WuXi Companies Say They're Not a Security Risk as U.S. Passes Draft of Biosecure Act — Update

By Jiahui Huang and Sherry Qin

The U.S. House of Representatives took another step to curb Chinese companies' U.S. operations by passing a draft of the Biosecure Act, prompting China-based biotech company WuXi AppTec and its affiliate to again deny they are threats to security.

The draft bill, which designates the WuXi companies as a "biotechnology company of concern," is preemptive and unjustified without due process, WuXi AppTec and WuXi Biologics said Tuesday.

"We firmly believe that WuXi AppTec has not posed, does not pose, and will not pose a security risk to the United States or any other country and it has not been subject to any sanction by the U.S. government agencies.," WuXi AppTec said.

The U.S. House passed the draft Biosecure Act on Monday.

Earlier this year, U.S. lawmakers introduced the bill aimed at barring federal contracts with the Beijing Genomics Institute and some Chinese biotech entities, including the Wuxi companies. The bill alleged that these companies had connections with the People's Liberation Army. WuXi companies at the time denied their association with the PLA and said they didn't pose a security risk.

The WuXi companies' shares fell sharply on the news. WuXi AppTec slumped 8.6% in early Hong Kong trade Tuesday and 4.7% in Shanghai. Its sister company WuXi Biologics was down 3.7% in Hong Kong.

Citi analysts said in a note that WuXi AppTec and WuXi Biologics shares looked undervalued but "the uncertainty is a potential risk to investor confidence in the names."

The U.S. wants to limit China's influence in its markets, accusing some companies of posing a threat to national security or collaborating with the Beijing government to gather data.

The latest draft Biosecure bill will also restrict U.S. government agencies from using funding, loans or grants for contracts that would use certain biotechnology equipment or services from a designated company.

The bill will move onto the Senate floor before it can sent to President Joe Biden to be signed into law.

However, it is still unclear whether the Senate will use the House version of the Biosecure Act, or if it will be attached to the government spending bill that has to pass before the end of this month, the Citi analysts said.

WuXi AppTec and WuXi Biologics said they don't have a human genomics business or collect human genomic data in the U.S., China, or elsewhere.

The two companies also said that they would work closely with their advisors to continue their engagement and dialogue with the relevant stakeholders involved in the legislative process.

Write to Jiahui Huang at jiahui.huang@wsj.com and Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

September 10, 2024 00:49 ET (04:49 GMT)

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