As bio corporations draw attention in the stock market, false claims are also spreading. Posing as fund managers on social media (SNS) to solicit investments or spreading rumors that a company is seeking financing due to clinical trial problems are typical examples. Experts warn that investor losses are inevitable.
According to the industry on the 17th, KOSDAQ-listed D&D Pharmatech recently faced a phishing case involving impersonation of a fund manager. With D&D Pharmatech expected to conduct a shareholder-allotted paid-in capital increase soon, solicitations appeared on SNS claiming that people had won a sort of subscription and could buy below market price, urging deposits of 30,000 won per share.
D&D Pharmatech said it detected the phishing after receiving multiple calls from investors seeking to verify the facts from late last year to early this year. A company official said, "There was even an investor who almost made the deposit," adding, "It is groundless, and we have not reviewed such a paid-in capital increase."
D&D Pharmatech is developing a candidate for a treatment for metabolic dysfunction–associated steatohepatitis (MASH), commonly called "fatty liver." It is conducting a phase 2 trial in the United States and plans to announce key results as early as May. As investors focus on whether the company will transfer the technology to an overseas pharmaceutical company, false claims spread. An industry official said, "It's unclear whether this was a simple phishing scam or an attempt at price manipulation, but as bio stocks gain attention, more people are spreading unfounded rumors."
Kolon TissueGene had a similar experience. Kolon TissueGene is conducting a phase 3 clinical trial in the United States for the cell gene therapy TG-C (Invossa-K) for osteoarthritis. Early this year, rumors spread that the trial had encountered setbacks and that financing was needed to address them. As a result, on the 2nd the share price fell 10% from the previous trading day. Investor sentiment weakened because it appeared as though there were problems with the clinical trial.
The company says the rumors are groundless. Wi Hae-joo, a researcher at Korea Investment & Securities Co., said in a report, "The likelihood of setbacks in the clinical trial is low," and "This is not a situation that requires additional financing." Setbacks in clinical trials usually mean safety issues. A Kolon TissueGene official explained, "TG-C is administered into the joint cavity," adding, "Because there is no blood in the joint cavity, the therapy does not spread throughout the body, and the likelihood of side effects in other areas is low."
Invossa has gone through many twists and turns. Invossa received marketing authorization from the Ministery of Food and Drug Safety in 2017 and was sold domestically. A separate clinical trial was conducted in the United States, but due to an error in the injection solution's components, the phase 3 trial was halted in 2019 and the domestic marketing authorization was revoked. The following year, after the company explained the situation to the U.S. Food and Drug Administration (FDA), the phase 3 trial resumed. Key results are expected to be announced as early as around Jul.
A Kolon TissueGene official said, "Dosing in the clinical trial has been completed, and we are in the stage of collecting clinical data as patients visit hospitals for X-ray imaging or to complete pain-related questionnaires," adding, "Structurally, this is not a stage where setbacks would occur."
OliX Pharmaceuticals previously also faced trouble due to false claims. In Jul. last year, rumors spread that OliX Pharmaceuticals would conduct a shareholder-allotted paid-in capital increase, which the company said was baseless information. A month later, OliX Pharmaceuticals conducted a third-party allotment paid-in capital increase worth 115 billion won. A shareholder-allotted paid-in capital increase grants existing shareholders the right to buy new shares, while a third-party allotment means selling new shares to a specific third party such as an external investor.
OliX Pharmaceuticals is developing a hair loss treatment using RNA interference technology. RNA interference refers to suppressing the expression of specific genes in cells. It works by suppressing the production of specific proteins that cause disease using RNA interference. In Feb. last year, OliX Pharmaceuticals transferred a candidate for a metabolic dysfunction–associated steatohepatitis treatment to Eli Lilly and Company. Earlier, when rumors spread in 2024 that the transfer had fallen through, the company hinted at legal action, calling them "malicious rumors."
Experts explain that bio stocks can sometimes rise on market expectations alone, making them vulnerable to rumors. Bio corporations conduct clinical trials over long periods and invest massive expense. There is no guarantee of 100% success in developing new treatments.
Hwang Se-woon, a senior research fellow at the Korea Capital Market Institute, said, "The ultimate responsibility for investment lies with the investor," advising, "Because high returns may not materialize in practice, it is necessary to judge conservatively." Investors are urged to make careful decisions so they are not swayed by unfounded rumors surrounding bio corporations.