Shinrajen Shareholders Sleepless Even During Lunar New Year Holiday... February Market Volatility Raises "Delisting Concerns"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] Since May 4, 2020, SillaJen has been in a trading suspension state for about 20 months. On the 18th, the Korea Exchange's Corporate Delisting Committee decided on the 'delisting' of SillaJen. SillaJen shareholders, facing the upcoming KOSDAQ Market Committee review in February, cannot help but spend a restless Lunar New Year holiday. The financial investment industry expects that although a 'delisting' decision has been made, there is a high possibility that a one-year improvement period will be granted at the second KOSDAQ Market Committee. While delisting may be avoided for the time being, the concerns of small shareholders, whose funds will inevitably be tied up, are expected to deepen.

According to the Korea Exchange on the 31st, only the final delisting decision by the Market Committee remains for SillaJen. The KOSDAQ Market Headquarters held a Corporate Delisting Committee meeting on the 18th and decided on SillaJen's delisting. The Exchange plans to hold a Market Committee meeting within 20 business days (by February 18) to decide on whether to delist and whether to grant an improvement period of up to one year.

Although the Market Committee is unlikely to overturn the Corporate Delisting Committee's decision, it can grant an improvement period instead of delisting. However, the financial investment industry expects the Market Committee to again decide on delisting. If delisting is concluded, SillaJen can file an objection, leading to a second Market Committee meeting. At this stage, SillaJen may be granted an improvement period instead of delisting. This is considered the most likely scenario by the financial investment industry.

As of the end of the third quarter last year, SillaJen had 174,186 small shareholders holding 66,253,111 shares (92.60% stake). Based on the currently suspended stock price of 12,100 KRW, the value of shares held by small shareholders amounts to 801.6 billion KRW. Ultimately, the funds of small shareholders, totaling about 800 billion KRW, will be tied up for several years.

Although unlikely, if the result is not overturned at the second Market Committee, a liquidation trading process will begin. SillaJen's last card is a lawsuit. In this case, the liquidation trading process will be suspended, and the delisting decision will be made according to the court's ruling. The SillaJen shareholder coalition has expressed its intention to fight through litigation.

Meanwhile, according to the SillaJen shareholder coalition, it has been confirmed that the Corporate Delisting Committee's decision to delist SillaJen was influenced by whether the clinical trials stated in the improvement plan submitted by SillaJen were carried out. The Corporate Delisting Committee and SillaJen engaged in a prolonged dispute over the execution of these clinical trials.

The Corporate Delisting Committee judged that SillaJen lacked the will to carry out research and development. As evidence, it pointed out that clinical trials were not conducted according to the improvement plan, specifically that some clinical trials planned to be completed by 2021 were not met.

SillaJen has been conducting kidney cancer clinical trials divided into four groups: A, B, C, and D. At the time of submitting the improvement plan, considering a lack of funds, they decided to slow down the newly started D group clinical trial and instead complete the A, B, and C groups early by 2021. Subsequently, SillaJen stated that positive signals emerged from the D group clinical trial involving 19 patients. When Regeneron and the oncolytic virus Pexa-Vec were administered together to patients unresponsive to immune checkpoint inhibitors, therapeutic effects were observed.

The SillaJen shareholder coalition explained, "According to a prior agreement with clinical partner Regeneron, clinical efficacy was confirmed around May last year, and in July, a final agreement was made to expand the target patient group." They added, "Contrary to the original plan, the D group clinical trial was expanded, and the clinical trial completion period for groups A, B, and C was readjusted to 2022." Although there was a discrepancy in the clinical trial completion period within the improvement plan, SillaJen emphasizes that they did not fail to carry out clinical trials but rather expanded them to include group D along with A, B, and C. On the other hand, the Corporate Delisting Committee viewed the failure to complete tasks that should have been finished last year as evidence of a lack of research competitiveness necessary to continue operations.

The SillaJen shareholder coalition emphasized, "The progress of the D group clinical trial, combining SillaJen's Pexa-Vec and Regeneron's Semiplimab, is proof that the drug efficacy is better than expected and can create better conditions for technology export," stating that the Exchange's reasons for delisting lack strength and are unacceptable. They requested, "Delisting based on reasons not stipulated in the regulations is illegal," and asked the Market Committee to decide to resume trading.

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