Loncar Cancer Immunotherapy Index Tracks Dynamic Biotechnology Market

Cancer immunotherapy is a key sector in the biotechnology space which has attracted significant interest from investors, innovators and patients alike. Unlike more conventional medicines for cancer – say, chemotherapies – immunotherapy can be more precisely tailored to battle a patient’s disease through checkpoint inhibitors, cancer vaccines, bispecific antibodies and chimeric antigen receptor technologies.
To learn more about this unique area of the market, the Investing News Network sat down with Brad Loncar, the designer of the Loncar Cancer Immunotherapy Index (INDEXNYSEGIS: LCINDX). Read on to learn more about cancer immunotherapy, the details of the Loncar Cancer Immunotherapy ETF (NASDAQ:CNCR) and the ways in which cancer immunotherapy is benefiting real patients. This is the first part of a two part interview.

Immunotherapy: the future of cancer treatment

According to Loncar, “immunotherapy is an innovative new way to treat many types of cancers. Most people are familiar with chemotherapy, which in many cases is toxic and affects the whole body. The immune system is different – it is natural and can adapt and learn. So the theory is if you can harness it to fight a disease like cancer, you might see stronger and longer lasting results.”
Loncar explains that “there are already a handful of immunotherapy drugs (called checkpoint inhibitors) on the market, such as Merck’s (NYSE:MRK) Keytruda and Bristol Myers-Squibb’s (NYSE:BMY) Opdivo. They have been approved in melanoma (which they have revolutionized the treatment of), lung cancer, bladder cancer, kidney cancer, and types of leukemia and lymphoma.”
“Over time, I think you will see checkpoint inhibitors build on these early approvals and become the foundation of care for dozens of different types of cancer. In addition, there is group of biotech companies working on second and third generation immunotherapy approaches that we will hopefully see come to market over the coming years.” Examples of these biotech companies are Juno Therapeutics (NASDAQ:JUNO), Kite Pharma (NASDAQ:KITE), Lion Biotechnologies (NASDAQ:LBIO), and Xencor (NASDAQ:XNCR).

Case study: former President Jimmy Carter’s battle with melanoma

The benefits of cancer immunotherapy aren’t just being witnessed in the lab, however. Loncar offered up the example of former President Jimmy Carter to illustrate how these drugs work in real life.
Loncar explains that “President Carter had late stage melanoma that unfortunately traveled to other parts of his body like his brain and liver. When cancer travels to other parts of the body like that, it is sadly when the prognosis is most serious.” In his case, the doctors gave him Merck’s Keytruda immunotherapy and “within a few months the cancer was no longer showing up on his scans. This turned out so well that he was recently told that he no longer needs any treatment at all.”
“In addition to the amazing efficacy, consider that President Carter is 91 years old. At that age, you might not even offer someone chemotherapy because it is so debilitating. In his case, not only was he able to take the drug, but he continued teaching Sunday school and doing his volunteer activities. So these drugs are not only highly effective, but they also deliver a better quality of life to patients as well.

What is the Loncar Cancer Immunotherapy Index?

So, with the benefits of cancer immunotherapy well outlined, Loncar explained the fundamentals of his index. He tells INN: “I created this index of the 30 leaders in the immunotherapy space. The 30 are broken up into two categories. First, there are seven large pharmaceutical companies such as Merck and Bristol Myers-Squibb. These are the companies that have the first generation of immunotherapy treatments on the market today. Second, we include 23 of what you more classically think of as biotech companies that are developing the second and third generation immunotherapy drugs. Hopefully we will see those come to the market in the coming years.”
Loncar created the index to “highlight what I think is the most innovative corner of the biotechnology space. Many people hear the word ‘biotech’ and think it is one thing. But that is not the reality at all.” He offers technology as an illustrative example.

Diverse market, diverse opportunities

“Twenty years ago,” says Loncar, “I thought of technology as one thing. You could look at the Nasdaq 100 and feel like it represented technology perfectly. However, most investors don’t think of tech like that today. Now you think of individual businesses that make up tech because they are so unique – like semiconductors, telecom equipment, and software. These things all have different business models. Some are high innovation and high growth while others are low growth. They have different multiples and attract very different sets of investors. Investors like to focus on them separately.”
All told, “the reality of biotech is the same. Biotechnology is not one thing. It is made up of at least a dozen different business models. Some of which are highly innovative while others aren’t. I think cancer immunotherapy is the most innovative thing happening in biotech today and has the most potential to have a long-term impact on healthcare. Therefore, I chose to specifically highlight it by creating this index. Immunotherapy is a long-term trend that is already here with the first handful of approved drugs, and will play out even further over the next 10 years. It has the chance to be very special.”
Stay tuned for the second half of our interview, in which Loncar details the stocks highlighted in the index, the sector’s top trends, and his future predictions for the market.
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Securities Disclosure: I, Morag Mcgreevey, hold no direct investment interest in any company mentioned in this article.