SillaJen investors likely to take legal action

SillaJen shareholders call for the trading of the biotech company's stocks to be resumed in front of the Korea Exchange's building on Yeouido, Seoul, Tuesday. Yonhap

Final decision for biotech firm to be made next month

By Kim Bo-eun

Retail investors of SillaJen are seeking to take legal action following the Korea Exchange's preliminary decision on Tuesday to delist the troubled biotech company. While the final decision is set to be made next month, with SillaJen pledging to appeal, the prevailing view is that there is little chance of the company's relisting on the secondary Kosdaq bourse.

It appears some 17,000 retail investors will sustain major losses in the delisting. According to data from the company, minority shareholders hold a 92.6 percent stake in the firm as of the end of 2020. SillaJen's stock price peaked over 150,000 won in late 2017, but dived to the 12,000 won level ahead of the trading ban.

Investors continued their protest in front of the Korea Exchange on Yeouido, Wednesday, urging trading to be resumed. They are represented by a 4,000-member group.

"I bought shares at 152,000 won and continued to make further purchases since my profit rate hit minus 50 percent. This is killing me," an investor wrote in an online community, Tuesday. "Should I sell the shares, even if it means I can barely get anything?"

Another investor posted on Naver's stock discussion board, “I learned a lesson worth 249 million won. I'm just going to think I experienced properly what I needed to learn.”

Trading of the company's stocks was suspended in May 2020, after CEO Moon Eun-sang and executives were indicted on charges of embezzlement and breach of duty. The Korea Exchange's corporate review committee gave SillaJen one year to improve its finances and governance. Accordingly, Emtuen became the company's largest shareholder in July 2021, securing 100 billion won ($83.9 million) by issuing new stocks.

Investors had been hoping for SillaJen's stock price to rebound, as the company carried out measures and presented plans for new businesses.

However, the local bourse operator stated the company's sustainability was unclear. SillaJen was listed on the Kosdaq in December 2016, via a process for promising companies. Firms listed via this process are required to make at least 3 billion won in annual revenue starting in the sixth year since their listing. SillaJen's revenue for the first three quarters of 2021 came to 234 million won, down 73 percent from 872 million won the previous year.

"We are going to do our best to deliver our position to the committee," the company said in a statement, after the Korea Exchange committee unveiled its decision. "SillaJen also wants to stress that its business activities ― such as research and development ― are operating normally. We apologize for causing concern to the shareholders.”

A lower court handed Moon a five-year prison sentence last August over illicit gains amounting to 35 billion won.

Investors' anger is also directed at the Korea Exchange, given Moon's irregularities took place before the company listed on the Kosdaq.

SillaJen was once considered a promising drugmaker, becoming the No. 2 company in market capitalization on the Kosdaq in 2017, fueled by expectations over its liver cancer treatment, Pexa-Vec. The treatment's clinical trial, however, was suspended in 2018. Moon and executives were found to have sold millions of shares just before the news of the failed trial caused the stock price to plummet in August 2019.