[Edaily Reporter KIM SAE-MI ] Funds from publicly traded companies that invested in a COVID-19 treatment—led by Professor Kang Se-chan of Kyung Hee University, the founder of Genencell, during the pandemic—have been disappearing one after another. Some of these companies are currently on the brink of delisting or have already been delisted.

Listed Companies’ Funds Flowed into ENCell Co., Ltd.… Far from Recouping Investments, They’ve Even Faced Lawsuits

According to the biotech industry on the 8th, not only have companies that invested directly in Genencell Co., Ltd.— SEJONG MEDICAL Co.Ltd.,(258830),KOREA PHARMA Co., Ltd.(032300), and #KH Philux—but also Gold Pacific (now KBIO COMPANY(038530)), which bet on Genencell Co., Ltd. through APRG, struggled to recoup their investments or seen the value of their investment assets plummet to zero. It is estimated that retail investors who purchased shares of these publicly listed companies also suffered significant losses.

SEJONG MEDICAL Co.Ltd., which invested in Genencell Co., Ltd.’s COVID-19 treatment “ES16001,” was a medical device company with ample cash reserves as recently as 2021. However, five years later, it now faces the threat of delisting. On June 11, the KOSDAQ Market Committee of the Korea Exchange issued a delisting decision against SEJONG MEDICAL Co.Ltd. Although the company was originally scheduled to be delisted on the 24th of the same month, the delisting process has been suspended after the company filed for a preliminary injunction.

The direct cause of SEJONG MEDICAL Co.Ltd.’s delisting was the deterioration of its financial structure following Canary Bio M’s rise to become the largest shareholder in 2022. However, it is also true that the investment in GenenCell prior to that had already placed a burden on the company’s finances and stock price. In 2021, SEJONG MEDICAL Co.Ltd. invested a total of 11.3 billion won in Genencell shares and convertible bonds (CBs). While the stock price fluctuated for a time on expectations surrounding the development of ES16001, the book value of Genencell-related investment assets dropped to zero following the suspension of clinical trials.

In response, the SEJONG MEDICAL Co.Ltd. Shareholders’ Alliance submitted a joint petition on the 7th to the Seoul Western District Court and the Seoul High Court, where Professor Kang and Ms. Yang are currently on trial on charges including promises to offer bribes. In the petition, the shareholders stated, “We are victims of stock price manipulation fraud,” and appealed, “Please use objective evidence to clarify how Ms. Yang utilized her connections in political circles, what specific information Candidate Kim’s camp communicated to the Ministry of Food and Drug Safety (MFDS), and whether such communication influenced the approval process.”

KOREA PHARMA Co., Ltd. established a relationship with Genencell in November 2020 by signing a memorandum of understanding (MOU) to develop and produce COVID-19 and shingles treatments using the active ingredient Dampalsu, and by taking on the contract manufacturing of investigational drugs. Subsequently, in February 2021, KOREA PHARMA Co., Ltd. invested 3 billion won in ENCell Co., Ltd. to acquire a stake in the company. This marked the company’s first-ever equity investment in another firm since its founding. However, following the suspension of the ES16001 clinical trial in 2023, the value of KOREA PHARMA Co., Ltd.’s stake in ENCell Co., Ltd. dropped to zero, resulting in the majority of the investment being written off as a loss.

KH Philux, which had also invested in GenenCell Co., Ltd., faced a similar situation. KH Philux acquired 455,000 shares of GenenCell Co., Ltd. for 1.5 billion won in late 2020 but, unable to recover its investment, filed a lawsuit to reclaim the funds and ultimately won the case. KH Philux was delisted earlier this year.

In a statement released on the 7th, the KH Group explained, “KH Philux filed a lawsuit after being unable to recover the funds invested in ENCell Co., Ltd. at the time and ultimately won the case,” adding, “The company is merely a victim that did not hesitate to take legal action to prevent investment losses.” The KH Group also emphasized, “The company has absolutely no personal relationship or connection with Representative Kim Seung-won.”

KH Group has been mentioned in the past during the investigations and trials related to the Daejang-dong development corruption scandal and the Ssangbangwool North Korea fund transfer scandal. In the Daejang-dong case, suspicions arose regarding KH Group affiliates in connection with the concealment of funds and share transactions by Kim Man-bae, the major shareholder of Hwacheon Daeyu. In the Ssangbangwool North Korea fund transfer scandal, financial transactions with former Ssangbangwool Group Chairman Kim Seong-tae and cooperative relationships regarding North Korea-related business were also addressed during the investigation.

However, a connection between KH Philux and Professor Kang has been confirmed. Professor Kang was appointed as an outside director of KH Philux on April 30, 2018, and served in that role for approximately two years and four months until August 28, 2020. On August 29 of that year—the day after Professor Kang’s resignation—the company signed an industrial consulting contract with Kyung Hee University’s Industry-Academic Cooperation Foundation. The consulting entity was the Kyung Hee University Biomedical Research Center, where Professor Kang served as director.

Kang Se-chan’s Track Record on Another COVID-19 Treatment Investment Also Shows “0 Won”

Gold Pacific, a publicly traded company that invested through an affiliate in “APRG64”—another natural-product-based COVID-19 treatment candidate led by Professor Kang, the founder of Genencell—was also unable to avoid losses.

Gold Pacific, whose core business was fashion and pharmaceutical wholesale and retail, invested 500 million won in the unlisted company APR in July 2020 to acquire a 30% stake. In August of the same year, APR received a technology transfer for “APRG64,” a natural product-based COVID-19 treatment candidate, from Professor Kang’s research team. At the time, Professor Kang served as a registered director and Chief Technology Officer (CTO) at APRG.

Whenever news of APRG64’s development emerged, the stock price of Gold Pacific, a related company, also fluctuated significantly. APR actively publicized the progress of its preclinical and Indian clinical trials, promoting the results of cell experiments by claiming the compound was “50 times more effective than remdesivir.” On October 8, 2020, the day news of the Indian clinical trial approval broke, Gold Pacific’s stock price hit the daily upper limit, rising 29.74% from the previous day to 1,985 won.

However, the investment did not perform well. The book value of the APRG shares that Gold Pacific had acquired for 500 million won had fallen to 34 million won by the end of 2020, and after reflecting additional valuation losses in 2021, it dropped to zero. By the end of 2022, APRG had fallen into a state of complete capital impairment, with total equity of approximately -3 billion won. Although KBIO LABS currently continues to hold a 25% stake in APRG, as of the first quarter of 2026, APRG’s net assets stood at -4.3 billion won, and the investment’s book value was 0 won.

Gold Pacific subsequently became embroiled in accounting issues. In 2023, the Securities and Futures Commission uncovered that the company had disguised its operations as a used mobile phone trading business from 2016 to 2019 and had falsely recorded revenue and cost of goods sold using fabricated tax invoices, among other violations, and referred the former CEO and former executive in charge to the prosecution. Trading in the company’s stock was suspended due to grounds for a substantive review of its listing eligibility, but resumed in April of the same year after the company was excluded from the review.

As a result, although funds from several publicly listed companies poured into the COVID-19 treatment led by Professor Kang during the pandemic, it has yet to achieve commercial success. The listed companies that invested have either recognized losses or filed lawsuits to recover their investments, and some have even been delisted. Considering that the stock prices of related companies surged sharply at the time based solely on news of the COVID-19 treatment’s development, it appears that retail investors have also suffered significant losses.

A biotech industry official stated, “Isn’t this a classic case of jumping on the COVID-19 theme stock bandwagon?” adding, “It’s unfortunate for the retail investors who suffered losses after investing in companies linked to Professor Kang.”

Meanwhile, the opposition’s offensive regarding nominee Kim’s request for expedited approval of Genencell’s COVID-19 treatment is intensifying by the day. The offensive, which began with former People Power Party leader Han Dong-hoon’s call for a special prosecutor to investigate the new drug lobbying scandal, now appears to be targeting President Lee Jae-myung, going beyond simply calling for the withdrawal of Kim’s nomination.

At a press conference on the 7th, People Power Party lawmakers Na Kyung-won, Park Soo-young, and Jin Woo Joo asserted regarding the new drug lobbying allegations surrounding Nominee Kim, “If you follow the trail, President Lee Jae-myung is at the end of the shadowy scheme.” They emphasized, “The Lee Jae-myung–Kim Seung-won ‘Genencell Gate’ is a serious matter that warrants a parliamentary investigation and a special counsel probe.”