SillaJen execs may have sold shares illegally

SillaJen could be in deeper trouble as Korea’s financial authority is looking into whether the company engaged in illegal trading practices.

Financial Supervisory Service (FSS) Gov. Yoon Suk-heun said during an audit Tuesday that it is working with prosecutors to fast-track an investigation into SillaJen.

The FSS is investigating suspicions that the biotech company’s executives knew the disappointing results of the Phase 3 clinical trial of Pexa-Vec therapy prior to it being released publicly. The executives could have used that undisclosed information to sell their shares and make a profit before the results affected the share price.

SillaJen aborted its Phase 3 clinical trial for the highly-anticipated liver cancer treatment in August after an independent data monitoring committee (DMC) advised the company to stop the trial as Pexa-Vec failed to extend the lives of liver cancer patients using it.

Pexa-Vec is an injectable genetically modified cowpox virus that selectively attacks cancer cells and stimulates patients’ immune responses against cancer cells. SillaJen was planning to conclude the trial by December 2020 after testing the liver cancer treatment on a total of 600 patients.

After the company announced it would abort the Pexa-Vec trial, SillaJen’s shares on the secondary Kosdaq bourse nosedived 69.4 percent from 44,550 won ($37.26) on Aug. 1 to 13,600 won on Aug. 14. SillaJen was once touted as one of the rising stars of the local biopharmaceutical industry.

Officials are looking into whether SillaJen’s executives were aware of the disappointing outcome prior to it being publicly released, as Shin Hyun-pil, chief science officer for SillaJen, sold all of his 167,777 shares, gaining around 8.8 billion won.

As Shin sold the shares right before SillaJen was expected to unveil the analysis results for Pexa-Vec, authorities have been questioning if the chief science officer and other executives were aware of the DMC’s analysis and launched an official investigation shortly after.

In late August, prosecutors raised SillaJen’s Seoul office in Yeouido, western Seoul, and its Busan headquarters and seized computers and documents related to the progress of Pexa-Vec development.

Although the company recovered some of its share price thanks to a net buying spree from foreign investors, after Yoon made the comment regarding the ongoing investigation Tuesday, SillaJen’s shares dropped another 7.65 percent to 15,100 won as of Thursday’s close.

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