How Vivek Ramaswamy Made the Fortune Fueling His Presidential Run

On the campaign trail, as he lays out 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 a number of medicines,” Mr. Ramaswamy, an entrepreneur and conservative writer, told a gathering at a construction firm this month in Davenport, Iowa. “The one I’m most proud of is a therapy for kids, 40 of them a year, born with a genetic condition who, without treatment, die by 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 prospector who went bargain hunting, hyped his vision, drew investment and then cashed out in two huge payouts — totaling more than $200 million — before his 35th birthday.

Mr. Ramaswamy’s enterprise 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 biotechnology industry’s history — 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 fortune anyway. He took his first payout in 2015 after stirring investor excitement about his growing pharmaceutical empire. He reaped a second five years later when he sold off its most promising pieces to a Japanese conglomerate.

The core company Mr. Ramaswamy built has since had a hand in bringing five drugs to market, including treatments for uterine fibroids, prostate cancer and the rare genetic condition he mentioned on the stump in Iowa. The company says the last 10 late-stage clinical trials of its drugs have all succeeded, an impressive streak in a business where drugs commonly fail.

Mr. Ramaswamy’s resilience was in part a result of the savvy way he structured his web of biotechnology companies. But it also highlights his particular skills in generating hype, hope and risky speculation in an industry that feeds on all three.

“A lot of it had substance. Some of it did not. He’s a sort 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.

For his part, Mr. Ramaswamy said that criticism that he overpromised was missing the point. Although he promoted the potential of the doomed Alzheimer’s drug, he now says he was actually selling investors on a business model.

“The business model was to develop these medicines for the long run. That’s the punchline, that’s the most important point,” he said.

Mr. Ramaswamy’s wealth is now underwriting a long-shot run for the Republican nomination that includes a campaign jet, plush bus and $10.3 million of his own money and counting. On the campaign trial, he sells what he calls “anti-woke” capitalism, skewering environmental, social and corporate governance programs and dismissing debates about racial privilege.

He is the child of Indian immigrants, and “privilege,” he said recently in Iowa, “was two parents in the house with a focus on education, achievement and actual values. That gave me the foundation to then go on to places like Harvard and Yale and become a scientist.”

With an undergraduate degree in biology from Harvard, Mr. Ramaswamy isn’t really a scientist; he made his name in the world of hedge funds and his graduate work was a law degree from Yale.

Along the way, he invested in biotech and became enamored with an idea for developing high-risk prescription drugs: scour the patents held by pharmaceutical giants, searching for drugs that had been abandoned for business reasons, not necessarily for lack of promise. Buy the patents for a song, and bring them to market.

In 2014, Mr. Ramaswamy founded 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 employed Mr. Ramaswamy after college.

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

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

Ms. Sebelius said she was swayed by Mr. Ramaswamy’s promises of bringing critical drugs to market affordably.

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

But in making his pitch to a different crowd, Mr. Ramaswamy was blunt about Roivant’s chief aim.

“This will be the highest return on investment endeavor ever taken up in the pharmaceutical industry,” he boasted in a cover story in Forbes.

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

In late 2014, the Roivant subsidiary that would be called Axovant bought for $5 million upfront — 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 starting any new clinical trials for the drug, Mr. Ramaswamy took Axovant public in a debut that sent the company’s market value to nearly $3 billion.

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

Mr. Ramaswamy was a powerful salesman. He talked up the Alzheimer’s drug, intepirdine, as a potential breakthrough that “could help millions” of people. “The potential opportunity is really tremendous for delivering value to patients,” he said on CNBC.

Patrick Machado, a former director of Roivant and Axovant, described Mr. Ramaswamy as “brilliant and audacious.” Others said Mr. Ramaswamy was overpromising.

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

With the drug headed into a crucial clinical trial, he set out to raise more money to finance his broader ambitions with Roivant.

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

In an interview, Mr. Ramaswamy said he cashed out only to make room for Viking, not to hedge his bets ahead of intepirdine’s clinical trial.

“We were forced to sell,” he said, “and in some ways it’s a regret because the shares would be more valuable today if they hadn’t been sold.”

In 2017, Mr. Ramaswamy made his pitch to Masayoshi Son, the founder of the Japanese conglomerate SoftBank who runs the world’s largest tech investment fund. His presentation included slides mimicking ones Mr. Son is known for, with charts 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 publicly.

In August 2017, SoftBank led an investment of $1.1 billion in Roivant. The investment wasn’t about getting in on Axovant; SoftBank thought intepirdine was unlikely to succeed, the person said. But SoftBank was seeking to invest in Mr. Ramaswamy’s wider drug portfolio, according to two people with knowledge of the matter.

SoftBank declined to comment.

A few weeks later, the Alzheimer’s drug’s clinical trial failed. The stock price plunged, losing 75 percent of its value in a single day. The stock slid 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 because of the drug’s failure.

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

But some investors lost real money on Axovant. One 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 in the days leading up to the disappointing clinical trial news. (The fund declined to comment.)

But for many Axovant shareholders who lost money, many of whom were sophisticated institutional investors, the loss was one missed gamble on a high-risk, high-reward stock within a large portfolio of safer bets.

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

“I think whipping people up into thinking this was a wonder drug was unconscionable,” he said. (Mr. Lowe bet against Axovant’s stock and made about $10,000 from the drug’s failure, he said.)

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

“On a personal level, it grates on me a little bit,” he said. “The business model of Roivant was to see these drugs through the market, and we could have cashed out big, and employees could have cashed up big, but that was not the business model.”

But Mr. Ramaswamy did eventually cash out on Roivant.

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

That proved to be Mr. Ramaswamy’s biggest payday. His 2020 tax return included nearly $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 a stake currently valued at more than $500 million. (He has yet to file personal financial disclosures for his presidential run, 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 called for 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 come to pass. One example is the product for which he has said he is most proud, a one-time implant for children with a rare and devastating immune ailment. When Enzyvant, the Roivant spinoff company by then controlled by Sumitomo, won regulatory approval in 2021, it set a sticker price of $2.7 million.

Sumitomo declined to comment.