Kolon Life Science’s false disclosure case related to Invossa-K Inj

   Hit. 477

Kolon Life Science is a company established on April 21, 2000 with the business focus on pharmaceutical raw materials production, sales, and research and development of biopharmaceuticals.


Kolon Life Science had publicly notified in annual reports and investor relations materials that the company had a patent right of a technology of Invossa, an osteoarthritis treatment agent that mixes allogeneic chondrocytes containing genes with various functions such as cartilage production and anti-inflammatory action according to a license agreement with Kolon Tissue Gene. It repeatedly announced that Invossa is an innovative technology in the treatment of osteoarthritis, and the company completed the phase 3 clinical trial in April 2016, received permission to manufacture and sell domestic medicines from the Food and Drug Administration(FDA) in July 2017, and signed a marketing contract for domestic sales in March 2017, and signed billions of export contracts in Japan in 2018, etc. In addition, Kolon Life Science had asserted the patent for Invossa and its technical value as a great asset to the company in the company's IR and homepage.


Therefore, in evaluating the company value of Kolon Life Science in the media and analyst reports, the value of Invossa was always mentioned first. This was directly linked to its stock price, and the stock price has spiked whenever positive issues related to Invossa arose.


However, when it was revealed that the composition of Invossa was 293 derived cells (fetal kidney-derived cells) rather than allogeneic chondrocytes, its stock price, which had been over 70,000 won, fell sharply to 30,000 won.


In May 2019, Kolon Life Sciences explained that the real composition of Invossa was only recently discovered, but this explanation is not convincing as the CEO of Kolon Life Sciences and Kolon TissueGene, the development company of Invossa, is the same person.


In other words, this is a false disclosure case in which Kolon Life Science, an owner of right to sell Invossa, had deceived investors of the main components of Invossa, which was the key issue for shareholders’ investment decision.


Hannuri, on behalf of the shareholders, filed a lawsuit against Kolon Life Science and its related persons for false disclosures such as false description on business reports.