Bellevue Biotech (CH)

Global equity markets accelerated over the month of August, with the MSCI World Index gaining 2.58% (in USD) on a net return basis. Healthcare outperformed the market for the third consecutive month, with the MSCI World Health Care Index up 3.7% (in USD) on a net return basis. The biotechnology segment (NBI; +10.3%) outperformed broader healthcare in August. The Bellevue Biotech (CH) Fund (ADGLBII shares; +4.9% in CHF) underperformed its NBI benchmark (+10.7% in CHF) by 549 bp. The underperformance was driven by stock selection.

Looking at global equities, the main drivers during August were continued Iran-US tensions, oil prices returning above USD 80, yield volatility and Nvidia's earnings.

The yield curve moved up with initial steepening driven by perceived concerns around a lack of demand for long-dated bonds. Yields flattened into month-end driven by increasing yields at the short end. This was driven by a sharp re-pricing of hike probability at the September meeting following Warsh's commentary from Jackson Hole.

Healthcare sector performance was broad based, with Pharma (+1.1% return contribution) and Biotech (+1.5%) contributing more than half of the sector's performance (2.6% out of 3.71%). From a geographic point of view, the US drove most of the sector’s performance (3.3%), with Asia also contributing positively (0.36%), while Europe was a detractor (-0.9%).

August's most consequential clinical event was the Moderna-Merck personalized mRNA cancer vaccine, which met its primary endpoint in a large Phase III melanoma trial on 19 August, reducing recurrences versus Keytruda alone. Moderna rose ~160% on the day, while Merck gained 11%. On the approval front, Revolution Medicines secured FDA clearance for Rasonque (daraxonrasib), the first RAS-targeted oral therapy in pancreatic cancer, nearly doubling median overall survival to 13.2 months versus 6.7 months for chemotherapy and Protagonist’s/Takeda’s Mimrylo (rusfertide) got approved for polycythemia vera. On policy, the Trump administration reached most-favored-nation drug pricing agreements with nine pharmaceutical companies - including Teva, Astellas, and BridgeBio - requiring Medicaid prices to match the lowest prices charged in other developed nations.

Top absolute performers in the fund included Halozyme Therapeutics (+29.0%; Q2 beat and guidance raise), Insmed (+23.5%; Brinsupri Q2 revenue beat and full-year guidance raise), and Viridian Therapeutics (+22.4%; Lumvoa commercial launch and positive Phase III TED data).

Top relative positive contributors included Protagonist Therapeutics (overweight; +48 bp; Icotyde launch comments and FDA approval of rusfertide), BeOne Medicines (overweight; +28 bp; sector tailwinds), and Madrigal Pharmaceuticals (overweight; +24 bp; Q2 earnings recovery).

Top relative negative contributors included Moderna (not invested; -236 bp; Phase III melanoma vaccine trial success), Tenax Therapeutics (overweight; -39 bp; Phase III LEVEL trial failure), and argenx (underweight; -38 bp; positive Vyvgart myositis data).

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 increasingly achieves sustainable 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.