Months after a sexual harassment scandal, OrbiMed’s banking another billion

Months after being rocked by sexual harassment allegations, biotech’s largest investment fund is in process of raising $1 billion from investors, its largest offering to date, while the founder who was at the center of the controversy remains a partner at the firm.

Legendary biotech financier Sam Isaly said late last year that he would retire following publication of a STAT investigation in which six former OrbiMed employees said he regularly sexually harassed the firm’s female employees, particularly executive assistants.

But recent filings with the Securities and Exchange Commission list Isaly — who had denied the charges — as OrbiMed’s manager. The Wall Street firm and Isaly are in the process of negotiating his departure, but it’s unclear how long those talks might take.

The process stands in stark contrast with the fallout in other industries that have been racked by sexual assault allegations recently. The Weinstein Company fired Harvey Weinstein within three days of a New York Times story detailing allegations of abuse, and Steve Wynn resigned from his hotel conglomerate a week after accusations appeared in the Wall Street Journal.

Read more: Biotech hedge fund titan Sam Isaly harassed, demeaned women for years, former employees say

Unlike those firms, OrbiMed has no public-facing business. It has not confronted boycotts or viral social media campaigns. Instead, it’s essentially a small business, one majority-owned by Isaly, meaning he can leave the $14 billion fund when and however he pleases.

Isaly has hired Sard Verbinnen, a storied crisis management firm on Wall Street, to represent him in the process, while OrbiMed retained FTI Consulting, according to the people familiar with the discussions.

Privately, OrbiMed has charged that Isaly has dragged his feet in the process and accused him of unilaterally approving a press release that announced his retirement without the approval of the other partners, according to the people familiar with the matter, speaking on condition of anonymity. Isaly’s camp maintained that his resignation would be a complicated process and refused to commit to a final date, the people said.

OrbiMed did not respond to questions about Isaly’s plans. A spokeswoman for Isaly declined to comment.

Apart from those discussions, OrbiMed has continued to invest millions into biotech startups, and its most visible partners have made the rounds at biotech’s largest investor conferences.

According to a January filing with the SEC, the firm is raising its seventh and largest-ever private equity fund, seeking $1 billion from investors.

Biotech insiders say they don’t expect OrbiMed to have any trouble meeting that goal. The firm’s clients, which include the public pension funds of California and Oregon, routinely double or triple their money after investing with OrbiMed.

For his part, Isaly has opened a private office in Manhattan to invest his personal fortune on the side, according to a person close to the firm who spoke on condition of anonymity.

At the time, on Jan. 10, the person described Isaly’s retirement as “nearing completion,” adding that “most issues have been resolved.” That month, in OrbiMed’s filings with the SEC, Isaly’s name began to be replaced by the three partners he promised would replace him: Jonathan Silverstein, Carl Gordon, and Sven Borho.

But Isaly still has not retired from OrbiMed, and the person close to the firm seemed to walk back the January statement, saying Feb. 15 that the parties “have made significant progress toward his retirement.” A Wednesday filing with the SEC listed Isaly as OrbiMed’s manager.

OrbiMed’s fortunes since December may come as little surprise on Wall Street, where allegations of financial impropriety have traditionally brought swifter repercussions than accusations of sexual harassment.

Read more: A month after promising to step down, Sam Isaly is still at OrbiMed

Deerfield Management, a competitor to OrbiMed, struggled to stay afloat last year after the SEC brought insider trading claims against some of its employees, according to people familiar with the matter. The firm managed to assuage its clients’ fears and paid the SEC $4.6 million to settle the charges in 2017.

Before that, Diamondback Capital Management gradually went out of business starting in 2012 as it dealt with an insider trading investigation in which it was later cleared. Visium Asset Management was forced to liquidate four of its funds in the wake of insider trading charges in 2016.

By contrast, the cast of an infamous 2014 biotech scandal — involving sex, drugs, an investment banker, and two CEOs — have all landed on their feet. Sage Kelly, then a managing director in Jefferies’ health care practice, was immersed in controversy after his estranged wife, in the course of a custody battle, accused him of goading her into having sex with potential clients to drum up business. She described him as the “ringleader” of a group of biotech professionals who routinely used cocaine, a group that included Aegerion Pharmaceuticals CEO Marc Beer and Seattle Genetics CEO Clay Siegall.

All three men denied the allegations.

Siegall remains in charge of Seattle Genetics, and Beer has since become CEO of the privately held Renovia. Kelly left Jefferies and now leads investment banking at Cantor Fitzgerald, the Wall Street firm that paid former President Obama a reported $400,000 to speak at its health care conference last year.