On Charges of Fraud, Breach of Trust
The Seoul Central District Prosecutors' Office requested an arrest warrant for former Kolon Group chairman Lee Woong-yeol on charges of violating the Pharmaceutical Act, fraud and breach of trust.
The prosecution has been investigating allegations surrounding Invossa K, a gene therapy drug for osteoarthritis. Invossa is an injection consisting of Fluid 1 containing human cartilage cells and Fluid 2 containing cells with transformed growth factor β1 (TGF-β1) of cartilage cells.
Former chairman Lee is suspected of manufacturing and selling Invossa that used a kidney-derived cell (GP2-293) for Fluid 2 instead of the authorized cartilage cells from November 2017 to March 2019.
Lee is also suspected of submitting false data to obtain permission from the Ministry of Food and Drug Safety while hiding the fact that the product contained kidney-derived cells, not cartilage cells.
Although Invossa was approved by the Ministry of Food and Drug Safety in 2017 as the country's first gene therapy drug, the license was revoked in July 2019 after the cells of Fluid 2 turned out to be kidney cells that could cause tumors.
The prosecution believes that Lee was also involved in Kolon TissueGene's listing, so it included charges of fraudulent transactions and price manipulation under the Financial Investment Services and Capital Market Act.
An affiliate of Kolon Life Science, Kolon TissueGene led the development of Invossa and was listed on the KOSDAQ market in 2017 after the Ministry of Food and Drug Safety permitted Invossa sales. Lee is charged for attracting about 200 billion won in share subscriptions by using false data.
Prosecutors previously indicted Kolon Life Science CEO Lee Woo-suk on seven charges including a violation of the Pharmaceutical Act, a violation of the Financial Investment Services and Capital Market Act and a violation of the Subsidy Management Act. Kolon Life Science and Kolon TissueGene were also indicted.