Who will lead Celltrion after Seo Jung-jin?

Biotech developing cocktail treatment for variants

By Nam Hyun-woo

After Celltrion Chairman Seo Jung-jin stepped down from his post at the biopharmaceutical giant, attention is being paid to the future shape of the company's leadership.

According to Celltrion, Seo has not worked as chairman since Dec. 31, following an earlier promise that he would wrap up his stint at the company by the end of 2020. During a local investment forum in October, the Celltrion founder said he would start a venture company on “ubiquitous healthcare,” an emerging area of medical technology.

Following his departure, he will also officially step down from other posts with Celltrion Group companies at each of their annual general meetings set for next month. Seo will hold an honorary chairman title without salary. He is Celltrion board chairman and an internal director of Celltrion Healthcare and Celltrion Pharm.

“I will pass over all my duties to executives at the annual general meetings,” Seo said during an online press conference Thursday. “However, I think I will be partially involved in the company's business related to COVID-19.”

A Celltrion spokesman said CEOs at each of the group affiliates will lead them independently, as has been done under Seo's leadership. The group has yet to announce plans on its future chairmanship, but it is anticipated that the next chairman will be appointed at the shareholders meeting.

Currently, the CEOs at Celltrion's major affiliates have their terms remaining. Celltrion CEO and Vice Chairman Kee Woo-sung's current term will end in March 2023, while Celltrion Healthcare CEO Kim Hyoung-ki and Celltrion Pharm CEO Seo Jung-su will see their terms expiring in March 2022.

Questions remain, however, whether this will change due to the group's plan to merge those three companies into a single entity.

On Sept. 25, Celltrion announced its plan to merge the three firms to address unfair intra-affiliate trading issues and improve shareholders' value. For this, Seo established Celltrion Healthcare Holdings for a smooth merger of the firms.

Before the plan, there were two main streams in Celltrion Group's shareholding structure. One was Celltrion Holdings in which Seo has a 95.5 percent stake. It controls Celltrion, which also controls Celltrion Pharm. Celltrion Healthcare was directly controlled by Seo with his 35.5 percent stake in it.

After the establishment of Celltrion Healthcare Holdings, Seo fully owns it and gave his 24.3 percent stake in Celltrion Healthcare to the new firm. He keeps the remaining 11.2 percent stake in Celltrion Healthcare. After this, the group plans to merge Celltrion Holdings and Celltrion Healthcare Holdings by the end of 2021, and will pursue the merger between Celltrion, Celltrion Healthcare and Celltrion Pharm.

Analysts said Celltrion Group opted to set up a holding firm with Celltrion Healthcare taking a central role mostly because of expected tax benefits for Seo and fairer valuation of each company in the merger process. Also, the plan will enable a smoother succession of Seo's stakes in the group to his sons.

Currently, Seo's first son, Jin-seok, is executive vice president of Celltrion, and his second son Jun-seok is a director of the company. Of them, Jin-seok is also a board member of Celltrion Healthcare Holdings, raising expectations that he will likely be a board member after the two holding firms are merged. In a press conference in January 2019, Chairman Seo said he asked his eldest son to be the board chairman of Celltrion.

Cocktail treatment to counter variants

Meanwhile, Seo held an online press conference Thursday and said the company's COVID-19 treatment, Regkirona, was effective in treating a number of variants of the coronavirus including one originated from the U.K., but its efficacy was reduced in treating the South African variant.

To counter this, Seo said the company has secured a pool of antibody candidates that can be used as a cocktail treatment with Regkirona. Of them, antibody No. 32 was effective in both the U.K. and South African variants, and the company will launch clinical trials in South Africa to develop it as a cocktail treatment.

“The goal is launching an isolated clinical trial in South Africa and completing Phase 2 studies in the next six months,” Seo said.

Regarding the production capacity of Regkirona, Seo said the company produced 300,000 doses for 100,000 people last year and will be able to produce up vials for 3.2 million people annually.

Along with the treatment, Seo said Celltrion is “ready” to jump into COVID-19 vaccine development, but will do so only when other Korean vaccine companies face difficulties in coming up with vaccines to combat coronavirus variants.