2024.02.04 ISM Roundup

Written by
Gabriella Couloubaritsis
Feb. 4, 2024

U.S. Satellite Firm Reports CFIUS Clearance After 2-Year+ National Security Agreement Mitigation Measures 

Sources: SEC Filing, Space News 

Momentus Inc., a U.S. commercial space company that offers satellite buses and in-space infrastructure services including transportation, hosted payloads, and other in-orbit services, announced that “the company has been informed by the U.S. Department of the Treasury that CFIUS has approved the Company’s exit from a National Security Agreement and its termination.” 

In October 2020, Stable Road Acquisition Corporation entered into an agreement to acquire, by way of merger, Momentus Inc, but the deal fell under CFIUS scrutiny given Momentus’ sensitive technology, govenrment contracts, and foreign ownership and control. Momentus signed a National Security Agreement with the Department of Defense and Department of the Treasury as lead agencies on behalf of CFIUS to implement increased security measures, hire key positions to provide additional oversight and appoint a CFIUS-approved director to its board of directors to oversee compliance with the NSA’s stipulations. Since then, over the course of the past two and half years, Momentus worked closely with the CFIUS Monitoring Agencies to implement a National Security Agreement. To reach CFIUS clearance, Momentus reported that, over the past two years, the firm has divested the original foreign Chief Executive Officer and investors; implemented, monitored, and tested increased cybersecurity measures; and conducted a complete zero-based review and improved the Company’s export control program.  

$11M Pharmaceutical Merger Parties Report Upcoming CFIUS Decision 

Sources: SEC Filing (Mustang Bio), 2023.11.27 ISM Roundup 

U.S.-based clinical-stage biopharmaceutical company, Mustang Bio, reported that CFIUS has “advised Counsel that their investigation will be completed no later than February 12, 2024.” CFIUS is in its second 45-day review period since CFIUS did not reach a conclusion during the first 45-day period. Mustang Bio is hoping to sell its Massachusetts commercial-scale CGT development, manufacturing, and analytical testing facility for $11M USD to uBriGene Biosciences, the U.S. subsidiary of uBriGene Group, a China-based cell and gene therapy contract development and manufacturing organization. In a previous SEC Filing, Mustang Bio had disclosed that the firm may be unable to complete the transaction if CFIUS implements mitigation measures, including the potential divestment of some or all of the transferred assets by the buyer. Mustang also disclosed that, even with CFIUS approval, if their landlord does not consent to the sale, the firm we may be obligated to negotiate the repurchase of the facility from uBriGene and undergo litigation. 

Media Outlets Report Updates on India’s Security Reviews of Telecomms Firms 

Source: Financial Express 

India’s Department of Telecommunications is reportedly reviewing foreign companies’ shareholder composition to determine whether any country sharing border with India held substantial stake in the company. The government recently reported that it has renewed the Internet Service Provider license to US-based Verizon Communications. The government asked Verizon to apply for a new license, since after two decades of operation in India, the firm had not disclosed its shareholders until a declaration statement last year. The security review determined that the shareholder value from border-sharing was “minuscule and does not warrant any concern.” The department of telecommunications (DoT) is following a similar approval process for foreign companies such as Amazon Kuiper and Starlink, in the satellite communication (satcom) space. 

EU Commission Proposes ISM Legislation Changes 

Sources: EU Commission Press Release, 2024.01.22 ISM Roundup 

The EU Commission has introduced a legislative proposal to strengthen their investment screening mechanism framework by adding three new features: requiring that all Member States have a screening mechanism in place, with better harmonized national rules; establishing a minimum sectoral scope where all Member States must screen foreign investments; and, extending the pre-existing screening to investments by EU investors that are ultimately controlled by individuals or businesses from a non-EU country. An example of a new harmonized rule would be the proposed requirement for national screening before investments are completed, since some Member States do not mandate prior approval for certain transactions. 

The Commission also included a White Paper on Export Controls, since dual-use export controls are often tied with the EU’s investment screening mechanisms. The Commission is proposing short and medium-term actions at the EU and multilateral level to reintroduce and require uniform EU controls on items that certain Member States had previously blocked from the whole block’s adoption. Additionally, there is potential over the coming years that the EU Commission will expand the technologies included on the Export Control List, given the proposal for more R&D on identifying potential dual-use technologies. 

The Commission also included a White Paper on Outbound Investments, potentially beginning the process of developing an outbound screening process. 

U.S. House of Representatives Committee Proposes Biotech Bill 

Sources: House Bill, Asia Financial 

This past week, the bipartisan U.S. House “Select Committee on the Strategic Competition between the United States and the Chinese Communist Party” introduced a bill that would restrict federally funded U.S. medical providers from contacting or conducting business with biotech firms in “foreign adversary” countries. The bill introduces an inter-agency committee that would periodically review and decide to modify the list of biotechnology companies of concern, and it creates a limited exemption process. Some affected firms would likely include BGI Group and its subsidiaries, MGI and Complete Genomics, along with another People's Liberation Army-affiliated firm called WuXi Apptec. It is unclear if the bill will go into law. Wuxi AppTec, a provider of drug R&D and manufacturing services, has denied any ties to China’s military and said its business does not pose national security risks to any country. BGI operates the China National 16 GeneBank, the world’s largest repository of genetic 17 data.  

Taiwan Expects New U.S. Export Controls in March 

Sources: Focus Taiwan, 2023.12.11 ISM Roundup 

Taiwan's Industrial Development Administration (IDA) reported that U.S. officials will brief Taiwanese semiconductor suppliers on new export controls in March. The end of March is the deadline for Taiwanese semiconductor firms to apply for Taiwanese government subsidies designed to help firms gain a larger global market share, especially in high-end processes and in advanced 2.5D-3D applications.