[Edaily Reporter KIM SAE-MI ] The COVID-19 treatment developed by Genencell Co., Ltd.—for which Justice Minister nominee Kim Seung-won had requested expedited processing—has fallen through one year and seven months after receiving approval for its Investigational New Drug (IND) application, and the value of the investment stake held by the related publicly traded company has dropped to zero. Independent lawmaker Han Dong-hoon characterized the approval process at the time as “successful lobbying” and urged Nominee Kim to submit to a “special investigation into new drug lobbying.”

Kim Seung-won’s COVID-19 Treatment That Requested ‘Expedited Processing’… 11.3 Billion Won Invested Just Before Approval

According to a comprehensive report by Edaily on the 3rd, GenenCell Co., Ltd. submitted an Investigational New Drug (IND) application to the Ministry of Food and Drug Safety (MFDS) on September 23, 2021, for a domestic Phase 2/3 clinical trial of ES16001. On the 30th of the same month, the MFDS requested supplementary information on a total of 14 items, including detailed supporting data from the Indian clinical trial results.

The Phase 2 clinical trial in India disclosed by GenenCell at the time was a study that assigned 60 patients with mild to moderate COVID-19 to an ES16001 treatment group and a placebo group, with 30 patients in each. The research team claimed that the symptom recovery rate on Day 6 was 95% in the ES16001 group and 68% in the placebo group. A closer look at the data reveals that no statistically significant difference was observed between the two groups in the moderate-symptom patient cohort. The study was published as a preprint, meaning it had not undergone peer review.

Professor Kang Se-chan of Kyung Hee University, the founder of GenenCell, sent a message around October 6 to Yang Soo-jin, CEO of Gusta—with whom he had collaborated in research and development areas such as the microbiome—expressing concern that clinical trial approval might not be granted by the 12th. It is reported that Professor Kang and CEO Yang met at the Kyung Hee University Graduate School of Biotechnology, where he was a professor and she was a graduate student, and formed a mentor-mentee relationship. Subsequently, CEO Yang asked Candidate Kim to ensure that the review of Genencell’s IND application would proceed expeditiously.

On October 12, Nominee Kim sent a message to Kim Kang-rip, then Commissioner of the Ministry of Food and Drug Safety (MFDS), specifying the relevant departments—including the “Herbal Medicine Division, Clinical Trials Division, and Statistical Analysis Team”—and stating, “I ask that you ensure the staff in charge can process this a bit more quickly.” Former Commissioner Kim replied that he had relayed the message to the staff, noting, “We are currently in the process of supplementing the data.”

During the briefing that day, Han Dong-hoon, an independent lawmaker, claimed that a phone call had taken place between Minister-nominee Kim and former Commissioner Kim even before the text message on October 12, and that former Commissioner Kim subsequently urged the staff to expedite the process. Rep. Han said, “Nominee Kim called former Director Kim directly to request approval for GenenCell’s clinical trial and subsequently sent a text message as well,” adding, “Former Director Kim urged the MFDS staff to ‘process this quickly’ and asked, ‘Are you going to let a lawmaker say such things to you?’”

A week later, on October 19, SEJONG MEDICAL Co.Ltd.,(258830)acquired 660,000 shares of GenenCell held by Professor Kang for approximately 6.3 billion won and purchased convertible bonds (CBs) worth 5 billion won, investing a total of 11.3 billion won to become the largest shareholder. The Ministry of Food and Drug Safety approved the Phase 2/3 clinical trial for ES16001 a week later, on the 26th.

A lawmaker argued, “The investment had been pledged on the condition that Phase 2 clinical trial approval be granted,” adding, “Since the investment would only be executed after clinical approval was granted, Genencell was desperate for that approval.” He went on to characterize the sequence of events—in which clinical approval and the investment followed Nominee Kim’s request—as “successful lobbying,” urging that “this is a matter that warrants a ‘special counsel investigation into new drug lobbying,’ not a confirmation hearing.”

Stock Price Swings on Approval Hopes… Investment Value Plummets to ‘0 Won’ Following Clinical Trial Suspension

The market reaction was intense. On October 27, 2021, when news of the IND approval broke, SEJONG MEDICAL Co.Ltd.’s stock price surged by more than 15% at one point early in the trading session compared to the previous trading day. KOREA PHARMA Co., Ltd.(032300)also rose by more than 5%.

However, SEJONG MEDICAL Co.Ltd.’s stock price took a sharp turn on the same day. The stock price, which had been 7,560 won the previous day, rose to the 7,800 won range early in the session before plummeting to the daily low of 5,300 won. It plunged by over 22% the following day and fell to 4,115 won on the 29th. Compared to the closing price of 7,840 won on the 25th, it had dropped 47.5% in just four trading days.

During that period, on the 27th and 28th, three other corporations and one individual sold 14,874,830 shares—equivalent to approximately 37% of the total issued shares. The Korea Exchange designated SEJONG MEDICAL Co.Ltd. as a “stock requiring investor caution” due to its status as a “top-traded stock by single-account volume.” Retail investors who had bought shares anticipating approval of the therapeutic agent bore the full brunt of the sharp decline.

A lawmaker reported receiving tips that investment losses and stock price damage had materialized, and that a victims’ group had even been formed. This was because the stock price surged in early trading on the day of approval but then plummeted to the daily price limit after a massive sell-off.

In reality, the development of the COVID-19 treatment did not proceed as planned. Genencell had initially planned to conduct a Phase 2/3 clinical trial involving approximately 1,100 participants across five countries, but later scaled it back to a Phase 2 trial and reduced the target number of patients to 424.

The final number of patients recruited was 109, and only 100 were actually randomized—just 23.6% of the target. Ultimately, in May 2023, Genencell Co., Ltd. temporarily suspended the trial, citing “interim statistical analysis and revisions to the clinical strategy.” Since then, there have been no reports indicating that development of ES16001 as a COVID-19 treatment has resumed in earnest.

Issues regarding falsified data also surfaced during the development process. Professor Kang was indicted on charges of submitting data to the Ministry of Food and Drug Safety (MFDS) that differed from the actual experimental results while seeking IND approval. In December 2024, the Seoul Western District Court found him guilty of charges including obstruction of public duty through fraud and sentenced him to three years in prison, suspended for five years.

During the investigation and trial, it was revealed that adverse results—such as the death of hamsters in animal experiments—were not properly reflected in the submitted data. It remains unconfirmed whether Nominee Kim was aware of these data issues at the time.

The suspension of clinical trials also affected the value of investment assets. SEJONG MEDICAL Co.Ltd.’s stake in GenenCell, which it had acquired for approximately 6.3 billion won, was fully written off, bringing its book value to 0 won, and the company subsequently disposed of the stake. Similarly, the book value and fair value of the GenenCell stake in which KOREA PHARMA Co., Ltd. invested approximately 3 billion won are both 0 won.

Ultimately, the COVID-19 treatment—which had even prompted political circles to intervene in 2021 to request expedited processing—failed to reach commercialization about five years later, resulting not only in wild fluctuations in the stock prices of related listed companies but also in the value of investment assets being reduced to 0 won.

Allegations Escalated to an MFDS Raid in 2023… All Eyes on the Hearing

The prosecution’s investigation into the Genencell case first came to light

in 2023

. On January 12 of that year, this newspaper first reported that the Seoul Western District Prosecutors’ Office had raided the Ministry of Food and Drug Safety (MFDS) as part of an investigation into COVID-19 treatments and vaccines. <Related Article: [Exclusive] Prosecutors Raid MFDS… ‘Related to COVID-19 Treatments and Vaccines’>

It later emerged that the investigation focused on allegations of lobbying surrounding the approval process for Genencell’s COVID-19 treatment. In May of that year, Genencell temporarily suspended the ES16001 clinical trial, and in August, prosecutors again raided the MFDS Commissioner’s office and other locations in connection with allegations that former Commissioner Kim had violated the Anti-Graft Act.

Candidate Kim’s camp maintains that the requests regarding GenenCell were not a solicitation for treatment approval but rather “a simple relay of a public-interest grievance.” He also claims that he never requested expedited review or a relaxation of review criteria.

However, at the time, ENCell Co., Ltd.’s IND had received a request from the MFDS for 14 items of supplementary information just one week after submission, and the company was in the process of providing the additional data. Given this situation, it remains a matter of controversy whether a sitting lawmaker’s request to the MFDS Commissioner for expedited processing—specifically mentioning a particular company and the responsible department—fell within the scope of a routine complaint. With one lawmaker even calling for a “special prosecutor to investigate lobbying regarding new drugs,” whether Nominee Kim’s request actually influenced the review sequence or processing speed is expected to become a key issue in the upcoming confirmation hearing.