Cancer ETF Redefines Biotech Investing

February 08, 2016

There’s a new ETF in the market that sets out to reinvent biotech investing, one theme at a time. The Loncar Cancer Immunotherapy ETF (CNCR) is the first ETF to cover cancer treatment specifically by tracking an index developed by Brad Loncar, head of Loncar Investments and a longtime biotechnology investor.

We caught up with Loncar to talk about why this strategy makes sense, and why it’s a needed take on the biotech segment. You just launched CNCR. What’s behind the idea of investing so specifically in a cancer-treatment-centered ETF?

Brad Loncar: There were two ideas behind it. First, there are a handful of biotech indices and ETFs in the market today, but they're all very broad, and very undifferentiated. As an investor, I remember 20 years ago thinking the same thing about technology.

If you wanted exposure to technology, you would buy the “Q’s” and feel like you owned technology. You don't think of technology that way anymore; you think of its individual components, like cybersecurity and semiconductors and telecom equipment. And all of those segments have different business models—some are high growth, some are low growth. They're valued differently by investors.

The reality of biotech is the same. Biotech is not one thing. There are high growth areas of biotech. And there're innovative areas of biotech. And there's the opposite, too. As a biotech investor, I noticed that there weren't products that made that distinction.

I wanted to look at the most innovative, high-growth, game-changing area within biotech and view that as an investment theme. To me, that’s cancer immunotherapy; it’s using your own immune system to fight cancer.

There are a handful of drugs that are on the market now that big companies like Bristol-Myers and Merck have approved and are starting to sell. And then there's this whole groundswell of immunotherapy treatments that are in development that you'll see come over the next two to five years.

That's going to revolutionize cancer and replace chemotherapy for most types of cancers. Since this is such a game changer within biotech, I thought it would be a good first segment to look at. In your view, immunotherapy's where the future is, not in chemo. So is this ETF in a way a growth fund?

Loncar: These companies will grow to the extent that they deliver value to patients. There are a handful of drugs that are on the market today. There have been approvals in melanoma; it's revolutionized melanoma, which used to be one of the most difficult cancers to treat. That's changed drastically.

They've been approved in melanoma, types of lung cancer, and most recently, kidney cancer and certain types of blood cancers. Over time, these immunotherapy drugs are going to be foundational. You're going to see them used for almost every type of cancer.

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