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An End-of-Year Message from Brad Loncar

Dec. 22, 2017

Brad Loncar, CEO of Loncar Investments and index provider to the Cancer Immunotherapy ETF (Nasdaq: CNCR), offers an end-of-year message and preview of 2018.

As 2017 comes to a close, I wanted to take a moment to reflect on the progress immunotherapy has achieved this year and sincerely thank you for your support of the field. Important new advances have reached patients in 2017 and there is a lot to be optimistic about heading into 2018.

Immunotherapy drugs won important new FDA approvals in 2017 for types of colorectal, gastric, hepatocellular, leukemia, lymphoma, lung, and Merkel cell carcinoma. Additionally, history was made in May when Merck’s Keytruda became the first medicine ever approved by FDA for a cancer’s specific genetic features rather than where it originates in the body. Overall, there were 16 FDA approvals for immunotherapy in 2017 versus eight in 2016.

2017 will also forever be remembered as the year that CAR-T cellular immunotherapy became a reality. CAR-T is where the patient’s own T-cells are drawn so they can be re-engineered outside the body and taught to look for cancer. Once infused back into the patient, the cells recognize the cancer and aim to destroy it. This was approved for a type of childhood leukemia in August and then later again in October for aggressive non-Hodgkin lymphoma in adults.

I attended a meeting at FDA’s headquarters this summer when the leukemia treatment was being reviewed and will never forget how it has changed the lives of families of these children. In the pivotal study leading to approval, 83% of patients were put into complete remission after three months and 79% were alive after one year. These are stunning results considering how the children were refractory to traditional treatments and likely only had months to live. I have never seen anything like that.

2017 also saw increased corporate and investor interest in immunotherapy after Gilead Sciences acquired CAR-T leader Kite Pharma for $11.9 billion in August. Kite launched its IPO at a valuation of approximately $600 million in June of 2014, which shows how quickly innovation and value creation can happen in this space. We have also seen immunotherapy drugs increase the pipeline value of companies by billions like BeiGene, bluebird bio, Incyte, Juno, and Nektar Therapeutics over the last year.

While these milestones have been exciting to watch, there is much work ahead because the vast majority of cancer patients still need better options. I am optimistic that these are early days and immunotherapy can build on its progress and play a disruptive role. Researchers are hard at work on new versions of these medicines to help more patients in the future. There are hundreds of studies ongoing utilizing new immunotherapy targets that hold promise for dozens of cancers.

In 2018, look for major studies to read out that combine two immunotherapy drugs for types of cancer including front-line advanced lung cancer and melanoma. I also recommend following closely the progress researchers are making using immunotherapy in tumor types that have not yet seen approvals such as breast cancer and hard-to-treat brain cancers like glioblastoma. In the CAR-T space, I recently returned from a large hematology meeting and am excited at inroads companies are making against multiple myeloma and other blood cancers. There is a lot to be optimistic about.

Please know that your support of this work is very important and highly appreciated. The goal of immunotherapy is to change cancer care and improve lives. The capital markets play an important role in making it happen and that is an impact we all can make. Much of the innovation that is happening in immunotherapy and cancer research today is coming from smaller companies in the biotech sector. These companies need investor support because it allows them to conduct the important work they are doing.

I sincerely thank all of you who have placed trust in our index methodology as a way to invest in this space. My colleagues and I are grateful for investor support and take the responsibility that comes with it very seriously. We highly admire researchers who develop new therapies, and also the courageous patients who participate in trials that make progress possible. It is our hope that focusing on immunotherapy in this way will drive more awareness and investment in their direction while giving investors exposure to one of the most innovative segments within the biotech industry.

Thank you again for your support. We wish you a healthy and prosperous 2018.

Best regards,

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Brad Loncar

 

Opinions expressed are those of the author or Funds and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice. Fund holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security.

View all holdings in the Loncar Cancer Immunotherapy ETF.


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CNCR Prospectus CHNA Prospectus

A basis point is a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001).

The Loncar Cancer Immunotherapy Index is an index of 25 securities that have a strategic focus on the area of cancer immunotherapy, or harnessing the immune system to fight cancer. Quotes for the index can be found under the symbol “LCINDX” on the Bloomberg Professional service and other financial data providers. One may not directly invest in an index.

The Loncar China BioPharma Index is an index of 28 securities that have a strategic focus on advancing China’s biopharma industry. Quotes for the index can be found under the symbol “LCHINA” on the Bloomberg Professional service and other financial data providers. One may not directly invest in an index.

Holdings are subject to change.

The Hong Kong Stock Exchange (HKEX) is the primary stock exchange in the Hong Kong Special Administrative Region of China. Nasdaq is one of the primary stock exchanges in the United States.

Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained at www.loncarfunds.com. Read the prospectus carefully before investing.

Investing involves risk. Principal loss is possible. The fund may trade at a premium or discount to NAV. CNCR will invest in immunotherapy companies which are highly dependent on the development, procurement and marketing of drugs and the protection and exploitation of intellectual property rights. A company’s valuation can also be greatly affected if one of its products is proven or alleged to be unsafe, ineffective or unprofitable. The costs associated with developing new drugs can be significant, and the results are unpredictable. The process for obtaining regulatory approval by the U.S. Food and Drug Administration or other governmental regulatory authorities is long and costly and there can be no assurance that the necessary approvals with be obtained and maintained. The Fund may invest in foreign securities, which involve political, economic, currency risk, greater volatility, and differences in accounting methods. The Fund is non-diversified meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. The Fund invests in smaller companies, which may have more limited liquidity and greater volatility compared to larger companies. The Fund is not actively managed and may be affected by a general decline in market segments related to the index. The fund invests in securities included in, or representative of securities included in, the index, regardless of their investment merits. The performance of the fund may diverge from that of the Index and may experience tracking error to a greater extent than a fund that seeks to replicate an index. Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

RISK FOR THE CHNA ETF: The biopharmaceutical industry in China is strictly regulated and changes in such regulations, including banning or limiting certain products, may have a material adverse effect on the operations, revenues, and profitability of Biopharma Companies. The laws and regulations applicable to the process of administrative approval of medicine and its production in China require entities producing biopharma products to comply strictly with certain standards and specifications promulgated by the government. Changes in currency exchange rates and the relative value of non-U.S. currencies will affect the value of the investment. Currency exchange rates can be very volatile and can change quickly and unpredictably. Investments in non-U.S. securities involve certain risks that may not be present with investments in U.S. securities. For example, investments in non-U.S. securities may be subject to risk of loss due to foreign currency fluctuations or to political or economic instability. Investments in non-U.S. securities also may be subject to withholding or other taxes and may be subject to additional trading, settlement, custodial, and operational risks. These and other factors can make investments in the Fund more volatile and potentially less liquid than other types of investments. To the extent the Fund invests a significant portion of its assets in the securities of companies of a single country or region, such as China, it is more likely to be impacted by events or conditions affecting that country or region. The Fund is a recently organized, non-diversified management investment company with no operating history. As a result, prospective investors have no track record or history on which to base their investment decision. The Fund is considered to be non-diversified, which means that it may invest more of its assets in the securities of a single issuer or a smaller number of issuers than if it were a diversified fund. The Fund is not actively managed and the Fund's sub-adviser would not sell shares of an equity security due to current or projected underperformance of a security, industry or sector, unless that security is removed from the Index or the selling of shares of that security is otherwise required upon a reconstitution of the Index in accordance with the Index methodology. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors."

Diversification may not protect against market risk.

Exchange Traded Concepts, LLC serves as the investment advisor, and Vident Investment Advisory, LLC serves as a sub advisor to the fund. The Funds are distributed by Quasar Distributors, LLC, which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.