By Sherry Qin


Shares of GenScript Biotech plunged in Hong Kong amid concerns that the company, like its China-linked biotechnology peers, could face U.S. scrutiny due to alleged ties with the Chinese government.

The biotech company's shares were recently 20% lower at 7.98 Hong Kong dollars (US$1.02) on Monday, taking its year-to-date losses to 60%.

Late last week, two members of the U.S. House Select Committee on the Chinese Communist Party sent letters to the directors of the Federal Bureau of Investigation and the Office of the Director of National Intelligence to seek information on GenScript and its three subsidiaries' connections to the Communist Party.

Select Committee Chairman John Moolenaar and Ranking Member Raja Krishnamoorthi, in a letter dated May 30, asked the two agencies for a briefing on the biotech firm and its units' links to the CCP and "the implications these connections may have for U.S. national security."

GenScript, in its response late Sunday, said, "The letter does not allege any illicit behavior on the company's part. The company is not under the control of any government."

In a note, Jefferies analysts said the select committee's move shouldn't impact the company's fundamentals in the near-to-medium term, but some investors might stay on the sidelines amid share-price volatility until after the U.S. election.

It isn't the first time the U.S. committee members have questioned China-linked biotech companies.

In late January, contract drugmaker WuXi AppTec and its affiliate were mentioned as companies of concern under the Biosecure Act.

The act, which the House of Representatives passed last month, gives U.S. companies until 2032 to reduce their dependency and business ties with these Chinese biotech companies, which would then be restricted on national-security grounds.

The WuXi companies have repeatedly denied any wrongdoing and said they don't pose a national-security risk to any country.

Although GenScript was founded in New Jersey, the select committee members said the biotech firm's primary operations are based in the eastern Chinese city of Nanjing, and many of its executives have links to the CCP.

"We will be actively engaging the Committee to help them better understand the company's business and decadeslong commitment to being a force for good in life sciences and the society," GenScript said.


Write to Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

06-03-24 0214ET