Will Washington Regulate Biotech Licensing Like Semiconductors? Tracking BINSA and Treasury’s Next Move

Sterne, Kessler, Goldstein & Fox October 22, 2026

Author

Paul A. Calvo, Ph.D.

Two tracks are headed toward U.S. review of China-origin biotech licensing, but recent reporting suggests they may arrive at very different places, and European deal counsel should be watching both.

Washington already knows how to screen outbound American money into sensitive foreign technology. Since January 2025, a Treasury-administered program has prohibited some U.S. investments in Chinese semiconductor, quantum, and artificial intelligence businesses outright and required notice of others.

Biotechnology is not on that list. For a sector that has become one of the largest categories of U.S.-China cross-border dealmaking, that omission has looked, for most of 2026, like an oversight waiting to be corrected rather than a settled policy choice.

It is now being addressed on two fronts, and the two no longer point in quite the same direction. A bipartisan bill to add biotechnology to the outbound investment regime has been introduced in both the House and the Senate, though neither version has yet left committee. Separately, Treasury already has authority to add biotechnology by rule, and a deadline that forces the question. September reporting suggests Treasury may use that authority far more narrowly than the bill’s sponsors want. Understanding both tracks, how far apart they now sit, and where they leave a European transaction matters more today than it did a few months ago.

What COINS Already Does

The Comprehensive Outbound Investment National Security Act (COINS), enacted in the fiscal year 2026 National Defense Authorization Act, gave Treasury’s outbound investment security program statutory footing. The program works in two tiers, prohibiting some transactions and requiring notification of others, and reaches a defined set of deal types: equity and contingent equity, certain debt, greenfield investments, joint ventures, and limited partner investments in funds.

Two of these features matter for biotechnology. First, a license is not on the list. Treasury has said that a joint venture would not ordinarily arise “simply where there is a licensing arrangement”[1], and there is doubt that a pure license, without an equity component or option, would be covered even if biotechnology were added as a sector[2]. Second, the rule’s definitions turn on ownership. An entity becomes a “person of a country of concern” when it is at least 50 percent owned or controlled by Chinese persons, a threshold that matters a great deal once dealmakers start structuring around it.

Track One: The Legislative Path

The Biotech Investment National Security Act (BINSA), introduced as H.R. 9102 by Representatives John Moolenaar (R-MI), chairman of the House Select Committee on the CCP, and Debbie Dingell (D-MI) on June 2, 2026, would amend the Defense Production Act provision underlying the outbound program to add biotechnology to both its notifiable and prohibited technology lists. The definition sweeps broadly, reaching the research, development, manufacturing, or commercialization of pharmaceutical products, biological products, and therapeutic compounds, the last expressly including “drug discovery platforms,” clinical research and development capabilities, biologics manufacturing, and “intellectual property and know-how relating to therapeutic compounds”[3]. Its most consequential feature is that it would add “licensing a prohibited technology from a covered foreign person” to the list of covered transactions, reaching the license itself, and would direct Treasury to treat licensing transactions, joint ventures, and equity investments involving drug discovery platforms, clinical development capabilities, and biologics manufacturing as priority categories[3]. The bill also requires a Defense Department assessment within 60 days of enactment and Treasury regulations within a year, and it directs Treasury to exclude agricultural biotechnology, industrial fermentation unrelated to pharmaceutical or therapeutic production, and basic academic research with no direct pharmaceutical or therapeutic application.

On August 6, 2026, Senators Pete Ricketts (R-NE) and Elissa Slotkin (D-MI) introduced S. 5316, the Senate version, with pharmaceutical licensing deals specifically named as a covered transaction type[4]. However, as of this writing, neither bill has advanced beyond committee referral: H.R. 9102 sits with House Financial Services and S. 5316 with Senate Banking[3],[5]. It appears that the fiscal year 2027 NDAA is the most realistic vehicle, the same route COINS took, but that bill has its own problems: the House passed its version 216–212 on July 22, while the Senate version stalled after a failed procedural vote on July 14[6]. Congressional interest in biotechnology is widening, as a September 16 House Science subcommittee hearing on biotechnology innovation and biosecurity showed, though that hearing focused on research security rather than licensing[7].

Track Two: Treasury Does Not Need Congress

The more immediate track requires no bill at all. Section 809 of the Defense Production Act, the definitions provision BINSA would amend, already lets the executive branch bring new industries and deal types into the outbound program by rule, and Treasury must issue final implementing regulations by March 13, 2027. Pressure to use that authority is on the record. On February 26, 2026, seven members of Congress, including Representatives Brian Mast and Moolenaar and Senators Tom Cotton and Ricketts, wrote to Treasury Secretary Scott Bessent recommending that the administration “consider expanding the Outbound Investment Security Program to address biotechnology-related investments that enable foreign adversaries’ military, coercive, or strategic capabilities”[8]. That framing is narrower than BINSA and, in my view, now looks prescient. On May 21, Moolenaar went considerably further, asking Treasury to cover biotechnology as a prohibited technology and to give “particular consideration” to the licensing of pharmaceutical IP, drug discovery platforms, clinical research and development capabilities, and biologics manufacturing and commercialization know-how[9]. The White House’s own America First Investment Policy memorandum lists biotechnology among the sectors in which the administration would “consider new or expanded restrictions on United States outbound investment in the PRC”[10].

The September Signal: Treasury May Go Narrow

On September 18, 2026, Reuters reported, citing people briefed on the process, that the rules Treasury is drafting would likely preserve U.S. drugmakers’ ability to do most licensing deals for Chinese drugs, and to invest in promising Chinese-developed medicines, unless the assets relate to pathogens or biotechnology that could be weaponized[11]. The rules are not final and could change, particularly if President Trump weighs in. The report also describes an active lobbying contest. Pfizer chief executive Albert Bourla said he sees no national security concern in licensing Chinese medicines; Ginkgo Bioworks chief executive Jason Kelly, who has met with Treasury officials to press for limits, asked: “Are we okay with a strategic dependence on China for innovative drugs?” Representative Jake Auchincloss (D-MA) put the skeptics’ case bluntly: “These are people who think that you can drag and drop semiconductor policy to biotechnology policy. You cannot.”

Hong Kong-listed biotech markets read the report as a reprieve. On September 21, the Hang Seng Biotech Index rose more than five percent, with Innovent Biologics and Akeso up seven and eight percent[12], and Macquarie analyst Tony Ren called the reported position “a substantially softer stance” than markets had feared based on the two bills[13]. The stakes are large: by a Seoul Economic Daily analysis of first-half 2026 deal data, Chinese assets accounted for 91 percent of disclosed antibody-drug conjugate licensing value and 62 percent of RNA licensing value[14]. Dealmaking has not paused. On September 28, Merck agreed to pay China’s SciBrunch Therapeutics $400 million upfront, and up to $2.13 billion in total, for exclusive global rights to SPR2015, a preclinical oral KRAS G12D inhibitor[15]. The late-September Trump–Xi summit in Washington ended with a two-month extension of the trade truce, to January 10, and no announced biotechnology outcome[16]. Reuters’ sources had said Treasury was unlikely to unveil the rules before that meeting[11], and they remain pending.

The practical implication may be that the two tracks, which looked in August like parallel routes to the same place, are beginning to point toward different regimes. BINSA would reach the license itself across drug development, discovery platforms, and related IP and know-how. Treasury’s reported approach, if it holds, could leave much of that untouched and focus on a narrower band of dual-use biotechnology. An increasingly attractive structure illustrates why the gap could matter: U.S. venture investors form a new U.S. startup built around a single licensed Chinese asset, and the Chinese licensor takes a minority equity stake, usually below 20 percent according to one practitioner[2], well under the 50 percent trigger in Treasury’s rule. Dealmakers call these “NewCo” deals. Because joint ventures are already a core covered category, at least one practitioner has flagged the joint-venture prong as a potential point of exposure for these structures if biotechnology is added broadly[2]. How any given NewCo would fare remains uncertain. A narrow Treasury rule of the kind reportedly under consideration might leave many of them unaffected, while BINSA, if enacted, could potentially make the license at the center of the structure reviewable. Much will depend on final definitions neither track has yet supplied, and counsel may be better served watching the gap between the two than assuming either will set the perimeter.

What This Means for a European Transaction

Neither track was built with a European company in mind. Both reach a transaction only through a U.S. nexus: a U.S. person investing directly, a controlled foreign entity of a U.S. parent, a U.S. person “knowingly directing” a non-U.S. entity’s deal, or a U.S. limited partner in a fund. A German or French company licensing a Chinese ADC platform through a structure with no U.S. person and no U.S. capital in it sits outside both tracks, on current and proposed text alike.

That does not mean European companies are unaffected. The exposure runs through relationships many BD teams do not think to map. A European company co-investing alongside a U.S. NewCo, or a European fund with U.S. limited partners, or a European fund that is itself an LP in a U.S. fund financing Chinese-origin assets, may be closer to a U.S. nexus than its deal team realizes.

A more concrete version involves a European company with its own U.S. office. Say a German biotech licenses a Chinese asset through its German entity but keeps a U.S. commercial or R&D presence. That presence does not, by itself, make the German parent a “U.S. person.” Treasury’s guidance addresses the point directly: a company organized outside the United States with a U.S.-incorporated subsidiary is not itself a U.S. person “absent additional facts”[17]. Two channels can still pull the deal in. First, an entity organized under U.S. law is itself a U.S. person, so if the U.S. subsidiary holds rights, provides financing, or is otherwise party to the license, it is transacting directly. Second, anyone physically in the United States is a U.S. person regardless of nationality. Treasury’s mirror-image example holds that a foreign company’s U.S.-based employee is a U.S. person while present, although “the physical presence of an employee in the United States does not itself render” the company a U.S. person. If that employee has authority over the licensing decision and exercises it by approving, negotiating, or signing off, the “knowingly directs” prohibition can attach to them personally. Treasury offers a recusal route: a U.S. person who stays out of deliberations, decision-making, work on the transaction documents, and negotiations is, absent additional facts, treated as not having directed the transaction. Whether Treasury’s new COINS regulations carry this guidance forward is unsettled; BINSA itself does not revisit either concept. But even a narrow Treasury rule would shrink only the set of covered assets, not the nexus analysis that decides whether a European company’s U.S. footprint brings a covered deal within reach.

The European side of the ledger offers no equivalent. The EU’s revised Foreign Investment Screening Regulation, Regulation (EU) 2026/1386, published on June 26, 2026, sets a mandatory minimum screening scope, applicable from early 2028 after an 18-month transition, covering military and dual-use items, certain semiconductor, quantum, and AI technologies, critical entities in energy, transport, and digital infrastructure, strategic raw materials, a limited set of financial entities, and electoral infrastructure. Biotechnology is not on that list, though member states may add sectors. The regime also screens foreign investment into the EU rather than a European company’s own outward licensing[18]. For now, a European company’s most concrete regulatory exposure on a China-origin deal may run through the American side of the transaction, an asymmetry that is easy to miss if counsel is only checking Brussels and the relevant member-state capital.

Deal teams should screen any China-linked in-license, out-license, joint venture, NewCo, platform arrangement, or equity deal before the term sheet, against both current law and a 12-to-18-month foreseeable perimeter, and allocate the risk through price, conditions, long-stop dates, cooperation covenants, and change-in-law provisions. For a European company, that screen should include a map of every U.S. entity, U.S. employee, and U.S. investor that touches the deal.

What To Watch Next

Several developments will likely dictate the rest of the story. First, whether Treasury’s reported narrow approach survives into a published rule, and how it defines pathogen-related and weaponizable biotechnology. Second, whether that rule appears before the March 13, 2027 deadline. Third, whether BINSA’s sponsors respond by pressing harder for legislation. Fourth, whether further letters or hearings spell out which transaction types Congress expects Treasury to capture. Fifth, whether NewCo-style structures keep spreading, which might suggest that dealmakers see the legislative track as the greater risk.

For European life sciences companies and investors, it is tempting to treat this as an American policy story with no immediate bearing on a European transaction, and September’s reporting may make that temptation stronger. It should not. Washington has not settled whether to build a licensing-specific tool for biotechnology. It now appears to be choosing between a broad version through Congress and a much narrower one through Treasury, on a clock that runs out on March 13, 2027. The perimeter could land anywhere between those points, and it could move after it lands. European companies with any American capital, limited partner, co-investor, or office in the structure should find out now which side of that line they are standing on, under both versions.

[1] https://www.govinfo.gov/content/pkg/FR-2024-11-15/pdf/2024-25422.pdf (Treasury final rule, 89 Fed. Reg. 90398 (Nov. 15, 2024)

[2] https://www.fiercebiotech.com/biotech/calls-coins-act-expansion-grow-new-rules-sweep-china-biotech-licensing

[3] https://www.govinfo.gov/content/pkg/BILLS-119hr9102ih/xhtml/BILLS-119hr9102ih.html

[4] https://www.slotkin.senate.gov/2026/08/06/slotkin-ricketts-introduce-bipartisan-legislation-to-keep-biotech-industry-in-america-not-china/

[5] https://www.govinfo.gov/app/details/BILLS-119s5316is

[6] https://www.everycrsreport.com/reports/IN12704.html (CRS Insight IN12704, FY2027 NDAA: Status of Legislative Activity)

[7] https://science.house.gov/2026/9/opening-statement-of-chairman-rich-mccormick-at-balancing%20biotechnology-innovation-and-biosecurity

[8] https://chinaselectcommittee.house.gov/sites/evo-subsites/selectcommitteeontheccp.house.gov/files/evo-media-document/coins-implementation-letter-02.26.2026.pdf

[9] https://chinaselectcommittee.house.gov/media/letters/moolenaar-calls-to-restrict-american-investment-in-china-s-biotechnology-companies

[10] https://www.whitehouse.gov/presidential-actions/2025/02/america-first-investment-policy/

[11] https://www.reuters.com/world/us-weighs-allowing-most-pharma-licensing-deals-with-china-sources-say-2026-09-18/

[12] https://www.cnbc.com/2026/09/21/chinese-biopharma-stocks-jump-as-us-plans-to-continue-drug-licensing-deals-.html