The share-dumping scandal involving Hanmi Pharmaceutical is nearing closure, with the prosecution charging 17 people Tuesday for insider trading.
The suspects are accused of reaping unlawful gains by taking advantage of undisclosed information regarding a broken licensing deal.
After a monthslong investigation, the Seoul Southern District Prosecutors’ Office announced that it found 45 offenders involved with the Hanmi case, 17 of whom were indicted.
|The Hanmi Pharmaceutical headquarters in southeastern Seoul (The Korea Herald/The Investor)|
Of those indicted, four people — including a 48-year-old Hanmi Science executive surnamed Hwang and a 31-year-old employee surnamed Kim from the same firm’s legal department — were indicted with detention.
Two people -- including a 52-year-old legal department executive from Boryung Pharmaceutical -- were indicted without detention. Eleven others were summarily indicted, meaning they have been charged with only a fine.
Of the remaining 28 offenders, who avoided indictment as secondary benefiters, the prosecution asked the Financial Services Commission to fine 25 people.
The prosecution decided not to press charges against the remaining three because their offenses were not serious enough.
The 45 offenders engaged in strategic stock transactions to gain illegal profits worth a total of around 3.3 billion won ($2.83 million) in total, the prosecution said.
With exclusive knowledge of this information, the 45 offenders together engaged in strategic stock transactions to gain illegal profits worth around 3.3 billion won ($2.83 million) in total, the prosecution said.
From early October, prosecutors had been investigating Hanmi employees and 10 major brokerage houses. The probe focused on whether Hanmi insiders gave early notice to select investors that Boehringer Ingelheim had ended its licensing partnership on Hanmi’s lung cancer drug Olmutinib.
The announcement, made at 9:29 a.m. on Sept. 30, led to the price of Hanmi Pharmaceutical shares plunging 18.06 percent to a closing price of 50,800 won that day.
The Korean drugmaker had also faced suspicions over the timing of its disclosure -- delaying the announcement to 29 minutes after the opening of the stock market to potentially allow select investors more time to withdraw or short-sell Hanmi shares.
Through its investigation, the prosecution found Hanmi employees spread news of the deal’s collapse via mobile messenger apps on Sept. 28. However, the authorities concluded Hanmi did not intentionally time its announcements to favor certain shareholders.
Hanmi Pharmaceutical released a statement of apology Tuesday expressing deep regret for its involvement in this case.
“We will strengthen our internal information and employee management system to ensure nothing like this happens again,” the company said.
Meanwhile, the market outlook for Hanmi Pharmaceutical has turned negative after delays in the overseas clinical trials of new drugs Hanmi had licensed out to global companies.
Earlier this month, Janssen Pharmaceuticals suspended participant recruitment for phase I clinical trials of a diabetes drug licensed from Hanmi, citing manufacturing issues.
Sanofi, which had obtained development rights to Hanmi’s long-acting diabetes treatments known as GLP-1 under a licensing agreement last year, also delayed the drug’s phase III trials. The final-stage trials, originally slated to begin in the fourth quarter of this year, were pushed to next year as the production of the drug had fallen behind schedule.
“Two key new drug pipelines, which were expected to enter the next phase of clinical trials and in turn bring milestone payments (to Hanmi), have been delayed” said HMC Investment Securities analyst Kang Yang-gu.
While maintaining his “buy” recommendation, the HMC analyst lowered his forecast for Hanmi Pharmaceutical shares’ target price by 28.5 percent from 560,000 won to 400,000 won.
Hanmi Pharmaceutical shares closed at 317,500 won on Wednesday, down 1.24 percent from the previous trading day.
By Sohn Ji-young (firstname.lastname@example.org)