The stock market regulator said it has pushed back the deadline to decide whether to evaluate Kolon TissueGene for a possible delisting until July 10.
The delay reflects the Korea Exchange (KRX)’s cautious approach on the matter, but the biotech firm was likely to be subject to delisting review, sources said.
Earlier, KRX suspended the trading of Kolon TissueGene shares to protect investors, shortly after the Ministry of Food and Drug Safety nullified the license of gene therapy Invossa-K due to the mislabeling of the drug’s cell ingredient.
“We are assessing whether Kolon TissueGene should be reviewed for delisting. As we need additional investigation to make the decision, we decided to extend the investigation period,” the KRX said in a public filing.
The regulator said it would need additional 15 business days until July 10. It was initially scheduled to decide by Wednesday. The suspension of the stock trading will continue until the regulator’s ruling.
If the KRX puts the company under a review for delisting, the corporate review committee will rule whether to kick the firm out of the secondary KOSDAQ market.
“It is difficult to say that the ministry’s probe results will directly affect the KRX’ decision. We will have our ruling,” an official at the KRX said. “When the company for a review has complicated issues, we sometimes delay the decision.”
Industry sources said Kolon TissueGene was highly likely to be subject to assessment for delisting. The ministry’s announcement to revoke the Invossa license directly led to the suspension of the stock trading, and it was unlikely that hearings would reverse the ministry’s decision, they said.
At the hearing on the Invossa issue at the food and drug safety ministry on Tuesday, Kolon TissueGene’s parent firm Kolon Life Science failed to present evidence to counter the ministry’s investigation results but repeated its existing claim that “it was not aware of the labeling error.” The ministry is to announce the results of the hearing this week at the earliest.
Ministry officials said Kolon Life Science submitted false evidence as if the second fluid of Invossa was made of cartilage-derived cells to obtain approval.
The ministry’s investigation revealed that Kolon TissueGene was notified of the mislabeling that the second fluid contained kidney-derived (GP2-293) cells, not cartilage-derived ones, in March 2017 through a contract manufacturer. It also found that the company shared the information with Kolon Life Science in July 2017.
However, Kolon TissueGene omitted the information in the securities registration statement submitted to the regulator for KOSDAQ listing in 2017.
The KRX said it would look into Kolon TissueGene’s document submitted for listing review and see if it had any false or omitted information regarding the mislabeling of the drug ingredient, and if such information affected investors’ decision significantly.
A source in the securities industry said the KRX would want to wait until the food and drug safety ministry concludes Kolon TissueGene. “Unless the ministry reverses its decision to nullify the Invossa license, Kolon TissueGene is very likely to be reviewed for delisting,” he said.
“To be assessed for delisting does not always mean it will be delisted. The company has enough chance to explain further after the corporate review committee’s review. The process afterward is quite important.”
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