Russia’s Ukraine Invasion: Which Healthcare Companies Are Exposed?

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Over land, air and sea, Russia invaded Ukraine two days ago. Despite the taking down of the iron curtain more than 30 years ago, a curtain of perception remains between Russia and the West, developed and supported, no doubt, by people for whom war is good business.

I wish there was a quick resolution to this war, because the sector I am involved with – Healthcare – has a lot invested in Ukraine. However, I doubt the war will end soon, because by going into Ukraine, Russia has done what it has always feared – come closer to NATO. Ukraine is not a NATO state; its crime, in Vladimir Putin’s eyes, was its wish to get into NATO. However, bordering Ukraine are Poland, Slovakia, Hungary and Romania, each a member of NATO. Countries like Poland and Romania are locations of NATO ballistic missiles and radars; in short, these are seriously committed NATO states. Therefore, invading Ukraine has brought Putin closer to his enemy. He is not in a position where he can leave quickly.

That brings me to the topic in question: which of my investments – which healthcare companies – are going to be significantly impacted by this invasion?

It is sad, really, for the world that, after having to go through the ruination that was the SARS-COV2 virus which originated in the Wuhan province of China and spread globally, we now have to contend with another devastation that has originated in Russia and may have global repercussions – and not just for your gas bill.

Ukraine has over 2395 clinical studies listed. This figure includes all studies from all sponsors in all stages of completion and in all phases. Cutting this down to interventional studies (studies with active drugs) sponsored by the industry, studies that are not yet completed (active and/but not recruiting), and phase 2 and 3 (late stage) trials, we get 554 studies.

Going through this list, I see a number of large pharma running studies over in Ukraine. AbbVie (ABBV) has no fewer than 15 phase 3 studies ongoing in Ukraine, with Allergan having 3 more. Amgen (AMGN) has 6 studies, AstraZeneca (AZN) 30, Bayer (OTCPK:BAYRY) 10, Celgene (BMY) 6, Eli Lilly (LLY)10, Roche (OTCQX:RHHBY) 45, Janssen (JNJ) 31 plus another 10 from Actellion, Merck Sharpe and Dohme (MRK) 53, Novo Nordisk A/S (NVO) 13, Pfizer (PFE) 12 and Sanofi (SNY) 16. To put that in a table:

Company

Number of studies

AbbVie

18

Amgen

6

AstraZeneca

30

Bayer

10

Celgene

6

Eli Lilly

10

Roche

45

Janssen

41

Merck

53

Novo Nordisk A/S

13

Pfizer

12

Sanofi

16

Source – author, clinical studies registry

Now, it would be superficial to say that these big pharma companies are critically invested in Ukraine. No, that is nothing like that. First, most of these studies will be of long term label expansion studies of already-approved products. Second, Ukraine might just have a few sites as part of a large, global trial. Therefore, while the war will be an inconvenience for most of these programs, big pharma, I don’t think, will be overly bothered. This war is not going to be like Covid-19 which shut the world down for 30 months. This could have a short, quick effect; or it could be worse.

No, what bothers me much more are the small pharma companies running trials in Ukraine, Karuna Therapeutics (KRTX), for one, As FierceBiotech says:

One biotech, in particular, called out the geopolitical tensions as a possible cause for concern. Karuna Therapeutics warned today that timelines for its second phase 3 study in schizophrenia, dubbed EMERGENT-3, are uncertain because 10 of the 19 trial sites are in Ukraine.

The study might not be needed for Karuna to file the drug, KarXT, for approval, according to RBC Capital Markets analysts. But, if the first phase 3 trial, EMERGENT-2, fails to meet its primary endpoint and produce safety data, Karuna could be in trouble. EMERGENT-3 is a “backup option,” RBC wrote in a Thursday note.

Here’s what Karuna said:

On February 24, 2022, Russia launched a wide-ranging attack on Ukraine. In light of the continuously evolving and worsening conditions in the region, KarunaTherapeutics, Inc. (the “Company”) is withdrawing its prior guidance for the timing of topline data for its ongoing Phase 3 EMERGENT-3 trial evaluating KarXT in schizophrenia. At this time, the escalating conflict in Ukraine has created uncertainty around the Company’s ability to project the timing of topline data from thistrial. The Company is actively monitoring the evolving geopolitical situation between Ukraine and Russia and the impact on clinical trial sites and operations. The safety of patients and clinical trial partners is the Company’s priority. The Company continues to enroll and treat patients in the EMERGENT clinical program at its sites in the U.S., and will provide updates on its sites and operations in Ukraine, as appropriate. The Company expects to provide updated guidance on the Phase 3EMERGENT-3 trial once it is able to better understand the impact of recent developments in Ukraine on its ongoing trial.

This is therefore a serious concern for KRTX investors.

TG Therapeutics (TGTX), one company I would have been worried about, has 20 sites in Ukraine of an 85-site trial of ublituximab in multiple sclerosis. Luckily, this is an extension study, and although a phase 3 study, will have no impact on the September 28 PDUFA of the molecule in RRMS. That ship has already sailed – a phrase which, for once, I can use with a positive connotation.

Interestingly, this trial also has 22 sites located in Putin’s Russia. O the ironies of war!

Taking that thought a little further, the global pharmaceuticals industry has 1127 interventional phase 2 and 3 studies running in the Russian Federation.

Coming back to my list, Agenus (AGEN) is running a more or less important trial of lead candidates Zalifrelimab + Balstilimab in cervical cancer in 10 locations in Ukraine, out of 47 global locations. This could be a problem for the company, which had a primary completion date of May 2022. This could be pushed out further.

Amryt (AMYT) could have been another stock that would have been affected. Phase 3 trial of its lead candidate Oleogel-S10 for the treatment of cutaneous manifestations of Junctional and Dystrophic Epidermolysis Bullosa is being run in one location in Ukraine, out of 51 locations. However, NDA was submitted last year, PDUFA was extended and now it is supposed to be on February 28. The FDA hasn’t yet approved the drug.

Arbutus (ABUS), too, has an important trial of AB-729 in HBV partly located in Ukraine. This is an important study for the company and the war will surely have some ramifications, although the trial is still in phase 2.

CymaBay (CBAY) has a critical phase 3 study of seladelpar in lead indication Primary Biliary Cholangitis. This trial was supposed to announce topline data in November 2022. Of the 139 study locations, 2 are in Ukraine. At this stage of the trial, I am hoping they have completed site level work. However, I have no clue whether they have – and that is a big problem.

Other companies that I follow – G1 Therapeutics (GTHX), Geron (GERN), FibroGen (FGEN), Exelixis (EXEL), Intra-Cellular Therapies, Inc. (ITCI), MacroGenics (MGNX) which I just covered yesterday, Rigel (RIGL), Veru (VERU) with a lead program in breast cancer, Vir Biotechnology (VIR) – all of these have late stage trials running at locations in Ukraine. Many, many other companies have trials running in Russia.

Now, thankfully, the exposure is minimal because no respectable trial for a drug aimed at the US market runs exclusively ex-US, in Ukraine, for example. That would be a disaster in more ways than one – for one thing, I know and have covered companies whose drugs were not approved by the FDA for the ostensible reason that their trials were not run in the US. So that has become a good thing for many of these companies. The exposure is minimal.

On the other hand, for active trials whose site work is not yet done, a location in Ukraine or Russia will have a lot of impact. The FDA may come out with numerous delay-causing instructions to amend such situations. Overall, the war is going to take a small toll on the sector. Nothing like Covid, but right after Covid, this is a small disaster for some of the companies I mentioned. Luckily, US pharma companies do not manufacture drugs in these two countries, and market exposure is minimal.

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