Bellevue Biotech (CH)

Global equities rose in September 2025 (MSCI World Index; +3.2%), while healthcare lagged (MSCI World Health Care Index; +1.0%) as political uncertainty weighed on stocks for much of the month. The Nasdaq Biotechnology Index (NBI) had another strong month (+4.4% in USD; +3.8% in CHF). The Bellevue Biotech (CH) Fund (AA shares; +3.2% in CHF) underperformed its NBI benchmark (-53 bps) for the month.

Large-cap healthcare lagged in September amid tariff headlines, MFN drug pricing concerns, and the risk of a US government shutdown. However, late-month news flow helped sentiment recover. In contrast, biotech outperformed (NBI +4%; Russell 2000 Biotech +11%), supported by M&A activity (Roche/89bio, Pfizer/Metsera, Genmab/Merus), positive clinical readouts (e.g. Ionis Pharmaceuticals, uniQure), and the Fed’s base rate cut.

Ahead of the September 29 drug pricing deadline, biopharma and the industries lobby group (PhRMA) signaled flexibility through direct-pay obesity models, selective EU price cuts, and US CapEx pledges. On September 30, Pfizer struck a deal with the administration: MFN pricing in Medicaid (<5% of US sales), a global pricing framework for new drugs, discounted direct-to-consumer sales («TrumpRx»), and a USD 70 bn US manufacturing/R&D investment – giving Trump a visible «deal moment.» This helped to change sentiment on biopharma, driving a rally on the last day of September. Beyond the political noise, we note the CEO transition announcement at GSK was taken positively by the market.

Among portfolio holdings, uniQure (Huntington’s disease trial readout; +257% in USD), Cytokinetics (FDA feedback on differentiated label; +56%), and Ionis Pharmaceuticals (hypertriglyceridemia data; +53%) delivered the strongest absolute performance for the month.

More certainty on US drug pricing should be supportive of the larger biotechnology companies. As a second derivative, we would expect M&A in SMID-cap biotech to increase as the larger biopharma companies have a better understanding of their mid-term operating environment.

The performance of biotech stocks is closely linked to interest rates because of how the sector is structured. Biotech valuations rely heavily on future cash flows being discounted back to establish current valuations. In addition, financing costs matter for capital-hungry biotech companies, risk appetite shifts during rate-cutting cycles, and M&A activity tends to be sensitive to interest rates. We would view a rate-cutting cycle as supportive of biotechnology sector valuations.

We remain focused on high-quality biotech/biopharma companies that are leading the way in terms of innovation and have already demonstrated clinical trial feasibility.

Long-term structural growth drivers remain intact, including aging populations, expanding access in emerging markets, and innovation in areas like robotics and AI. Importantly, innovation is central to addressing rising societal costs through efficiency gains and reduced long-term care burdens.