Pharmaceutical and biotech companies listed in Korea will be required to include the potential success rate of their clinical trials in regulatory filings, according to a new guideline released by the Financial Services Commission (FSC) on Sunday.

The new measure aims to improve transparency in compulsory filings with the Kosdaq stock exchange and allow investors to better understand the risk associated with their investment.

The introduction of the Korean financial regulator’s stricter regulatory filing rules on pharmaceutical and biotech companies comes after a number of Kosdaq-listed biotech companies failed to properly inform investors their clinical trial and business results. SillaJen shares plummeted last year after it stopped the clinical trial of its virus-based immune-oncology treatment Pexa-Vec, and it was embroiled in an inside trading scandal.

The new guideline also requires companies to specify major business activities in regulatory filings for investors by categorizing them into clinical trial, marketing approval, in/out-licensing, state-funded project, and patent right deal in order to enhance the quality of information.

In case a clinical trial is discontinued, companies are required to specify whether the discontinuation is decided by regulators or by themselves and any potential impact on their business and assets. In particular, the caution text in filings related to a clinical trial must include the likelihood that the study drug would be finally approved.

A commission official said the new guideline will add transparency and agility to the filings for investors, helping them make reasonable investment decision making.

By Jin Young-tae and Minu Kim

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