Worldwide Healthcare manager quits following harassment claims

OrbiMed, the specialist healthcare investment company which Mr Isaly co-founded in 1989 and manages Worldwide Healthcare, announced on 7 December that he would be stepping down "pursuant to years-long succession planning discussions". Mr Isaly, aged 72, has denied the allegations of harrassment. 

Mr Isaly will also step down from the boards of Worldwide Healthcare and Biotech Growth Trust (BIOG), which is also managed by OrbiMed. We include Biotech Growth Trust and Worldwide Healthcare among the IC Top 100 Funds.

The rest of Worldwide Healthcare's management team remain in place, led by Sven Borho, managing partner and co-founder of OrbiMed, and Trevor Polischuk. They have managed the trust with Mr Isaly since 2013 and 2015 respectively. 

Mr Isaly will be replaced as managing partner of OrbiMed by a management committee composed of Sven Borho, Carl Gordon and Jonathan Silverstein.

Mr Isaly had managed Worldwide Healthcare since its launch in 1995, over which time the trust has delivered strong performance and grown to be the largest healthcare investment trust in the UK, with assets of about £1.3bn. Over five years the trust has delivered a share price return of 217 per cent against 125 per cent for MSCI World Health Care index, according to Winterflood Securities.

But analysts think Mr Isaly's departure is unlikely to have a great effect on the performance of the investment trusts he was involved with.  

"Sam Isaly was an extremely experienced life sciences investor, and OrbiMed's listed funds have achieved outstanding long-term performance records," said Ewan Lovett-Turner, director, investment companies research at Numis. "However, OrbiMed has an experienced team of over 80 professionals with expertise across a wide variety of disciplines, including medicine, finance, and law. We do not believe that Mr Isaly's departure will have any significant impact on the investment approach of [Worldwide Healthcare or Biotech Growth] which is focused on stock-picking through fundamental research."

Simon Elliott, head of research at Winterflood, added: "24 investment professionals at OrbiMed are involved with Worldwide Healthcare, including portfolio management duties, sub-sector analyst coverage, trading, operations and risk management. The investment strategy and process is based on fundamental research of companies with the firm's analysts generating investment ideas, which are scrutinised by the whole team. Investment is made in the most attractive ideas – ie, those that are considered to be mispriced. The portfolio is relatively concentrated and often is operated on a 'one in, one out' basis. While the managers of Worldwide Healthcare have the final say on stock selection, it is essentially a collegiate approach. Consequently, we would not expect any fundamental change to the portfolio in the near future or any changes to the investment process."

Worldwide Healthcare's share price dipped from around 2,470p following a statement about the harassment claims on 6 December, but by 12 December it had risen to 2,519p. The trust was trading on a premium to net asset value of 2.1 per cent but the share price appreciation had reduced this to 0.9 per cent by 12 December. 

Performance

Source: Winterflood Securities, as at 12/12/17