KRX gives Kolon TissueGene one-year reprieve

The Korea Exchange (KRX) on Friday deferred the delisting of troubled pharmaceutical company Kolon TissueGene for a year.

The distributor of the controversial gene therapy drug Invossa has been given a one-year grace period to improve the management of its business after a corporate review board at KRX on Aug. 26 decided to delist Kolon TissueGene on allegations of filing false documentation.

Following the KRX decision, the company needs to submit documents to show how it has improved its business management within seven business days of Oct. 11, 2020, when the grace period ends. The KRX will then decide whether to delist the company or not.

Kolon TissueGene is affiliated with Kolon Life Science.

Invossa, marketed as a treatment for arthritis in the knee, was approved by Korean authorities in 2017 on the basis that it used cartilage cells. It was later found that the treatment instead used kidney cells, which some argue could cause tumors.

The Ministry of Food and Drug Safety nullified the licenses of Invossa in May.

The U.S. Food and Drug Administration’s (FDA) decision not to end clinical trials largely affected the KRX decision.

“The U.S. FDA could have completely scrapped clinical trials but demanded complementary materials through official documents [on Sept. 19], which leaves the possibility of resuming the clinical trials,” said a person from the KRX corporate review board.

The screening process is designed to force out poorly managed companies but could also offer a second opportunity to those that have a chance of being revived, according to the spokesperson.

Kolon TissueGene’s total market capitalization stands at 489.6 billion won ($438 million).

A total of 179.5 billion won is owned by minority shareholders, accounting for 36.66 percent of the entire company.

BY KANG KWANG-WOO, JIN MIN-JI [jin.minji@joongang.co.kr]