(TMTPOST) -- The U.S. Senate Committee on Homeland Security & Governmental Affairs has passed a bill with a vote of 11:1 during a hearing. The bill, called the “BIOSECURE Act” (“the Act”), would prohibit executive agencies from contracting with or extending loans or grants to any company with current or future commercial arrangements with a “biotechnology company of concern.” It also specifically names certain Chinese companies —BGI, MGI, Complete Genomics, WuXi Apptec—as companies of concern.
However, the approval in the hearing does not mean that "the Act" can be enacted. According to the regular legislative process, next, the U.S. Senate Committee on Homeland Security & Governmental Affairs will internally organize or modify the bill before sending it to the Senate for full member deliberation and voting.
Regarding the approval of the bill, some market analysts said that it was within expectations. The sole vote of objection was cast by Sen. Rand Paul, who worries that Congress is using anger toward China as a cover for advancing parochial interests. At the same time, Paul pointed out that this is a kind of protectionist behavior.
The hearing passage of "the Act" quickly triggered a stock tumble for WuXi AppTec and its related companies.
As of the noon closing on Thursday, WuXi AppTec closed at 52.86 yuan per share, down 9.99%; WuXi Biologics closed at HKD 17.24 per share, down 20.74%; JW (Cayman) Therapeutics (02126.HK) closed at HKD 1.89 per share, down 7.8%.
Market pessimism quickly spread to the entire CRO sector. As of the noon closing on Thursday, the CRO (BK0899) closed at 1185.08, a substantial fall of 3.25%.
In response, WuXi AppTec said in a statement Thursday that it doesn’t have a human genomics business, and promised to continue engagement with relevant stakeholders involved in the bill. WuXi Biologics also reiterated that it doesn’t pose any national security risk to the U.S. or any other countries.
Currently, the probability of the passage of "the Act" is still relatively low. According to predictions from relevant U.S. websites, the probability that “the Act” will be enacted is only 23%.
According to the U.S. legislative process, a bill must undergo five steps in both the House and the Senate: first reading, second reading, committee stage, report stage and third reading. A bill has a first reading when it is referred to committee, a second reading when it has been reported, debated and examined by the committee. The committee holds a hearing for voting. If the vote passes, the committee will report to the relevant chamber after completing the work on the bill and plan the time for public debate. A vote by all members will be conducted after the debate (third reading).
Therefore, the approval of the hearing of "the Act" is only the "second reading."
Currently, the "BIOSECURE Act" (H.R.7085) is scheduled to hold a hearing at 9:00 am local time on Thursday.
Whether the "BIOSECURE Act" (H.R.7085) passes or not may once again influence the domestic CRO sector's stock movements in the secondary market.
(This article was first published on the TMTPost APP, authored by Zhang Haixia)
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