[비즈한국] It has been confirmed that Sejong Medical has filed a lawsuit for the return of unjust enrichment against Kang Se-chan, the founder of Genencell. Founder Kang, a former professor at Kyung Hee University, established the biotech company Genencell in 2016. He currently remains listed as an internal director at Genencell. Sejong Medical previously acquired a stake in Genencell, becoming its largest shareholder.
At the time, Genencell was highly anticipated in the biotech industry for developing a COVID-19 treatment. However, it was discovered that Founder Kang had submitted fraudulent data during the clinical trial application process. Furthermore, he is suspected of having lobbied Kim Seung-won, a Minister of Justice nominee who was a member of the National Assembly at the time, to facilitate the clinical trials. Ultimately, not only did the COVID-19 treatment development fail, but Founder Kang also faced legal punishment. Sejong Medical, which invested in Genencell, also suffered massive losses.
Aftermath of Genencell Investment Leads to Lawsuit Against Founder Kang Se-chan
On October 19, 2021, Sejong Medical acquired a 13.55% stake in Genencell from its founder, Kang Se-chan, for 11.9 billion KRW, becoming the largest shareholder. At the time, Genencell was in the process of developing a COVID-19 treatment. One week after Sejong Medical's acquisition, on October 26, 2021, the Ministry of Food and Drug Safety (MFDS) approved Genencell's clinical trials for the treatment.
Following the news of the approval, Sejong Medical's stock price fluctuated wildly as it was labeled a COVID-19 related stock. Sejong Medical's closing price was 6,600 KRW on October 20, 2021, but it briefly soared to 8,760 KRW on October 27, 2021. That was the peak. Subsequently, the stock price steadily declined, and the company was ultimately notified of delisting by the Korea Exchange this June.
Genencell's COVID-19 treatment also effectively failed in development. Although it received clinical trial approval in October 2021, the trials were suspended in 2023, and there has been no significant progress since. Moreover, according to a prosecution investigation, Genencell submitted fraudulent data to the MFDS when requesting clinical trial approval, such as omitting suspected side effect cases. Ultimately, Founder Kang Se-chan was sentenced to three years in prison with a five-year suspended sentence in 2024.
For Sejong Medical, the significant investment in Genencell did not yield results but instead inflicted heavy losses on the company. BizHankook's investigation confirmed that Sejong Medical is currently in the process of suing Founder Kang Se-chan for the return of unjust enrichment. The claim amount is 8.7898 billion KRW. A lawsuit for the return of unjust enrichment is a legal action brought against someone who has obtained a benefit from another person's property or labor without a justifiable reason, causing loss to the other party.
A notable point is that the lawsuit was filed against Founder Kang Se-chan personally, rather than Genencell. This is interpreted to be because Kang was the entity that sold the Genencell stake to Sejong Medical. Additionally, as Founder Kang led the development of Genencell's COVID-19 treatment and even submitted false data to the MFDS, it appears Sejong Medical holds him responsible for the failure of the project. BizHankook contacted Sejong Medical for a detailed statement, but a representative replied, "We will contact you after checking with the person in charge," and has not followed up since.
Lobbying Allegations Involving Nominee Kim Seung-won Become a Focal Point Again
Founder Kang Se-chan is also accused of lobbying for clinical trial approval through Minister of Justice nominee Kim Seung-won. It is alleged that Kang requested nominee Kim, through a broker named Mr. Yang, to speed up the clinical trials, and that Kim then relayed this to the then-Minister of Food and Drug Safety, Kim Gang-lip. Nominee Kim Seung-won received a suspension of indictment at the time.
Independent lawmaker Han Dong-hoon criticized this on social media, stating, "The purpose of the lobbying by Founder Kang's Genencell to nominee Kim Seung-won through Mr. Yang was clinical trial approval, as approval was the condition for receiving billions of won in investment." He added, "Genencell earned billions of won thanks to nominee Kim, and subsequently, countless investors and people affected by stock price fluctuations emerged. Nominee Kim Seung-won played a core role in this fraud."
In response, nominee Kim Seung-won's side clarified, "Genencell had been in preliminary consultations according to the MFDS's advance consultation system since June 2021, long before the contact with nominee Kim." They added, "The clinical trial approval was not expedited by nominee Kim's contact, but was processed according to the official MFDS procedures that had been ongoing for months."
However, the view of nominee Kim Seung-won remains negative, not only from the People Power Party but also from civic groups. In a commentary, People's Solidarity for Participatory Democracy pointed out, "Generally, a suspension of indictment is a disposition where charges are recognized, but prosecution is deferred for various reasons. The circumstances regarding the lobbying for new drug approval are very specific," and added, "Nominee Kim Seung-won must provide a sufficient and detailed explanation during the confirmation hearing."