Here’s How Russia Is Helping Grow the Biotech Sector

“Life is short, and the process is long.” That’s what Cleveland BioLabs (NASDAQ:CBLI) President Dr. Michael Fonstein told Forbes last year while discussing the U.S. Food and Drug Administration’s regulatory process. Cleveland BioLabs shifted the development of several of their drugs from the U.S. to Russia, the birthplace of the company and a land where regulations are more flexible, in order to expedite the process towards commercialization.

In 2011, Cleveland BioLabs and Rusnano, a company and fund owned by the Russian government, partnered to start Panacela Labs in collaboration with Roswell Park Cancer Institute, Children’s Cancer Institute of Australia, and Cleveland Clinic Foundation. Rusnano agreed to provide up to $26 million in funding over a four-year period to Panacela, which maintains operations in Buffalo, New York, and Moscow, Russia. Cleveland BioLabs also has a 59-percent ownership in Incuron another Russian Federation-based joint venture (with Russian closed mutual venture fund, Bioprocess Capital Ventures) conducting clinical trials in Russia.

Russia has made no bones about its initiatives to command a larger portion of the global biotech market. In 2010, Russia only had a 0.2-percent market capture, but promises by now-President Vladimir Putin were meant to boost that to 5 percent by the end of the decade as part of The Comprehensive Program for Development of Biotechnology in the Russian Federation through 2020.

Retooling its biotech framework and dedicating funds, Russia has been encouraging Western companies to consider bringing their technology there. It seems to be working as the Ministry of Health approved 210 new clinical trials in the third quarter of 2013, up 59 percent compared to the year prior quarter, according to an orange paper by Synergy Research Group, a Russia-based contract research organization. Companies from 18 different countries were represented in those trials.

Amongst those trials, Amgen (NASDAQ:AMGN) sponsored seven of the new studies and Sanofi SA (NYSE:SNY) sponsored six. Janssen Pharma, a Johnson and Johnson (NYSE:JNJ) company, AstraZeneca (NYSE:AZN), and GlaxoSmithKline (NYSE:GSK) applied for five new trials each.

It’s also interesting to note that nine of the 23 new drugs that were approved by the FDA’s Center for Drug Evaluation and Research during the third quarter were researched in clinical trials in Russia. Pfizer’s (NYSE:PFE) conducted part of its pivotal trial of Lyrica in Russia on the path to receiving FDA approval last June as a treatment for neuropathic pain associated with spinal cord injury.

For any drug maker, financial support and trial ideology that expedites development, shaving years and potentially hundreds of millions of dollars of research, is certainly a benefit of trials in Russia. That is especially true for generally cash-strapped juniors that are now garnering significant support from Russian investors as well.

AtheroNova (OTCBB:AHRO) has an agreement with OOO CardioNova, a Russian subsidiary of Maxwell Biotech Group owned jointly by the Russian Federation and private investors. The Maxwell Biotech Venture Fund, created with the participation of the Russian Venture Capital and managed by Russia’s Maxwell Asset Management, is the first venture fund in Russia fully dedicated to investments in the life sciences sector.

CardioNova has licensed territorial development and commercialization rights to AtheroNova’s AHRO-001, a drug candidate for the treatment of atherosclerotic plaque. In May, the Russian Ministry of Health approved CardioNova to commence a Phase I clinical trial of AHRO-001, which subsequently began in June. The company is already planning for a Phase II trial in Russia in 2014, expecting that Phase I data is going to replicate lab studies showing strong safety, tolerability and pharmacokinetic profiles while lowering atheroma burden.

The Maxwell Biotech Venture Fund has provided all capital necessary to fund CardioNova to date. CardioNova has become an equity investor in AtheroNova, making several purchases that total over $260,000 to date.

The confluence of global biotechs in Russia is likely to pay dividends for both the country and the individual biotechs leveraging the government initiatives. That’s not to say that matriculating to Russia to conduct research doesn’t present its own set of challenges, namely many investors in the States holding some bias for studies conducted outside U.S. borders. However, reliability and validation as to the completeness and caliber of research that dovetails with U.S. regulations has grown tremendously in recent years and looks to be gaining steam with majors and juniors alike realizing the benefits, much to the ultimate benefit of the patient population worldwide.

Originally written for, a leading provider of SEC filings, real-time alerts, and in-depth analysis, with a team of experienced financial writers that cover quarterly/annual reports, insider trading/hedge fund activity, and IPOs, spin-offs, and other special events found within U.S. regulatory filings.

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