Oscotec, a KOSDAQ-listed company, faces multiple tasks, including governance restructuring that could involve a change in the largest shareholder following the death of founder and adviser Kim Jeong-geun, and pending issues related to subsidiary Genoscience. With the regular shareholders meeting set for Mar., attention is focused on how the company will respond.
Kim died in the United States on the 4th (local time). As a result, the inheritance process for Kim's equity in Oscotec has begun, and the final allocation of the equity and whether there will be a change in the largest shareholder after the inheritance have not yet been determined.
Kim, a former dentist, founded Oscotec in 1998 and laid the groundwork for the development of Leclaza (ingredient name Lazertinib), the first domestically developed anticancer drug to win U.S. Food and Drug Administration (FDA) approval. The drug candidate was jointly researched and developed by Oscotec and its subsidiary Genoscience, and Yuhan introduced it in 2015 and continued development.
However, Kim faced shareholder opposition over efforts to separately list subsidiary Genoscience, and after failing to win reappointment as CEO at the regular shareholders meeting in Mar. last year, served as an adviser.
The key challenge Oscotec now faces is the possibility of governance changes. Kim held 4,763,955 Oscotec shares, equivalent to 12.45% of the total equity. Based on the closing price on the 5th, the stake is worth about 240 billion won.
In the industry, using the held shares as collateral to take out a loan to pay inheritance taxes has been discussed, but considering the interest burden, some expect that, in the mid to long term, selling part of the equity could also be reviewed.
Governance issues also remain around Genoscience, a subsidiary Kim founded in Boston in 2000. Genoscience has been led since 2008 by CEO Ko Jong-seong, a former head of the new drug research center at LG Chem, and is the original developer that discovered Lazertinib, the core candidate for Leclaza.
Oscotec has sought to make Genoscience a wholly owned subsidiary, but has faced shareholder opposition contending the move was intended to raise succession funds for Kim's eldest son, Genoscience director Kim Seong-yeon.
Director Kim Seong-yeon currently holds about 13% equity in Genoscience. With the founder's death raising the possibility of changes to the existing succession framework, there is also interest in whether the agenda will be revived.
Ahead of the regular shareholders meeting in Mar., moves by minority shareholders are also being watched as a variable. The Oscotec Minority Shareholders Alliance has repeatedly expressed opposition to key proposals through proxy fights with management at past regular shareholders meetings.
It influenced meeting results by differing with management over Kim's consecutive term as CEO, the push to list Genoscience, and the plan to make it a wholly owned subsidiary.
Shareholder actions appear to be gaining momentum ahead of the meeting. On the 5th of last month, a minority shareholder filed for a provisional injunction with the Suwon District Court Seongnam Branch to allow inspection and copying of the shareholder register. The move is seen as aimed at assessing the voting landscape ahead of the regular shareholders meeting.
Along with this, minority shareholders also filed on the 13th of last month for a provisional injunction to suspend the effect of shareholders meeting resolutions. If the court limits the effect of the supermajority clause in the articles of incorporation, key items such as the appointment or dismissal of directors could be approved by a simple majority of shareholders present. The minority shareholders alliance is working to appoint its recommended candidates as auditor and outside director at this regular meeting to bring them onto the board.
In response, the company is strengthening communication with shareholders, led by Chief Financial Officer (CFO) Shin Dong-jun. Recently, through shareholder communication sessions and technology briefings, the company has directly explained its business direction and research and development (R&D) status to improve shareholder understanding.
Oscotec says that, apart from potential governance changes, management and research and development will proceed normally. Oscotec maintains a co-CEO structure with Yun Tae-young and Lee Sang-hyun; Yun oversees R&D and Lee handles business operations.
A company official said, "The details regarding the final allocation of equity due to inheritance and any change in the largest shareholder have not yet been determined," adding, "The current management and board structure will be maintained, and key tasks such as business operations and R&D will proceed as planned."