WuXi AppTec and WuXi Biologics saw significant stock gains (7% and 14%, respectively) after the BIOSECURE Act was unexpectedly excluded from the National Defense Authorization Act (NDAA). The Act, which targets foreign biotech companies over U.S. national security concerns, proposed cutting ties with certain Chinese firms by 2032. Despite the setback, experts believe the Act will eventually pass, either as standalone legislation or as part of the Senate's NDAA.

The following article originally appeared in Fierce Pharma.

After months of sharp share-price declines, WuXi AppTec and WuXi Biologics enjoyed a brief respite Wednesday amid new uncertainties about the legislative path of the BIOSECURE Act.

WuXi AppTec and WuXi Biologics shares jumped after SmartKarma analyst Criss Wang flagged “obstacles” for the act’s inclusion in the annual National Defense Authorization Act (NDAA), sparking speculation about the bill's path to becoming formalized legislation in the U.S. The NDAA determines the Department of Defense’s budget each year and had been expected to include the BIOSECURE Act this time around.

After months bouncing around at multi-year lows, WuXi Biologics’ stock jumped 14% in Hong Kong to a Wednesday high of 12.84 Hong Kong dollars. WuXi AppTec notched a 7% increase to reach 45.68 Chinese yuan in Shanghai.

The companies are two of the firms named in the BIOSECURE Act, which proposes banning certain “foreign adversary biotech companies of U.S. national security concern” from accessing federal funding. That means U.S. and other drugmakers would need to cut ties with the Chinese contractors by 2032 to retain their spots on Medicare and Medicaid.

In a development that may raise other questions about BIOSECURE's legislative path, the proposed bill was left out of the House Rules Committee’s final list of amendments to be voted on for inclusion in the NDAA, BioSpace first reported.

Reps. Brad Wenstrup (R-Ohio) and Raja Krishnamoorthi (D-Ill.) introduced the bill for inclusion in the NDAA, but House members on both sides of the political aisle didn’t back the proposed amendment at a Tuesday committee meeting, BioSpace reported. Krishnamoorthi was one of the legislators to first propose the bill in January.

While WuXi investors enjoyed new optimism on Wednesday, some experts believe the legislation will eventually overcome any obstacles. At TD Cowen, the team continues to believe the measure "will be enacted," analysts wrote in a recent note. It's possible that the bill could be proposed on its own in the House or attached to the Senate's upcoming NDAA, the analysts pointed out.

WuXi Biologics, a contract manufacturing powerhouse, has previously defended itself against allegations that it poses a U.S. biosecurity concern. The company has said it's “committed to supporting its customers globally and to operating with the highest standards of compliance and in accordance with the applicable laws and regulations of all jurisdictions where it has business operations.”

WuXi AppTec, a contract research giant, is “fully committed to the highest quality and compliance standards, prioritizing our customers’ needs, protecting their intellectual property (IP), and abiding by the laws and regulations in the countries in which we operate,” an executive said in April.

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