(Yicai) June 3 -- Shares of GenScript Biotech plunged after two members of a committee of the United States House of Representatives called for an investigation into the Chinese biopharmaceutical company over potential intellectual property threats to US firms.

GenScript [HKG: 1548] was trading down 18 percent at HKD8.2 (USD1.05) as of 2.40 p.m. today, after earlier sinking as much as 24.8 percent.

Ranking member Raja Krishnamoorthi and Chairman John Moolenaar of the House of Select Committee on Strategic Competition Between the US and the Chinese Communist Party asked the director of the Federal Bureau of Investigation and the director of national intelligence to probe GenScript and its three main business segments -- Bestzyme, Legend Biotech, and ProBio -- for their ties to the CCP and the implications they may have for US national security, the committee announced on May 31.

"GenScript's role as a contract development and manufacturing organization, including services such as the production of custom gene synthesis for companies and US government entities, raises concerns about potential risks to the IP of US firms and GenScript's broader role in advancing China's biotech capabilities,” Krishnamoorthi and Moolenaar said in their letter.

The investigation into GenScript is truly concerning because it indicates that the US will not relent its pressure on Chinese biopharmaceutical companies, an American investor told Yicai. In the future, more Chinese firms may be targeted, especially those with production capabilities in the US, the investor added.

Founded in 2002, GenScript is a world leader in technologies and services for life science research, development, and manufacturing, according to its website. It has sales, manufacturing, and research and development facilities in China, the US, Europe, and Asia-Pacific.

Legend Biotech is GenScript's integrated global cell therapy company. It went public on the Nasdaq in 2020. Its stock [NASDAQ: LEGN] closed 7.7 percent down at USD40.01 on May 31.

In 2017, Legend Biotech joined hands with Johnson & Johnson to develop Car-T cell therapy Carvykti (Cilta-cel). The drug achieved sales of USD500 million last year and is expected to eventually exceed USD5 billion in annual sales.

On May 15, the US House of Representatives Committee on Oversight and Accountability voted to advance the Biosecure Act, which would restrict some US federal agencies, researchers, and laboratories in the US from cooperating with China's WuXi AppTec and BGI Group, as well as their affiliated companies.

In the future, the Biosecure Act will be submitted to the full sessions of the House of Representatives and Senate for approval. If passed, it will then reach President Joe Biden before becoming law.

Editor: Futura Costaglione