With the likely suspension of SillaJen’s trial on its major anticancer pipeline Pexa-Vec, investors raised suspicion that the company’s executives might have predicted the drug would fail in a futility test and sold their shares in advance.
SillaJen said in a public filing on Friday that the Independent Data Monitoring Committee (DMC) advised the company to discontinue the trial on Pexa-Vec for liver cancer after a meeting for the evaluation of the study’s futility.
The futility test was regarded as a significant indicator to gauge the potential of Pexa-Vec’s value as a new drug.
SillaJen CEO Moon Eun-sang had been confident about the result of the futility test on the phase-3 trial, saying, “The futility assessment is an important tool to measure Pexa-Vec’s first medical value. It will also enable the global market to check the credibility of Pexa-Vec and anticipation for the drug.”
However, the DMC had delayed the announcement of the futility test result since August last year, worrying investors that the result might be negative.
SillaJen had brushed off such concern, repeatedly saying, “We expect the result of the futility test to be positive.”
In early July, however, an executive at SillaJen suddenly sold more than 160,000 shares. Shin Hyun-pil, chief science officer of SillaJen in charge of new businesses, sold all of his 167,777 common stocks on four trading acts between July 1 and July 8. Shin gained about 8.8 billion won ($7.25 million) through the selling.
The massive selling just one month before the disclosure of the result of the futility analysis on Pexa-Vec made other shareholders of SillaJen on edge.
The company said Shin sold the shares for personal reasons, such as to pay taxes and personal debt, but the jittery sentiment did not abate quickly.
The market’s concerns turned out to be reasonable when SillaJen disclosed the test result on Friday saying the investigational drug did not have a therapeutic effect.
Investors are again suspecting that Shin had known about the test result and sold the shares before SillaJen stocks plummeted.
Others raised a similar suspicion that CEO Moon might be doing the same with Shin.
“In an official occasion, Moon covers his one eye, deliberately signaling that he has health issues. I heard he has not been coming to his office due to health problems,” an industry source said.
Moon sold 1,562,844 shares of SillaJen at 84,815 won per share from late 2017 to early 2018, gaining 132.5 billion won.