Intelligence officials warned lawmakers WuXi AppTec furnished China with client's intellectual property: Reuters

An alleged development in the national security crackdown against WuXi AppTec and a handful of other Chinese companies in the U.S. suggests intelligence officials and lawmakers may have good reason to be concerned about the CDMO’s ties to its home country.

U.S. intelligence officials last month informed Senators on the bipartisan homeland security committee that WuXi AppTec had transferred a U.S. client’s intellectual property to China without the customer’s consent, Reuters reported Thursday, citing two unnamed sources.

WuXi AppTec, for its part, said in an email that it was “not aware” of any unauthorized transfers of client data or intellectual property to China. Safeguarding customers’ information is “of the utmost importance” to the company, a spokesperson told Fierce Pharma.

The contract testing and manufacturing giant “respects and fully complies” with requirements of U.S. federal and state authorities, the spokesperson added.

"WuXi AppTec has never been subject to U.S. sanctions or determined by any federal agency to pose a national security risk to the United States," she explained. "Because of our long-standing and strict adherence to U.S. laws and regulations and respected security protocols, WuXi AppTec has earned its role as a valued and trusted contributor to the pharmaceutical and life sciences industries and a trusted partner to customers in the U.S. and around the world."

The latest update in the WuXi national security saga comes after a whirlwind of accusations against WuXi AppTec, its sister company WuXi Biologics and a trio of unrelated Chinese genomics companies.

In late January, the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party unveiled the BIOSECURE Act—a bill aimed at keeping federal funding out of the hands of so-called “foreign adversary biotech companies of U.S. national security concern.”

Besides barring WuXi AppTec from receiving federal contracts, the BIOSECURE Act would also limit the ability of drugmakers participating in Medicare and Medicaid to work with the CDMO giant. Effectively, it would cut the large Chinese contractor out of the U.S. market.

Both WuXi Biologics and WuXi AppTec were quick to defend themselves in the face of the draft legislation, with AppTec execs penning an open letter in February that pushed back on what they called a “misguided” initiative from the House Select Committee.

Lawmakers upped the stakes in mid-February in a letter to Secretary of the Treasury Janet Yellen, Secretary of Defense Lloyd Austin and Secretary of Commerce Gina Raimondo pressing for sanctions on WuXi AppTec and WuXi Biologics.

The legislators cited Chinese government documents, university websites and media articles to argue that the two companies have ties to China’s Communist Party (CCP) and its military and support the country's policies in Xinjiang, where China has long been accused of human rights violations primarily targeting Uyghur Muslims.

When WuXi AppTec and WuXi Biologics were first put under a magnifying glass earlier this year, the influential trade group the Biotechnology Industry Organization (BIO) originally stood behind the CDMOs. In mid-March, however, the group said it was taking “important steps” to support U.S. national security, including by supporting the BIOSECURE Act.

"Our adversaries abroad have stated that they intend to become the biotechnology center of excellence in the world," BIO CEO John Crowley said in a statement at the time. "America and our allies cannot let this happen. Securing and advancing our preeminence in biomanufacturing will be one key component of a multi-prong approach to secure and advance this strategic imperative in biotechnology.”

Around that same time, WuXi AppTec “proactively ended its membership” with the BIO, the group said.

Just last week, though, WuXi AppTec appeared to be taking the increased scrutiny in stride.

During an earnings presentation, the company issued a surprisingly upbeat 2024 forecast, stating that it was still counting on revenue growth and expansion projects to unfold as planned this year, despite the threat of the looming national security legislation.

The legislation could deal a major blow to Shanghai-based WuXi AppTec, which last year channeled 26.1 billion yuan ($3.6 billion)—65% of its total revenue—from its customers in the U.S.

Editor's note: This story has been updated with a statement from WuXi AppTec.