Bellevue Biotech (CH)

Global equities continued to recover in June 2025, with the NBI Index ending the month up 3.7%. While remaining a laggard, Healthcare also started recovering (MSCI World Healthcare up +1.4%) from what had been a significant (perhaps peak) level of fear around US drug pricing reform in May. The Bellevue Biotech fund (AA-shares: +3.7%, in USD) was inline with its healthcare index benchmark.

US President Trump released an Executive Order (EO) calling for most-favored-nation (MFN) drug pricing on May 12. This called for the HHS to propose drug price targets within 30 days, with the industry being given 180 days to show signs of progress (deadline November 8, 2025). Alongside this, there remains the 232 investigation on pharmaceuticals related to national security and potential tariffs. We are therefore within the middle of these two processes, with a lack of clear direction at present. The potential for a pilot program around MFN appears to have waned. In addition, we have not seen MFN enter the reconciliation bill (big beautiful bill) negotiations in congress. This lack of information and slowing momentum has provided a support to pharmaceutical valuations.

Beyond US politics, June was a busy month of healthcare conferences. Early in the month we attended the American Society of Clinical Oncology (ASCO) annual meeting in Chicago. This is the largest medical conference on the calendar. During the meeting we gained a growing picture of the potential new modalities and mechanisms that are emerging in early/ mid-stage studies (ADCs, bispecifics etc.). Later in June, we attended the American Diabetes Association (ADA) conference (also in Chicago). This year ADA spotlighted the next generation of obesity and metabolic therapies. While nuanced differences exist across the pipeline, one thing is clear: the space is ripe for further innovation. Oral GLP-1 alternatives, muscle-sparing regimens, and combination hormone therapies all gained traction, pointing toward a maturing market still rich in unmet needs. Across both therapeutic areas, we have been impressed by the innovation now coming from China, including some of the stocks we hold in our portfolio.

The Bellevue Biotech (CH) Fund (AA-shares: 3.7%, in USD) performed inline with its biotech index benchmark, benefiting from positive clinical trial readouts and security selection. Among the portfolio holdings, the strongest relative performance came from Insmed (+39.9%, in CHF) based on successful Phase II results in PAH, as well as from Innovent (+22.6%, in CHF) in the context of broader performance strength of Chinese biotechs.

The companies in our portfolio are working on technologies or products for novel treatment solutions. We are also invested in selected specialty pharma companies that offer high growth rates and moderate valuations. The Bellevue Biotech (CH) Fund is well-positioned to profit from the milestones that are expected to be reached in 2025. The regulatory environment favors the innovation coming out of biotech labs and the coronavirus crisis burnished the image of drug developers. Looming patent expiries coupled with large piles of cash suggest large biopharma companies will continue to hunt biotech companies over the next 18 months. Inexpensive small and mid caps with attractive pipeline candidates are obvioustakeover targets. By 2030, products generating USD 183 bn in annual sales will lose their patent protection.