Real-world data gatherer PatientsLikeMe has to shop for a new buyer—and quickly—after the Trump administration ordered a Chinese company to divest its majority stake, according to a report from CNBC.
In 2017, PatientsLikeMe partnered with the Shenzhen, China-based iCarbonX—a genomics data firm supported by the conglomerate Tencent—and raised more than $100 million in a series C round with iCarbonX serving as lead investor.
iCarbonX agreed to provide multi-omics sequencing services, while PatientsLikeMe would serve as “a cornerstone” of its health technology collaboration, which aimed to merge and analyze biological and patient-generated information using artificial intelligence.
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The Cambridge, Massachusetts-based PatientsLikeMe links together about 700,000 people with those who have similar conditions to share health experiences and gather data for research studies. Other companies participating in iCarbonX’s alliance included SomaLogic, HealthTell, AOBiome, GALT, Imagu and Robustnique, according to a release.
However, the Treasury Department’s Committee on Foreign Investment in the United States (CFIUS) has been scrutinizing Chinese investments in American companies.
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CFIUS ordered the divestiture under a 2008 statute that allows the president to review and block any merger that could result in a foreign person or company controlling a U.S. company. That was expanded last year to include foreign investments and minority stakes, in addition to takeovers, the article said.
While CFIUS previously focused on multibillion-dollar international acquisitions, the actions singling out a small company could have harsh effects on the startup sphere by chilling international investment.
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CNBC reported that Chinese expenditures in U.S. businesses have dropped 90% in the past two years, from $46 billion in 2016 to $4.8 billion in 2018, according to data from the Rhodium Group, which said another $20 billion in divestitures is still pending.