From Washington to Main Street and even Wall Street, drug pricing is under intense scrutiny. So right now may not be the most ideal time to launch a biotech exchange-traded fund.
The sector (IBB) has also experienced a huge selloff following Hillary Clinton’s tweet last month to fight “price gouging” for prescription drugs. She was responding to Turing Pharmaceuticals’ price boost for its pill from $13.50 to $750.
“People deserve to be outraged by that and I think our industry is outraged,” said Brad Loncar, who recently launched a new ETF. The Loncar Cancer Immunotherapy Index (LCINDX), which specifically tracks developers of cancer treatments that use the body’s own immune system.
“While you may hear stories in the news about one product that has a high price, the overall system is working and so I think we need to keep that perspective,” he added.
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Loncar maintains now is a good time to start his ETF. “It's a very exciting time for cancer research and this should be an exciting trend over the next five or ten years,” he said. Global demographics is also in biotech’s favor, according to the popular blogger turned investor.
His strategy is to invest in companies that “have the biggest impact on patients’ lives.” The fund focuses on three areas including cancer immunotherapy, gene therapy and rare diseases.
Loncar’s ETF holds 30 pharmaceutical and health care stocks. Among those stocks, Bristrol-Myers Squibb (BMY) is a stock he likes to highlight because of the approval of its melanoma drug. “That's going to be a foundational drug for many types of cancers in the future, so that's definitely one to watch very closely,” he said.
Unsurprisingly, his outlook for the entire biotech sector is also bright. “Science has never been more exciting. Researchers are on the cusp of breakthroughs, not incremental gains,” said Loncar.
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