Bellevue Asia Pacific Healthcare (Lux)

World stock markets tacked on more gains in April. The MSCI World closed the month 1.8% higher in USD. Macro data played an only minor role for a change, although the economy could take center stage again already in early May when the next inflation readings are published. Instead, investor attention in April was captured by quarterly earnings reports. Strong earnings from mega tech stocks led markets to higher ground. April was also a very pleasing month for the healthcare sector. Takeover deals in the biotech sector and strong quarterly results from numerous medtech names helped the sector to outperform the broader market and close 3.5% higher mom in USD. That was also the case for healthcare stocks in the Asia-Pacific region, which closed the month of April with a gain of 1.2%, clearly outperforming the broader Asia-Pacific market (-1.5%).

The Chinese biotech company Legend Biotech and its partner Johnson & Johnson published exciting Phase III data on their cell therapy Carvykti in multiple myeloma. In the CARTITUDE-4 study, in which 419 patients had been enrolled, 208 were treated with Carvykti and 211 received standard of care treatments after having received one to three prior lines of standard therapy. Legend’s cell therapy slashed the risk of tumor progression or death by a 74% compared to standard of care (hazard ratio of 0.26). This represents an entirely new playing field in the early treatment of multiple myeloma compared to both standard therapy and the only other approved fifth-line myeloma treatment (Abecma from Bristol-Myers Squibb). This news report was based on information from an interim analysis as of November 1, 2022, so conclusive data regarding progression-free survival was not available. Calculations of median PFS are around 35-40 months. Some doctors have said the drug might even be able to cure patients with multiple myeloma. It seems very likely that Carvykti will be approved as a second-line treatment by the end of this year and will then establish a high penetration rate in this indication. Its high price tag of more than USD 400000 per treatment should not be a problem because most patients will not need any other treatment for three or more years. The side effect profile was also favorable. Although 76% of patients experienced cytokine release syndrome, the vast majority of these episodes were mild.

This news is also very encouraging for Legend's ongoing studies of Carvykti (CARTITUDE-5&6) as a first-line treatment for myeloma. Carvykti’s peak sales potential is projected at above USD 5 bn. We are staying invested in the stock.

A position in Genscript was opened during the past month and existing positions in Eisai and Sysmex were increased. Positions in Fisher Paykel, Wuxi AppTec and Shin Nippon Biomedical were closed.

Asia is the most dynamic growth region in the world and it accounts for more than half of the world's population. Asian emerging markets are forecast to account for more than 50% of global GDP by 2050. As household incomes rise, the economic growth model of Asian countries will shift from manufacturing to the services sector. A growing middle class fuels demand for modern medicine. Healthcare ranks increasingly high on their wish list. Billions are being invested in infrastructure, technology and research to modernize the healthcare systems in emerging market countries. This is giving a greater swath of the population access to better healthcare. Meanwhile rapid population aging is also stoking demand for healthcare. In 30 years’ time there will be 400 to 500 million people over 60 in China alone, and they will have a growing need for modern health services and medicines.

Japan, which has been referred to as “the world's demographic laboratory”, has championed cutting-edge innovation for decades. The Land of the Rising Sun boasts technology leadership in numerous fields, ranging from therapeutic antibody technology, immunotherapy and robotics to digitalization, diagnostics and medical imaging systems. The fund offers defensive access to Asian emerging markets as well as exciting investment opportunities in technology leaders throughout the entire region. It invests in the entire healthcare system value chain, from generic drug producers and biotechnology companies to medical device manufacturers and digital health specialists.