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| Hanmi Pharmaceutical CEO Lee Gwan-sun speaks during a press conference on the company's disclosure delay and possible side effects of its lung cancer treatment Olmutinib at the company headquarters in Songpa-gu, southeastern Seoul, Sunday. / Yonhap |
By Nam Hyun-woo
The financial regulator will investigate Hanmi Pharmaceutical on suspicions of insider trading, after a belated posting rattled the Korean stock market last week.
The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) said Sunday that they will look into whether Hanmi posted a canceled deal properly and whether top managers have been engaged in any insider trading.
The Korea Exchange (KRX) will also investigate the latter.
The authorities will focus on the massive flow of Hanmi and its holding company Hanmi Science stocks, including possible short selling, to find out whether they reaped any illicit gains.
On Sept. 30, Hanmi shares closed at 508,000 won, down 18.06 percent. The plunge followed a bullish opening on the company's after-hour public notice a day earlier that the company inked a 1 trillion won deal with Genentech, a U.S. biotechnology firm, over targeted anticancer drug technology.
Thirty minutes after the market opening, however, Hanmi announced that Boehringer Ingelheim had cancelled a deal on the clinical development of the lung cancer treatment Olmutinib. Hanmi shares plunged on the news, losing 1.5 trillion won of market value at the end of the day's trading.
On Friday, 104,327 Hanmi shares were the target of short-selling, the biggest one-day volume since the company was listed in 2010. It is also more than the 20 times the Hanmi average of short-selling volume of 4,850 shares this year.
Short-selling refers to a trading strategy in which an investor sells borrowed stocks in anticipation of a price decline. After the decline, the investor can buy the stocks at a cheaper price and enjoy benefits from the margin.
Questions and criticisms are mounting on Hanmi, because the company could have posted the cancellation at an earlier time. In a press conference on Sunday, Hanmi Pharmaceutical CEO Lee Gwan-sun said that the company received notice of cancellation at 7:06 p.m. on Sept. 29.
Lee said it took time for the company to take appropriate procedures under KRX regulations, but suspicions are rising that the company had enough time to report the cancellation because it was aware of the progress of a rival drug Osimertinib by AstraZeneca and the side effects of Olmutinib, which Lee said were cited as reasons by Boehringer Ingelheim for the cancellation.
This is not the first time that Hanmi Pharmaceutical caused a stir.
On July 28 last year, Hanmi announced the deal with Boehringer Ingelheim and enjoyed a surge a day later. However, on the same day, the company announced its second quarter performance, which was far lower than expectations.
Hanmi Pharmaceutical's stock price once hit 606,000 won on the day, but ended at 445,000 won.
In a separate case, a Hanmi researcher was sentenced to a prison term for earning 87 million won unfairly through insider trading.
Meanwhile, the Ministry of Food and Drug Safety will announce on Tuesday whether it will order the suspension of domestic sales of Hanmi's Olita Tab, a component of Olmutinib.
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