Bellevue Biotech (CH)

Global equity markets continued to progress positively in May, with the MSCI World Index rising 4.6%, driven by the artificial intelligence (AI) narrative. Healthcare underperformed the broader market, with the MSCI World Health Care Index up 1.9% in the month. The biotechnology segment (NBI; +2.3%) performed somewhat better than the broader healthcare sector in May. The Bellevue Biotech (CH) Fund (ADGLBII shares; +3.5% in CHF) outperformed its NBI benchmark by 139 bp (in CHF).

The US-Iran conflict continued to dominate headlines. While a resolution was not reached, the overall trend was one of de-escalation. This sent oil prices down and US equities to record highs, led by a return of the AI thematic. Yields climbed, pricing in persistent inflation and a higher likelihood of a rate hike. Healthcare sector performance over the month was driven by Pharma (+4.2%) and Life Science Tools (+6.7%) offset by Medtech (-3.6%).

In May, the biopharma sector saw a mix of clinical, regulatory, and commercial catalysts. Cytokinetics reported positive Phase III ACACIA-HCM topline results, while Viridian's Phase III REVEAL-2 study met its primary endpoint. Regeneron's Phase 3 LAG-3 melanoma trial failed, whereas AstraZeneca's Enhertu received regulatory approval. Biogen reported a Phase II Alzheimer's disease setback. At ASCO, Merck & Co presented lung cancer data from its Kelun-partnered sac-TMT program, while Akeso/Summit's HARMONi-6 study demonstrated a statistically significant overall survival benefit. Separately, Merck secured approval for sac-TMT in endometrial cancer, and Eli Lilly reported TRIUMPH-1 results for retatrutide. The month also saw unexpected FDA leadership turnover, with the departures of Commissioner Marty Makary and the head of CDER.

Top absolute performers in the fund included Viridian (+31%; Phase III REVEAL-2 study met its primary endpoint), Alkermes (+25%; M&A speculation after a peer was acquired), and Neurocrine (+20%; strong Q1 2026 results).

Top relative positive contributors included Alkermes (overweight; +67.1 bp contribution, M&A speculation and strong momentum after a peer was acquired), New Amsterdam (overweight; +55.0 bp; strong momentum), and Mineralys Therapeutics (overweight; +51.8 bp; FDA approval for a peer in the same class). Top relative negative contributors included Guardant Health (not invested; -47.1 bp; strong Q1 results), Illumina (not invested; -46.0 bp), and Jazz pharmaceuticals (not invested; -17.2 bp).

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 stabilizing, 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.