Hsu Chang-shan, CEO of Summit Biotech and the applicant for the patent on Samchundang Pharmaceutical's (000250.KS) core technology—the oral formulation platform "S-PASS"—was found to have been convicted of securities law violations in Taiwan, the Seoul Economic Daily has confirmed.
Hsu was found to have illegally profited after brokering a contract between Samchundang Pharmaceutical and a Taiwanese contract development and manufacturing organization (CDMO).
According to court documents exclusively obtained by the Seoul Economic Daily on Thursday, Hsu was sentenced in 2020 by a Taiwanese court to one year and eight months in prison, suspended for two years, for insider trading under the Securities and Exchange Act. He was also ordered to forfeit criminal proceeds of 541,605 Taiwan dollars (approximately 25.2 million won).
Previously, Samchundang Pharmaceutical, through Hsu's brokerage, signed a contract in October 2018 with Taiwan's Mycenax Biotech for Phase 3 clinical trials and commercial CDMO production of an Eylea biosimilar. The deal represented the largest contract in Mycenax's history, accounting for 25-30% of the company's revenue at the time.
Hsu reportedly received more than 10 million Taiwan dollars (approximately 500 million won) in commission from Mycenax after brokering the contract and signing a confidentiality agreement. However, a Taiwanese prosecution investigation revealed that he simultaneously purchased 609 shares of Yung Shin Biomedical privately between July and September 2018, then sold them immediately after the contract announcement. The court ultimately determined that Hsu obtained illegal profits of 540,000 Taiwan dollars (approximately 25.11 million won). Hsieh Yang-lien, CEO of Hermon Global, who obtained inside information from Hsu and purchased Mycenax shares, was also sentenced to one year and eight months in prison, suspended for two years.
During the trial, witness testimony revealed that Jeon In-seok, CEO of Samchundang Pharmaceutical, and Tim Souk, CEO of Dios Pharma, were very actively involved in the contract from early discussions. Wen Guo-lan, general manager of Mycenax and a witness for the company, testified that Samchundang Pharmaceutical, which was developing the Eylea biosimilar, had initially been seeking a production partner. According to Wen, Souk held an initial meeting with Mycenax through Hsu's introduction and subsequently visited Taiwan nearly every month to conduct negotiations, with Jeon accompanying Souk at major negotiations. The contract was finalized on June 1, 2018, and Samchundang Pharmaceutical also requested production preparation, including asking Mycenax to secure raw materials.
Hsu is the patent holder for Samchundang Pharmaceutical's S-PASS technology. He filed the patent in June 2024 under the title "Biological Complex, Micelle Complex Derived Therefrom, and Method for Preparing Same." Regarding Summit, Hsu's company, Samchundang Pharmaceutical has stated that "it is one of Samchundang Pharmaceutical's several overseas research laboratories, and Samchundang fully bears all S-PASS-related costs."