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The Trump administration has ordered a U.S. health tech startup to find a new buyer because of national security concerns about its China-based owner, a move that is likely to serve as a warning sign for a significant number of other American companies with Chinese investors.

The order concerns the patient social network PatientsLikeMe, whose majority owner is iCarbonX, a Chinese digital health company. The news was first reported by CNBC on Thursday and confirmed to STAT by a person who had seen the terms of sale being circulated to potential buyers.


The news comes just months after the Trump administration announced plans to more rigorously scrutinize certain foreign investments in U.S. companies for whether they jeopardize American interests. The new rules, which were pushed through with concern about the Chinese government in mind, expanded the power of the Committee on Foreign Investment in the U.S., a federal interagency group that can block deals deemed to pose a threat to national security, and even force companies to undo investments after the fact. CFIUS previously had authority only over deals that gave foreign investors a controlling stake.

Such a dramatic forced sale indicates that investors in biotechnology and health technology startups will now have to think about competitive issues related to the deal when they contemplate any cross-border deal. Companies that are involved with handling patient data could be a particular focus. “What’s clear here is it’s not just a U.S. issue; it’s a China issue, too,” one U.S.-based investor said. “Both countries, when it comes to patient data, there’s a bright line.”

Both that investor and the person who had seen terms of the sale spoke on condition of anonymity.


Chinese investors have been pouring money into U.S. biotech. In the first nine months of 2018, 43 percent of private biotech deals included at least one Asian investor, up from just 11 percent in 2016, according to data from Pitchbook. At the same time, concerns about the Trump administration’s scrutiny on Chinese investments seem to have contributed to a slowdown in overall investment from China into U.S. companies, which dropped dramatically last year relative to the boom time of 2016.

In 2017 iCarbonX invested in PatientsLikeMe in what was at the time characterized as a minority stake. CNBC reported that iCarbonX took a majority stake in the company, based in Cambridge, Mass., that same year. Two iCarbonX executives, CEO Jun Wang and chief investment officer Cindy Yang, sit on PatientsLikeMe’s board of directors, according to the company’s website.

A spokesperson for PatientsLikeMe declined to comment to STAT, and a spokesperson for the Treasury Department said the agency does not comment on specific CFIUS cases. Invus Group, a New York-headquartered investment firm and a longtime investor in PatientsLikeMe, also declined to comment. iCarbonX didn’t immediately return a request for comment on Thursday afternoon.

PatientsLikeMe, founded in 2006, is a social network that allows users to connect with people who have their same illness, sharing tips and experiences. Over the years, the company has amassed a huge repository of patient-reported information, and the site makes money by selling aggregated data to medical companies. The site says that it does not “rent, sell or share personally identifiable information for marketing purposes or without explicit consent.”

iCarbonX, founded by Wang, a Chinese genomics pioneer, and backed by the big Chinese tech firm Tencent, aggregates health data and is using artificial intelligence to try to make recommendations and predictions.

The 2017 deal uniting iCarbonX and PatientsLikeMe was framed as a partnership to “apply next generation biological measures and machine learning, and accelerate a deeper understanding of the basis of human health and disease.” iCarbonX would “provide multi-omics characterization services” to PatientsLikeMe, the social network said at the time.

PatientsLikeMe isn’t the only company with access to health data that’s been scrutinized by CFIUS. NBC News reported earlier this week that CFIUS began investigating the gay dating app Grindr around last summer months after it was bought by a Chinese gaming company.

The Trump administration was concerned about Los Angeles-based Grindr’s new ownership created potential for the China government to access sensitive user data, including their HIV status. Around the same time, the company engaged in initial discussions about collaborating with a researcher from China’s equivalent of the U.S. Centers for Disease Control and Prevention on HIV prevention research, though the project was not ultimately carried out.