Kim Jung-geun, chief executive officer of Oscotec, has been dismissed. His reappointment was thwarted by the upset minority shareholders, who are angry over the controversy surrounding the subsidiary Genosco's 'split and duplicate listings.'
At the Oscotec regular shareholders' meeting held on the 27th in Pangyo, Seongnam, shareholders protested the company's push for Genosco's listing and voted against the key agenda item of reappointing Kim Jung-geun, securing more than half of the votes against it. About 60.68% (23,212,279 shares) of the shares with voting rights participated in the meeting, with 40.52% opposing the motion, leading to its rejection. CEO Kim is the founder of Oscotec and is set to have his term expire on the 28th.
Genosco, a subsidiary of Oscotec, is the original developer of 'Raclara' (generic name: lazertinib), which became the first domestic anticancer drug approved by the U.S. Food and Drug Administration (FDA). Raclara has demonstrated superior efficacy in phase 3 clinical trials compared to AstraZeneca's Tagrisso, which is currently dominating the global market, making it possible for the domestic new drug to become the first blockbuster (global sales of 1 trillion won).
Yuhan Corporation, which acquired the technology for lazertinib in 2015, exported the technology again to Johnson & Johnson (J&J) in 2018. Consequently, J&J will pay Yuhan Corporation 60% of the royalties (continuous technology fees) from Raclara sales, with Oscotec and Genosco each receiving 20%.
The dispute between Oscotec's management and minority shareholders began as the company pursued a separate listing for its subsidiary Genosco. The company applied for a preliminary review for listing with the Korea Exchange last October, arguing that funding is essential for the future success of Genosco's research and development.
Before the vote on the agenda, CEO Kim noted in a performance report that 'the approval of lazertinib in the United States last year initiated commercialization, and this year, additional milestones such as approvals in Europe and Japan are expected to come in.' He added that data on efficacy for immune thrombocytopenia has been secured in phase 2 trials to find business partners and that several meaningful new drug development projects, including solid tumor treatments, are progressing, with phase 1 patient dosing completed.
However, shareholders protested that Genosco's listing would be 'an illicit gift'. Until now, the profits from Raclara have directly reflected Oscotec's stock value, but if Genosco goes public, the profits will be divided, leading to a dilution of value. Additionally, it was pointed out that Kim Jung-geun's son holds more than 10% of Genosco's equity, raising concerns that Kim could derive significant personal gains upon the listing. The phrase 'illicit gift' was also mentioned.
Oscotec shareholders gathered about 15.15% of equity through the shareholder action platform 'Act' to block Kim's reappointment. In contrast, the management's stake was only 12.84%, including major shareholder Kim Jung-geun's ownership of 12.46%. One shareholder attending the meeting stated, 'The Oscotec board has seen the will of the shareholders today, so it is appropriate to immediately appoint a professional manager and withdraw Genosco's listing.'
Genosco earned a perfect score of 'AA, AA' in the technological evaluation for technology-specialized listing, increasing the likelihood of approval. Previously, Orum Therapeutics received a lower rating of 'A, BBB' in the evaluation but obtained listing approval from the exchange within three months.
However, as the shareholders' coalition has effectively prevailed at the meeting, the feasibility of Genosco passing its preliminary listing review has also become uncertain. Oscotec has yet to announce a position on rescinding the listing. The exchange has not issued results for Genosco's preliminary listing review for over five months, which has led to analysis suggesting awareness of criticisms concerning 'split and duplicate listings.'