Market Overview

Biographical Profiles in Investing: Dr. Phillip Frost


Dr. Phillip Frost is a pharmaceutical entrepreneur and current CEO at Opko Health (NYSE: OPK). The self-made billionaire is known for his investments in ChromaDex Corp (OTC: CDXC), Teva Pharmaceutical Industries (NASDAQ: TEVA), and Ivax Corporation, which he sold to Teva. Dr. Frost serves as the Chairman of the Board for Miami-based Ladenburg Thalmann Financial Services (NYSE: LTS) and is an investor in multiple smaller operations, such as Pershing Gold (OTC: PGLC). In 2010, Forbes ranked Dr. Frost #437 on the list of the world's richest people, with a net worth of approximately $2.2 billion.

Frost's Estate
Regarded as an aggressive pharmaceutical investor, Dr. Frost is a former dermatologist and professor of dermatology with a long history of building pharmaceutical businesses. In 1972, Dr. Frost and then-attorney Michael Jaharis purchased a struggling company known as Key Pharmaceuticals that was in dire need of cash. Dr. Frost and Jaharis turned Key Pharmaceuticals around and the company was later acquired by Schering-Plough Corporation in 1986 for $826 million. According to Forbes, Dr. Frost then founded Miami-based pharmaceutical company Ivax in order "to develop generic pharmaceuticals and veterinary products." Dr. Frost served as Ivax's CEO and as a Chairman on its Board of Directors. In 2005, Frost sold Ivax to Israel-based Teva Pharmaceuticals for $7.6 billion.

According to Forbes' 2010 listing, Frost "owns more than $850 million in Teva stock" while serving as Vice chair of the company. The remainder of Frost's fortune is "held in bonds, cash, [and a] slew of medical startups." Frank R. Nero, CEO of the Beacon Council, commented on Frost's estate, "There is no question why he is successful. He has very good business acumen, but he is also a visionary." Due to his large amount of wealth and aggressive business style, however, Frost also has his critics in the financial community.

Aside from Frost's record as a investor in medical firms, he is also known for his philanthropic efforts. Harry B. Smith, a close friend of Frost and attorney for the law firm Ruden McCloskey, has said, "You wouldn't know he was [a] man of such wealth. He isn't grandiose." Smith added elsewhere, "He started out as a local dermatologist, took over a failing company."

Frost and his wife Patricia are known for being philanthropic supporters of the arts, with donations to institutions such as Florida International University and Scripps Research Institute. The Patricia & Phillip Frost Art Museum is part of the Florida International University, and in late February, the Patricia and Phillip Frost Museum of Science broke ground in downtown Miami's Museum Park.

Cramer's Thoughts
In October 2011, Dr. Frost spoke with Jim Cramer, the host of CNBC's Mad Money, regarding Opko Health. According to CNBC's Drew Sandholm, "When asked about Opko Health on September 30, Cramer said that the $1.3 billion drug and diagnostics company made sense as a trade, but not as an investment." That being the case, later that month, Cramer noted that "Frost has a fantastic track record. He has decades of experience in the business... In short, here's a guy who's made people an incredible amount of money."

Opko Health
In response to Cramer's prior sentiments, Frost discussed that Opko Health is in the process of expanding research and development with respect to the diagnosis and detection of diseases. "That's where Claros came in." Frost showed a device the size of a credit card that could be used "in every doctor's office, at every nurse's station, in every nursing home" for the sake of getting diagnostic medical information in an efficient manner.

Frost also mentioned a partnership with Bristol Myers Squibb Co. (NYSE: BMY) for the development of tests for Alzheimer's disease. According to Frost, the significance of being able to detect Alzheimer's disease early is to aid in the effective treatment of the disease in order to repair brain tissue.

In terms of Opko's efforts in treating asthma, Dr. Frost discussed a "new molecule" that works "by mouth or when inhaled" that appears to be "potent" and effective for treating asthma, chronic obstructive pulmonary disease, and cystic fibrosis. Frost: "We're very excited about that, and we're going to resume clinical trials on this in the near future." In light of Frost's discussion, though noting that Opko is speculative, Cramer said that "there's a lot to like here... There's a lot of good things with Opko."

Despite criticism of the aggressive business ventures of Dr. Frost (criticism that has circulated widely for all of Frost's 30+ year career), financial writers seem to agree on Dr. Frost's behind-the-scenes nature: "We all know Steve Jobs, John Chambers, and Warren Buffet. A hidden star is Dr. Phillip Frost."

In conclusion, here is the price performance of some of Dr. Frost's holdings. Teva Pharmaceuticals closed Friday at $45.06 per share, up 11% percent over the past 3 months and up 21% over the past 6 months. Pershing Gold closed Friday at $0.55 per share, up 7% since it started trading one week ago. Lastly, Opko Health closed Friday at $4.73 per share, up 9% over the past 6 months and up nearly 24% over the past year.


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