By Nam Hyun-woo
Controversy has arisen over the KOSDAQ's No. 3 biotech company SillaJen after its largest shareholders offloaded significant portions of their shares on the market.
After the sales, its stock price is fluctuating, while doubts are rising whether its price is a bubble or not.
Rumors are even circulating that its key cancer treatment Pexa-Vec has failed in getting a patent and its clinical trials have been stopped.
On Tuesday, SillaJen ended at 93,800 won, down 6.2 percent from Monday.
SillaJen has been on a roller-coaster ride throughout recent sessions after CEO Moon Eun-sang and his relatives who delegated decision making rights on their shares to Moon said in a Jan. 4 regulatory filing that they have sold 2.71 million shares, worth 130 billion won ($122 million), of the company since Dec. 21. Thus their stake in the company has declined to 16.53 percent from 20.52 percent.
This panicked SillaJen investors, with the price on Jan. 4 shedding more than 10 percent from the session earlier to end at 92,200 won. On Jan. 5, it also made a weak start, but soon recovered to 100,000 won after the company announced that the sale was the "inevitable choice to pay taxes and repay debts" and negative rumors over its Pexa-Vec are "groundless."
However, questions remain over the sale.
The filing was posted at 5:45 p.m., Jan. 4, which is after the day's trading closed at 3:30 p.m. However, rumors had already spread before the posting that there would be a major filing on the company, which led the price to plunge even before the filing.
SillaJen began its sharp surge in September last year, after a Yuanta Securities Korea report claimed SillaJen's Pexa-Vec may be worth more than 1 trillion won in the market.
According to the company, the drug is engineered to directly deal with tumor cells and stimulate anti-tumor immunity. SillaJen says the drug is going through phase three trials with the goal of testing it with 600 liver cancer patients, after improving the survival rate of end-stage liver cancer patients in its phase two trials. The company aims to receive its sales approval in 2020.
The problem is that Pexa-Vec is yet to create tangible profits for SillaJen.
Despite SillaJen's market cap moving in the vicinity of 6.5 trillion won, just a year after its listing, the firm posted 37.2 billion won in operating losses in the first three quarters last year. The company also logged 46.8 billion won in operating losses in 2016, with its sales remaining at 5.3 billion won during the same period.
Since its surge was attributable to rosy expectations on its investigational drug, rather than the company's actual growth fundamentals, analysts say hypes are pumping up the company's price. Small stakeholders' share in the company account for more than 80 percent.
Amid those uncertainties, rumors are spreading that Moon sold his stake as Pexa-Vec failed to get a patent and its trials halted.
The company said in a statement that Pexa-Vec has 87 patents in 41 countries including Korea. "There is no problem in the Pexa-Vec trials, while getting patents and pursuing trials have no relation at all."
Controversy has arisen over the KOSDAQ's No. 3 biotech company SillaJen after its largest shareholders offloaded significant portions of their shares on the market.
After the sales, its stock price is fluctuating, while doubts are rising whether its price is a bubble or not.
Rumors are even circulating that its key cancer treatment Pexa-Vec has failed in getting a patent and its clinical trials have been stopped.
On Tuesday, SillaJen ended at 93,800 won, down 6.2 percent from Monday.
SillaJen has been on a roller-coaster ride throughout recent sessions after CEO Moon Eun-sang and his relatives who delegated decision making rights on their shares to Moon said in a Jan. 4 regulatory filing that they have sold 2.71 million shares, worth 130 billion won ($122 million), of the company since Dec. 21. Thus their stake in the company has declined to 16.53 percent from 20.52 percent.
This panicked SillaJen investors, with the price on Jan. 4 shedding more than 10 percent from the session earlier to end at 92,200 won. On Jan. 5, it also made a weak start, but soon recovered to 100,000 won after the company announced that the sale was the "inevitable choice to pay taxes and repay debts" and negative rumors over its Pexa-Vec are "groundless."
However, questions remain over the sale.
The filing was posted at 5:45 p.m., Jan. 4, which is after the day's trading closed at 3:30 p.m. However, rumors had already spread before the posting that there would be a major filing on the company, which led the price to plunge even before the filing.
SillaJen began its sharp surge in September last year, after a Yuanta Securities Korea report claimed SillaJen's Pexa-Vec may be worth more than 1 trillion won in the market.
According to the company, the drug is engineered to directly deal with tumor cells and stimulate anti-tumor immunity. SillaJen says the drug is going through phase three trials with the goal of testing it with 600 liver cancer patients, after improving the survival rate of end-stage liver cancer patients in its phase two trials. The company aims to receive its sales approval in 2020.
The problem is that Pexa-Vec is yet to create tangible profits for SillaJen.
Despite SillaJen's market cap moving in the vicinity of 6.5 trillion won, just a year after its listing, the firm posted 37.2 billion won in operating losses in the first three quarters last year. The company also logged 46.8 billion won in operating losses in 2016, with its sales remaining at 5.3 billion won during the same period.
Since its surge was attributable to rosy expectations on its investigational drug, rather than the company's actual growth fundamentals, analysts say hypes are pumping up the company's price. Small stakeholders' share in the company account for more than 80 percent.
Amid those uncertainties, rumors are spreading that Moon sold his stake as Pexa-Vec failed to get a patent and its trials halted.
The company said in a statement that Pexa-Vec has 87 patents in 41 countries including Korea. "There is no problem in the Pexa-Vec trials, while getting patents and pursuing trials have no relation at all."
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