Shares of Shinpoong Pharm, a midsized Korean drug maker, crashed Tuesday after it sold a quarter of its holding in treasury stock that soared 27 times this year on wondrous grounds and without major drug breakthroughs.

The COVID-19 drug developer disclosed Monday that it would sell 1,289,550 treasury stocks to Hong Kong hedge fund Segantii Capital Investment in the after-hour market on Tuesday for 167,000 won ($143) per share, 13.7 percent cheaper than Monday’s closing price.

Kospi-listed Shinpoong Pharm shares finished Tuesday 14.2 percent lower at 166,000 won.

The transaction would bring Shinpoong Pharm a cash of 215.4 billion won, about 120 times its annual operating profit.

The drug maker said it would use the proceeds for investment in R&D and facility.

The company’s stock price soared by a whopping 27 times this year with its market cap surpassing 10 trillion won on news about its commercial development of a COVID-19 cure. The company said the proceeds from the treasury stock sale will be used to upgrade production facilities and support research projects.

Thanks to its ballooned market cap, the stock became a new member of the MSCI index in August, but its consolidated revenue stayed at less than 200 billion won last year. Operating and net profit numbers are almost a fraction of its market cap. It is no wonder many investors question the company’s valuation. No securities companies have ever presented their opinion for investors, which is rare for a company whose current value reaches 10 trillion won.

By Kim Gyu-sik and Minu Kim

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