would have been worth more now if we hadn’t sold it,” he said.

In 2017, Ramaswami made a pitch to Masayoshi Son, founder of Japanese conglomerate SoftBank, which runs the world’s largest technology investment fund. A person familiar with Mr. Ramaswami’s allegations said he was not authorized to speak publicly, but a person familiar with Mr. Ramaswami’s allegations said Mr. The slide contained a graph showing a flying arrow in the upper right corner.

In August 2017, SoftBank $1.1 billion investment at Roivant. This investment was not for joining Axovant. SoftBank said it thought intepirdine was unlikely to succeed. But two people familiar with the matter said SoftBank was looking to invest in Mr. Ramaswamy’s broad drug portfolio.

SoftBank declined to comment.

A few weeks later, a clinical trial for an Alzheimer’s drug failed. The stock plummeted, losing 75 percent of its value in one day. The stock fell further in the months that followed and did not recover until the company dissolved earlier this year.

Mr Ramaswami declined to say how much he had lost on paper due to the drug’s failure.

Due to the way he built his biotech empire, he had no direct stake in Axovant. His personal stake, through Roivant, helped Ramaswamy weather the storm. QVT, the hedge fund where Ramaswami once worked, also invested in Roivant and was largely immune to the effects. QVT did not respond to a request for comment.

But some investors lost real money on Axovant. The California Teachers’ Retirement Plan, one of the largest public pension funds, sold its shares a few months later, when the shares were worth hundreds of thousands of dollars more than they were in the days leading up to the disappointing clinical trial news. was going down. (The fund declined to comment.)

But for the many Axovant shareholders who suffered losses, many of them sophisticated institutional investors, that loss was a missed gamble against high-risk, high-yielding stocks in a larger portfolio of safer bets. was.

The failure of intepirdine confronted Ramaswami with the harsh realities of biology, said Derek Lowe, a longtime pharmaceutical researcher and industry commentator. “The patient’s sick cells you’re trying to treat don’t really care how hard you’re charging,” he said.

“I think it’s unconscionable to make people think this is a silver bullet,” he said. (Lowe bet on Axovant stock and made about $10,000 on the drug’s failure, he said.)

Ramaswamy has long lamented the failure of Alzheimer’s drugs that have plagued researchers for years. And criticism that he’s making money while investors are losing money angers him, he says.

“On a personal level, it’s a little frustrating,” he said. “Roivant’s business model was to get these drugs into the market, and we got a lot of cash, and our employees got a lot of cash, but that’s the business model. There was no.”

However, Ramaswamy eventually cashed Roivant.

In 2019, Roivant sold stakes in five of its most promising spin-offs to Japanese conglomerate giant Sumitomo.

That turned out to be Ramaswamy’s biggest payday. His 2020 tax return included capital gains of approximately $175 million.

Ramaswamy recently stepped down from Roivant, stepping down as CEO in 2021 and chairman in February. He is the company’s sixth largest shareholder, with a current stake valued at over $500 million. (Although he has yet to submit personal financial information for the presidential campaign, Released tax returns for 20 years And he called on his Republican opponents to do the same. )

Ramaswamy’s claims that his business model will lead to affordable drug prices have not materialized. One example is the product he is most proud of, a one-time implant for children with rare and devastating immune disorders. When Enzyvant, a spin-off of Roivant, then owned by Sumitomo, won regulatory approval in 2021, the company set the list price at $2.7 million.

Sumitomo declined to comment.

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