Oncolytics Biotech Inc ONCY

RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:USA Inflation Reduction Act (IRA) 2022 Re: Biotech and China

[Noteable]

On Wednesday, 3 April, 2024, a letter from the House’s Select Committee on the Chinese Communist Party recommended more companies to add to the Pentagon’s list of firms that are allegedly working with the Chinese military. The letter identifies several companies, including two headquartered in California—Innomics (Sunnyvale, CA, US) and Axbio (Santa Clara, CA, US)—as potentially Chinese military-backed companies, and implied the companies may have tried to hide their affiliation with Chinese-headquartered BGI Genomics (Shenzhen, China), which has been on the security risk list since 2022. Other Chinese companies recommended for the list are Origincell (Shanghai, China), Vazyme Biotech (Nanjing, China), and STOmics (Shenzhen, China).

The letter states that Innomics recently registered to conduct business operations in Kentucky under BGI. Innomics provides sequencing services to institutional and corporate clients for research purposes and STOmics sells lab kits and reagents. BGI asserts that both Innomics and STOmics belong to BGI but do not have any connections to the Chinese military. Targeting Chinese-based biotechs would heavily affect the US pharma industry, which relies on these companies for R&D and for supply chain support.

US Congress has targeted Chinese-affiliated companies in the biotech and pharma sector in recent months and is seeking to prevent these companies from conducting business with US firms by threatening to withhold federal funding. The BIOSECURE Bill, introduced in the House of Representatives on 25 January, 2024, initially targeted companies such as WuXi AppTec (Shanghai, China), BGI Genomics (Shenzhen, China), MGI (Shenzhen, China), and the MGI subsidiary Complete Genomics (San Jose, CA, US) and any subsidiary, parent affiliate (such as WuXi Bio [Jiangsu, China]), or successor of such entities. It claimed these companies pose a risk to US national security by “engaging in joint research with, being supported by, or being affiliated with a foreign adversary’s military, internal security forces, or intelligence agencies.” Reuters reported that in February, US intelligence officials briefed senators that WuXi AppTec had transferred a US client’s intellectual property to China without the customer’s consent. 

If the BIOSECURE Bill passes, it would effectively prevent US federal agencies from doing business with companies that contract with Chinese CDMOs such as WuXi. To mitigate risk, WuXi is considering beefing up its foreign direct investment (FDI) activities in Ireland, according to the Irish newspaper The Business Post.

Both R&D and manufacturing operations by WuXi in Ireland have received hundreds of millions of euros of investment. Recently WuXi transferred $348 million into WuXi Atu (Ireland) Holding Limited (Dublin, Ireland), a “dormant” business entity based in Ireland, although it is unclear if this has a connection to the emerging national-security crackdown targeting Chinese companies in the US. The Irish government and its foreign direct investments agency IDA Ireland are increasingly proactive in seeking to attract life science investments from China that had been destined for the US. This approach amounts to a high-risk, high-reward play by the Irish government, given that the world is set to become increasingly geopolitically polarised between China and the US, including US regulators’ efforts to control technology flows to China and the EU policy of “de-risking” trade with China.