[NEWS IN FOCUS] Invossa’s FDA win could redeem Kolon Life Science

With Kolon TissueGene resuming clinical trials of Invossa, a turnaround for the company and its parent is becoming more of a possibility.

If the trials are a success, the gene therapy could be approved for sale in the United States, a large market and one that brings credibility for pharmaceutical products and companies that manufacture them.

That could result in an end to the delisting process for Kolon TissueGene and the return of Invossa to the Korean market, but it might not be enough to end lawsuits against the company.

The U.S. Food and Drug Administration (FDA) on Saturday allowed Kolon TissueGene to resume Phase 3 clinical trials for Invossa. The trials have been delayed for months since the safety and efficacy of the osteoarthritis gene therapy were brought into question.

The Ministry of Food and Drug Safety revoked the license for Invossa in early July after the gene therapy was taken off the shelves in April 2019.

With fraud a possibility, Kolon TissueGene has been faced with possible Kosdaq delisting. Prosecutors have also said they suspect that Kolon TissueGene may have been fraudulently listed.

But with the unexpected green light from the FDA, the delisting process for Kolon TissueGene looks increasingly less likely as the exchange was most concerned about whether the company is a viable enterprise.

Kolon TissueGene is 27.21 percent owned by Kolon Corporation, 17.8 percent owned by former Kolon Group Chairman Lee Woong-yeul and 12.55 percent owned by Kolon Life Science.

The company said Sunday the letter indicates that the FDA acknowledged the viability of clinical trial data from the past. The FDA initially rejected the company’s request to resume Phase 3 clinical trials in September and asked for additional data on the drug’s ingredients.

The Korea Exchange deferred the delisting of Kolon TissueGene for a year in October and demanded the company find ways to improve its management.

Since being suspended from trading in late August, Kolon TissueGene’s total market capitalization has remained 489.6 billion won ($438 million).

Boston-based L.E.K. Consulting earlier estimated that Invossa sales could reach as much as $5.5 billion a year in the United States alone.

“It’s too early to say for sure whether this news will serve as an appealing point for Kolon TissueGene in avoiding delisting from the stock market,” said Kim Seung-han, a spokesperson for Kolon Corporation, in a telephone interview.

“The next step in the delisting process comes in October, so we will have to wait and see, but we will use this progress as best as we can in future steps.”

Upon news of the green light from the FDA, Kolon Life Science’s share price soared by its daily limit of 30 percent to 26,900 won, and Kolon Corporation, which owns 20.35 percent of Kolon Life Science, hit the daily limit, closing at 18,100 won. Kolon Corporation’s preferred shares also hit their daily limit to close at 10,400 won.

If Kolon TissueGene eventually succeeds in winning sales approval for Invossa from the FDA, two paths remain for Invossa to return to the Korean market.

Invossa could be registered as an imported drug to be reviewed by the Ministry of Food and Drug Safety or Kolon Life Science could start the whole clinical trial and approval process for Invossa over with properly-labeled ingredients.

“The fact that Invossa earned approval to resume clinical trials in the United States has nothing to do with us,” said Kim Dal-hwan, a senior scientific officer at the Ministry of Food and Drug Safety over the phone.

“If Invossa wants to return to the market, the product should re-enter the review process here again as a new drug or be categorized as an import and go through that process.”

Kolon Life Science said reintroducing Invossa to the Korean market depends on the outcome of its administrative lawsuit against the Ministry of Food and Drug Safety over the authority’s decision to nullify the license.

Invossa was taken off the market last year after it was found that the treatment was made using potentially tumorous kidney cells, not cartilage-originated cells as was claimed. Prosecutors kicked off an investigation into the scandal after it was also discovered that Kolon Life Science and Kolon TissueGene were aware of the presence of the kidney cells far earlier than they have claimed.

According to the Drug Safety Ministry, Kolon Life Science received an email from Kolon TissueGene, its U.S. subsidiary, on July 13, 2017. The message conveyed test results showing that kidney cells were present in Invossa.

Company executives claim that they had no idea the kidney cells were present in the drug. They only revealed the presence of the cells in early 2019. If they received and read the email, it would mean that they had been hiding the problem for at least two years.

Kolon Life Science CEO Lee Woo-suk is currently under arrest after the Seoul Central District Court issued a warrant in February for the mislabeling of the key drug ingredient in Invossa.

Jang Se-jin, a spokesperson for the company, said the FDA decision will allow Kolon Life Science to reopen talks to resume clinical trials in other jurisdictions for Invossa. Jang said Invossa plans to continue trials in China, Hong Kong, Macau, Japan and some countries in the Middle East and Southeast Asia.

The U.S. clinical trial resumption for Invossa is also significant as Kolon Life Science and Kolon TissueGene are being sued by investors and Invossa-injected patients. The two companies are currently the subject of three class action lawsuits from a total of around 900 patients who were treated with Invossa. They are represented by Seoul-based OhKims Law & Company.

“The clinical trial news doesn’t change the fact that patients were injected with mislabeled Invossa,” said Eom Tae-seob, a partner at the firm.

“Kolon Life Science likes to claim that the clinical trial resumption proves the safety of the drug, but it still stands that patients had to pay millions of won to be given treatment with false ingredients.”

The law firm is demanding 10 million won per patient in the compensation suit but is considering upping the amount in the future.

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