Ramaswamy - Axovant trade explained?
I came across an interesting WSJ article on Vivek Ramaswamy (https://www.nytimes.com/2023/06/27/us/politics/vivek-ramaswamy-wealth.h…).
I was wondering if anyone could help explain how it was possible for Axovant to buy a drug for $5 million and take it public 6 months later for $3 billion? Does this sort of opportunity still exist in the biotech world?
Pharma companies often have a lot of pre-FDA approval drug candidates in their pipelines making their way through the R&D process, and sometimes they are constrained by capital/manpower from investing in all of them simultaneously.
Rather than let some of the perceived less-promising assets languish, they can sell them off to interested parties as lottery tickets that require commitment of time/money (10-100s of $mm) to generate clinical results.
These opportunities will always exist. But you need to be able to spot them. In fact, Roivant (after Vivek left, so without his involvement) bought a TL1A drug Pfizer cast off for $45mm in Dec 2022 and sold to Roche for $7.1bn less than a year later, in Oct 2023
Pretty nice return
https://www.biospace.com/roche-pays-7-1b-to-roivant-for-us-rights-to-te…
This was a great answer - thanks for taking the time to respond! I don't know anything about the industry but I find it super fascinating.
Are there specialized firms that tend to buy these lottery tickets? How could they have a better view of how promising an asset is compared to the pharma company themselves?
If you have any recommendations on learning materials, I'd really appreciate it!
Near impossible to learn how to evaluate the prospects of a preclinical drug asset without PhD level basic science training, if that’s what you’re asking…
There’s no shortcuts. You do the science work if you want to be in the business of buying cheap assets to later develop and flip. No there’s no specialist who only does this bc it’s incredibly hard and hit rate is pretty low. There are serial entrepreneurs who go dumpster diving and license something cheap, then launch a company to develop it and hopefully raise funds to do so. Very tough gamr
Look at MLTX. Similar thing
Also televant buying a TL1A for $25m or something like that then flipping it to roche a year later for $10B
Hmm, let’s see:
Yes, a great trade, if you can get it!
Scamming is a time honored tradition in Indian culture.
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