Kolon TissueGene shares tumble 85% in a month after Phase 3 trial setback

"Selling now would be pointless. We're completely ruined." — Kolon TissueGene shareholder

"My purchase price was 100,000 won ($68). What am I supposed to do?" — Kolon TissueGene shareholder

Three consecutive daily limit-down sessions. Then a 29 percent plunge. In effect, the stock hit its daily floor four trading days in a row. A share that traded above 100,000 won just a month ago now sits in the 10,000-won range. That is the story of Kolon TissueGene, once celebrated as one of South Korea's flagship biotech names.

During the three straight limit-down sessions, sell orders piled up with no buyers to match them, leaving shareholders unable to exit even if they wanted to. When the floor was finally lifted, the stock still fell nearly 29 percent.

Shareholder forums have been flooded with outrage. The extraordinary collapse has investors in an uproar, and those who had firmly believed in the clinical trial's success are now in a state of panic.

The sell-off was triggered by a regulatory disclosure Monday announcing the results of a US Phase 3 trial. Kolon TissueGene said the first interim analysis of its Phase 3 trial for TG-C — a cell and gene therapy for knee osteoarthritis formerly known as Invossa-K — failed to meet statistical significance. In effect, the Phase 3 trial had failed.

After the news broke, the stock hit its daily limit-down for three consecutive sessions before closing Friday at 15,000 won, down 28.74 percent on the day. Kolon TissueGene had closed at 101,100 won on June 24; within a month, its share price had cratered more than 85 percent. Measured against its 52-week intraday high of 149,000 won, set on May 12, the collapse is striking.

Kolon TissueGene executives announce the US Phase 3 trial results for TG-C (formerly Invossa-K) on Tuesday. [Yonhap]

As the share price collapsed, Kolon TissueGene CEO Jeon Seung-ho held a press briefing and said he did not consider the outcome a failure, calling it "half a success" and asking investors to view it as "a growing pain." The remarks did little to stop the bleeding.

Analysts say the severity of Kolon TissueGene's decline reflects the company's unusual dependence on a single new drug, unlike other biotech firms that carry a broader pipeline.

Ultimately, the key question is the outcome of the second Phase 3 trial (TGC-12301), results of which are expected in October. However, the company's previously announced timeline — an FDA Biologics License Application submission in the first quarter of 2027 and commercialization by 2028 — now looks certain to be delayed.

Some observers are watching for a technical rebound given the scale of the decline, but experts warn that entering the stock prematurely is dangerous while the fundamental risk of a failed trial remains unresolved.

Wi Hae-ju, an analyst at Korea Investment & Securities, downgraded the stock from "buy" to "neutral."

"If the second Phase 3 trial succeeds, it may be possible to submit a Biologics License Application to the FDA," Wi said, adding that "in that case, the robustness of the clinical results would inevitably be lower than previous estimates, and market share projections would need to be revised downward."

park@heraldcorp.com