Shares of Medytox nosedived Thursday after the Ministry of Food and Drug Safety said it would revoke the sales license of its botulinum toxin product Meditoxin for fabricating test data, from a week later.
Botulinum toxin is a medication that has both aesthetic and therapeutic purposes. Hospitals have mainly used the treatment for cosmetic reasons such as smoothing wrinkles around the eyes and forehead in Korea. More recently, local firms have expanded the indication of the drug to treat other disorders and illnesses such as muscle spasm and chronic migraines.
Meditoxin, Korea's first BTX product, had the most indications by showing efficacy in six treatment areas -- cervical dystonia, post-stroke upper extremity muscle stiffness, and cerebral palsy equinus, eyelid twitching, forehead wrinkle, and eye rim wrinkle.
Such a wide range of indications made Medytoxin the flagship product of Medytox, accounting for about 40 percent of its annual sales.
The ministry had accused Medytox of covering up document manipulation to win a regulatory approval based on fabricated test reports in 2006 and issued an administrative order on April 17 to suspend the manufacturing and sales of the BTX product.
"Companies that distribute inadequate products by manipulating documents cannot be trusted," the ministry said. "Data manipulation not only has a significant impact on national health and public well-being but also fundamentally damages and negatively affects international confidence in the local pharmaceutical industry as a whole."
The ministry has revoked the sales license for three of the company's products – Meditoxin, Meditoxin 50 unit, Meditoxin 100 unit – and imposed a fine of 174.6 million won ($143,550) on Innotox.
The ministry also stressed that it had ordered Medytox to collect and dispose of the revoked drugs in circulation while advising medical institutions to cooperate actively for the retrieval process.
To prevent similar irregularities, the ministry announced that it would strengthen its drug management system and establish countermeasures.
In detail, the ministry will focus on strengthening the data reliability assurance system among Good Manufacturing Practices (GMP) to eradicate the manipulation of manufacturing and quality control documents.
"We plan to prepare and distribute management guidelines that allow us to track the history of changes such as data creation, modification, deletion, and addition, according to the Pharmacist Act," the ministry said. "Also, we plan to manage not only the test results but also data throughout the test process and beef up checks on those with a high probability of false operation."
The drug regulator also plans to improve the operation of the National Lot Release system, a procedure to grant marketing authorization to a specific lot of biologics through the state review of summary protocol and quality control testing.
"As the Meditoxin case is regarded as a manipulation that exploited the National Lot Release system for approving low-risk, first-class drugs only by reviewing documents, we plan to randomly select low-risk first-class drugs examine to block any further attempts to manipulate documents," the ministry said.
Industry watchers said the ministry's announcement dealt a critical blow to Medytox, whose stock had been in a nosedive since the company first faced complaints for breaching GMP on pharmaceutical products, filed with the Anti-Corruption & Civil Rights Commission in May last year.
The company's shares, which had hovered around 300,000 won until four months ago, plummeted to 200,000 won in March, affected adversely by the spread of Covid-19, and sank below it as the ministry's final verdict neared.
Upon the ministry's announcement, the company shares plummeted to 123,700 won at 10:00 a.m. Thursday, a 17.53 percent decrease from the previous trading day. Considering that the company's shares surged above 800,000 won two years ago, the recent plummet has been devastating for the firm.
During the period, the firm's market cap also contracted sharply. Based on the previous day's closing price, Medytox's market capitalization was 746 billion won. Compared to the market cap of 1.76 trillion won on Feb. 26, the company lost more than 1 trillion won in the four months, with its Kosdaq market cap ranking plunging from eighth to 53rd place.
With the ministry pulling the product license of the product, the company faces additional problems as it may face an uphill battle with its current dispute over the origin of BTX strain with Daewoong Pharmaceutical going on at the U.S. International Trade Commission.
Medytox has been pressing Daewoong to release the gene sequence, but the latter has not budged to the request yet.
"Instead, Daewoong is implementing a strategy to reduce the credibility of the claim by highlighting that Medytox is a company that uses unapproved substances in its BTX," an industry official said. "It seems that the ministry's decision may have an additional impact on the ITC decision."
The decision could also adversely affect the company's global sales plan.
For instance, the Thai health authorities suspended the sale of Meditoxin. They recalled all the Meditoxin products distributed in the market after the Korean regulator informed them of its decision to suspend the sale of Meditoxin because of the company's use of unauthorized substances and fabrication of data.
After the ministry’s latest decision, other countries that use Meditoxin may also pull the drug off the market.
There is now a high possibility that the company may not receive regulatory approval for Meditoxin (export name: Neuronox) in China, a market that the firm has been working hard to enter.
Such a gloomy outcome in both home and abroad can result in a devastating sale loss for the company this year.
No Medytox officials were available for immediate comments regarding the ministry's decision.