Fate of SillaJen to Be Determined This Month
Korea Exchange decided on Nov. 4 to delist Kolon TissueGene. Previously, it turned out that its Invossa-K, the world’s first gene therapy product for osteoarthritis patients, contains renal cells instead of chondrocytes and the Ministry of Food and Drug Safety canceled its approval in May last year for the false ingredient information. Then, trading of the shares of the company was suspended.
Although the company can raise an objection, the decision is finalized once the Korea Exchange maintains it. If the decision is postponed, a grace period of about a year can be given. Kolon TissueGene used to have the fourth-largest market cap in KOSDAQ. Its current market cap stands at 489.6 billion won and about one-third of it is owned by minority shareholders.
The problem is that similar situations are being witnessed in not a few KOSDAQ-listed biotech companies. The examples include SillaJen and Helixmith, which used to be the second-largest in the stock market. At present, they are on the precipice due to malpractice and embezzlement, deteriorating financial conditions, and so on. Individual investors currently own more than 85 percent of the companies’ shares and their financial losses seem almost unavoidable.
The fate of SillaJen, which develops anticancer immunotherapies, will be determined within this month. The company became subject to an eligibility review in May due to malpractice and embezzlement. Its stocks are untradeable now and its market cap plunged from 8.7 trillion won to less than 0.87 trillion won in three years.
Helixmith invested its money from investors in high-risk financial instruments instead of new drug development. The company announced on Oct. 16 that it invested 264.3 billion won in private equity funds and the like for five years and failed to recoup approximately 40 billion won. The stock price of the company plunged 29.92 percent the next day. More than 64,300 individual investors currently have 502 billion won of shares in the company whose pre-tax losses are estimated to exceed 50 percent of its equity capital for two years in a row.