Recent Articles in Gov't & Regulatory

Asymchem’s $58 million acquisition of Boston’s Snapdragon Chemistry, a cross-border tie-up of CDMOs, was blocked by US regulators. Asymchem, headquartered in Tianjin, but with operations also in the US and EU, is a CDMO. Snapdragon, a Boston-area company with expertise in flow chemistry, has developed a novel advanced continuous manufacturing program and built a manufacturing facility with up to 30kg capacity. The US Treasury’s Committee on Foreign Investment in the United States (CFIUS) refused to approve the acquisition, in part because Snapdragon developed its technology with US government funds, and CFIUS did not want a China-based company to own the technology. More details....

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Shanghai Zai Lab has changed its Hong Kong listing from secondary listing status to primary listing. Zai says it now has dual-primary status in the US and Hong Kong. Zai is one of many China biopharmas that faces de-listing from a US exchange because of its financial auditor: China does not allow domestic companies to open their financial records to foreign auditors, but the US has will de-list any China company that does not allow US-certified auditors complete access to its financial data. A few months ago, China said it would change its rules, but so far no formal agreement has been announced. Zai seems to be taking the first protective steps against the US de-listing. More details....

Stock Symbol: (NSDQ: ZLAB; HK: 9688)

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China plans to furnish US auditors with full access to the financial records of China companies that have US listings. The change seems to solve a looming crisis between the two countries, as the US is currently threatening to de-list all China companies that closed their financial documents to US auditors. The revised regulation will allow scrutiny of China-based companies’ books, while detailing how to handle national security information, which will remain protected. The new policy was announced over the weekend in a draft published on the website of the China Securities Regulatory Commission. More details....

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China regulators may be agreeable to a work-around that would prevent the de-listing of China companies from US stock exchanges, according to a Financial Times article. A new US law demands China-based companies with US listings must have their financial reports reviewed by a US auditor The problem is Article 177 of China's security law, which prohibits foreigners from examining the inner workings of China companies. However, the purpose of Article 177 is to prevent IP theft and protect national security. If Article 177 was defined more narrowly, information that pertains to China's concerns could be restricted, while allowing US auditors access to a company's financial details. More details....

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