State of Biotech: A Slower Q3, but Fundamentals Remain Intact

Over the past quarter, biotech has remained resilient despite headwinds from a more restrictive monetary policy and a slower pace of M&A activity. We do not believe the sector is in a bubble yet, as the rally over the past 12-18 months has been underpinned by strong fundamentals, including the removal of regulatory overhangs, record levels of M&A activity, and a significantly improved financing environment. We remain constructive and see potential for further upside into YE26 and 2027. Three observations: (1) Biotech has remained resilient through the September rate hike and expectations for further rate hikes;