Glass Lewis at center of Helixmith's war with minority shareholders

A Helixmith's minority shareholder protests near Yeouido station in Seoul in this May 31 file photo. Courtesy of Helixmith's minority shareholders association

By Park Jae-hyuk

The world's second-largest proxy adviser, Glass Lewis, has added fuel to the ongoing conflict between Helixmith and its minority shareholders, by publishing a controversial research report earlier this month that sides with the Korean biopharmaceutical company against small investors.

Helixmith said in a press release last week that Glass Lewis has recognized the incumbent executives for their efforts in improving the firm's financial stability and showed skepticism concerning the appointments of people whom the minority shareholders recommended as new directors.

“The report seems to be having a significant impact on our shareholders ahead of the forthcoming extraordinary general meeting,” Helixmith said in the press release. “Glass Lewis has over 1,000 institutional investors as its clients, and is the world's second-largest proxy adviser following ISS, so it will likely affect foreign investors.”

Ahead of next Wednesday's shareholders' meeting that will discuss the dismissals of six top executives, including CEO Kim Sun-young, however, the minority shareholders alleged that Glass Lewis did not reflect their opinions in the report at all, whereas the management has claimed that its advice is trustworthy.

The minority shareholders claimed that the company paid for the favorable report from Glass Lewis, and produced an email, saying that it was a reply from the proxy adviser.

“The company purchased the Glass Lewis report last week. Glass Lewis allows companies and shareholder proponents to include their unaltered opinions with our reports, as well as have them delivered directly to the individuals who make the voting decisions at every investor client,” the letter reads. “To maintain fairness, we offer both sides the same opportunities and price to purchase and include their opinions with our report.”

Helixmith has refuted their claim, denying any meeting or talks with the institution.

The conflict over control of Helixmith was sparked after a failure of the Phase 3 clinical trials of Engensis, or VM202, a DNA plasmid gene therapy for diabetic peripheral neuropathy.

Helixmith was embroiled in another controversy last year, after it was revealed that the company lost almost 263.4 billion won ($230 million) by investing in high-risk assets over the past five years.