(Yicai) June 12 -- WuXi AppTec’s shares rose after the Chinese biotech firm said it is suing the United States Department of Defense for wrongfully adding it to a list of companies with alleged links to China’s military and disclosed that it has bought back CNY1 billion (USD147.8 million) of its own stock.

WuXi AppTec [SHA: 603259] ended 2.7 percent higher at CNY99.71 (USD14.72) per share in Shanghai today, after falling by as much as 2 percent in the morning. The stock has gained nearly 13 percent since an intraday low of CNY88.32 on June 9, the day after the DOD released its updated “Chinese military companies” list.

WuXi AppTec filed the lawsuit against the DOD with the federal court in Washington D.C. to safeguard the interests of its clients, partners, staff, and shareholders, the firm said in a statement yesterday. It is requesting the court to legally rule the “Chinese military company” designation of WuXi AppTec null and void, revoke and cancel the decision, and remove the firm from the list.

The DOD’s “Chinese military company” designation lacks factual grounds and fails to meet legal criteria set forth by applicable statutes and case law, the firm added.

On June 8, the DOD added WuXi AppTec and a number of other Chinese businesses to its “Chinese military companies” list in accordance with Section 1260H of the National Defense Authorization Act for Fiscal Year 2021.

The DOD said WuXi AppTec is “indirectly owned by the State-Owned Assets Supervision Administration Commission of the State Council and is indirectly affiliated with the State Administration of Science, Technology, and Industry for National Defense and the People’s Liberation Army.”

Entities on the Section 1260H list are prohibited from doing business with the DOD, so the immediate direct impact on WuXi AppTec will be limited. But under the US Biosecure Act passed at the end of last year, any biotech firm on the list is automatically considered a candidate for the List of Biotechnology Companies of Concern.

Entities on the BCC list, as well as US pharmaceutical firms that have business ties with them, are prohibited from doing business with federal agencies. The long-term goal of the Biosecure Act is to remove Chinese companies on the list from the global drug research and development chain.

On June 9, WuXi AppTec launched a one-year, CNY10 billion (USD1.5 billion) share buyback program to signal confidence in its future and its intrinsic value. The firm said yesterday that it had repurchased CNY1 billion (USD147.8 million) of its own shares that day at prices between CNY95.59 and CNY97.54.

Buybacks are generally aimed at buoying a company’s stock price by removing some of its shares from the market.

WuXi AppTec provides global pharmaceutical companies with entire-chain drug development services, from discovery to clinical development and commercial production. Income from US clients climbed 34 percent to CNY31.3 billion last year, accounting for 72 percent of the firm’s total revenue, according to its annual financial report.

Alibaba Group Holding, Baidu, Nio, BYD, BOE Technology Group, and Innolight Technology -- six other well-known Chinese companies -- issued statements on June 9, expressing bewilderment at the DOD including them in the Section 1260H list. They said they have no equity ties nor business links whatsoever to the Chinese military.

Editor: Futura Costaglione