[비즈한국] The so-called 'Invossa saga,' sparked by the controversy over the components of the osteoarthritis gene therapy 'Invossa-K (Invossa),' has reached a major turning point following consecutive judicial rulings. In the civil and criminal lawsuits that have plagued Kolon Group Honorary Chairman Lee Woong-yeol for about seven years, the courts have issued consecutive rulings to the effect that 'there was no intentional deception or concealment,' fueling speculation that the possibility of restoring his reputation is higher than ever.
On the 5th, the 13th Criminal Division of the Seoul High Court dismissed the prosecution's appeal and upheld the not-guilty verdict of the first trial for Honorary Chairman Lee Woong-yeol, who was charged with violations of the Capital Markets and Financial Investment Business Act.
In its ruling, the court stated, "While it is clear that there was opacity in the decision-making and business processing methods during the new drug development process, holding someone criminally responsible for this is a separate matter," adding, "It is difficult to conclude that the defendant deliberately concealed the change in Invossa's components to boost stock prices or deceive investors while knowing of the change in advance."
Chairman Lee was indicted in 2020 on charges including defrauding patients of approximately 16 billion won by manufacturing and selling Invossa, which contained 'kidney-derived cells' rather than the 'cartilage cells' approved by the Ministry of Food and Drug Safety, from 2017 to 2019. However, the second trial court, like the first, determined that Kolon only became aware of the component error after receiving the U.S. STR (Short Tandem Repeat) test results in March 2019, and therefore could not apply fraud or false disclosure charges to actions prior to that date.
The same logic was applied in a civil ruling delivered the same morning. The 30th Civil Division of the Seoul Central District Court ruled against the plaintiffs in a 26 billion won damages lawsuit filed by approximately 1,300 minority shareholders. The court stated, "It is acknowledged that there were some falsehoods or omissions in the components listed in the business report, but it is difficult to see this as a 'material matter' that would influence an investor's judgment." In particular, it cited the lack of objective evidence that the component change caused definitive harm to Invossa's safety or efficacy. A Kolon official stated, "We are grateful for the court's judgment," adding, "We will do our best to successfully complete the ongoing U.S. clinical trials for Invossa to ensure good results."
Some in the industry view these rulings as an acknowledgement that this was a technical error during the drug development process rather than intentional manipulation by management. For Honorary Chairman Lee, who has one son and two daughters and has shown such attachment to Invossa that he called it his 'fourth child,' these rulings could be seen as him overcoming a major hurdle in his legal risks and restoring his honor.
Invossa is the first domestic gene therapy developed by a Korean pharmaceutical and biotech company, and the 29th new drug developed in Korea. Kolon Life Science102940 received product approval from the Ministry of Food and Drug Safety (MFDS) in July 2018, and Invossa garnered significant attention, being administered to a cumulative total of 3,700 patients. However, after it was revealed in 2019 that it used kidney-derived cells rather than the allogeneic cartilage-derived cells stated in the original Phase 3 clinical trial plan, the MFDS revoked its product approval in July of the same year.
Although it faced difficulties with the suspension of clinical trials in the U.S., it received notification of the lifting of the clinical hold from the U.S. Food and Drug Administration (FDA) in April 2020 and resumed patient dosing, successfully completing Phase 3 clinical patient dosing in July of last year. Kolon TissueGene950160, which conducted the Invossa clinical trials in the U.S., aims to complete patient follow-up observations this March, release topline data in July, and apply for product approval to the FDA within the first quarter of next year.
However, the fact that an administrative lawsuit with the MFDS is still pending in the Supreme Court is a variable. Kolon Life Science is disputing the MFDS's revocation of Invossa's product approval, and the first and second trials ruled that the MFDS's action was lawful. The Seoul High Court ruled in February 2024 that "the use of cells different from those at the time of approval is a significant defect that undermines the safety and credibility of the medicine," siding with the MFDS.