After disappointing investors, SillaJen gets into trouble with Korean prosecutors on suspected insider trading
SillaJen investors suffered a bad rout when the stock took a freefall earlier this month in the wake of a notice that the company is abandoning a Phase III for its oncolytic virus, shaving more than $800 million off a multi-billion market cap in less than 2 hours.
Executives at the biotech, though, apparently avoided that loss by selling stock ahead of the bad news — and Korean authorities have reportedly raided their offices for an apparent investigation.
District prosecutors seized computers and documents at SillaJen’s Seoul office as well as Busan headquarters, according to Korea Biomedical Review.
“The scope of the search and seizure was limited to several executives,” the news outlet quoted a statement. “The investigation is limited to only some of the employees, and we intend to cooperate with the investigation fully.”
One of them could be CSO Shin Hyun-Pil, who investors say sold all of his 167,777 shares between July 1 and July 8, bagging about $7.25 million (8.8 billion won).
That raised some serious suspicion of insider trading, as Shin might have already known that the PHOCUS study had failed the futility test — the reason why the independent monitoring board advised SillaJen to give up. The Phase III trial was testing a combo of their Pexa-Vec with Bayer’s Nexavar in liver cancer.
The country’s prosecutors have been busy going after not just rogue biotech players but the Korean stock market itself, first with accusations of insider trading around Hanmi’s cancer drug that later proved lethal — triggering a fallout with partner Boehringer Ingelheim. More recently they launched a probe into the events around Samsung BioLogics’ IPO, where the stock market operator was suspected of softening regulations to allow the big biopharma manufacturer to list. The high-profile raids of the stock exchange, in turn, followed a suspension of Samsung BioLogics’ stock and a $7.04 million fine, citing accounting violations during its 2016 public debut.
SillaJen’s stock on KOSDAQ has plunged 19% since news of the raids broke Wednesday, now trading at 10,200 won or $8.41.
Social image: SillaJen