The prosecution on Wednesday carried out simultaneous raids on Sillajen's Busan headquarters and its Seoul office over allegations that the company management used undisclosed information to sell their stocks.
Prosecutors said they had secured the futility test data on Pexa-Vec, which evaluates if a candidate drug is worth developing based on its potential as a treatment. The raid came after investors raised suspicion regarding an executive at SillaJen, who suddenly sold more than 160,000 shares.
Shin Hyun-pil, chief science officer of SillaJen in charge of new businesses, sold all of his 167,777 common stocks on four trading acts between July 1 and July 8 and gained about 8.8 billion won ($7.25 million) through the transaction. Investors had suspected that Shin had known about the test result and sold the shares before SillaJen announced the Independent Data Monitoring Committee's recommendation to halt phase 3 trials for Pexa-Vec Aug. 2.
"The prosecution conducted a seizure search to find out the alleged use of undisclosed information," Sillajen said. "The investigation is limited to only some of the employees, and we intend to cooperate with the investigation fully."
After news broke about the prosecutor’s raid, the company's shares tanked and hit the lower limit on Wednesday to end the trading day at 10,350 won ($8.5) per share, a 19.46 percent drop from Tuesday.