Bellevue Biotech (CH)

Global equity markets posted modest gains in December 2025, with the MSCI World Index rising 0.8%. The healthcare sector underperformed during the month, with the MSCI World Health Care Index and Nasdaq Biotechnology Index (NBI, in USD) declined by 0.8% and 0.7% respectively, following strong performances in November.

For the full year, global equities advanced 21.1%, driven primarily by Communication Services (+32.0%), reflecting continued strength in AI-related themes. The healthcare sector underperformed on a relative basis during the year, with the MSCI World Health Care Index reporting an 14.8% gain. However, the Nasdaq Biotechnology Index (NBI) performed broadly in line with broader equities in the year with an 21.0% gain in USD.

The Bellevue Biotech (CH) Fund (ADGLBII shares; +17.0% in CHF) outperformed its NBI benchmark in CHF by 39 bp in the year (NBI; +16.6% in CHF; FY 2025). In December, the fund underperformed its benchmark by 122 bp driven by stock specific binary events (for example, overweight Corcept Therapeutics which received an CRL from the FDA; underweight Structure Therapeutics which reported positive Phase II oral obesity data).

Subsector news flow remained constructive. In mid-December, an additional ten biopharma companies – including biotechnology companies such as Gilead and Amgen – reached drug pricing agreements with the US Administration. While M&A activity was slower in December compared with a strong series of months, we note that Sanofi agreed to acquire hepatitis B vaccine specialist Dynavax for USD 2.2 bn late in the month.
Among portfolio holdings, Vera Therapeutics (+48.0% in CHF; strong drug pricing for drug class), Axsome Therapeutics (+18.9%; filing for Alzheimer’s agitation), Apellis Pharmaceuticals (+17.0%; EU CHMP positive opinion for Aspaveli), were the best performing stocks in December.

We see the potential for the biotechnology sector to enter a new and more durable phase of growth after several years of structural, regulatory, and capital-market headwinds. The sector is transitioning from a speculative and capital-intensive model to one that is becoming defined by sustainable, cash-generative growth, driven by premium drug pricing, leaner cost structures, and disciplined capital allocation. After years of pricing uncertainty and policy overhang, fundamentals are stabilizing, and investor confidence is returning as the industry demonstrates consistent profitability and operational efficiency.

Long-term structural drivers continue to reinforce the sector’s trajectory. Aging populations, increased access to healthcare in emerging markets, and accelerating innovation in areas such as AI-enabled drug discovery, precision medicine, and advanced biologics are expanding the opportunity set. Biotech innovation is increasingly central to healthcare system efficiency – reducing chronic-care burdens, extending quality of life, and containing long-term costs through curative or one-time interventions.

Against this backdrop, the fund maintains a selective, high-conviction strategy focused on biotechnology. The portfolio is oriented toward companies with de-risked late-stage assets, proven pricing power, and scalable platforms capable of generating durable free cash flow. This approach aims to capture both the structural rerating underway in biotechnology and the sector’s cyclical outperformance potential within a normalizing policy and macroeconomic environment.