[E-Daily Reporter KIM SAE-MI ] The debate surrounding the complaint filed by Kim Seung-won, nominee for Minister of Justice, regarding the approval of Genencell Co., Ltd.’s Investigational New Drug (IND) application for a COVID-19 treatment continued during the National Assembly confirmation hearing on the 15th. Seo Young-kyo, Chair of the National Assembly’s Legislation and Judiciary Committee, emphasized that Genencell Co., Ltd. and SEJONG MEDICAL Co.Ltd.,(258830)were unrelated at the time Nominee Kim contacted the Ministry of Food and Drug Safety; however, investment negotiations worth around 10 billion won between the two companies had actually been underway for four days prior.

On that day, Seo Young-kyo, Chair of the National Assembly’s Legislation and Judiciary Committee, rebuked the opposition party for linking allegations of stock price manipulation involving ENCell Co., Ltd. and SEJONG MEDICAL Co.Ltd., stating, “When Nominee Kim made the call, ENCell Co., Ltd. had absolutely no connection to SEJONG MEDICAL Co.Ltd.,” and added, “Do your homework.” He continued, “You’re feeling a little guilty, aren’t you?” adding, “Genencell Co., Ltd. isn’t even a publicly traded company, and this happened afterward. If you’re going to force a connection, you should at least make it a plausible one.”

From a strictly legal perspective regarding investment relationships, it is true that SEJONG MEDICAL Co.Ltd. was not yet a shareholder of Genencell as of October 12, since the actual investment agreement was signed a week later, on the 19th.

However, it is difficult to conclusively state that the two companies had no relationship whatsoever at the time Candidate Kim submitted the complaint regarding GenenCell to the Ministry of Food and Drug Safety.

Previously, on September 23, 2021, GenenCell had filed an Investigational New Drug (IND) application for “ES16001,” a potential COVID-19 treatment candidate, and on the 30th of the same month, it received 14 requests for additional information from the Ministry of Food and Drug Safety, with the review still underway. October 12, the day Nominee Kim conveyed the complaint regarding GenenCell to then-MFDS Commissioner Kim Kang-rip, fell within this period for addressing the requests for additional information.

Investment negotiations worth approximately 10 billion won between SEJONG MEDICAL Co.Ltd. and GenenCell had been underway since before that time. According to the first-instance judgment in the case involving GenenCell founder Kang Se-chan—a former professor at Kyung Hee University—who was charged with obstruction of official duties through fraud, former Professor Kang told Ms. Yang on October 8, four days before Candidate Kim contacted the Ministry of Food and Drug Safety, “If the Ministry of Food and Drug Safety approves the IND around October 20, it will be 5.7 billion won for existing shares and 5.0 billion won for new shares.” This means that, at least by this point, negotiations were underway with SEJONG MEDICAL Co.Ltd. regarding investment terms in the range of 10 billion won.

On the 14th of the same month, former Professor Kang made a statement regarding the investment to the effect that “we need to finalize this by the 19th,” and the following day, he left a message indicating that, due to delays in the clinical trial schedule, something needed to be done to secure the investment agreement.

In fact, on October 19, SEJONG MEDICAL Co.Ltd. entered into an agreement to acquire 660,000 shares of ENCell held by Mr. Kang for 6.2898 billion won and to purchase 5 billion won worth of convertible bonds (CBs) issued by ENCell. The total transaction amounted to 11.2898 billion won. Through this deal, SEJONG MEDICAL Co.Ltd. secured a 14.01% stake in GenenCell and became its largest shareholder.

Regarding this, Rep. Yoon Sang-hyun of the People Power Party emphasized, “After a phone call from Nominee Kim, the Ministry of Food and Drug Safety (MFDS) ultimately granted IND approval,” adding, “One week before the approval was granted—on October 19—SEJONG MEDICAL Co.Ltd. acquired 660,000 shares for 6.3 billion won and also acquired 5 billion won worth of convertible bonds. Then, on the 26th, the IND approval was granted.”

When Nominee Kim claimed he was unaware of these details, Rep. Yoon acknowledged, “Nominee Kim may not have known,” but added, “However, claiming ignorance is implausible.” He went on to criticize, “The Minister of Justice is responsible for rooting out stock manipulation rings—how can a nominee who didn’t even know how his own influence would be wielded claim to eradicate such groups?”

Rep. Kim Min-jeon of the People Power Party linked complaints regarding Genencell to allegations of stock price manipulation at SEJONG MEDICAL Co.Ltd. and pressed Nominee Kim on his responsibility. Rep. Kim pointed out, “Don’t you already know that SEJONG MEDICAL Co.Ltd.’s stock price skyrocketed and then crashed?” He continued, “Even if you claim you only sent a text message asking for the process to be expedited without knowing anything, stock price manipulation ultimately occurred. “So aren’t you responsible?” he pointed out.

In response, Nominee Kim refuted the claims, asserting that he had not been involved in any investment in SEJONG MEDICAL Co.Ltd. or in stock price manipulation. He maintained that he had merely relayed a complaint regarding the delay in the IND review for the GenenCell treatment and was unaware of any investment ties or the possibility of stock price manipulation; furthermore, he stated that he had not gained any financial benefit from such manipulation.

At the same time, Nominee Kim also stated that he would look into the damages suffered by shareholders of SEJONG MEDICAL Co.Ltd. who incurred losses following the investment in GenenCell. “If I become Minister of Justice, I will meet with the victims and work to restore their losses,” he emphasized, adding, “I will meet with the victims. I will listen to their voices. I will devise a solution.”