Review board votes to delist Kolon TissueGene

The first step toward delisting Kolon TissueGene was taken on Monday since trading was suspended on May 28 after the Ministry of Food and Drug Safety nullified the licenses of its gene therapy drug Invossa.

A corporate review board at the Korea Exchange (KRX) has voted in favor of delisting the drug company, which is accused of false documentation.

However, this does not immediately remove the company from the stock exchange.

Kolon TissueGene is given 15 days to respond before the preliminary decision is finalized.

The company is facing delisting due to allegations of false documentation. Its gene therapy, marketed as a treatment for arthritis of the knee, was approved by Korean authorities in 2017 on the basis that it used cartilage cells. It later turned out that the treatment used kidney cells, which civic groups have claimed could cause tumors.

Recent report, however, said the concerns were unfounded as radiation has been used on the drug to prevent cells from multiplying out of control.

The delisting is expected to affect the 59,400 minority investors who hold 4.51 million shares, or 36.6 percent of the company. The damage is estimated to be around 200 billion won.

The company, first traded on the secondary market in November 2017, once saw its shares go up to as high as 75,100 won ($62), resulting in a market capitalization exceeding 4 trillion won. Before the crisis started, Kolon TissueGene’s shares were traded around 40,000 won. But since the KRX suspended trading, the drug company’s share has been frozen at 8,010 won per share with a market capitalization of 489.6 billion won.

Kolon Life Science, which owns a 12.57-percent stake in the U.S.-based drug company, started the day negatively by falling more than 5 percent but closed up 5.26 percent, largely thanks to foreign investors’ net purchasing.

Kolon Life Science shares have been rallying for the last six days on expectations that the KRX would not delist Kolon TissueGene.

BY LEE HO-JEONG, KO JUN-TAE [lee.hojeong@joongang.co.kr]