On the campaign trail, while explaining why he’s a different kind of presidential candidate, Vivek Ramaswamy calls himself a Harvard-educated “scientist” from the lifesaving world of biotechnology.
“I’ve developed a number of drugs,” said Mr. Ramaswamy, an entrepreneur and conservative writer, at a meeting at a construction company in Davenport, Iowa, this month. “What I’m most proud of is therapy for children, 40 of them a year, born with a genetic disorder who, without treatment, die at the age of 3.”
The reality of Mr Ramaswamy’s business career is more complex, the story of a financier more than a scientist, and a gold digger who went on a bargain hunt, hyped his vision, attracted investment and then cashed out in two huge payouts – totaling more than $ 200 million – for his 35th birthday.
Mr. Ramaswamy’s venture is mostly known for a spectacular failure. A 29-year-old with a bold idea and connections to the Ivy League, he engineered what was at the time the largest IPO in biotechnology industry history. value tank.
But Mr. Ramaswamy, now 37, made a fortune anyway. He received his first payout in 2015 after thrilling investors about his growing pharmaceutical empire. He reaped a second five years later when he sold his most promising pieces to a Japanese conglomerate.
The core company Mr. Ramaswamy built has since helped bring five drugs to market, including treatments for uterine fibroids, prostate cancer and the rare genetic disorder he mentioned on the stump in Iowa. The company says the last 10 final clinical trials of its drugs have all passed, an impressive streak in an industry where drugs often fail.
Mr. Ramaswamy’s resilience was partly a result of the clever way he structured his web of biotechnology companies. But it also highlights its particular skills in generating hype, hope and high-risk speculation in an industry that feeds on all three.
“A lot of it had substance. Some of it didn’t. He’s kind of a music guy,” said Kathleen Sebelius, a Democrat and former health minister during the Obama administration, who advised two of Mr. Ramaswamy’s companies.
For his part, Mr. Ramaswamy that the criticism he overpromised made no sense. While he promoted the potential of the doomed Alzheimer’s drug, he now says he was actually selling investors based on a business model.
“The business model was to develop these drugs for the long term. That’s the punch line, that’s the main point,” he said.
Mr. Ramaswamy’s wealth now guarantees a long-running run for the Republican nomination, including a campaign jet, a luxury bus and $10.3 million of his own money and more. During the campaign process, he sells what he calls “anti-woke” capitalism, puncturing environmental, social and corporate governance programs and rejecting debates about racial privilege.
He is the child of Indian immigrants and “privilege,” he recently said in Iowa, “was two parents in the house with a focus on education, achievements and true values. That gave me the foundation to then go to places like Harvard and Yale and become a scientist.
With a bachelor’s degree in biology from Harvard, Mr. Ramaswamy is not really a scientist; he made his name in the world of hedge funds and his graduate work was a law degree from Yale.
Gradually he invested in biotech and became enamored with an idea to develop high-risk prescription drugs: scour the patents of pharmaceutical giants, looking for drugs that had been abandoned for business reasons, not necessarily because they lacked promise. Buy the patents for a song and market it.
In 2014, Mr. Ramaswamy Roivant Sciences – incorporated in the tax haven of Bermuda and backed by nearly $100 million in funding from investors, including QVT, a hedge fund that Mr. Ramaswamy after his studies.
Using his connections and his confidence, Mr. Ramaswamy put together a star-studded bipartisan advisory board. A Harvard friend helped him recruit Democrats, including Mrs. Sebelius; Tom Daschle, a former Senate Majority Leader; and Donald M. Berwick, a former administrator of the Centers for Medicare and Medicaid Services.
Republicans included former Senator Olympia Snowe of Maine and Mark McClellan, a prominent former health regulator.
Ms. Sebelius said she was influenced by Mr. Ramaswamy’s promises to bring critical medicines to market affordably.
“It was an entrepreneurial take on driving down drug prices,” she said of his pitch. “We shared a lot of the mission and vision.”
But when Mr. Ramaswamy pitched to a different audience, he was blunt about Roivant’s main goal.
“This will be the highest return on investment ever undertaken in the pharmaceutical industry,” he boasted in a cover story in Forbes.
The “Roi” in the company name stands for return on investment.
In late 2014, Roivant’s subsidiary, which would be called Axovant, pre-purchased for $5 million — biotech industry pocket change — an Alzheimer’s drug that GlaxoSmithKline had abandoned after four failed clinical trials.
Six months later, before commencing new clinical trials for the drug, Mr. Ramaswamy took Axovant public in a debut that propelled 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 doctors.
Mr. Ramaswamy was a powerful salesman. He spoke of the Alzheimer’s drug, intepirdin, as a potential breakthrough that could help “millions” of people. “The potential opportunity is really huge for delivering value to patients,” he said on CNBC.
Patrick Machado, a former director of Roivant and Axovant, described Mr. Ramaswamy as “brilliant and daring”. Others said Mr. Ramaswamy promised too much.
Thanks to the public offering, Mr. Ramaswamy had a large and suddenly extremely valuable interest in Axovant through its parent company Roivant, which was still privately owned and controlled about 80 percent of Axovant.
With the drug moving into a pivotal clinical trial, he wanted to raise more money to fund his broader ambitions with Roivant.
At the end of 2015, Mr. Ramaswamy sold part of his Roivant shares to an institutional investor, Viking Global Investors, who wanted to get in. The sale was a big payday: On his 2015 tax return, Mr. capital gains.
In an interview, Mr Ramaswamy said he was only paying out to make way for Viking, not to hedge his bets ahead of the clinical trial of intepirdin.
“We were forced to sell,” he said, “and in some ways it’s a shame because the shares would be worth more today if they hadn’t sold.”
In 2017, Mr. Ramaswamy made his pitch to Masayoshi Son, the founder of Japanese conglomerate SoftBank, which manages the world’s largest technology investment fund. His presentation included slides mimicking those Mr. Son is known for, with graphs showing an arrow shooting up and to the right, according to a person familiar with Mr. Ramaswamy’s pitch who was not authorized to speak in public.
In August 2017, SoftBank led a $1.1 billion investment in Roivant. The investment was not about joining Axovant; SoftBank thought intepirdin was unlikely to succeed, the person said. But SoftBank was trying to invest in Mr. Ramaswamy’s broader drug portfolio, according to two experts.
SoftBank declined to comment.
A few weeks later, the clinical trial of the drug against Alzheimer’s failed. The share price plummeted, losing 75 percent of its value in one day. The stock slipped further in the months that followed and never recovered before the company was dissolved this year.
Mr. Ramaswamy declined to disclose how much he lost on paper due to the drug failure.
Thanks to the way he structured his biotechnology empire, he had no direct interest in Axovant. His personal commitment was through Roivant, enabling Mr. Ramaswamy to weather the storm. QVT, the hedge fund where Mr. Ramaswamy once worked, had also invested in Roivant, isolating it from much of the fallout. QVT did not respond to a request for comment.
But some investors lost real money on Axovant. A major 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 had been in the days leading up to the disappointing news about the clinical trials. (The fund declined to comment.)
But for many Axovant shareholders who lost money, many of whom were sophisticated institutional investors, the loss was a missed bet on a high-risk, high-reward stock within a large portfolio of safer bets.
With the failure of intepirdin, Mr. Ramaswamy encountered the harsh realities of biology, said Derek Lowe, a longtime pharmaceutical researcher and industry commentator. “The diseased cells of the patients you’re trying to treat don’t really care how hard you charge,” he said.
“I think it was unconscionable to make people think this was a panacea,” he said. (Mr Lowe bet against Axovant’s stock and made about $10,000 from the drug’s failure, he said.)
Mr Ramaswamy has spent years regretting the failure of his drug against Alzheimer’s disease, a disease that has long plagued researchers. And the criticism that he profited while his investors lost angers him, he said.
“On a personal level, it kind of grates on me,” he said. “Roivant’s business model was to bring these drugs to market, and we could have cashed in a lot, and employees could have cashed in a lot, but that wasn’t the business model.”
But Mr. Ramaswamy finally paid Roivant.
In 2019, Roivant sold its stake in five of its most promising spin-off companies to Sumitomo, a giant Japanese conglomerate.
That turned out to be Mr. Ramaswamy’s biggest payday. His 2020 tax return included nearly $175 million in capital gains.
In recent years, Mr. Ramaswamy has taken a step back at Roivant, stepping down from his positions as CEO in 2021 and Chairman in February. He remains the sixth largest shareholder in the company, with a stake currently valued at more than $500 million. (He has yet to file personal financial disclosures ahead of his presidential run, but he released 20 years’ worth of tax returns and called on his competitors in the Republican race to do the same.)
Mr. Ramaswamy’s pitch that his business model would lead to affordable drug prices has not materialised. An example is the product he says he is most proud of, a single-use implant for children with a rare and devastating immune disease. When Enzyvant, Roivant’s spin-off company then controlled by Sumitomo, received regulatory approval in 2021, it set a sticker price of $2.7 million.
Sumitomo declined to comment.
