Bellevue Biotech (CH)

Global equities rose in October 2025 (MSCI World Index; +2.0%), with healthcare outperforming (MSCI World Health Care Index; +3.1%) as visibility on the future pharmaceutical operating environment improved and Q3 results delivered. The Nasdaq Biotechnology Index (NBI) had another strong month (+10.0% in USD; +11.3% in CHF). The Bellevue Biotech (CH) Fund (AA shares; +9.0% in CHF) underperformed its NBI benchmark (-229 bps) for the month.

On September 30, Pfizer became the first major biopharma company to reach an agreement with the US administration on drug pricing and domestic investment, establishing a new framework for negotiated pricing and manufacturing commitments. This was followed by AstraZeneca on October 10 and Merck KGaA on October 16, both signing similar arrangements under the administration’s evolving «most-favored-nation» and «TrumpRx» initiatives. While still at an early stage, these agreements have played a meaningful role in shifting market sentiment – from one of maximum policy uncertainty to a more balanced outlook in which investors are increasingly comfortable with the likely medium-term operating environment for the global pharmaceutical industry.

After a strong month of M&A in September (Metsera, 89bio, and Merus), the trend continued in October. Novartis agreed to acquire Avidity Biosciences for USD 12 bn, expanding its RNA-therapeutics pipeline via Avidity’s AOC neuromuscular platform. Novo Nordisk continued its metabolic expansion by purchasing Akero Therapeutics for USD 5.2 bn, adding a late-stage MASH (fatty liver) asset. Meanwhile, Thermo Fisher Scientific announced plans to buy Clario, a clinical-trial data and software provider, for up to USD 9.4 bn to strengthen its drug-development services.

Among portfolio holdings, we saw positive contributions from SMID-cap innovators with clinical catalysts or strong product launches. NewAmsterdam Pharma benefited from adjacent M&A in cardiometabolic stocks, making it the single largest contributor. Protagonist Therapeutics rallied on the back of positive full trial data at medical conferences for its oral peptide therapy franchise. Insmed continued its breakout following exceptional Brinsupri launch sales. BridgeBio benefited from dual positive phase 3 results (LGMD2I/R9 & ADH1). Altogether, the month was defined by solid earnings (e.g. Illumina), active capital markets, strong momentum in deal flow, and continued innovation across biotechnology.

We see the potential for the biotechnology sector to enter a new and durable phase of growth after several years of structural, regulatory, and capital-market headwinds. The sector has transitioned from a speculative and capital-intensive model to one that is becoming defined by sustainable, cash-generative growth, driven by premium drug pricing, leaner cost structures, and disciplined capital allocation. After years of pricing uncertainty and policy overhang, fundamentals are stabilizing, and investor confidence is returning as the industry demonstrates consistent profitability and operational efficiency.

Long-term structural drivers continue to reinforce the sector’s trajectory. Aging populations, increased access to healthcare in emerging markets, and accelerating innovation in areas such as AI-enabled drug discovery, precision medicine, and advanced biologics are expanding the opportunity set. Biotech innovation is increasingly central to healthcare system efficiency – reducing chronic-care burdens, extending quality of life, and containing long-term costs through curative or one-time interventions.

Against this backdrop, the fund maintains a selective, high-conviction strategy focused on biotechnology. The portfolio is oriented toward companies with de-risked late-stage assets, proven pricing power, and scalable platforms capable of generating durable free cash flow. This approach aims to capture both the structural rerating underway in biotechnology and the sector’s cyclical outperformance potential within a normalizing policy and macroeconomic environment.