[News in focus] Invossa might struggle to gain approval in U.S.

Earning approval from the U.S. drug authority is the only option for Kolon Life Science and its affiliate Kolon TissueGene after a Korea Exchange (KRX) review board voted to delist the latter company over its controversial gene therapy drug Invossa.

But that could be a distant dream, as evidence now suggests that a recent U.S. academic paper supporting Kolon TissueGene and Invossa was actually funded by the company.

Kolon TissueGene announced early Tuesday morning that it has submitted an application to the U.S. Food and Drug Administration (FDA) to resume Phase 3 clinical trials for Invossa, a gene therapy drug for knee arthritis, in the UniAted States.

The trials have been put on hold since it was found that the drug was using kidney cells instead of the cartilage cells the manufacturer reported to the Ministry of Food and Drug Safety when seeking approval for commercialization in 2017.

The Tuesday announcement came less than 12 hours after a corporate review board at the KRX made a preliminary ruling late Monday to delist the company from the secondary Kosdaq bourse for filing false documentation.

It is the first time a conglomerate affiliate has seriously faced delisting since the exchange implemented related rules in February 2009. Although Hanwha and Samsung BioLogics were once considered for possible delisting in 2012 and 2018 respectively, they both survived the chopping block.

After the ruling, Kolon Life Science shares plummeted 21.8 percent to 17,200 won ($14.16) by Tuesday’s close.

Kolon TissueGene’s shares have been suspended from trading since the Korean drug authority revoked the license for Invossa in early July. Invossa is the only drug from Kolon TissueGene thus far, which means that it is the one and only hope for the company and its investors to make any money.

Yet the Kolon bio affiliates remain confident in the drug, especially after a highly-publicized recent research paper suggested that Invossa was safe and effective, despite the misidentification of genes.

The affiliates have been continuously arguing that Invossa proved its efficacy through years of clinical trials and real applications on patients. The drug was administered to more than 3,000 patients and 443 hospitals and clinics in Korea since its debut.

“Clinical holds and resumptions happen all the time,” a Kolon TissueGene official told the review board before the Monday ruling, according to the company, adding it also requested suspending the ruling until next March.

But the neutrality of the academic report defending Invossa has been called into question after it turned out that the authors had been involved in the drug’s U.S. clinical trials. A footnote on the report also noted that it received financial support.

The investors who welcomed the news of the recent report are facing significant financial losses, especially as many purchased shares of Kolon Life Science after the report was released.

After the report was published in Surgical Technology International on Aug. 22, Kolon Life Science stock price rose a total of 37.5 percent from its previous close of 16,000 won to 22,000 won prior to the KRX board ruling. During that period, retail investors net purchased 8.3 billion won worth of shares while foreign investors net offloaded a 6.5 billion won worth.

The KRX will convene again before Sept. 18 to decide on the delisting of Kolon TissueGene and rule whether to offer a grace period for the company. Even if the exchange again rules to delist it, Kolon TissueGene can appeal, and the KRX is obligated to hold another round of discussions.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]