V ivek Ramaswamy, the hedge fund manager became a biotech entrepreneur, was so confident that he could make money from pharmaceutical drugs, he called his new venture Roivant Sciences – "Roi" which was short on return on investment.  It turns out that Ramaswamy meant his return. Outside investors in Ramaswamy's listed "Won" spinoffs are still waiting for their part.
In a broad alliance announced Friday, Roivant sells its stake in five “Won” biopharma companies to Japanese pharmaceutical Sumitomo Dainippon for $ 3 billion. The agreement also provides Sumitomo with an option to purchase six additional Roivant spinout companies, access to Roivant's technology platforms and a 1
The Sumitomo deal is very good for Ramaswamy – $ 3 billion is a nice return for what constitutes a package of various assets he picked up on cheap.
But two of Vants included in the Sumitomo agreement – Myovant Sciences (MYOV) and Urovant Sciences (UROV) – are listed. Ramaswamy gets his money first, leaving other investors holding the proverbial purse for now.
Myovant shares have lost 43% of their value since they became public in 2016. Unrovant is down 29% from IPO pricing.
How do Myovant and Unrovant shareholders feel on Friday morning? A popular meme helps explain:
Of course…. pic.twitter.com/tSsudN3yEw
– Adam Feuerstein (@adamfeuerstein) September 6, 2019
The terms of the Roivant-Sumitomo alliance announced Friday are still preliminary and may change itself when that transaction concludes later this year. Finally, changes to the agreement may also benefit minority shareholders by letting Sumitomo buy its shares. Sumitomo could also get Myovant and Urovant directly.
Let's hope so. "Roi" in Roivant should not just concern Ramaswamy.