By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
Sitting on the bottom step of a narrow, dimly-lit, back-hallway staircase at the Handlery Union Square (a 1920s-era hotel in San Francisco), I find myself ruminating on two sayings: “Invest in what you know;” and, “If it sounds too good to be true, it probably is.” It is Wednesday, January 11, during the 35th Annual J.P. Morgan Healthcare Conference (i.e., JPM), and I am waiting to enter a room in this hallway where I’ll meet with Roivant Sciences’ founder and CEO, Vivek Ramaswamy.
Ramaswamy has been portrayed by some as the next wizard of Wall Street by “conjuring drug companies from thin air.” Perhaps this is the reason behind my recent contemplation — a poke from my subconscious to uncover if what Ramaswamy is trying to do (i.e., liberate undeveloped drug candidates from the R&D shelves of other companies) is in fact too good to be true. I am soon greeted by Pavan Cheruvu (see sidebar “What Type Of Top Talent Do You Surround Yourself With?”), a member of Ramaswamy’s team, who ushers me into the room where I take a seat at a round table. When Ramaswamy arrives, he looks weary, no doubt from the seemingly endless meetings, receptions, and peripheral events surrounding JPM. Still, he manages that trademark smile that has graced the pages of Forbes, and as I explain that we are not interested in writing a similar story — namely one perpetuating his wunderkind stereotype — that smile turns to a look of intrigue. I know that look because it’s the same one I had when I first heard about Ramaswamy. I was curious. Yes, I wanted to know why he had chosen this path, but more importantly, I wanted to know how he had done it. After all, it’s not every day that a 31-year-old tries to change the rules of how a traditional pharma company should operate.
THE IMPETUS BEHIND THE MISSION OF LIBERATING THE LANGUISHING
First, let’s do a quick review of why Ramaswamy has garnered so much attention. For years as an investor, he had his eye on the biopharmaceutical industry. In 2008, as an analyst for QVT Financial, Ramaswamy began buying shares of Pharmasset at about $5 a share. By the time Gilead decided to acquire the company in 2011 for about $137 a share he was one of Pharmasset’s top shareholders. He repeated this “buy low, sell high” exercise with Inhibitex in 2012 netting a 25-fold increase over QVT’s initial investment when the company was acquired by Bristol-Myers Squibb. All this success led to his being a partner at QVT at the age of 28, but he aspired to do more. “As an investor and industry observer, you can offer commentary and feedback,” he shares. “But beyond allocating capital, there isn’t much you can do to impact the system.” In his investor role he was frustrated to see the number of promising drugs languishing in company R&D departments. “For reasons related more to corporate strategy than science, many potential drugs seemed to have gotten stuck in an industrywide logjam,” Ramaswamy analogizes. While he understands the importance of biopharma companies wanting to focus on key therapeutic categories to stay competitive, this practice doesn’t necessarily help the patient. So, he decided to try to fix the problem from the inside-out by starting his own company, Roivant. “Every time there’s a dead-end investment into a promising drug, that cost gets spread out over every drug that ultimately makes it,” he says. “So beyond rescuing drugs, the hope is that we can reduce the average time and cost of the drug-development process.”
One of his first rescue projects involved an Alzheimer’s disease drug at a company no longer focusing its resources on neurosciences. “It’s a curious fact that the top two drugs for the treatment of Alzheimer’s disease, Aricept (donepezil hydrochloride) and Namenda (memantine HCI) had both been sitting on shelves and required revival before eventually gaining U.S. approval,” he explains. Compelling science resulted in Axovant Sciences (a Roivant company), acquiring a drug candidate, Intepirdine, from GSK for $5 million upfront. (But not every acquisition goes as planned — see sidebar — “How A Lost Opportunity Led To Roivant’s Core Business.”)
Like most stories chronicling Ramaswamy’s success, that one ended with the acquisition of a previously unused asset that may be revitalized. But there’s more to this story and the others that make up the mythos of Roivant and Ramaswamy. For example, what’s often not mentioned about the acquisition of that particular drug is that Ramaswamy brought on board Larry Friedhoff, M.D., Ph.D., to spearhead its development. Friedhoff, who was responsible for developing Aricept, is now Axovant’s chief development officer. While many outsiders focus on invalidating how Ramaswamy (a non-Ph.D. scientist) could possibly be successful in picking which idle drug candidates could be the next breakthrough, perhaps what they should pay attention to is how he manages to surround himself with staff that — as Ramaswamy readily admits — are truly the backbone of the company’s success.
LOOK, THIS IS MY FIRST TIME IN THIS ROLE. INITIALLY, WHEN HEARING OTHER SENIOR LEADERS REPEATEDLY TALK ABOUT THE IMPORTANCE OF CULTURE, I WAS SKEPTICAL.
Founder & CEO, Roivant Sciences
WHAT’S THE BEST PREDICTOR OF FUTURE PERFORMANCE?
“We prefer doers over talkers,” says Ramaswamy while pondering how the Roivant family of companies has grown to employ 170 people. “But because interviews are all about talking, the process of interviewing makes it difficult to ferret out the doers.” One thing Roivant does during the interview process is to put candidates through some type of exercise that replicates some of the duties of the job they are seeking. “We learn a tremendous amount from how people respond to this process,” he relates. “Some people get very motivated and do an outstanding job.” In fact, he says one recent candidate stated that even if she didn’t get the job she’d like Roivant to continue giving her assignments. “Her current job was so unmotivating, and these assignments were so much more fulfilling and in line with what she’d rather be doing, that she was willing to do them for us for free,” Ramaswamy laughs. “Predictably, we ended up hiring her.” But not all approach the process with such energy and vigor. “Others go through the exercise but don’t do as well as their talk might have suggested,” he shares. “Those are the kind of people who may very well get ahead through political maneuvering, managing their manager, or highlighting their own accomplishments, but when push comes to shove, might not have the chops to actually get something done.” (see sidebar — What Type Of Top Talent Do You Surround Yourself With?) Roivant also employs some newer technologies to help it find its “exceptional” candidates, including an app designed to determine which qualities exhibited in the interview process correlate with subsequent on-the-job performance.
Ramaswamy believes that every senior-level manager has to be capable of actually doing the primary work of their direct reports. “This supports the idea of oversight being inextricably linked with the actual action itself,” he says. This is why Roivant places such a premium on seeing not only how someone does during the assigned task component of the interview process, but also how they respond to just being given an assignment.
AN UNUSUAL APPROACH TO EMPLOYEE RETENTION
Most of you are probably familiar with the concept of golden handcuffs, a collection of financial incentives designed to encourage employee retention (e.g., stock options that can be exercised three years after being granted to those still employed at a company). And while such tools are useful, Ramaswamy is employing more of a golden parachute approach to employee retention. “It’s modeled on a similar policy at Zappos and is more aligned with the culture we are aspiring to create.” The goal of the program is to make sure people hired by Roivant are truly prepared and committed to taking the leap. Here’s how it works.
During the first two months of an employee’s tenure, each new hire goes through orientation along with a substantial onboarding program. “At some point in those two months, I meet with every new hire, either individually or as a group,” Ramaswamy explains. “At the end of the two months, we give everyone a form that gives them the option to either opt in — meaning they want to continue working here, and we ask them to state their reasons why — or opt out.” The latter option includes a very attractive financial package and is intended to determine the employee’s commitment to working at Roivant. Ramaswamy feels that many people, after decades of working at large multinational firms, continue going to work out of a passive habit, rather than remembering the active choice they once made. “Opting in [i.e. turning down the large opt-out financial package] symbolizes that each day an employee walks in the front door, they want to be here.” I think this process helps people affirm that,” he says.
Ramaswamy doesn’t view the decision to opt out as being a bad one. Rather, by allowing some self-selection at Roivant (and its affiliated organizations), the company is more likely to have an appropriate fit between the people and the pace/intensity of the work being done. “We encourage people who don’t want to be here to leave,” he states candidly. “But if someone’s just not meeting our standards, we believe in showing them gracefulness and letting them know we appreciate the risk they took by joining us.” In such circumstances, the company allows these employees to participate in something closely resembling the opt-out program and assists them in finding another job better suited to their manner of working.
The opt-out program plays a key role in the corporate culture Ramaswamy is striving to create. “Look, this is my first time in this role,” he admits. “Initially, when hearing other senior leaders repeatedly talk about the importance of culture, I was skeptical.” But his preliminary perception of its being “corporate mumbo jumbo that didn’t relate to getting any actual work done” soon changed. “We were scaling Roivant up from startup into a professionally managed firm,” he shares. “During the transition we encountered microcosms of unproductive behavior and work not meeting our standards, yet we were only at a size of perhaps 10 very capable individuals.” Ramaswamy says the concept he had heard preached regarding the importance of proactively managing corporate culture must have nestled somewhere in his subconscious. For when he saw firsthand what was happening, it really clicked. “I quickly realized that getting the company on the path I wanted it to go required proactively setting cultural norms,” he states. “I feel like I’m speaking to you as though I’m some practiced and accomplished corporate culture guru — far from it. I consider myself very much a student and experimental scientist with respect to many of the initiatives we have implemented. All I can tell you is that we have thought a lot about the things we are trying, with the awareness that there is substantial room for improvement.”
While it remains to be seen if what Ramaswamy is doing via his collection of corporate “vants” (Axovant, Myovant, Enzyvant, Dermavant, etc.) is “too good to be true,” what can’t be denied is his willingness to invest in that which he knows: people.
HOW A LOST OPPORTUNITY LED TO ROIVANT’S CORE BUSINESS
For Roivant to be successful, biopharmaceutical companies not only must agree that the company is trying to help solve one of its biggest challenges (i.e., R&D prioritization), but be willing to open its R&D cupboards to Roivant’s scientific team for review. And while Roivant’s founder and CEO, Vivek Ramaswamy, admits that after three years the process has gotten a bit easier, it wasn’t always that way.
“In 2014, a large-cap biopharmaceutical company had a promising compound for a very specific biological target,” he reflects. “We studied what we could from the publicly available information and thought it had the potential to deliver a major medical advance in an area of unmet need.” According to Ramaswamy, Roivant tried to get in touch with senior R&D decision makers for the project but were unsuccessful. “We were able to establish contact with some lower-level folks in the organization who were quite receptive, as they were under the impression the compound was not moving forward,” he states. As a result, Roivant spent several months putting together an extensive development plan for the compound. “We approached these junior-level people with a potential deal to acquire the asset, something we felt to be a real win-win,” he says. The 50-page document was presented to the other company’s research committee. “It was decided that this was exactly the plan they should be adopting in taking the drug forward themselves,” he says in exasperation. “Not once, neither before, nor after, did we have any contact with the senior-level team members responsible for making that decision.” Ramaswamy admits that this was quite demotivating at first. “At the time we were a small organization — less than fifteen people — working out of a shared, windowless office that didn’t even have air conditioning,” he recalls. “We had put a lot of eggs in this basket, not financial per se, but intellectual resources, and time, which was our scarcest commodity.” While the Roivant team was disappointed about losing the opportunity to add the compound to its pipeline, of greater import was how the experience made them question their business model. “Was this going to be an obstacle that would happen time and again when approaching the goal line?” they wondered. “But we took a step back and looked at our organizational mission — to participate in the process of delivering drugs to market that otherwise would not have seen the light of day,” says Ramaswamy. “That had occurred, even if we were not the company to move it forward.”
So rather than dwell on the missed opportunity, Ramaswamy used it as an opportunity to rethink the company’s approach. “We received feedback that it would have been much more productive to have had an R&D exchange between teams rather than trying to make it a transactional relationship,” he explains. “Furthermore, though we were a well-capitalized company, there were questions as to how a 15-person company could develop the drug into an approved medicine.” As a result, Roivant not only redoubled its efforts to find the next opportunity but also set about quickly building an internal research infrastructure. “We learned the importance of developing intellectually connected R&D relationships at very senior levels of leadership versus approaching opportunities strictly from a transactional basis. And we learned the importance of dealing directly with decision makers.” All of these lessons helped sow the seeds for what eventually became Roivant’s core business model — being a solutions provider to these companies, rather than a “transactional counterparty.”
WHAT TYPE OF TOP TALENT DO YOU SURROUND YOURSELF WITH?
If you took the time to review the leadership teams and corporate boards of various Roivant companies, you would see a rather impressive cadre. For example, Laura Williams, M.D., head of clinical development at Myovant Sciences, spent her previous 18 years working in R&D at Abbott/AbbVie. Mark Altmeyer, president and chief commercial officer at Axovant Sciences, previously served as president and CEO of Otsuka America Pharmaceuticals. Other executives and board members hail from J&J, Merck, Pfizer, and Roche (to name a few). But what about those employees whose bios can’t be found prominently listed on Roivant corporate websites? After all, most leaders attribute their success to being surrounded by “great teams” or “top talent.” Let’s look at some of the other team members Vivek Ramaswamy (Roivant founder and CEO) has recruited to surround himself with.
Pavan Cheruvu (mentioned in the main article) earned his medical degree from Harvard Medical School in 2009. During medical school, he took a year’s leave to conduct preclinical studies of a diagnostic catheter at Infraredx (a startup cardiovascular imaging company). He also has a Bachelor of Science in biomedical engineering, electrical engineering, and chemistry from Duke University. He did a summer internship at Guidant Corp. designing cardiac device technology. He then completed a Master of Science as a Rhodes Scholar at the University of Oxford. Cheruvu joined Roivant after emailing Ramaswamy telling him he needed a chief of staff and that he would like to fill the role. Ramaswamy agreed.
Roivant’s most recent c-suite hire is Dan Rothman, the company’s CIO. He previously worked for Goldman Sachs as the head of digital structuring (i.e., responsible for the strategic development of internal and external technology platforms). Prior to this, he worked at Lehman Brothers, Banque Nationale de Paris, Kidder Peabody, and Xilinx. Rothman completed his Bachelor of Science in electrical engineering at MIT in just three years, before going on to complete a Master of Science in electrical engineering and computer science, also from MIT. He is responsible for ensuring that Roivant remains innovative in its use of technology across the entirety of the company.
Karen Segal, Ph.D., is a VP of clinical research at Roivant. With 19 years of leadership experience in clinical development and medical affairs, Segal most recently worked at Mesoblast where she was the therapeutic head and medical lead for a cell therapy product for metabolic and inflammatory disease. Her previous work experience includes stints at Hoffmann-La Roche, Sanofi-Aventis, Academic Medical Development Corporation, Regeneron, and J&J. Segal completed a Bachelor of Arts in English literature at Wesleyan University before going on to complete a Master of Arts, a Master of Education, a Ph.D. in Clinical Physiology, as well as a postdoctoral fellowship, all at Columbia University. Segal is currently working extensively on Roivant’s rare disease work at its wholly-owned subsidiary, Enzyvant.
Finally, Melissa Rhodes is working as the VP of nonclinical research at Roivant. Rhodes joined the team in 2015 after working for nine years at GSK, where she held several positions in safety assessment. Rhodes is responsible for overseeing pharmacology, DMPK (drug metabolism and pharmacokinetics), bioanalytical sciences, and toxicology for multiple programs. In her two years at Roivant, she has managed over a hundred nonclinical trials. Rhodes completed a Bachelor of Science in Zoology at North Carolina State University before earning a Ph.D. in Pharmacology and Toxicology at Duke University. She is based in Roivant’s Durham, NC office, located within the historic downtown American Tobacco Campus.