SillaJen shares jump as exchange maintains listing, allows resumed trade

Shares in South Korea’s scandal-hit biotechnological company SillaJen Inc. soared on Thursday after the local exchange decided to maintain the stock’s listing, given its measures to diversify its new drug pipeline and improve its financial structure.

SillaJen closed up 29.5% at 10,850 won ($7.6) from a newly set opening price of 8,380 won, far outperforming the country’s junior Kosdaq market, which lost 3%. That came after the Korea Exchange’s Kosdaq market committee on Wednesday decided to allow SillaJen to resume stock trading after a two-and-a-half-year hiatus.

But that compared to a closing price of 12,100 won on May 3, 2020, the day before its stock trading was halted. The stock had tumbled to as low as 6,050 won on Thursday before the local market opened.

The stock had been expected to temporarily suffer a sharp loss as its trading was suspended for a protracted period, experts said.

SillaJen’s top management was indicted on charges of embezzlement and breach of trust. Its former Chief Executive Moon Eun-sang was accused of selling the company stock using insider information gleaned from the halted clinical trials of its anti-cancer drug. He was arrested in 2020.

DIVERSIFIED PIPELINE, BETTER FINANCIAL STRUCTURE

In January this year, the KRX’s corporate review committee decided to delist SillaJen. But the Kosdaq market committee gave the company another chance to avoid being delisted, requesting the improvement of corporate governance, diversification in the new drug pipeline and other requirements, in six months.

SillaJen has been actively expanding its research and development personnel since February of this year. Last month it signed an asset purchase agreement and a sub-license agreement with Basilea Pharmaceutica Ltd. for the Swiss firm’s novel kinase inhibitor, BAL0891, expanding its new drug pipeline. SillaJen had only one anti-cancer drug candidate Pexa-Vec.

Its second-largest shareholder also extended its lockup period for 40 billion won in stocks to next year, stabilizing the company’s financial structure.

“We are conducting phase 2 clinical trials for a new drug with a global biotechnology company Regeneron Pharmaceuticals,” SillaJen said in a statement. “We will closely cooperate with the top shareholder and affiliates with abundant cash flow to normalize the management situation.”

(Updated with SillaJen stock’s closing, Kosdaq)

Write to Tae-Ung Bae at btu104@hankyung.com
Jongwoo Cheon edited this article.