Medical breakthroughs are occurring constantly, but they often get lost in the news headlines unless they directly impact our lives. I wanted to take a moment to highlight a few recent medical breakthroughs and developments and explore a few ways to get actionable exposure to them with ETFs.
Oncology
Last month, researchers publicized the results from the INTERLACE trial. The findings represent one of the most important leaps forward in treating cervical cancer in 20 years. The trial found that cervical cancer patients benefited from receiving a short course of chemotherapy followed by the standard treatment. The alteration in protocol lowered the likelihood of death by 40%. It also reduced the risk of a cervical cancer resurgence by 35%.
The FDA has also approved many new cancer therapies this year. This includes nivolumab (Opdivo) for multiple solid tumors, selpercatinib (Retevmo) for pediatric thyroid cancer, and alectinib (Alecensa) for ALK-positive non-small cell lung cancer. UC San Francisco researchers developed a drug candidate for the treatment of pancreatic cancer, a disease with very few treatment options. It has the potential to stop tumor growth in patients.
A few ETFs with specific exposure to cancer drugs include the Range Cancer Therapeutics ETF (CNCR) and the Tema Oncology ETF (CANC). Passively managed CNCR is the winner in terms of one-year performance, up 52% vs. 27% for CANC. However, the actively managed TEMA product, CANC, is the champion in asset growth, with $48 million vs. $12 million.
Weight Loss
CDC data finds that more than 40% of U.S. adults are obese, meaning they have a BMI of 30 or higher. However, this is a global epidemic that extends well beyond our borders, with The Lancet journal reporting that more than 1 billion people worldwide qualify as obese.
The success of a new category of weight loss drugs, called GLP-1s, has helped transform the way we view obesity. It is now understood to be a treatable medical condition rather than a personal failing.
Two drug makers, Novo Nordisk and Eli Lilly, lead the pack regarding market share with their diabetes drugs Ozempic and Monjauro. This also includes the stronger weight loss versions Wegovy and Zepbound, respectively. That said, many new entrants and drugs using this technology are in the pipeline.
Beyond weight loss, GLP-1 drugs are being tested on other indications such as cardiovascular disease, kidney disease, fatty liver disease, sleep apnea, and even addiction. If some of these indications pan out, that raises the case for insurance coverage. That is probably bad news for the compounding pharmacies and telehealth companies benefiting from drug shortage statuses.
Besides new indications and more insurance reimbursement, new combo drugs with fewer side effects, more convenient dosing, and cheaper oral formulations will be additional catalysts for future growth.
There are three ETFs focused on the GLP-1 weight loss drug revolution: the Roundhill GLP-1 Weight Loss ETF (OZEM), the Amplify Weight Loss Drug & Treatment ETF (THNR), and the Tema GLP-1, Obesity, and Cardiometabolic ETF (HRTS).
Cell Therapy
CAR-T is an immunotherapy that uses a patient’s T cells to fight disease. The area of CAR-T cell therapy to date has been mostly focused on treating certain types of cancer. These would include as blood cancers like leukemia, lymphoma, and multiple myeloma. It has not been found as effective, however, on solid tumors.
Recently, there has been research indicating these drugs might be effective in treating autoimmune disorders such as lupus, myasthenia gravis, and multiple sclerosis. Research in this area is at an early stage but has massive implications for treating these diseases. In addition, autoimmune diseases are such a vast addressable market that some companies are pivoting their research efforts to this area.
Immunotherapy exposure is available in the cancer-focused ETFs mentioned previously. Still, other ETFs also benefit from positive developments in cell therapy. One ETF to consider is the ALPS Medical Breakthroughs ETF (SBIO), which is up 22% YTD and 68.5% on a one-year basis. Meanwhile, the iShares Genomics Immunology and Healthcare ETF (IDNA) is up a modest 6.8% YTD, but it has gained 34% on a one-year basis.
A Tailwind On The Horizon
Against the backdrop of all these favorable medical developments, the lower interest rate environment is expected to be a tailwind for capital-intensive biopharma and biotech companies. Similarly, many expect a more favorable regulatory environment for mergers and acquisitions. Robert F. Kennedy’s “Make America Healthy Again” impact on the FDA remains a big unknown. That said, it is initially expected to be more focused on vaccines. Finally, artificial intelligence will play a rising role in drug development, which could result in more breakthroughs and lower costs.
VettaFi LLC (“VettaFi”) is the index provider for SBIO and THNR for which it receives an index licensing fee. However, SBIO and THRN are not issued, sponsored, endorsed or sold by VettaFi. VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SBIO or THNR.