Bellevue Biotech (CH)

Global equity markets were positive in July, with the MSCI World Index gaining 0.5% (in USD). Healthcare outperformed the broader market, with the MSCI World Health Care Index up 1.4% in the month. The biotechnology segment (NBI; -1.7% in USD) underperformed broader healthcare in July. The Bellevue Biotech (CH) Fund (ADGLBII shares; -3.3% in CHF) underperformed its NBI benchmark (-1.7% in CHF) by 166 bp. The underperformance was driven by stock selection.

Global equities reported a modest gain in July, though beneath the surface the drivers shifted materially. The Federal Reserve held its target range at 3.5-3.75%, but an unusual three-way dissent and the absence of forward guidance left the September decision unclear, pushing the 10-year Treasury yield to 4.7% and the 30-year above 5.2%, its highest since 2007. Trade policy re-emerged as a live risk after the administration responded to the Supreme Court's rejection of its earlier tariff regime with fresh 10-12.5% levies on some 60 economies. A late-month rally in mega-cap technology and semiconductors carried the index into positive territory. Healthcare sector performance over the month was driven by Life Science Tools (+8.0%), Healthcare IT (+6.8%), Medtech (+4.8%), Healthcare Services (+2.0%), and Biotech (+0.8%), while Pharma (-0.4%) detracted. Within healthcare, geographic performance was led by Emerging Markets (+5.1%), Asia (+4.1%), and the US (+2.1%), while Europe (-0.9%) lagged.

While there were some positive clinical trial readouts and M&A activity in July within biopharma, there were also some notable setbacks. The month's defining event was the failure of AstraZeneca and Ionis' eplontersen (Wainua) in the Phase III CARDIO-TTRansform trial in ATTR cardiomyopathy. Ionis fell 23% on an impaired royalty stream, while BridgeBio rose 15% due to reduced competition; Alnylam opened 17% higher before reversing as investors questioned the value of adding a silencer to a stabilizer. Vera's atacicept won accelerated approval in IgA nephropathy at USD 425,000 per patient per year, and Merck secured early approval for Lipfendra (enlicitide), the first once-daily oral PCSK9 inhibitor. Arrowhead's plozasiran delivered roughly 80% triglyceride reduction in severe hypertriglyceridemia, pointing to a large market shared with Ionis' olezarsen. The M&A cycle accelerated markedly, led by Vertex's USD 10 bn acquisition of Crinetics at a 100% premium, with Lilly/AtaiBeckley, argenx/Forte and Novartis/Myricx also announced. FDA decision-making remained politicized, with an advisory committee voting against the agency's own scientists on several peptide products.

Top absolute performers in the fund included Protagonist (+11.5%; partner JNJ highlighted to a very positive launch for key drug Icotyde), BeOne Medicines (+10.9%; strong recovery after a weak prior month), and Spyre Therapeutics (+10.8%; positive read-across from M&A in a related segment).

Top relative positive contributors included Alnylam (not invested; +87 bp; Q2 miss and FY TTR guidance cut), Protagonist (overweight; +43 bp; partner JNJ highlighted a very positive launch for key drug Icotyde), and Moderna (not invested; +40 bp; norovirus vaccine failed in a Phase III clinical trial). Top relative negative contributors included Ionis (overweight; -111 bp; CARDIO-TTRansform failure impaired the eplontersen royalty stream), Regeneron (not invested; -99 bp; Q2 beat of low underlying quality), and New Amsterdam (overweight; -51 bp; approval of a competing oral PCSK9).

Biotechnology may be entering a more durable phase of growth after 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 stabilizing, and investor confidence is returning as the industry demonstrates consistent profitability.

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.

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.