EXCLUSIVE Wuxi Biologics Takes Steps To Remove From US ‘Unverified’ Trade List

NEW YORK, July 5 (Reuters) – Wuxi Biologics (2269.HK), a Chinese company that makes ingredients for AstraZeneca’s COVID-19 vaccine, may be set to be removed from a U.S. trade list on which it landed five months ago, wiping HK$77 billion ($9.9 billion) from its market value at the time.

Chinese authorities authorized a US export control official to carry out inspections of at least one company in the city of Wuxi last week, a US Department of Commerce official said.

The official declined to identify the company or companies involved, but a person familiar with the matter told Reuters a check was carried out last week at Wuxi Biologics.

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If the United States deems the check favorable, it could be delisted.

The company did not respond to requests for comment. Shares of Wuxi Biologics jumped 12.2%, their highest level since Jan. 24, on Tuesday after the news.

Wuxi Biologics’ units in Wuxi and Shanghai were among 33 entities added to the US Commerce Department’s “unverified list” in February. The company was one of only two to be added to the list with addresses in Wuxi. Read more

The US placed the entities on the list because it could not conduct on-site inspections to verify information about them and US items being shipped to them.

The resumption of inspections is seen by the United States as a positive development amid heightened tensions with China over a range of issues, including the United States blocking imports linked to forced labor in China and the possible delisting Chinese companies that do not pass the audit. terms.

Last week there were also fresh threats to shut down SMIC, China’s top chipmaker, if it is found to be sourcing Russia in violation of US export controls. Read more

“I have good news,” the Commerce Department official, who could not be publicly identified, said Thursday at an export controls conference in Washington.

“We were able to get end-use check movements this week in Wuxi.”

The official added that he hoped a U.S. export control officer could visit another province, Anhui, in the coming weeks, although that may be delayed by new COVID-19 outbreaks.

US inspections of Chinese companies must be approved and scheduled by China’s Ministry of Commerce, the US official said.

China’s zero-tolerance COVID-19 protocols have caused most of the delay over the past two years, although there have been some opportunities to carry out checks, the official said.

“Covid aside, it’s really up to them to agree to schedule the pending end-use controls that we have,” the official said.

China’s Ministry of Commerce did not respond to a request for comment.

In February, U.S. Under Secretary of Commerce Matthew Axelod said the additions to the list “signal to the PRC government the importance of their cooperation in planning end-use controls.”

But China’s Commerce Ministry criticized the development and said Washington should correct its “wrongdoings”, return to the path of cooperation and contribute more to global economic recovery. Read more

At an investor day on June 16, Wuxi Biologics said it hoped to see the “unverified listing” issue resolved for at least one of its units by September, and the other by September. the end of the year.

The company said it originally expected an inspection in April, which was disrupted by COVID-19. He said he did not see a significant impact on actual operations from his addition to the list.

U.S. exporters can engage with parties on the unverified list, but are required to conduct additional due diligence before they can ship goods to them, and may need to apply for more licenses.

Citi analysts said in a report on Tuesday that the company’s management had noted that the result of the checks could be positive but was still awaiting final confirmation.

“In our view, the potential removal of the Wuxi site from the (unverified list) would help alleviate market concerns over geopolitical risk and bolster market sentiment on the CRO (contract research organization) sector.” , they said.

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Reporting by Karen Freifeld; Additional reporting by Roxanne Liu in Beijing and Brenda Goh in Shanghai. Edited by Kenneth Li, Deepa Babington and Sonali Desai

Our standards: The Thomson Reuters Trust Principles.

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