Samchundang Pharm, embroiled in controversy over alleged stock manipulation and a Korea Exchange notice of possible sanctions for inadequate disclosure, moved to explain the situation.

Jeon In-seok (전인석), CEO of Samchundang Pharm, held a news briefing at its headquarters in Seoul's Seocho district on Sunday and laid out an official position on why it withdrew a major shareholder stake sale, disclosure regulation and plans for future communication with the market.

In opening remarks, Jeon announced the company was scrapping a previously disclosed 250 billion won block deal plan.

He disclosed that gift and capital gains taxes he and his spouse must bear amount to about 233.5 billion won. He said the planned stake sale was intended to meet tax obligations in good faith.

But after the announcement of the large stake sale plan, allegations of stock manipulation raised online and rumours of selling at a peak spread, prompting a change of plan.

"I could no longer stand by and allow the stake sale to be trapped in a malicious frame that damages corporate value," Jeon said. "Even if I have to bear interest costs, I will pay the taxes through a stock-backed loan and focus on proving management and performance," he said.

Jeon rebutted allegations of being a so-called rigged stock and of stock manipulation that have recently spread through bloggers and others, citing the specific nature of the business structure.

He stressed that Samchundang Pharm is not a company that simply sells technology and receives royalties, but a firm that directly supplies its independently developed products to the global market.

He also set out the company's position on keeping information about overseas partners and detailed patent matters undisclosed.

"Non-disclosure is not meant to hide facts, but the best defensive strategy to prevent pre-emptive legal defences and patent litigation by originator drugmakers," Jeon said. "There is absolutely no reason to expose our supply lines to the enemy," he said.

He also addressed the Korea Exchange's notice of possible designation as an unfaithful disclosure firm on the grounds of failing to comply with fair disclosure of business performance forecasts.

The Korea Exchange earlier judged that Samchundang Pharm had omitted formal disclosure procedures related to a press release it distributed on Feb. 6 on performance forecasts for an Eylea biosimilar, and notified it of possible sanctions on March 31.

"I understand 120 percent, and actively respect, the position of the Korea Exchange, which must protect the market and investors," Jeon said.

He accepted that, given the pharmaceutical and biotechnology industry's long path to commercialisation and many variables, strict disclosure guidelines by the exchange are necessary.

He also expressed regret that under current rules, at a stage before product approval it is not possible to directly include future sales estimates in disclosure documents, creating an information gap that was filled with malicious rumours.

At the end of the briefing, he formally apologised for a lack of communication so far.

"The beginning of all misunderstandings and conspiracies stemmed from the CEO's fault," Jeon said. "Going forward, within the scope that does not undermine strategic security, I will share information as transparently as possible and build a system to communicate directly with the market," he said.