Shareholder letter

Dear Shareholders

After a volatile first half, BB Biotech delivered a strong third quarter. Our share price and NAV outpaced the Nasdaq Biotechnology Index (NBI), while a sequence of clinical, regulatory, and M&A milestones reinforced the momentum building across the biotechnology sector. Macro conditions have turned incrementally more constructive: in September, the US Federal Reserve enacted its first rate cut of 2025, lowering the target range to 4.00–4.25% and signalling a gradual normalization of financing conditions for capital-intensive industries. Markets are now beginning to price a path toward additional easing as inflation cools, offering renewed support to innovative growth sectors such as biotechnology.

Beyond cyclical relief, signs of structural improvement are emerging across the industry’s long-term economics. Early signs of recovery are visible as global pharmaceutical pricing begins to adjust to new market realities, formed by tariffs and price referencing. At the same time, the sector is approaching the largest patent cliff in its history, prompting renewed strategic M&A and partnership activity. These dynamics are compressing timelines between scientific discovery and value recognition, benefiting differentiated innovators.

Despite this improving backdrop, valuations remain attractive. As financing costs decline and balance sheets remain solid, the setting for a multi-year re-rating is emerging.

The long-term fundamentals of biotechnology remain robust. A growing and aging population continues to drive demand for therapies addressing chronic and age-related diseases. Innovation is accelerating, with progress in RNA medicines, next-generation biologics, targeted small molecules, and other precision approaches. These advances, combined with data-driven research and AI-assisted design, are reshaping the global biomedical development and collaboration.

Public research funding is being reorganized, and governments are reshaping how medicines are priced and reimbursed through tariffs, reference systems, and new industry agreements. Despite these adjustments, incentives for developing truly innovative therapies remain strong. The FDA is also refining its processes, becoming faster in some areas and more selective in others, while continuing to set the global regulatory standard. Recent initiatives such as the new National Priority Voucher program underline the agency’s commitment to accelerating reviews for therapies addressing high unmet medical needs. During the recent government shutdown, the agency maintained review operations but paused new submissions, allowing ongoing evaluations to proceed largely as planned.

Together, these developments point to a sector whose fundamentals are strengthening even as its valuation base resets. The signs of renewed momentum are clear: capital is returning, strategic acquirers are active, and science continues to accelerate. For BB Biotech, this environment reinforces our conviction that a disciplined, innovation-driven, and patient investment approach is the best way to capture the next phase of value creation.

Importantly, our own sustainability journey also reached a new milestone: as of September 22, BB Biotech was included in the SPI ESG Index on the SIX Swiss Exchange, recognizing our long-standing commitment to responsible investing and transparent corporate governance.

Strong Q3 2025 performance and encouraging momentum

BB Biotech delivered a strong third quarter, marked by a convincing absolute and relative performance. Both the share price and NAV rose sharply, clearly outpacing the Nasdaq Biotechnology Index (NBI). The combination of lower interest rates, broad sector recovery, and solid operational execution across key holdings translated into a significant uplift in value.

• Notable NAV performance. The Net Asset Value (NAV) advanced by 24.0% in CHF and EUR and 23.5% in USD, outperforming the NBI (+15.7%) by a wide margin. The quarter closed with a net profit of CHF 448 mn, one of the strongest results in recent years and a clear reversal from the CHF 157 mn loss in Q3 2024.
• Strong share price recovery. BB Biotech’s share price increased by 20.0% in CHF, 20.1% in EUR and 19.5% in USD, again outpacing the NBI across all currencies.
• Stable valuation and rising engagement. While the discount to NAV remained broadly unchanged, higher trading activity and increased investor participation signaled a clear rebound in sentiment toward the biotech sector and BB Biotech’s focused portfolio.

Together, these results confirm that BB Biotech has regained clear momentum. The portfolio benefited from strong operational execution among core holdings, selective exposure to M&A activity, and the supportive macroeconomic environment following the September rate cut. With conviction positions intact and valuations still attractive, BB Biotech enters the fourth quarter from a position of strength.

With conviction positions intact and valuations still attractive, BB Biotech enters the fourth quarter from a position of strength.

Portfolio highlights: innovation driving progress in Q3

Q3 2025 brought a number of important milestones across our portfolio, underscoring our conviction that scientific innovation is the most enduring driver of long-term value creation. Our holdings made meaningful progress on regulatory, commercial, and clinical fronts. Some highlights include:

Regulatory and commercial execution

• Ionis Pharmaceuticals: September was a landmark month for Ionis. The company announced positive Phase III results for Olezarsen in severe hypertriglyceridemia, confirming significant triglyceride reduction and a favorable safety profile. Later in the month, Ionis reported encouraging Phase I/II results for Zilganersen in Alexander disease, showing the first clinical evidence of disease stabilization. Together with the August FDA approval of Donidalorsen (Dawnzera) for hereditary angioedema, these achievements further cement Ionis’s leadership in RNA-based medicines.
• Alnylam Pharmaceuticals: Strong launch momentum for Amvuttra in transthyretin amyloidosis and positive interim data from next-generation candidates supported broad franchise expansion.
• Argenx: Continued uptake of Vyvgart across both intravenous and subcutaneous formulations drove solid commercial growth, while regulatory submissions for additional indications advanced globally.
• Agios Pharmaceuticals: Progress toward the expected approval of Mitapivat in thalassemia and further clinical expansion into sickle cell disease strengthened its rare-disease positioning.

Clinical breakthroughs and translational momentum

• Revolution Medicines: Early data for Daraxonrasib (KRAS-Multi) and Zoldonrasib (KRAS-G12D) confirmed high response rates and strong investor interest following Breakthrough Therapy designation.
• Scholar Rock: Preparation of a resubmission for Apitegromab following the FDA’s manufacturing-related Complete Response Letter kept this potential first-in-class SMA therapy on track for 2026 launch.
• Vertex Pharmaceuticals: Continued post-launch strength of Journavx (VX-548) and encouraging progress in its autoimmune kidney disease programs underlined Vertex’s ambition to build franchises beyond cystic fibrosis.
• Rivus Pharmaceuticals: Positive Phase II data in MASH confirmed the differentiation of its controlled mitochondrial uncoupling approach.
• Relay Therapeutics: Readiness for pivotal Phase III initiation of RLY-2608 (PI3Kα) in HR⁺/HER2⁻ breast cancer supports its evolution into a late-stage precision-oncology company.

Collectively, these achievements demonstrate how BB Biotech’s conviction in scientifically differentiated, well-capitalized mid-cap innovators continues to translate into both portfolio resilience and performance.

Sharpening the portfolio: active rotation and strategic focus

Disciplined capital allocation and portfolio rotation remain central to our investment strategy. We continuously refine the portfolio to concentrate on companies with the most differentiated science, clear value-creation pathways, and sustainable financial strength.

During the third quarter, we adjusted the portfolio from 23 to 21 holdings, keeping the investment level broadly stable at 96.6%.

• Exits: Moderna, Black Diamond Therapeutics and Blueprint Medicines. We fully exited our positions in Moderna, Black Diamond Therapeutics and Blueprint Medicines. Moderna’s long-term vaccine outlook remains uncertain amid changing public health priorities and lower demand for COVID-related products under the current US administration. In addition, increased regulatory scrutiny and societal skepticism toward vaccines continue to weigh on sentiment, reducing the visibility of near-term catalysts. We also sold our stake in Black Diamond Therapeutics following a reassessment of its clinical competitiveness and strategic optionality. Despite progress in early oncology programs, the company faced intensifying competition and limited differentiation versus peers. These two exits freed capital for higher-conviction opportunities within the portfolio. Our position in Blueprint Medicines was closed following the completion of Sanofi’s acquisition in July.
• New investment: Avidity Biosciences. In Q3, we initiated a position in Avidity Biosciences, a leader in antibody-oligonucleotide conjugates (AOC). The company’s proprietary AOC platform combines targeted delivery with RNA-based precision, addressing key challenges in muscle and rare genetic diseases. Recent clinical progress in myotonic dystrophy (DM1) and facioscapulohumeral muscular dystrophy (FSHD) demonstrates proof of concept and underpins meaningful upside potential. Avidity’s strong balance sheet and diversified partnership base further support its long-term growth profile.
• Selective reinvestment. Positions increased notably in Revolution Medicines, Akero Therapeutics, Scholar Rock and other mid-cap innovators, reflecting both strong share-price performance and targeted capital redeployment. The addition of Avidity Biosciences further enhanced exposure to next-generation RNA therapeutics.

These portfolio adjustments reflect our commitment to maintaining a focused group of highquality innovators while reallocating capital toward the most compelling scientific and financial opportunities. By staying selective and responsive, BB Biotech remains well positioned to capture emerging value across the sector. The announced acquisition of Akero Therapeutics by Novo Nordisk in early October, shortly after the quarter’s close, illustrates how strategic buyers continue to reward differentiated science. Generally the third quarter was marked by a series of major acquisitions in the biopharmaceutical industry – including transactions by Pfizer (Metsera), Roche (89bio), Genmab (Merus) and Merck (Verona Pharma), each involving multi-billion-dollar valuations. These developments highlight the continued strong interest of large pharmaceutical companies in innovative, scientifically differentiated platforms and leading biotech assets, as well as their willingness to pay substantial premiums for quality innovation.

The portfolio currently sits at the lower end of our target range in terms of the number of holdings. This creates room to expand the tail with new, high-potential positions while maintaining our core convictions. With a solid cash position, an enlarged US research team providing deeper market coverage, and a broad set of attractively valued opportunities across the biotech universe, BB Biotech is well equipped to deploy capital selectively and to strengthen both the depth and diversity of its portfolio in the coming quarters.

Portfolio breakdown of BB Biotech as of September 30, 2025

Advancing our strategy: executing with discipline, evolving with insight, deepening shareholder alignment

The third quarter reaffirmed that sustainable long-term value in biotechnology comes from a combination of conviction, adaptability, and continuous improvement. Our strategic framework continues to rest on three key principles:

• High-conviction concentration: We maintain a focused portfolio of 21 companies, currently at the lower end of our 20–35 position range. This concentration allows us to back the most compelling innovation platforms with meaningful capital while keeping flexibility to expand the tail as new opportunities emerge. Our permanent capital structure enables us to act on long-term conviction – investing through volatility and capturing value as science and market sentiment realign. Q3’s strong performance, driven by Ionis Pharmaceuticals, Alnylam Pharmaceuticals, Argenx, and Agios Pharmaceuticals, highlights the benefit of holding mid-cap innovators at clear clinical and commercial inflection points.
• Dynamic capital allocation: Our S-curve investment model continues to guide capital toward companies moving from research to commercialization, where valuation upside is promising. During the quarter, we exited Moderna and Black Diamond Therapeutics and initiated a new position in Avidity Biosciences, strengthening our exposure to next-generation RNA therapeutics. This approach keeps the portfolio agile and focused on the most attractive opportunities across therapeutic areas.
• Process evolution and agentic AI integration: We continue to refine our investment process through a more systematic framework for managing risk, exposure, and time horizons. A structured, gate-based approach helps maintain long-term focus while enabling tactical agility within defined conviction ranges. By progressively digitalizing our workflow, we are enhancing transparency, measurability, and analytical depth across all stages of the investment process. The ongoing integration of AI-assisted tools supports earlier identification of opportunity, clearer assessment of risk-adjusted returns, and improved decision consistency – strengthening both human and data-driven insight over time.

BB Biotechʼs S-curve model

Outlook: turning innovation into enduring value

As we look ahead to the remainder of 2025 and into 2026, we maintain a constructive, however realistic view of the environment for biotech investing. The macroeconomic backdrop continues to improve. The Federal Reserve’s first rate cut in September lowered the policy range to 4.00–4.25%, reinforcing expectations for further easing in 2026 as inflation moderates. Lower funding costs are beginning to support capital-intensive sectors such as biotechnology.

Policy visibility has improved as recent developments in US healthcare legislation and the Pfizer agreement have brought greater clarity to drug pricing and trade dynamics. The debate around pharmaceutical tariffs and Most-Favored-Nation frameworks has stabilized, and the rollout of Medicare negotiations under the Inflation Reduction Act is progressing in a more predictable way. At the same time, the FDA’s review activity remains consistent, providing a supportive regulatory environment for innovation.

Moreover, scientific innovation is accelerating. BB Biotech’s portfolio companies are advancing multiple programs with the potential to deliver value-defining catalysts over the coming quarters. Recent approvals such as Donidalorsen (Ionis) and strong late-stage data for Olezarsen highlight the strength of RNA-based medicine.

Expected regulatory approvals and launches:

• Mitapivat (Agios Pharmaceuticals) – α/β-thalassemia
• Troriluzole (Biohaven) – spinocerebellar ataxia
• Apitegromab (Scholar Rock) – spinal muscular atrophy (resubmission expected for 2026)

Pivotal data and late-stage catalysts expected for Q4 2025:

• Mitapivat (Agios Pharmaceuticals) – Phase III results in sickle cell disease
• WVE-006 (Wave Life Sciences) – Phase I/II data RNA editing in alpha-1-antitrypsin-deficiency (AATD)
• NBI-’770 (Neurocrine Biosciences) – Phase II results in major depressive disorder
• EDG-7500 (Edgewise Therapeutics) – CIRRUS-HCM Part D Phase II data in hypertrophic cardiomyopathy (HCM)
• INCB160058 (Incyte) – Phase I/II data for JAK2 V617F in myeloproliferative neoplasms
• RLY-2608 (Relay Therapeutics) – Phase I/II PI3Kα triplet data in first-line breast cancer

Looking ahead, our portfolio is positioned to benefit from a series of expected milestones, including pivotal and proof-of-concept readouts across key holdings in metabolic, cardiovascular, and neurological diseases. These clinical and commercial inflection points reflect the continued shift of innovation toward specialized, well-capitalized mid-cap companies – precisely the area where BB Biotech is most active.

Beyond portfolio activity, we continue to strengthen our analytical and technological foundation. The gradual rollout of AI-assisted research tools and the expansion of our US research capabilities are enhancing our ability to assess opportunity, manage risk, and communicate insights transparently with shareholders.

Biotech valuations remain near historic lows, even as fundamentals improve and innovation gathers pace. This combination of attractive entry points, accelerating science, and improving capital conditions represents one of the most compelling circumstances for long-term investors in recent years.

We enter the final quarter of 2025 with confidence. The convergence of breakthrough science, intelligent infrastructure, and a long-term investment horizon gives BB Biotech a clear edge in identifying and capturing enduring value for shareholders.

Thank you for your continued trust and partnership.

The Board of Directors of BB Biotech AG