Samchundang Pharmaceutical hits lower limit after 86% plunge from peak

Samchundang Pharmaceutical, which once held the top spot on Kosdaq by market capitalization and earned the title of "emperor stock," hit the daily lower limit in a single session. Its share price, which had surged on expectations for an oral obesity drug just months earlier, has now fallen more than 86% from its peak — putting the vast majority of retail investors in the red.

Samchundang Pharmaceutical closed Tuesday down 29.87% at 167,600 won ($113) on the Kosdaq market.

On Monday, the company announced it had received a Pre-ANDA response from the US Food and Drug Administration — a formal consultation step ahead of filing an Abbreviated New Drug Application for an oral semaglutide generic — sending its share price up 29.82%. But profit-taking the following day wiped out nearly all of those gains.

The current share price is 86.4% below the intraday high of 1.23 million won recorded on March 30. An investor who put 100 million won into the stock at that peak would now hold a position worth roughly 13.58 million won.

Samchundang Pharmaceutical had been on a steep climb since early this year, riding expectations for growth in the oral obesity drug market. Its share price rose more than 300% from January through late March, propelling it to the top of Kosdaq as both the market's largest stock and its highest-priced.

The mood shifted sharply after the stock hit its all-time high on March 30. The share price began to tumble immediately after the company disclosed a new licensing agreement just after the close of regular trading that day.

Allegations of false disclosure surrounding the terms of the agreement quickly soured investor sentiment. Korea Exchange ultimately designated Samchundang Pharmaceutical as an unfaithful disclosure corporation in April, citing the company's failure to make a fair disclosure of forecasts or projections regarding operating results.

As volatility intensified, investment funds rotated into semiconductor stocks. Some market observers say the wild swings in Samchundang Pharmaceutical's share price have been among the factors dampening overall Kosdaq investor sentiment.

The mood among retail investors has shifted dramatically as well. A stock once nicknamed "Chundang" — a play on the Korean word for paradise — is now widely referred to in online investment communities as "Hwangcheondang," a pun evoking the underworld.

According to NH Investment Securities' NH Data analysis of its mobile trading platform users, the average purchase price paid by retail investors stood at 448,441 won as of Thursday, when the stock closed at 184,100 won. Some 94.6% of investors were sitting on losses.

Analysts say biotech stocks with high growth expectations are particularly prone to sharp swings driven by individual developments such as clinical trial results, licensing deals and regulatory disclosures. They caution that stocks which surge rapidly in a short period can see steeper declines once investor sentiment turns, and urge careful judgment before making investment decisions.