The Biosecure Act could ban Chinese biotechs and hurt Mass. drug developers. But some see an opportunity for local R&D.
By Hannah Green
Driven by concerns over national security, the federal government is weighing a crackdown on Chinese biotechnology suppliers that would have far-reaching effects in the life sciences industry.
The legislation, known as the Biosecure Act, would prevent biotech companies that receive federal loans or grants from doing business with a “biotechnology company of concern,” specifically companies that U.S. lawmakers believe are in some way controlled by “the government of a foreign adversary” and pose a risk to national security.
The Biosecure Act specifically calls out several Chinese companies, including big names such as R&D biomanufacturer WuXi AppTec and genomics testing company BGI.
If the Biosecure Act were to pass, biotech companies receiving federal funds would not be allowed to sign or renew a contract with companies such as WuXi AppTec or BGI and would be barred from using U.S. funds to access equipment or services provided by banned companies.
WuXi AppTec reported that 65% of its total revenue in 2023 came from U.S. customers. A company spokesperson said WuXi AppTec has a center for small-molecule screening and testing, as well as logistics, at 22 Strathmore Road in Natick that employs over 40 people.
“Since WuXi AppTec’s founding in 2000, our top priority has been to support our customers, including those in Massachusetts and throughout the United States, in advancing discoveries in the life sciences and developing and delivering medicines to patients in need. Our large number of Massachusetts-based customers reflects the quality of our work, the security of our procedures, and the resulting trust these partners have in our services,” a WuXi AppTec spokesperson told the Business Journal.
BGI lists its U.S. office as One Broadway in Cambridge.
Massachusetts biotech leaders said the proposed law would slow innovation and that the high-quality, large-scale labor handled by overseas companies is difficult to find stateside.
At the same time, while the legislation could prove time-consuming and costly for local biotechs, some local life science and legislative leaders said it also presents an opportunity for Massachusetts — to invest in its own biomanufacturing rather than relying on Chinese companies.
“Now is our time to really make sure that we’re making that investment. Because, if not Massachusetts, another cluster in the country will try to take that leadership position,” said Kendalle Burlin O’Connell, CEO of the trade group MassBio.
‘Dramatic impact on patients’
PepGen is just one of many local companies that list Chinese contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs) among its suppliers.
PepGen CEO James McArthur told the Business Journal he’s worked with WuXi at three or four companies he’s been at, and “they’ve always done a good job for us.” PepGen is a clinical-stage biotech working on treatments for severe neuromuscular and neurological diseases.
At a prior company where he was developing a small-molecule drug, McArthur said the company had tried to find an American manufacturer to help develop the company’s Phase Two material. But, he said, it “could not find anyone who could do it in that timeline anywhere near as close” as WuXi.
“And I have to say, I thought (WuXi) came up with creative solutions and did a really, really solid job,” McArthur added.
“We appreciate the movement that is happening right now in Washington D.C.,” he said, “(but) I think if drastic action were taken to immediately cut off supplies from groups like Wuxi, it would have a dramatic impact on patients.”
Burlin O’Connell agreed that “it absolutely will take away from the progress of their innovation in science, because they’re channeling resources to having to find other partners.” As for her preferred solution, she said, “the faster we can move here in Massachusetts to bring partners to the table and open up further capacity, the easier it makes that transition for our biotech companies.”
McArthur said PepGen doesn’t rely on a single supplier — a lesson learned during the pandemic, when supply chains broke down. But many small biotech companies don’t have the luxury of time and funding to work with multiple CDMOs or CROs.
Theresa Tribble, CEO of Droplet Biosciences Inc., said she didn’t initially think her startup would be directly impacted by the Biosecure Act because Droplet doesn’t work with the companies listed in the bill. But she realized the increase in demand for stateside R&D and CRO services could drive prices up.
“I suspect it will make development more expensive in the short run, and maybe the long run,” Tribble said.
Building U.S. biomanufacturing
Some biomanufacturing capacity already exists in Massachusetts. Germany-based Rentschler Biopharma acquired a manufacturing site in Milford in 2019. Tom Roberts, president and general manager U.S., said it is “quite possible that we will have greater demand in the future, and we are talking to more clients.”
“The wonderful thing is that we started our expansion project over three years ago and completed just a couple months ago. So we are well-positioned and well-aligned for the increased demand that might result from this,” Roberts said.
But Jake Becraft, co-founder and CEO of Strand Therapeutics in Boston, said there is generally a lack of biomanufacturing capacity in the U.S. Becraft believes a lot of companies would like to use domestic manufacturing services if they existed (he declined to share Strand’s suppliers).
The challenge is that biomanufacturing margins are low, especially with U.S. interest rates so high, Becraft said. He sees a need for new funding models, whether that’s a nonprofit, public-private partnership or something else. No matter the approach, Becraft believes there needs to be government intervention.
“It’s going to require funding….you can’t expect the free market to come and fill that back in if the margins aren’t there. And so that becomes a question for the government, which is, is this a priority?” Becraft said.
U.S. Rep. Jake Auchincloss, a co-sponsor of a previous version of Biosecure, said a good policy would have “both carrots and sticks.”
The current legislation has prohibitions for companies, but not inducements to boost domestic biomanufacturing.
It is not yet clear if the Biosecure Act will be passed or what the final policy would look like. Auchincloss said “both the policy itself and also prospects of passage this term are both highly fluid.”
Burlin O’Connell said maintaining national security is imperative, but so is providing solutions to challenges that could be caused by the Biosecure Act.
Some of that support for local biomanufacturing could have come from the billion-dollar Life Sciences 3.0 initiative put forward by Gov. Maura Healey. The initiative was part of the $3.5 billion economic development bill that legislators failed to pass before the end of the legislative session this summer. Legislators are still weighing whether they will reconvene in a special formal session.
“Through Biosecure, we’re going to really be forced to onshore more of the manufacturing work that we’re doing…it could be a great thing for the commonwealth of Massachusetts, because we’re so well positioned to be a leader in biomanufacturing,” said Burlin O’Connell.