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A year later, Reich’s enterprise is based in Miami, has funding for its final clinical trial and is a key part of Frost’s new publicly traded Opko Health. “I can’t really think of a better outcome for a small company,” says Reich, now Opko’s executive vice president. “What Dr. Frost enabled us to do was the best of all worlds.”
Frost is so taken with Opko that he officially came out of retirement to serve as CEO. Investors are betting that Frost fortunes, like good things, come in threes. “It’s early in the game,” Frost says, deflecting a question about his investor fan following. “My approach is the classical one where the harder I work the luckier I get.”
Frost, 70, began his classical career with a bachelor’s degree in French literature from the University of Pennsylvania. He earned his M.D. from the Albert Einstein College of Medicine in New York before coming to Miami Beach, where he spent nearly 20 years as head of Mount Sinai Medical Center’s dermatology department. In 1972, he began to blossom as one of Florida’s most famed dealmakers. He took over struggling Key Pharmaceuticals, revived it and sold it 14 years later for $800 million to Schering-Plough. He founded generic drug maker Ivax the following year, 1987, and sold it last year for $9 billion to Israel-based Teva Pharmaceutical Industries in what was one of the largest deals, as Florida Trend reported at the time, in Florida history. Forbes places him No. 717 on its list of the world’s richest people with $1.4 billion.
Frost became Teva’s vice chairman and seemed to throttle back. He served on corporate boards as well as the boards of the University of Miami and the Smithsonian Institution. He and his wife, Patricia, are philanthropists. The music school at UM — funded with the $33 million they donated — bears the Frost name.
Frost was looking forward to making passive investments in business ventures that appealed to him. An example: Dreams, a Plantation sports memorabilia and licensed-merchandise company. Frost is a longtime friend of Dr. Richard
Greene, a dermatologist whose son-in-law is Dreams’ CEO, Ross Tannenbaum, and whose son is Dreams’ senior vice president, David Greene. Frost, not a sports collector, took a 14% stake in the company. He counseled Dreams executives to think bigger in an industry with no true national leader. “He’s all about being the 800-pound gorilla,” David Greene says.
Dreams executives long had wanted to move up from the lowly over-the-counter market where Dreams traded to a listing on an exchange. Frost happens to be co-vice chairman of the American Stock Exchange. “In one of our early strategy meetings,” Greene says, “Dr. Frost gets the chairman of the American Stock Exchange on the phone and puts me on the phone with him. It was a pretty fantastic day. It was almost surreal for us.”
Frost took a more active interest in Ladenburg Thalmann, becoming chairman of the old-line but struggling New York investment house. He relocated it to Miami to the former Ivax headquarters building on Biscayne Boulevard that Frost bought from Teva for $18 million.
Ladenburg has developed a specialty in a favorite Frost vehicle for taking companies public — blank-check companies. Rather than go public through an initial public offering of shares, some companies go public by merging with pre-existing public companies that have no line of business. Such empty companies are old firms that either have sold or ceased their operating divisions and now are just publicly traded shells. Or, in the case of blank-check companies, they were founded with no line of business other than to find a private company to merge with and take public.
| The Inner Circle In pursuing his varied business interests, Frost relies on a small circle of former Ivax executives who invest with him and sometimes serve on corporate boards. |
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Frost used a public shell with $16 million in cash and no business to take the eye therapy company public. Reich had been a graduate student in molecular biology at the University of Pennsylvania’s ophthalmology department in 2002 when he gave up the degree track to co-found privately held Acuity Pharmaceuticals. Acuity is developing gene-silencing drug therapies for eye diseases, most notably wet age-related macular degeneration. Acuity’s drug, bevasiranib, is the first therapy based on a Nobel Prize-winning technique called RNA interference technology to get to phase three clinical trials. Acuity was mulling its options on raising money to fund phase three when Frost called.
The deal Frost cooked up combined Acuity with Froptix, a private Gainesville company using University of Florida-
licensed technology to develop treatments for other eye illnesses, including dry age-related macular degeneration. The two were merged into a public shell and renamed Opko, which trades on the American Stock Exchange.
Opko, with the shell’s cash and a $12-million line of credit from Frost, now has the money for phase three trials, which began in July, and also has Frost’s experience and connections. For instance, Frost sits on the board of La Jolla, Calif.-based Scripps Research Institute and recruited Scripps president and researcher Dr. Richard Lerner as an Opko board member.
| Macular Degeneration
Macular degeneration is caused when part of the retina deteriorates. Early signs of vision loss associated with macular degeneration can include seeing shadowy areas in the central field of vision or experiencing unusually fuzzy or distorted vision. The disease is progressive, with larger areas of the retina affected. As the light-sensitive cells continue to deteriorate, peripheral vision remains, but the ability to clearly see straight ahead is lost.
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Dermatology and ophthalmology both feature a relatively small number of practitioners, which means Opko won’t need a giant sales and marketing force to reach them. Both are fields ripe for a new era in their science and approaches to care, Frost says.
Wet age-related macular degeneration, the leading cause of vision loss in the developed world, will afflict 11 million people by 2013. Dry age-related macular degeneration afflicts more than 35 million people worldwide.
In therapeutics and diagnostics, “we feel we’re innovators,” Frost says.
So much for downshifting during his golden years. “I was envisioning relaxing a little bit more,” Frost says.