'1300% Increase in 6 Months' ShillaJen Delisting? ... 170,000 Retail Investors 'Anxious'

Moon Eun-sang, CEO of SillaJen, is bowing his head in apology regarding the suspension of the global Phase 3 clinical trial of Pexa-Vec for liver cancer at an emergency meeting held on August 4 last year at the CCMM Building in Yeouido, Seoul.

[Asia Economy Reporter Koh Hyung-kwang] '10,650 won (closing price on May 16, 2017) → 152,300 won (intraday on November 21, 2017)'. A 14-fold (1330%) surge in just 6 months.

The 'bio miracle' SillaJen is now facing delisting from the KOSDAQ market. This follows the arrest of CEO Moon Eun-sang and other current and former executives on charges of insider trading using undisclosed information, embezzlement, and breach of trust. Once ranked as the second largest company by market capitalization on the KOSDAQ and regarded as a role model among bio stocks, SillaJen’s delisting threat has heightened anxiety among its 170,000 small shareholders.

According to industry sources on the 17th, it will be decided by the 29th whether SillaJen will be subject to a substantive review of its listing eligibility. This review process comprehensively examines whether there are issues with maintaining the company’s listing status.

Under KOSDAQ listing regulations, if the amount embezzled or breached by a listed company’s executives exceeds 3% of the company’s equity capital, the company’s suitability for listing is re-evaluated. SillaJen disclosed embezzlement and breach of trust amounting to approximately 200 billion won, exceeding 340% of its equity capital. The occurrence of such allegations against management constitutes grounds for a substantive review of listing eligibility under exchange rules.

Due to these suspicions, CEO Moon, who led SillaJen, was arrested on the 12th. He is suspected of selling shares in advance using internal company information before publicly announcing the clinical trial suspension of the immuno-oncology drug candidate 'Pexa-Vec', thereby avoiding massive losses. There are also allegations that he unjustly acquired company shares without capital through a paper company.

If SillaJen is designated for the substantive review, the Korea Exchange will receive a management improvement plan from SillaJen within 15 days and hold a corporate evaluation committee meeting to decide whether to delist the company or grant a period for improvement. Considering additional investigations, the review period may be extended by 15 days, and even if delisting is decided, if the company raises objections, another review will be conducted. Therefore, the final decision on SillaJen’s delisting is expected around August.

As of the end of last year, SillaJen had 168,778 small shareholders. They hold 62.3 million shares (87.6% stake), which at the current stock price (12,100 won) amounts to a stock value of 750 billion won. If SillaJen is ultimately delisted, these shares will become worthless, inevitably causing losses to investors.

Until two years ago, SillaJen’s market capitalization hovered between 8 to 9 trillion won, ranking second on the KOSDAQ. However, in August last year, the U.S. Data Monitoring Committee (DMC) recommended halting the phase 3 clinical trial of Pexa-Vec, causing the stock price to plummet. The stock, which once soared to the 150,000 won range, is currently suspended at 12,100 won.

This content was produced with the assistance of AI translation services.