There are currently eight dedicated, non-leveraged biotechnology exchange traded funds on the market. That number could grow by at least one if the Loncar Cancer Immunotherapy ETF comes to market.
Kansas-based Loncar Investments said in a statement out Monday that it is partnering with ETF-in-a-box provider Exchange Traded Concepts to bring the new ETF market, perhaps as soon as the second half of this year.
The new ETF will be based on the Loncar Cancer Immunotherapy Index (LCINDX), which was developed by Loncar Investments founder Brad Loncar and is calculated by Indxx. The index “seeks to track the combined performance of a basket of companies that develop therapies to treat cancer by harnessing the body’s own immune system. Immunotherapy is a transformational field within the biotechnology space,” according to Loncar Investments.
The index, which started trading on March 18, holds 25 stocks, including six large-cap biotechs and 19 stocks that are considered growth biotech names. Advaxis (NasdaqGS: ADXS) is the index’s largest holding at a weight of 12%. No other index component receives a double-digit weight. Other top 10 holdings include Cellectis (NasdaqGS: CLLS), Bluebird Bio (NasdaqGS: BIO) and Agenus (NasdaqGS: AGEN).
The index is also home to blue-chip pharmaceuticals stocks, including Dow component Merck (NYSE: MRK) and AstraZeneca (NYSE: AZN) as well as biotech behemoths Celgene (NasdaqGS: CELG) and Amgen (NasdaqGS: AMGN). The index has risen about 10% since its March debut, according to Loncar data.
The index is the first dedicated cancer immunotherapy benchmark. Loncar, manager of a biotech-focused family office, told ETF Trends a ticker has not yet been chosen for the ETF but added that he expects the fund’s expense ratio to be in the area of 0.8% per year.
“Cancer immunotherapy is an important sector in biotechnology that is changing the way many cancers are treated. While traditional medicines like chemotherapies often give cancer a broad punch, the benefit of using immunotherapy is derived from the immune system’s dynamic nature and the way it can more precisely be tailored to fight the disease. Some immunotherapies have exhibited uncommon results in clinical trials including partial and complete responses in late stage cancer patients,” according to Loncar Investments.
Assuming Loncar’s ETF comes to market, it would be the latest in an expanding line of biotech ETFs with narrow focuses. For example, the BioShares Biotechnology Clinical Trials Fund (NasdaqGM: BBC) focuses on companies with a lead drug candidate in a Phase 1, Phase 2 or Phase 3 trial. The ALPS Medical Breakthroughs ETF (NYSEArca: SBIO), which focuses on small- and mid-cap companies that have one or more drugs in either Phase II or Phase III U.S. FDA clinical trials. Those ETFs debuted in the fourth quarter of 2014 as did the BioShares Biotechnology Products Fund (NasdaqGM: BBP).
BBP tracks an index follows U.S.-listed biotech companies with a primary product offering or product candidate that has landed FDA approval. [New Breed Biotech ETFs]
Loncar Cancer Immunotherapy Index
