[Edaily Reporter KIM SAE-MI ] “(SEJONG MEDICAL Co.Ltd.) was delisted due to the failure of clinical trials for the anticancer drug ‘Pearl’ and various reckless investments, but now that these events have come to light, they’re blaming Genencell.”

Kang Se-chan, founder of Genencell and former professor at Kyung Hee University, made these remarks during a recent appearance on CBS Radio’s *Park Seong-tae’s News Show*. SEJONG MEDICAL Co.Ltd.,(258830)This was a direct rebuttal to claims that he had suffered losses during the Genencell investment process. With the so-called “new drug lobbying allegations” surrounding Justice Minister nominee Kim Seung-won coming to light, former Professor Kang—who has been at the center of the controversy—broke his silence to offer an explanation.

The term “pearl” mentioned by former Professor Kang is slang in the securities market referring to positive news that could have a favorable impact on a company’s stock price or corporate value. For biotech companies developing new drugs, examples of such “pearls” include entering or successfully completing clinical trials, technology exports, and investments or mergers and acquisitions (M&A).

Former Professor Kang, a researcher specializing in natural product-based new drugs, founded GenenCell in September 2016. Through GenenCell, he expanded the development of a herpes zoster treatment candidate—based on a Dampalsu extract and developed by a Kyung Hee University research team—into a potential COVID-19 treatment. In 2021, ENCell Co., Ltd. submitted an Investigational New Drug (IND) application to the Ministry of Food and Drug Safety for Phase 2 and 3 clinical trials of its COVID-19 treatment “ES16001” in South Korea and received approval.

This incident from five years ago has resurfaced due to allegations that nominee Kim lobbied on behalf of the new drug. It sparked controversy over preferential treatment after it was revealed that Ms. Yang, who was acquainted with GC CELL, had asked nominee Kim—who was a member of the National Assembly at the time—to ask then-MFDS Commissioner Kim Kang-rip to look into the status of GC CELL’s IND review.

Former Professor Kang drew a clear line, stating he had no direct relationship with Nominee Kim. “I have never met him at all,” he said, adding, “I have never spoken with him on the phone, nor do I have his contact information.” He acknowledged that he had expressed frustration to Mr. Yang regarding the delay in the IND review but insisted that he had no intention of making a request through political channels.

Recalling the situation at the time, former Professor Kang said, “I didn’t even consider it a special request, and I thought a complaint of this magnitude wouldn’t be a problem.” He acknowledged that when Mr. Yang offered to help, he replied, “If you can help, then help.”

He also denied any quid pro quo regarding his intention to donate 5 million won in political campaign funds to Candidate Kim. Former Professor Kang mentioned that when Mr. Yang brought up the topic of political donations, he “thought I could manage that much,” adding, “I never even considered it a quid pro quo, and nothing of the sort ever happened.” He further explained that the donation did not actually take place because he had reached his contribution limit.

Another focal point of the controversy is the animal testing data for ES16001. Former Professor Kang was indicted on related charges and, in a first-instance trial at the end of 2024, was found guilty of charges including obstruction of official duties through fraud. During that trial, data regarding the drug’s therapeutic effects on animals and its side effects became a key point of contention. The appeal trial is currently underway.

Former Professor Kang maintains that it is unreasonable to directly link animal deaths occurring during the testing process to clinical safety. He explained, “It is actually standard practice not to record cases where it cannot be clearly determined that the death was caused by the drug,” adding, “The death of a single animal cannot be linked to any specific clinical outcome.”

He also made no secret of his dissatisfaction with the first-instance ruling. Former Professor Kang criticized the court, saying, “It is questionable that the court would render a judgment based on matters that cannot be determined with academic certainty.”

He also argued that the transcripts released by the prosecution and political circles failed to consider the full context. “If you look at only a part of it, it might appear as Representative Han Dong-hoon claims,” said former Professor Kang, “but if you look at the full context or read the text, don’t you fail to grasp the nuance? The intent of the conversation could be distorted.”

Genencell shares a similar stance. A Genencell official argued that while the company and former Professor Kang have been consistently providing explanations regarding the clinical trial data and research process at the time, these explanations are not being properly accepted during the trial because the case has become entangled with political issues.

The conflict between former Professor Kang and SEJONG MEDICAL Co.Ltd. is another new variable. In 2021, SEJONG MEDICAL Co.Ltd. made a large-scale investment, including the acquisition of GenenCell shares previously held by former Professor Kang. At the time, expectations surrounding GenenCell’s development of a COVID-19 treatment also influenced SEJONG MEDICAL Co.Ltd.’s stock price.

Former Professor Kang drew a clear line between the investment and the IND approval, stating that they were separate matters. He explained that SEJONG MEDICAL Co.Ltd. had been reviewing the investment for several months prior to the IND approval and had decided to invest only after conducting a corporate valuation. In particular, he stepped up his rhetoric against SEJONG MEDICAL Co.Ltd., which claims to have suffered damages from stock price manipulation.

Former Professor Kang retorted, “I don’t know who manipulated the stock price, but if anyone did, wouldn’t it have been SEJONG MEDICAL Co.Ltd.?” He went on to argue that ENCell actually fell into financial difficulties after SEJONG MEDICAL Co.Ltd.’s management changed and demanded early repayment of the investment funds, stating, “ENCell is also a victim.”

The controversy surrounding former Professor Kang dates back to 2021. The key issues are whether the clinical trial data for ES16001 was appropriate, whether there was undue external influence during the Ministry of Food and Drug Safety’s approval process, and what relationship existed between SEJONG MEDICAL Co.Ltd.’s investment decision and the IND approval.

The biotech industry is watching closely to see how former Professor Kang—who transformed from a researcher of new drugs derived from natural products into a biotech venture founder—will navigate this controversy. The key issue in the appellate trial is whether the first-instance ruling regarding ES16001 will be upheld or overturned. The extent to which his explanation is accepted by the judiciary is expected to determine the outcome of this controversy.

◇ Profile of Kang Se-chan, Inside Director of GenenCell
△Born in Jeju in March 1973
△Graduated from the Department of Biology at Sungkyunkwan University
△ Master’s and Ph.D. in Biopharmaceutical Sciences, Sungkyunkwan University Graduate School
△Professor and Department Chair, Department of Natural Products and Pharmaceutical Biotechnology, Semyeong University
△Professor, Department of Life Sciences, College of Bio-Nano, Gachon University
△Professor, Department of Korean Medicine Materials Engineering, College of Life Sciences, Kyung Hee University
△Director, Biomedical Research Center, Kyung Hee University
△Visiting Professor, University of Munich, Germany
△Founded Genencell in September 2016