[Asia Economy Reporter Yoo Hyun-seok] Concerns are emerging in the market that HL Biotech, embroiled in allegations of false disclosure, might face a trading suspension. However, it is understood that the possibility of a trading suspension is low, as the conditions for such action are not met.
As of 12:43 PM on the 18th, HL Biotech was traded at 60,900 KRW, down 2.56% (1,600 KRW). This marks the third consecutive day of decline since the 16th.
On the 16th, a media outlet reported that HL Biotech was facing action from the Securities and Futures Commission (SFC) over allegations of false disclosure, claiming that the company had arbitrarily interpreted the results of the Phase 3 trial of the anticancer drug 'Rivoceranib' in the U.S. in 2019.
This caused HL Biotech's stock price to plunge sharply. Additionally, as the false disclosure controversy grew, some raised concerns about a possible trading suspension.
However, it is understood that a trading suspension is unlikely. According to the KOSDAQ Market Listing Regulations Enforcement Rules (Article 33 on the application of delisting criteria), a trading suspension is imposed if there is a violation of accounting treatment resulting in ▲prosecution or notification to the prosecution (including the corporation and current/former executives) or ▲if the company has previously been designated as a management or investment caution item.
In particular, if the Financial Supervisory Service’s Accounting Review Department investigates for reasons such as accounting fraud or breach of trust and then refers the case to the prosecution, action is taken. However, since HL Biotech does not fall under this category, a trading suspension is not expected.
Meanwhile, on the 16th, Jin Yang-gon, chairman of HL Biotech, addressed the false disclosure allegations via YouTube. He said, "It is true that the Financial Supervisory Service (FSS) investigated, the Capital Market Investigation Deliberation Committee (CMIDC) passed it, and the Securities and Futures Commission (SFC) is pending. However, this is a matter where the parties’ claims are conflicting and no conclusion has been reached yet."
Regarding the use of the word 'Fail' during the meeting with the U.S. Food and Drug Administration (FDA) about the New Drug Application (NDA), he emphasized that it was mentioned in a pre-NDA meeting, not in the context of drug approval. He explained, "The 'Fail' in the document review opinion refers to the failure to secure statistical significance in the primary efficacy endpoint OS (Overall Survival), which means that drug approval could be delayed or face difficulties, but it is not a failure." He added, "The important point is that after document submission and review, during the subsequent face-to-face meeting, the FDA said that if supplementary materials for the NDA are prepared, they will review it again, as seen in the meeting minutes."
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