Bellevue Biotech (CH)

Global equity markets fell sharply in March, with the MSCI World Index declining 6.4%, as escalating Middle East tensions weighed on oil prices, inflation expectations, and growth prospects. Healthcare underperformed the broader market, with the MSCI World Health Care Index declining 8.3%. The biotechnology sector was a relative outperformer, with the Nasdaq Biotechnology Index (NBI) decreasing 3.3% in USD (+0.8% in CHF). The Bellevue Biotech (CH) Fund (ADGLBII shares; +0.9% in CHF) outperformed its NBI benchmark by 13 bp. A number of M&A deals were rumoured and announced during the month, which supported the small and mid-cap Biotech segment.

The month opened with the US attack on Iran, which rapidly led to a closure of the Strait of Hormuz. This sent oil prices up by 60%. The uncertainty on duration and magnitude of the conflict, which increased during the month, weighed on markets, yields (US 10-year +36 bp) and rate cuts (first Fed rate cut repriced from Summer 26 to Autumn 27) in particular. Deteriorating financing prospects and increasing supply chain complexity weighed most on industrial and materials sectors performing most negatively over the month.

The month was shaped by three themes: significant clinical readouts, continued momentum in IgA nephropathy (IgAN), and a reacceleration in M&A activity. United Therapeutics' TETON-1 readout was among the quarter's most consequential pulmonary hypertension catalysts. Johnson&Johnson / Protagonist's icotyde received FDA approval, and BridgeBio delivered encouraging Phase III data in achondroplasia. In IgAN, Otsuka advanced the sibeprenlimab launch and Vertex reported positive Phase III data for povetacicept, reinforcing our conviction that nephrology remains one of the most attractive areas in specialty care. Strategic activity picked up, with Eli Lilly acquiring Centessa, Biogen acquiring Apellis, and Gilead acquiring Arcellx.

Top absolute performers in the fund included Centessa (+51%; takeover announced), Madrigal (+21%; takeover rumours), and United Therapeutics (+18%; strong clinical trial data).

Top relative positive contributors included Centessa (overweight; +87bp; +51%; takeover announced), Madrigal (overweight; +36 bp; +21%; takeover rumours), and Protagonist (overweight; +35bp; +15%; FDA approval of ICOTYDE). Top relative negative contributors included Agomab (overweight; -72bp; -35%), Viridian (overweight; -33bp; -33%; mixed clinical data), and Apellis (underweight; -25bp; +92%; takeover announced).

Biotechnology may be entering a more durable phase of growth after several years of structural, regulatory, and capital-market headwinds. The sector is transitioning from a speculative, capital-intensive model toward sustainable, cash-generative growth, driven by premium pricing, leaner cost structures, and disciplined capital allocation. Fundamentals are stabilising, and investor confidence is returning as the industry demonstrates consistent profitability and operational efficiency.

Long-term structural drivers remain compelling. Aging populations, expanding healthcare access in emerging markets, and accelerating innovation in AI-enabled drug discovery, precision medicine, and advanced biologics continue to broaden the opportunity set. Biotech innovation is increasingly central to healthcare system efficiency, reducing chronic-care burdens and containing long-term costs through curative interventions.

The fund maintains a selective, high-conviction strategy oriented toward late-stage, de-risked assets, proven pricing power, and scalable platforms capable of generating sustainable free cash flow.