Two months af­ter Leg­end Biotech made the star­tling dis­clo­sure that founder and then-CEO Frank Zhang was placed un­der “res­i­den­tial sur­veil­lance,” its par­ent com­pa­ny re­vealed that he’s been for­mal­ly ar­rest­ed.

Zhang — who, since found­ing Gen­Script 18 years ago, has tak­en the CRO pub­lic and groomed Leg­end Biotech in-house un­til the J&J-part­nered CAR-T play­er was ma­ture enough for its own Nas­daq list­ing — is sev­er­ing his fi­nal ties with both. He is re­sign­ing as board chair/non-ex­ec­u­tive di­rec­tor of Gen­Script and di­rec­tor of Leg­end.

The cir­cum­stances around the cus­toms in­ves­ti­ga­tions and the ar­rest re­main opaque.

But the com­pa­nies are ready to move on. Gen­Script has in­stalled Meng Jiange, its VP of in­vestor re­la­tions, as the chair, while adding for­mer chief strat­e­gy of­fi­cer Zhu Li and Wang Xue­hai, VP of the Chi­na Phar­ma­ceu­ti­cal En­ter­pris­es As­so­ci­a­tion, to the board. Zhu is al­so join­ing Leg­end’s board.

“While no charges have been filed against him, Dr. Zhang de­cid­ed that to avoid un­nec­es­sary dis­trac­tion to Leg­end Biotech, his res­ig­na­tion would be in the in­ter­ests of Leg­end Biotech and its share­hold­ers,” a state­ment from Leg­end read.

In an HKEX fil­ing, Gen­Script re­port­ed it had learned about his ar­rest on Fri­day from a fam­i­ly mem­ber who sent over “a copy of a no­tice of ar­rest is­sued by (the) Cus­toms An­ti-Smug­gling De­part­ment of Zhen­jiang” dat­ed Nov. 20. The sus­pect­ed of­fense had to do with “smug­gling goods pro­hib­it­ed by the im­port and ex­port reg­u­la­tions un­der the laws of the PRC.”

Two oth­er em­ploy­ees who had han­dled im­port and ex­port ac­tiv­i­ties have al­so been ar­rest­ed, it wrote. There was no word on what the goods might be.

Jef­feries an­a­lyst Biren Amin has pre­vi­ous­ly sug­gest­ed, based on a chat with Leg­end, that the po­ten­tial vi­o­la­tion sur­round­ed Gen­Script’s ex­port of blood and ge­net­ic sam­ples out of Chi­na.

With a crit­i­cal fil­ing for its BC­MA CAR-T cell ther­a­py loom­ing, Leg­end shares $LEGN fell 4.84% pre-mar­ket.

Ying Huang, the for­mer CFO, is now over­see­ing all that as CEO while Gen­Script co-founder Sal­ly Wang serves as board chair­woman.

More than five years after Corey Fishman and Michael Dunne dusted sulopenem off Pfizer’s shelves — the second castoff antibiotic they’ve brought out of the pharma giant — and founded Iterum Therapeutics around that single drug, they have lined up a quick shot at approval with priority review from the FDA.

The decision, six months from now, will mark a make-or-break moment for a struggling biotech that has just enough cash to keep the lights on until the third quarter.

Immunocore spent much of 2019 dealing with the fallout of the Neil Woodford scandal, as the former star investor’s fall crashed the biotech’s valuation out of unicorn range. Now it turns out that the company spent 2020 dealing with another internal scandal.

The longtime UK biotech darling disclosed in their IPO filing last week that they had fallen victim to an alleged kickback scheme involving one of their employees. After a whistleblower came forward, they said in their F-1, they spent the summer and spring investigating, finding fraud on the part of an employee and two outside vendors.