On the campaign trail, while explaining why he’s a different kind of presidential candidate, Vivek Ramaswamy calls himself a Harvard-trained “scientist” from the world of life-saving biotechnology.
“I developed several drugs,” Ramaswamy, a conservative businessman and writer, said at a meeting at a construction company this month in Davenport, Iowa. “The one I’m most proud of is a therapy for children, 40 of them a year, born with a genetic condition that, without treatment, die at 3 years of age.”
The reality of Mr. Ramaswamy’s business career is more complex, the story of a financier rather than a scientist and a prospector who went bargain hunting, promoted his vision, attracted investment and then cashed in two large payments, for one total of more than $200 million. — Before his 35th birthday.
Mr. Ramaswamy’s company is best known for a spectacular failure. As a 29-year-old with a bold idea and Ivy League connections, he engineered what was at the time the largest initial public offering in the history of the biotech industry, only to see the Alzheimer’s drug in its center failed two years later and the value tank company
But Mr. Ramaswamy, now 37, made a fortune anyway. He received his first payment from him in 2015 after sparking investor enthusiasm for his growing pharmaceutical empire. He reaped a second five years later when he sold the most promising pieces of his to a Japanese conglomerate.
Since then, the parent company that built Ramaswamy has been involved in the commercialization of five drugs, including treatments for uterine fibroids, prostate cancer and the rare genetic condition he mentioned in the stump in Iowa. The company says the last 10 clinical trials in late stage of your medications all have been successfulan impressive run in a business where drugs often fail.
Mr. Ramaswamy’s resilience was partly the result of the clever way in which he structured his network of biotech companies. But he also highlights his particular ability to generate excitement, hope and risky speculation in an industry that feeds on all three.
“A lot of it had substance. Some of it didn’t. He is kind of a music man,” said Kathleen Sebelius, a Democrat and former health secretary during the Obama administration who advised two of Ramaswamy’s companies.
For his part, Mr Ramaswamy said criticism that he overpromised was nonsense. Although he promoted the potential of the doomed Alzheimer’s drug, he now says he was actually selling investors a business model.
“The business model was to develop these drugs for the long term. That is the punchline, that is the most important point, ”he said.
Ramaswamy’s wealth now supports a long-term run for the Republican nomination that includes a campaign plane, a luxury bus and $10.3 million of his own money and counting. In the campaign trial, he sells what he calls “anti-wake-up” capitalism, criticizing environmental, social and corporate governance programs and dismissing debates about racial privilege.
He is the son of Indian immigrants, and the “privilege,” he said recently in Iowa, “was two parents at home with a focus on education, achievement and real values. That gave me the foundation to later go to places like Harvard and Yale and become a scientist.”
With a biology degree from Harvard, Mr. Ramaswamy isn’t really a scientist; He made a name for himself in the world of hedge funds and his graduate work was a law degree from Yale.
Along the way, he invested in biotech and fell for an idea for developing high-risk prescription drugs: scouring pharmaceutical giants’ patents for drugs that had been abandoned for commercial reasons, not necessarily for lack of promise. Buy the patents of a song and take them to the market.
In 2014, Mr. Ramaswamy founded Roivant Sciences, incorporated in the tax haven of Bermuda and backed by nearly $100 million in investor funds including QVTa hedge fund that employed Mr. Ramaswamy after college.
Using his connections and trust, Mr. Ramaswamy assembled a star-studded bipartisan advisory board. A Harvard friend helped him recruit Democrats, including Ms. Sebelius; Tom Daschle, former Senate Majority Leader; and Donald M. Berwick, former administrator of the Centers for Medicare & Medicaid Services.
Republicans included former Sen. Olympia Snowe of Maine and Mark McClellan, a prominent former health regulator.
Ms Sebelius said she was convinced by Mr Ramaswamy’s promises to bring critical medicines to market affordably.
“It was a business vision of how to lower drug prices,” he said of his presentation. “We share a lot of the mission and vision.”
But making his introduction to a different crowd, Ramaswamy went straight to Roivant’s main target.
“This will be the highest ROI effort ever undertaken in the pharmaceutical industry,” he boasted in a cover story on Forbes.
The “Roi” in the company name stands for return on investment.
In late 2014, Roivant’s subsidiary to be called Axovant bought for $5 million up front (pocket change in the biotech industry) an Alzheimer’s drug that GlaxoSmithKline had given up on after four failed clinical trials.
Six months later, before beginning any new clinical trials for the drug, Mr. Ramaswamy took Axovant public in a debut that brought the company’s market value to nearly $3 billion.
At the time, the company reported that it had only eight employees, including Mr. Ramaswamy’s mother and brother, who are both doctors.
Mr. Ramaswamy was a powerful salesman. He spoke of the Alzheimer’s drug, interpirdine, as a potential breakthrough that “could help millions” of people. “The potential opportunity is really tremendous to bring value to patients,” he said on CNBC.
Patrick Machado, former director of Roivant and Axovant, described Ramaswamy as “brilliant and bold”. Others said that Ramaswamy promised too much.
Thanks to the public share offering, Mr. Ramaswamy had a large and suddenly extraordinarily valuable stake in Axovant through its parent company Roivant, which was still private and controlled around 80 per cent of Axovant.
With the drug on its way to a crucial clinical trial, he set out to raise more money to finance his broader ambitions with Roivant.
In late 2015, Mr. Ramaswamy sold a portion of his Roivant shares to an institutional investor, Viking Global Investors, who wanted to participate. The sale was a major payday: In his 2015 tax return, Mr. Ramaswamy claimed more than $37 million in capital gains.
In an interview, Mr. Ramaswamy said he was paid only to make room for Viking, not to hedge his bets ahead of the interpirdine clinical trial.
“We were forced to sell,” he said, “and in some ways it’s a regret because the stock would be more valuable today if it hadn’t been sold.”
In 2017, Mr. Ramaswamy made his pitch to Masayoshi Son, the founder of the Japanese conglomerate SoftBank which runs the world’s largest technology investment fund. His presentation included slides mimicking those Son is known for, with graphics showing an arrow shooting up and to the right, according to a person familiar with Ramaswamy’s proposal who was not authorized to speak publicly.
In August 2017, SoftBank led a $1.1 billion investment in Roivant. The investment was not about getting into Axovant; SoftBank thought intertepirdine was unlikely to be successful, the person said. But SoftBank was looking to invest in Ramaswamy’s broader drug portfolio, according to two people with knowledge of the matter.
SoftBank declined to comment.
A few weeks later, the clinical trial of the Alzheimer’s drug failed. The stock price plummeted, losing 75 percent of its value in a single day. Shares fell further in the months that followed and never recovered before the company dissolved earlier this year.
Mr. Ramaswamy declined to disclose how much he lost on paper due to the drug’s failure.
Thanks to the way he structured his biotech empire, he had no direct stake in Axovant. His personal involvement was through Roivant, allowing Ramaswamy to weather the storm. QVT, the hedge fund where Ramaswamy once worked, had also invested in Roivant, insulating him from much of the fallout. QVT did not respond to a request for comment.
But some investors lost real money with Axovant. 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 news of the clinical trial. (The fund declined to comment.)
But for many Axovant shareholders who lost money, many of whom were sophisticated institutional investors, the loss was a failed bet on high-risk, high-reward stocks within a large portfolio of safer bets.
With the failure of interpirdine, Mr. Ramaswamy was faced with the harsh reality 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 strong you are,” he said.
“I think that inciting people to think that this was a wonder drug was inconceivable,” he said. (Mr. Lowe bet against Axovant stock and won about $10,000 on the drug’s failure, he said.)
Mr. Ramaswamy has for years expressed regret over the failure of his drug for Alzheimer’s, a disease that has long plagued researchers. And the criticism that he profited from it while his investors lost angers him, he said.
“On a personal level, it irritates me a little bit,” he said. “Roivant’s business model was to see these drugs on the market, and we could have charged a lot, and the employees could have charged a lot, but that was not the business model.”
But Mr. Ramaswamy eventually took money from Roivant.
In 2019, Roivant sold its stake in five of its most promising spinoff 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 retired from Roivant, stepping down as CEO in 2021 and Chairman in February. He remains the company’s sixth largest shareholder, with a stake currently valued at more than $500 million. (He still has to file personal financial statements for his presidential bid, but he has released 20 years of tax returns, which were provided to The Times by Jeffrey A. Sonnenfeld and Steven Tian, two Yale Business School academics who have studied Mr. Ramaswamy’s business record. The candidate has also asked his competitors in the Republican race to do the same.)
Mr. Ramaswamy’s argument that his business model would lead to affordable drug prices has not been met. One example is the product he has said he is most proud of, a one-time implant for children with a rare and devastating immune disorder. When Enzyvant, the Roivant spinoff then controlled by Sumitomo, won regulatory approval in 2021, he set a sticker price of $2.7 million.
Sumitomo declined to comment.