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[Newsmaker] Korea Exchange to decide fate of scandal-ridden Osstem Implant

SillaJen, Kolon TissueGene on the verge of being delisted from Kosdaq

Osstem Implant headquarters in Seoul (Yonhap)
Osstem Implant headquarters in Seoul (Yonhap)
The Korea Exchange on Monday will decide whether Osstem Implant should undergo an eligibility review to stay listed on the country’s second bourse Kosdaq, making it the third biotech firm facing a possible delisting this year.

The dental implant manufacturer’s stock trading was suspended on Jan. 3 as the company announced that it had filed embezzlement charges against an employee for stealing 221 billion won ($185 million) in company funds.

The stock market operator can postpone the decision for another 15 business days if it sees a need for an additional investigation into the case. If the KRX concludes that Osstem Implant does not need a review, the company’s stock trading can resume the next day.

On the other hand, if the KRX decides that Osstem Implant needs to undergo the listing eligibility review, it will require the company to submit a plan on improving management transparency, financial stability and business sustainability within the next 15 business days.

Once the required documents are submitted, the KRX will form a company review committee. The committee can either opt to keep the subject company listed, delist it or give a reprieve period of up to one year for the company to improve its governance structure. Trading can resume if the committee decides to retain the company, but a delisting recommendation means the case will go to a Kosdaq market committee for the final ruling.

Throughout the review process, all transactions of Osstem Implant would be suspended and the stoppage could last over two years depending on the review progress. According to Osstem Implant’s company report, there were almost 20,000 individual minority shareholders at the end of 2020, accounting for 55.6 percent of the entire stock.

The KRX’s company review committee on Tuesday decided to delist SillaJen, 20 months after the biotech company’s market transactions were stopped due to a breach of trust and embezzlement charges against key executives.

SillaJen submitted documents to back up its improvement plan, but the committee concluded they were not enough for the company to be sustainable.

The stock market operator will hold a Kosdaq market committee meeting to decide the fate of the biotech company before Feb. 18.

After SillaJen made its Kosdaq debut in December 2016, the price of its stock reached as high as 152,300 won at one point. But in August 2019, SillaJen’s shares plunged on the reports that Pexa-Vec, the firm’s anti-cancer drug candidate, had failed its phase 3 clinical trial. The nosedive continued, hitting 12,100 won by the time of the suspension order in May 2020.

According to the company’s quarterly report, SillaJen had about 174,000 small-scale shareholders at the end of 2020, taking up over 90 percent of the company stock. After the delisting decision was announced, some individual investors said they will file legal charges against the KRX.

Kolon TissueGene, another bio company listed on Kosdaq, will face a final decision from the stock market operator on Feb. 9 when the KRX is scheduled to decide whether the biopharmaceutical company will be delisted for good.

Trading in the shares of Kolon TissueGene was suspended in May 2019 over false reporting of its gene therapy drug Invossa and mislabeling of its ingredients. The gene therapy, which was approved on the basis of using cartilage cells, later was found to have used kidney cells.

The KRX had already given two grace periods for the biopharmaceutical company in 2019 and 2020. The firm submitted its final plan for improving business to the stock market operator earlier this month.

According to Kolon TissueGene’s company report, there were over 64,000 retail investors at the end of 2020 owning 34.5 percent of its stock.

By Kan Hyeong-woo (hwkan@heraldcorp.com)
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