It’s been a bad month for SillaJen. The Korean biotech and partner Transgene started August by canning a phase 3 study of their oncolytic virus after an independent data committee deemed it likely to fail. The companies’ stocks went tumbling down—but now, it looks like a SillaJen exec may have avoided that loss by doing some insider trading.
Prosecutors raided SillaJen’s sites in Busan and Seoul on Wednesday, after allegations that its management used undisclosed information to sell their stocks, reported Korea Biomedical Review.
According to the Korean news outlet, the allegations against SillaJen Chief Science Officer Shin Hyun-pil claim that he sold all of his 167,777 shares between July 1 and July 8, raking in about 8.8 billion won ($7.25 million) in the process. Investors suspected that, armed with the lackluster phase 3 data for the virus, dubbed Pexa-Vec, Shin had offloaded his shares ahead of the data committee’s recommendation to halt the study on Aug. 2, Korea Biomedical Review reported.
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SillaJen designed the phase 3 study to show whether dosing patients with Pexa-Vec ahead of Nexavar could extend patients’ lives over the Bayer drug alone. After looking at interim data, the data committee recommended the study be stopped for futility.
Neither SillaJen nor Transgene shared trial data at the time, but prosecutors got their hands on the futility data through the raid.
"The prosecution conducted a seizure search to find out the alleged use of undisclosed information," Sillajen said, as quoted by Korea Biomedical Review. "The investigation is limited to only some of the employees, and we intend to cooperate with the investigation fully."
SillaJen’s stock has dived 19% since the news hit Wednesday and is now trading at about 10,300 won ($8.50).