The legal battle between Nature Cell(007390) and the Ministery of Food and Drug Safety over the marketing approval of the stem cell therapy "JointStem" is intensifying with the agency's appeal.
After the court canceled the Ministery of Food and Drug Safety's decision to reject the approval, the appeal has emerged as a factor that could shape Korea's entire drug approval and review system, beyond a simple approval dispute. The industry is watching to see whether standards for future new drug approvals, review procedures, and operating methods will change.
According to the industry on the 5th, the Ministery of Food and Drug Safety recently filed an appeal with the Seoul High Court, objecting to the first-trial ruling that canceled the disposition rejecting the marketing approval for JointStem. The Ministery of Food and Drug Safety said, "We decided to seek a higher court's judgment due to differences of opinion with the first-trial court regarding the interpretation and application of approval regulations."
JointStem is a treatment for degenerative knee osteoarthritis in which mesenchymal stem cells cultured from a patient's own fat are injected into the knee joint. It was developed by RNL Bio Research Institute, an affiliate of Nature Cell.
◇Court halts the Ministery of Food and Drug Safety's "approval rejection"… "Doubts about the legitimacy of review standards and procedures"
The conflict over JointStem has continued for eight years. Nature Cell applied to the Ministery of Food and Drug Safety for conditional marketing approval in 2017, but it was rejected in 2018. The company again applied for full marketing approval in 2021, but still failed to obtain approval in 2023.
Nature Cell later expanded the number of clinical trial subjects and submitted supplemental data, including three-year long-term follow-up results, and reapplied in 2024, but the Ministery of Food and Drug Safety again rejected it in August last year. The company filed an administrative lawsuit in September last year, and the first-trial court canceled the agency's disposition refusing marketing approval.
The core issues the first-trial bench took up were the legality of the review standards applied by the Ministery of Food and Drug Safety and the legitimacy of the review procedures.
Nature Cell argued that it secured statistical significance in key endpoints such as pain (VAS) and joint function (WOMAC) in a domestic phase 3 trial. However, the Ministery of Food and Drug Safety determined that JointStem failed to demonstrate superior efficacy compared with existing treatments.
In response, Nature Cell argued that the Ministery of Food and Drug Safety newly applied the criterion of "clinical significance," which had not been clearly presented in the existing review standards, to deny approval.
The court found that, in the process of assessing the safety and efficacy required for approval, the Ministery of Food and Drug Safety effectively reviewed the product by demanding superiority over existing treatments. The gist is that it decided on approval by applying standards not specified in the Pharmaceutical Affairs Act.
The bench also took issue with how the Central Pharmaceutical Affairs Advisory Committee (Advisory Committee) was operated. The Advisory Committee is a procedure in which the Ministery of Food and Drug Safety gathers expert opinions before making a final decision on new drug approval. The court pointed out that a Commissioner who voiced opposition to approval at the first Advisory Committee meeting was employed by a competing institution of Nature Cell.
It also found problematic that the second review focused on additionally submitted materials without comprehensively examining the original review materials and the supplemental materials. The point was that the Ministery of Food and Drug Safety should have reviewed the initially submitted data together with the subsequent supplemental data, and assessing only the additional materials amounted to an administratively convenient judgment.
◇Legal community: "The Ministery of Food and Drug Safety appealed out of a sense of crisis over the review system"
In legal and industry circles, the view is that the Ministery of Food and Drug Safety decided to appeal not just over whether to approve a single item, JointStem, but out of concern that its authority and system as a regulator that determines drug approvals could be shaken.
The Ministery of Food and Drug Safety is the regulatory authority that reviews the safety and efficacy of drugs and decides whether to grant marketing approval. If the first-trial ruling is finalized, the standards and procedures applied in the approval review process could themselves become subject to judicial scrutiny, potentially affecting future new drug review methods and the operation of the Advisory Committee.
An attorney who has handled cases related to drug regulation said, "This is not simply a lawsuit between one company and a regulator, but an issue related to how a government ministry operates its regulatory system," adding, "From the Ministery of Food and Drug Safety's perspective, it had no choice but to appeal to have the legitimacy of its existing review method recognized."
In the appeal trial, the key issues are expected to be ▲ the review procedures for reapplications ▲ the standards for assessing clinical significance ▲ the scope and independence of the Central Pharmaceutical Affairs Advisory Committee's review.
To overturn the first-trial ruling, the Ministery of Food and Drug Safety will likely need to persuade the court that its existing review method was lawful and that the criterion of clinical significance was a necessary basis in the new drug approval process.
A bio-healthcare specialist attorney said, "Given that the first-trial court did not accept the argument that the Ministery of Food and Drug Safety rejected approval by judging clinical significance mainly on the additional materials submitted by Nature Cell, the agency must prove the legitimacy of its existing review method on appeal," adding, "The Ministery of Food and Drug Safety should medically and pharmaceutically explain why it had no choice but to require superiority over existing treatments from JointStem and why that criterion is a necessary basis for assessing safety and efficacy."
Meanwhile, as the domestic approval process drags on, Nature Cell is also accelerating its push into the U.S. market.
JointStem received a Regenerative Medicine Advanced Therapy (RMAT) designation from the U.S. Food and Drug Administration (FDA) in 2024 and was also designated a Breakthrough Therapy (BT) in 2025. With the RMAT and BT designations, observers say the likelihood of priority review by the FDA has increased.
Nature Cell recently requested a pre-biologics license application (pre-BLA) meeting with the FDA. A pre-BLA meeting is a procedure to coordinate in advance with the FDA on submitted materials, review strategies, and any supplemental needs before a formal approval application. The company plans to use domestic phase 3 data to pursue U.S. approval.