"Oscotec has faced a severe trust crisis for years due to a lack of communication with shareholders and attempts at duplicate listings of a subsidiary. We will make Genosco a 100% subsidiary so that the results Genosco generates belong entirely to Oscotec shareholders."
Shin Dong-jun, Oscotec's chief financial officer (CFO), said at an Oscotec shareholder communication meeting held on the 26th at the Korea Institute of Financial Investment in Yeouido, Seoul, "We will correct the distrust and misunderstandings toward management over the years and build a virtuous cycle of trust centered on shareholders." Shin, a finance expert who previously headed KB Securities' research center, joined Oscotec in July. The meeting was organized to address shareholder concerns over making Genosco a wholly owned subsidiary and to directly explain the company's strategy and capital allocation plans.
Oscotec is the original developer of lazertinib, the active ingredient in the anticancer drug Leclaza. Co-developed with Yuhan Corp., Leclaza was out-licensed to Janssen, a subsidiary of Johnson & Johnson (J&J), in the United States in 2018 for around 1 trillion won. Genosco was founded in Boston by former Oscotec CEO Kim Jeong-geun and is currently led by CEO Go Jong-seong, who has developed multiple Korea-made new drugs.
Oscotec is pushing to acquire the remaining 41% equity to make Genosco, which failed to list on KOSDAQ amid a split listing controversy, a wholly owned subsidiary. To that end, it will increase the total number of authorized shares from 40 million to 50 million and plans to resolve at an extraordinary shareholders meeting on Dec. 5 to: ▲ amend the articles of incorporation (change in total authorized shares), ▲ appoint outside director Kim Gyu-sik, ▲ appoint inside director Shin Dong-jun, and ▲ approve the cap on auditor compensation.
Oscotec said bringing Genosco in as a 100% subsidiary is aimed at maximizing shareholder value and advancing governance. CFO Shin said, "To ensure transparency and fairness of the transaction, we will establish a special committee composed of independent outside directors, including outside director Kim Gyu-sik, to oversee the valuation and transaction procedures." Outside director candidate Kim is a former chairman of the Korea Corporate Governance Forum and has worked to protect the rights of minority shareholders.
However, a minority shareholders' alliance is demanding the appointment of shareholder-nominated directors, citing a lack of trust over the use of funds. It warned that if the appointments are not made, the extraordinary meeting could lead to a proxy fight. The alliance had also expressed opposition during the previous push to list Genosco by removing former CEO Kim Jeong-geun. A shareholder attending the meeting protested, saying, "If you believed this agenda had to pass, shouldn't you have communicated more closely, and earlier?"
CFO Shin said, "The additional authorized shares this time will be used only to attract strategic investors for purchasing Genosco shares," and stressed, "They will never be used for operating funds or any other purposes." Addressing criticism that the extraordinary shareholders meeting was pushed through abruptly, Shin said, "This extraordinary meeting began at the request of the shareholders' alliance," adding, "At the end of June, the alliance submitted items such as the articles amendment as a formal shareholder proposal, and through meetings in July, September and October, we fully shared shareholder concerns and the agenda."
The company also dismissed concerns about the return or influence of former CEO Kim Jeong-geun. The company said, "The agenda for the extraordinary meeting is unrelated to any particular individual and is intended to carry out the demands of minority shareholders."
The meeting also shared future research and development (R&D) plans. Oscotec CEO Yun Tae-young said, "By 2030, we aim to out-license at least two resistant anticancer candidates, focusing on resistant anticancer drugs and fibrosis," adding, "Within five years, we will strengthen research efficiency and global cooperation systems with a goal of achieving more than five out-licensing deals."
CEO Lee Sang-hyun said, "Beyond lazertinib (Leclaza), we will devote ourselves to developing a second and third lazertinib. This is an important inflection point for leaping from a Korea-style biotech to a global biotech." He added, "We will streamline pipelines that do not fit the strategy and steadily nurture candidates that could be big hits," and "Early next year, we will present shareholders with a detailed roadmap and plans to enhance corporate value."