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Court rejects arrest warrant for ex-Kolon chief over drug development scandal

All News 00:35 July 01, 2020

SEOUL, July 1 (Yonhap) -- A Seoul court on Wednesday refused to grant an arrest warrant sought by prosecutors against former Kolon Group chief Lee Woong-yeol as part of an investigation into a controversial gene therapy drug developed by a group company.

Prosecutors sought the arrest of Lee on charges of fraud, breach of trust and violation of the pharmaceutical affairs act.

They believe he is responsible for the drugmaker's fraudulent report of a key ingredient used in the drug and the listing on the local stock market of the company's U.S. subsidiary, which has played a key role in the development of the drug, allegedly based on the false documents.

Kolon Life Science, a unit of Kolon Group, initially received approval for Invossa, a cell and gene therapy for osteoarthritis, from the Ministry of Food and Drug Safety in 2017. But approval was revoked last year after the drugmaker was found to have falsely reported an ingredient used in the drug and violated labeling rules.

Former Kolon Group chief Lee Woong-yeol enters the Seoul Central District Court to attend a hearing to determine whether to issue an arrest warrant for him over a drug development case on June 30, 2020. (Yonhap)

According to prosecutors and government regulators, a key material used in Invossa came from a kidney cell instead of from cartilage as stated in the document submitted for approval. They also suspect that the company had intentionally submitted false data to the authorities in the process of obtaining an item approval for Invossa.

The company acknowledged that a substance in the joint pain treatment drug had been mislabeled but claimed no one has suffered from any medical complications from the use of Invossa.

Prosecutors also believe Lee, who stepped down from the post in November 2018, is involved in alleged listing fraud of Kolon TissueGene, a U.S. subsidiary that had played a key role in the development of Invossa. The company went public on the tech-heavy KOSDAQ market in November 2017.

In February, the prosecutors indicted Kolon Life Science CEO Lee Woo-suk over breach of pharmaceutical affairs and capital market laws. Other Kolon executives connected to the Invossa scandal were indicted last December.

Former Kolon chief Lee had been heavily involved in the development of Invossa, which he called his "fourth child," since the late 1990s. He has a 51.65 percent share of the group's holding company Kolon Corp. and a 17.8 percent share in Kolon TissueGene.

The photo taken on Jan. 6, 2020, shows the headquarters of Kolon Group. (Yonhap)


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