Bellevue Obesity Solutions

Stock markets performed well in the opening month of the new year. The S&P Index advanced 1.65%, Nasdaq 0.71% and the MSCI World Healthcare Index 5.58%.

The US economy continued to hum along in January so the Federal Reserve saw no need to cut its key interest rate again. The biggest event during the month under review was the inauguration of President Trump. He had been talking about imposing new tariffs on US imports of goods from Mexico, Canada, Europe and China and had vowed to start negotiations to end the armed conflicts in the Middle East and Eastern Europe already before taking office and, after his inauguration, he issued a slew of executive orders to back up his promises. In the healthcare sector, the confirmation hearing for Robert F. Kennedy Jr. as US health secretary attracted considerable interest, mainly because of his critical views about vaccine safety and abortion. During his hearing he repeatedly emphasized the importance of healthy foods and exercise. At the start of the high-profile JP Morgan Healthcare Conference, J&J issued a takeover bid for Intra-Cellular Therapeutics. Its USD 14.6 bn offer represents a premium of 39% compared to Intra-Cellular's already strong closing the previous day. At the end of the month, Vertex received FDA approval for its new painkiller Journavx (suzetrigine) for the treatment of acute pain. Journavx selectively blocks on pain-sensing nerve cells. This new approach establishes a new class of painkillers, ending a more than 20-year lull, and it could also be of interest in surgical procedures for the management of obesity. Novo presented strong phase I/II data for its subcutane ous amycretin, which led to 22% weight loss after just 36 weeks. 

The following stocks were the best portfolio performers during the month under review: Boston Scientific shares traded higher after the company confirmed its forecast of 15% yoy organic sales growth at the JP Morgan Conference. Thermo Fisher reported solid 4Q 2024 results and noted that demand for its tools and services is increasing. Despite the headwinds from the drop in demand for its COVID-19 testing solutions, Thermo is guiding for organic sales growth of 3-4% in 2025, taking "moderate" political challenges into consideration. Intuitive Surgical's preliminary sales for the fourth quarter of 2024 beat market expectations and its management’s initial guidance for 2025 also led the shares higher.

The following stocks detracted from fund performance: NewAmsterdam was weak although the company didn't publish any announcements. News flow from competing firms created some uncertainty though. For example, Novartis announced that the next data readout from the HORIZON study of Lp(a)-lowering drug pelacarsen had been pushed back to 2026. That news also led to a weak performance for Ionis, which discovered pelacarsen and licensed it to Novartis.

The companies in the fund's portfolio are working on technologies or products for novel treatment solutions and holistic treatment approaches. Selected healthcare companies with relevant exposure to the obesity care market can be found in the portfolio, and up to 20% of the fund's assets can be invested in fitness and nutrition companies that have a strong growth profile and a modest valuation. The Bellevue Obesity Solutions (Lux) Fund is well-positioned to profit from the milestones likely to be reached in 2025. On the regulatory front, innovation that helps to address the obesity crisis is being encouraged and promoted. Besides clinical trial data readouts and today’s attractive valuations, share prices will also be driven by ongoing M&A activity.

In the first half of 2025, we are anticipating important Phase III data from Eli Lilly for its oral weight-loss drug orforglipron. Novo Nordisk will publish additional data for CagriSema (CS) in the first half, too, including from a trial comparing CS with Lilly's tirzepatide and from another trial assessing CS as a weight-loss medication in patients with type 2 diabetes. Pipeline updates on therapeutics that preserve muscle mass are also expected, for instance from Eli Lilly, Scholar Rock and Regeneron. Demand is currently much greater than supply, so increasing production levels is crucial for the GLP-1 market. We are also closely monitoring whether this class of therapeutics could be approved for the treatment of other diseases such as cardiovascular disorders, obstructive sleep apnea and chronic kidney disease.