South Korean justice minister candidate faces scrutiny over Genencell
In South Korea, justice minister candidate and lawmaker Kim Seung-won has come under scrutiny over ties to biotechnology company Genencell. The company’s claims about a COVID-19 drug featured in a Financial Supervisory Service investigation into suspected stock price manipulation, The Korea Herald reports.
Allegations regarding trials
Kim is accused of submitting a request to drug regulators in October 2021 to approve clinical trials of a Genencell drug. It is also alleged that the subsequent approval was used to manipulate stock prices.
According to a Financial Supervisory Service report obtained by lawmakers, misleading information about Genencell’s drug candidate had already figured in another suspected stock manipulation scheme. KH Fillux disseminated information through the media about investments of 1.5 billion won, or $1.1 million, in Genencell and other pharmaceutical projects. The regulator estimated the likely illegal profit from inflating stock values at 11.58 billion won.
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Questions over Genencell’s claims
The regulator separately questioned Genencell’s claim that Indian authorities had approved a clinical study of the ES16001 drug as a COVID-19 treatment. Data from India’s clinical trials registry indicated that the trial was part of the procedure for classifying the product as an Ayurvedic, or traditional Indian, medicine.
Genencell said the study was conducted under a separate procedure in accordance with Indian rules, and that permission from the relevant institution had the same meaning as the approval announced by the company. In January 2021, Genencell reported a 95% recovery rate in the trial, after which KH Fillux shares rose by 29.95%.
The Financial Supervisory Service found that KH Fillux subsequently sold at elevated prices shares converted from convertible bonds and also raised 116.8 billion won through a rights issue in March 2021. The regulator sought compulsory measures to obtain evidence and consulted prosecutors in December 2022, and the following month asked the chair of the Securities and Futures Commission to take urgent action. It is unknown whether these measures were carried out and how the case ended. According to an informed person, the Financial Supervisory Service is also examining other trading activity linked to Genencell.
