Subscribe
E-Paper
 |
| HLB Chairman Jin Yang-gon speaks during an online press conference via YouTube in this February file photo. Captured from YouTube |
Pharmaceutical firm resolves uncertainties regarding stock price
By Park Jae-hyuk
The Securities and Futures Commission (SFC), a sub-commission within the Financial Services Commission (FSC), eventually rejected a request from the Financial Supervisory Service (FSS) to ask the prosecution to indict biopharmaceutical company HLB over an unfair transaction.
In its regular meeting on Wednesday, the SFC decided to just "inform" the prosecutors of the case involving the Kosdaq-listed firm, alleviating the sanctions imposed by the FSS.
Sources familiar with this issue view the recent measure as a virtual acquittal, considering that the SFC has tended to let prosecutors make the final decision if its commissioners do not consider a company guilty of allegations.
"It is regrettable that we have not been acquitted officially, because we have tried to vindicate ourselves by submitting a huge volume of data to the financial authorities," an HLB spokesman said. "We hope the prosecutors will draw a conclusion as soon as possible, so that we can completely resolve any remaining uncertainties."
An FSC official declined to comment on this issue. The financial regulator has not disclosed its stance or the specifics about the unfair trading allegations involving listed companies, in order to follow the "presumption of innocence" principle.
Although HLB has to wait for the prosecutors' decision, market observers believe uncertainties regarding the company have almost been resolved. On a related note, its stock price rose 6.35 percent to 67,000 won during Thursday's session.
 |
| The Financial Services Commission headquarters in the Government Complex Seoul / Korea Times file |
The SFC's decision came out more than a year after the FSS's capital market supervision department launched an investigation into HLB in May last year, after the commissioners could not reach an agreement in their three previous meetings in May, June and August this year.
The FSS has suspected that the company attempted to raise its stock price by exaggerating the results of its phase 3 clinical trial on Rivoceranib, an anti-cancer compound developed by its U.S. subsidiary Elevar Therapeutics.
In June 2019, HLB Chairman Jin Yang-gon announced that Rivoceranib did not reach the primary endpoint, so it could face difficulties in applying for a novel drug approval. The announcement led disappointed investors to dump HLB stocks.
Three months later, however, HLB said that the phase 3 clinical trial on Rivoceranib demonstrated sufficient clinical significance.
The FSS suspected that the company interpreted the test results arbitrarily, so it asked the SFC late last year to demand prosecutors indict HLB. After the FSC's Capital Market Inquiry Committee reviewed the request last November, the case was sent to the SFC.
The financial regulator initially tried to conceal its investigation into HLB from the public, but the information was leaked to the press in February, prompting HLB shareholders to seek lawsuits against FSS officials and the journalists who reported that the company was under investigation for false disclosure.
The shareholders criticized the report, given that HLB only issued press releases on Rivoceranib, without submitting a regulatory filing.
Because the clinical trials on Rivoceranib were conducted by Elevar, HLB was not supposed to submit a regulatory filing regarding the test results.
The Korea Exchange consequently did not ban the trading of HLB stocks, saying individuals in charge of publishing the press releases will be punished, if the allegation of the company's unfair transaction turns out to be true.
The HLB chairman held an online press conference in February to deny the charge, even though he admitted the fact that his company had been inspected by the FSS.
"Although we used the word 'fail' during our meeting with the U.S. Food and Drug Administration (FDA) for the novel drug approval, it did not mean a failure in the clinical trial, as it meant a failure in securing statistical significance," he said at that time.
