(Yicai) Aug. 10 -- WuXi AppTec’s shares climbed after a US judge granted a preliminary injunction stopping the Department of Defense from imposing restrictions on the Chinese biotechnology giant after it classified the firm as a "Chinese military company.”

After climbing by as much as 7.7 percent in Shanghai to the highest in about five years, WuXi AppTech [SHA: 603259] closed up 4.2 percent at CNY161.34 (USD23.92) per share today. The stock has rebounded nearly 83 percent from an intraday low of CNY88.32 (USD13.09) on June 9, the day after the DOD added it to a list of companies with alleged links to China’s military. In Hong Kong, Wuxi AppTech [HKG: 2359] ended 3 percent higher at HKD198 (USD25.24).

US District Judge James E. Boasberg issued the temporary block on Aug. 7, suspending the DOD's designation of WuXi AppTec as a "Chinese military company,” while the Shanghai-based firm fights the case in federal court.

The order will shield WuXi AppTec from the immediate adverse impact of Section 1260H during the litigation process, the company said yesterday, adding that it believes facts eventually prevail after objective and fair judicial review. The company will continue to provide high-quality services and support customers’ needs, benefiting patients worldwide, it noted.

The DOD added WuXi AppTec to its "Chinese military companies" list on June 8, in accordance with Section 1260H of the National Defense Authorization Act for Fiscal Year 2021, claiming it 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.”

WuXi AppTec filed a lawsuit against the DOD with the US District Court for the District of Columbia on June 11 and submitted a preliminary injunction motion on June 29, seeking to prohibit the DOD from executing, implementing, or taking any other action based on the Section 1260H determination. The court held a hearing on the motion on July 22.

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.

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 (USD4.6 billion) last year, accounting for 72 percent of the firm's total revenue, according to its annual financial report.

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

Editor: Futura Costaglione