Why Did Naturecell Shareholders File a Complaint Against MFDS Employees?

JointStem Sales Rejection Hits NatureCell Stock
Shareholders Claim "Illegal" Drug Review Committee Process

263 shareholders of Naturecell, a KOSDAQ-listed company, have filed a complaint with the prosecution against an employee of the Ministry of Food and Drug Safety (MFDS), drawing attention to the background of the issue. They submitted a complaint to the Seoul Eastern District Prosecutors' Office accusing MFDS employee A and a well-known private medical school professor B of dereliction of duty and obstruction of business by deception, related to the rejection of the marketing authorization for the degenerative arthritis stem cell treatment 'Jointstem'.

The shareholders' collective backlash is closely linked to the continued damage following the rejection of the product approval application, including Naturecell's stock price hitting the lower limit. In the complaint, the shareholders claimed, "As an MFDS official, A reflected the results of the Central Pharmaceutical Affairs Deliberation Committee's review, which had serious procedural flaws, and rejected the (Jointstem) product approval application." They also explained, "This was an act of obstructing Naturecell's rightful approval through deception." Regarding B, they stated, "B should bear responsibility as an accomplice in abuse of authority and obstruction of business along with A."

Earlier, the MFDS rejected the product approval for Jointstem, applied for by Naturecell, on the grounds of "lack of clinical significance" on the 8th of this month. Considering that the Pharmaceutical Affairs Deliberation Committee recognized "clinical significance" during the first product approval application in September last year, shareholders find this recent decision difficult to accept.

Naturecell also stated, "It is true that we believed Jointstem would naturally receive approval after successfully completing Phase 3 clinical trials," adding, "We have sufficiently submitted data on clinical significance and cannot accept the reason for rejection being 'lack of clinical significance.'"

Shareholders are raising questions about the Pharmaceutical Affairs Deliberation Committee's review process, which precedes the decision on product approval. There is particular interest in whether B, who also serves as the representative of a competitor company of Naturecell, participated as a committee member in the September last year review of the first product approval application. Under the current Pharmaceutical Affairs Act, persons with conflicts of interest must be excluded or recused from the committee's deliberations.

Shareholders are expressing suspicion about the relationship between A and B and believe that an investigation is necessary to verify the facts.

Meanwhile, Jointstem has attracted expectations as the world's first autologous stem cell treatment for severe degenerative arthritis, treating severe knee osteoarthritis through a single local injection into the knee joint cavity.

According to Naturecell, after the conditional approval was rejected in 2018, they successfully completed Phase 3 clinical trials and applied for marketing authorization. However, with the rejection of the product approval application, the stock price hit the lower limit for two consecutive trading days. As of 9:45 AM on the 11th, it was trading at 9,600 won, down 2,510 won (20.73%) from the previous trading day.