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F-Star suitor invoX sees hopes of CFIUS clearance fading -” sources

invoX Pharma, a subsidiary of China’s Sino Biopharmaceutical, does not anticipate a favorable outcome from the Committee on Foreign Investment of the United States’ (CFIUS) review of its proposed acquisition of F-Star Therapeutics [NASDAQ:FSTX] by the 31 January deal deadline, according to two sources familiar with the matter.  

On 18 January, the parties further extended the deal’s expiration date to 31 January, to facilitate the ongoing CFIUS review of the proposed transaction. 

The CFIUS review has been long and contentious with the parties voluntarily submitting a notice to CFIUS. They withdrew and refiled, and have cooperated with the agency throughout the process, according to the first source.   

Yet, with the review stretching more than 150 days and the merger end date of 31 January approaching, it is clear to the merging parties that there is not a path forward, even though they have stressed the urgent financial distress of F-Star, the first source said.   

CFIUS reviews are indeed highly sensitive and secretive, but the delayed process yields some insight into how the review is going, the second source said.

On 29 September, the UK notified the parties that its investigation was complete and that they were cleared to proceed with the proposed transaction under the UK’s National Security and Investment Act. On 29 December, however, the parties said that CFIUS issued an order preventing the consummation of the transaction, citing unresolved national security risks.

Hope that CFIUS will clear the deal has run out, according to both sources.  

invoX, headquartered in London, was established to build Sino’s R&D platform outside of China.  

“invoX’s location did not fool anyone,” according to an independent CFIUS attorney following the deal. “This is a Chinese company and CFIUS views biotechnology as a critical technology in its reviews and clearance process.” 

The US government’s assessment and perception of national security risks are broad and nuanced, explained the attorney. CFIUS has taken on a very aggressive enforcement posturing and that is not expected to let up anytime soon, the attorney said.   

F-Star, invoX, and Sino declined comment. Cfius does not comment on deals under review.