Celltrion Inc (068270): Fundamental Stock Analysis

CelltrionInc068270KS

LegalDisclaimer

Thisreportisforeducationalpurposesonly.Nothinginthisdocumentoranyinformationhereinshouldbeconstruedasanoffer,invitation,marketingofservicesorproducts,advertisement,inducement,orrepresentationofanykind,norasinvestmentadviceorarecommendationtobuyorsellanyinvestmentproductsortomakeanytypeofinvestment,orasanopiniononthemeritsorotherwiseofanyparticularinvestmentorinvestmentstrategy.Anyexamplesofstrategiesortradeideasareintendedforillustrativepurposesonlyandarenotindicativeofthehistoricalorfuturestrategyorperformanceorthechancesofsuccessofanyparticularstrategy.Thisreportandanystatementsmadeinconnectionwithitaretheauthorsopinions,whichhavebeenbaseduponpubliclyavailablefacts,information,andanalysis,andarenotstatementsoffact.Youshouldassumethatasofthepublicationdateofthisreport,theauthorhasashortpositioninallstocks(and/oroptions,swaps,andotherderivativesrelatedtothestock)andbondscoveredherein,andthereforestandstorealizesignificantgainsintheeventthatthepriceofeitherdeclines.Theauthorintendstocontinuetransactinginthesecuritiesofissuerscoveredonthisreportforanindefiniteperiodandmaybelong,short,orneutralatanytimehereafterregardlessofher/hisinitialrecommendation.

2

TableofContents Summary IntroductiontoCelltrion CompanyHistory SummaryoftheBullCase AccountingIssues

Peercomparison Corporatestructure Aconsolidatedview Inventorybuild Revenuerecognition Relatedpartytransactions Revenuedoublecounting Disguisingleverageassales Sharepledges Expensecapitalization Celltrionseconomicincome 2014update SamsungSecuritiesInitiation Auditorchronology

AcomparisontoDaewoo Otherrelatedpartyissues ThemarketopportunitiesofCelltrionsproducts

Remsima Herceptinbiosimilar

Conclusion

3

SummaryAccountingissuesatCelltrionInchavedoggedthecompanythroughoutitshistory.Itappearsthattheirregularitiesuncoveredin2011bythelocalKoreanresearchfirm,CenterforGoodCorporateGovernance,haveonlyworsenedovertime1.Thelastseveralyearssawthecompanyanditsprivateaffiliatestakeonadditionalleverageintheformofpledgedshareloans,equityinjections,andwhatwebelieveishiddendebt,anditappearsthatthisleveragehasproppedupthesalesgrowthatthepubliclytradedentity.

Ironically,webelievethatitispreciselybecauseCelltrionIncisonthecuspofrealizingactualendmarketsalesthatthissituationwillcometoahead.WeestimatethatCelltrion Inchasalreadyprebooked2outof3ofitsfullypenetrated,peaksalesyears.ThisimpliesthatwhenproductsareactuallylaunchedinearnestintheUnitedStatesandEurope,CelltrionInc willhavetofacethefactthatasignificantportionofitsinventorythatwasintheorypresoldisactuallyexpiredandobsolete.

Itappearsthattheaccountingissuespresentedinthisreportareonlythetipoftheiceberg.Celltrionexecutives,asexDaewooemployees,shouldbewellversedinthemanyconvolutedmethodologieswithwhichtocommitaccountingfraud.AndevenasuperficialcomparisonofthetwocompaniesshowsCelltrionandDaewoosmanysimilarities.Thisreporthasnotevendelvedintothemany otherrelatedpartiesintheCelltrioncomplex.WebelievethatthereisamuchgreaternetworkofDaewooesqueaffiliatesbothdomesticallyandinternationally.

WebelievethisiswhyCEOandfounderJJSeo failedtoattractstrategicbiddersoverthelasttwoyearsinhispublicstakesaleinCelltrionInc evenafterCelltrion Incs biosimilarRemsima wasapprovedintheEuropeanUnion2.

Finally,itappearsthatthemarketpotentialforCelltrionIncsmainproductsislimitedinfinancialandtimescope.CelltrionIncsrealeconomicsforitsproductsarelimitedbyitswholesaleagreementswithitsdistributorsandthewindowofprofitswillclose as soonascompetitorbiosimilarscometomarket,includingoneownedbyCelltrionslargestdistributionpartner,Pfizer/Hospira.

1. ReportbytheCenterofGoodCorporateGovernance10/11/112. WallStreetJournal,Celltrions FounderSaysInvestorsDontUnderstandtheCompany,4/26/13

4

IntroductiontoCelltrionBusinessDescription:CelltrionIncisabiopharmaceuticalcompanyspecializingindevelopmentofbiosimilarsformonoclonalantibodydrugs.CelltrionIncsbiosimiliarportfolioistargetingdrugswithpatentexpirationsinthenextfewyears,includingHerceptin(breastcancer)andRituxan(nonHodgkinslymphoma).CelltrionIncsbiosimilarforthedrugRemicade(rheumatoidarthritis)hasalready beenapprovedintheEuropeanUnion.

Leadership: JungJinSeo(JJSeo)hasservedastheChairmanandCEOofCelltrionIncsince2002.JJSeooverheardaconversationaboutbiosimilarsinthelobbyofaSanFranciscohotelwhichinspiredhimtostartthebusiness1.PriortoCelltrionInc,JJSeowastheStandingAdvisortotheGroupChairmanofDaewoo,WooChoongKim,from1993to1999.JJSeowasalsoinchargeofDaewooMotors2.Daewoocollapsedin1999inoneofthebiggestaccountingfraudsinhistory,committingadeceptionworthUSD15.3billion3.In2013,JJSeowasinvestigatedbytheKoreanfinancialregulatorsformultiplecountsofstockmanipulationfrom2011to2013relatedtoCelltrion Inc4.

PublicScrutiny: In2011,alocalKoreanorganization,theCenterforGoodCorporateGovernance,publishedareportquestioningCelltrionIncsgovernanceandpractices.In2012,theWallStreetJournalfollowedupwithapieceontherevenuerecognitionissuesatCelltrionInc.

1. TheFinancialTimes,KoreasBiotechComebackKid,3/18/122. BloombergBusinessProfile3. NorthwesternJournalofInternationalLawandBusiness,AForensicStudyofDaewoo'sCorporateGovernance:DoesResponsibility fortheMeltdownSolelyLiewith

theChaebolandKorea?4. BloombergBusiness,CelltrionCEOFacesShareManipulationProbeinSouthKorea,10/8/13

5

IntroductiontoCelltrionFinancials:CelltrionInc.(068270KS)isvaluedatKRW6,815BN(USD6,190MM)ofmarketcapitalization.Thesharestradesat35x2013salesand54x2013EBITDA.Basedonprelim2014results,sharestradeat17x2014sales.

Despiteitslargemarketcapitalization,allbulgebracketbankshavedroppedcoverageofthecompany.Incidentally,twoofthethreelocalKoreanbankswhopublishresearchonCelltrionIncaredebtholdersofCelltrionHoldings(CelltrionHoldingsdebtiscollateralizedbysharesofCelltrionInc)1.

Historical5yearfinancialandstockperformancebelow2:

1. Companyfilings2. Bloomberg

6

AHistoryofCelltrion

2002:CelltrionIncwasfoundedin2002byaGenentechspinoffcalledVaxgen.VaxgenpartneredwithagroupofKoreaninvestors(NexolCorp,KoreaTobaccoandGinsengCorp,andJ.StephenandCo.VentureLtd.).TheoriginalmissionofCelltrionIncwastodevelopanAIDSvaccine.

2005:CelltrionIncreceivedacontracttomanufactureOrenciaforBristolMyers.

2008:CelltrionInclistsonKOSDAQthroughareversemerger.ValorEconomicoreportedthatCelltrionIncplannedtoinvestUSD329mminanethanolmillinthetownofBarra,Brazil.Theprojectwasexpectedtostartin2011.

2009:CelltrionIncwonaKRW213billion(USD183mm)ordertosupplybreastcancerandarthritisdrugstoHospira.

2010:TamasekinvestsinCelltrionGSC.BristolMyerscontractmanufacturingrelationshipterminated.

2011:LocalKoreanpressallegesaccountingissuesatCelltrionInc.OneEquity(JPMorgan)investsinCelltrionHealthcare.

2012:WallStreetJournalallegesaccountingissuesatCelltrionInc

2013:Remsima(biosimilarforRemicade)approvedbytheEuropeanMedicinesAgency.CelltrionIncCEOfacesstockmanipulationinvestigationbyKoreanregulators.

2014:CelltrionIncfilesforFDAapprovalofRemsima

Source:FinancialTimes,CompanyWebsite

7

BullCase:CelltrionIncisaleaderintheburgeoningbiosimilarsmarketBiosimilarsdefinition:Abiologicmedicineisalargemoleculederivedfromlivingcellsandusedinthetreatmentofdisease.Biosimilarsaresimilartobutnot identicalcopiesoftheoriginatorbiologic.Biosimilarsaredeterminedtobesimilartoanoriginalbiologicintermsofstructuralcharacteristics,safety,andefficacy1.

ThebullcaseforCelltrionInc: WithanUSFDAapprovedproductionfacility,consistenttrackrecordinmanufacturingqualifiedbiodrugs,andsolidmarketingpartnershipsacrosstheglobe,weexpectCelltriontobealeadingbiosimilarandnewbiologicaldrugdeveloper/manufacturerintheglobalbiopharmaceuticalmarket.GiventheexpectedpatentexpirationsinEuropeandtheUSincomingyears,webelieveCelltrionisfullyleveragedtothefastgrowingglobalbiosimilarmarket...Thecompanyalreadyhassignedsalescontractwithdistributorsacrosstheglobalmarket,targetingamarketshareof50%intheemergingmarketsand20%inthedevelopedmarkets(exUS)by2015. JPMorganInitiationonCelltrionInc4/18/2011

EarlyinitiationsonCelltrionIncfocusedonthehugemarketopportunityinreplicatingbiopharmaceuticals.Thebelowtables illustratethemarketsizesofbiopharmaceuticalstargetedbyCelltrionIncspipeline:

Pastaccusationsofaccountingmanipulationdismissedbyinvestors:Botha2011localKoreanreportbytheCenterforCorporateGovernanceand a2012WallStreetJournalarticlepointedoutthelackofendsalesatCelltrionIncandthebuildupofinventoryatCelltrionHealthcare3. However,thesubsequentEuropeanUnionapprovalofRemsimain2013pushedtheseconcernstothebackgroundasinvestorslookedforwardtothedruglaunchandfutureendmarketsales.

1. AmgenBiosimilarsOverview(http://www.amgen.com/pdfs/misc/Biologics_and_Biosimilars_Overview.pdf)2. WallStreetJournal,TheTaleBeneaththeTopLineatCelltrionInc,10/28/12

Source:CLSACelltrionIncInitiation7/15/10

8

SummaryofAccountingIssuesWebelievethatthedismissalofaccountingissuesisnaveespeciallysincetheprematurerecognitionofrevenuesatCelltrionInc.wasonlyonelayerofitsmultifacetedweb.ItappearsthatthesubsequentevolutionofeventshaveputCelltrionIncinanevenmoreprecariousfinancialposition.Thefollowingslideswilldemonstrate:

CelltrionIncsmarginsappearabnormallyhighcomparedtopeerdrugdevelopers. CelltrionIncscomplexcorporatestructureallowsforthecompanytodothefollowing:

CelltrionInc appearstobefundingitsaccumulatednegativecashwithamassivebuildupofleverage. CelltrionInchasminimalthirdpartysales.Themajorityofthesaleshavebeentoitselfwhichhasledtoinventorybuildup. Webelievethat57%oftheinventorystockpileatCelltrionHealthcaremaybeexpiredsincethedeterminedshelflifeof

Remsimais36months.Iffullyimpaired,CelltrionHealthcarewillcarryanegative equityvalue. Celltrion Inc.appearstohavealreadybookedmorethantwoyears offullyrampedendmarketsalesaspresalesfor

Remsima.CelltrionsabilitytorecognizefurthersalesfromRemsimaevenifmarketentriesandadoptionaresuccessfulappearstobeverylimited.

CelltrionIncandCelltrionHealthcareengagedinarbitraryconsolidationanddeconsolidationofrelatedpartieswhichservedtoboostsalesinbothcases.

Aggressivecapitalizationofbothresearchanddevelopmentexpenseandinterestexpense. Webelievethattheuseofpledgedsharesasloancollateralandtheuseofoutsidefinancingtofulfillcashneedscreatesan

ecosystemwherethesharepriceandfalsesalesaremutuallydependent.ThismayhavemotivatedmanagementtocommittoactionstopropupCelltrionIncshareprice.

91. HospiraJPMorganHealthcareConferencePresentation1/14/14

AccountingIssues PeerComparisonCelltrionIncreportshighermarginsthanbranded,proprietarydrugdevelopers 1.ThemargindisparityisevenmoreastonishingwhenconsideringthatCelltrionIncspriceshouldbediscountedtoaccountforitswholesaleagreements.

CelltrionIncsreportedgrossmarginsare26%higherthanevenJPMsearliestbullishestimatesforfirstgenerationbiosimilar margins.

Source:Bloomberg

10Source:JPMorganInitiationonCelltrionInc4/18/2011

AccountingIssues CorporateStructure

Source:Companyfilings

JJSeo

CelltrionHealthcare

CelltrionPharm(public)

CelltrionHoldings

CelltrionInc(public)

CelltrionGSC

93.9% 20.1% 32%

68.4%53.9%

Inordertounderstandtheaccountingdisparities,onemustfirstvisualizeCelltrionIncswebofrelatedparties.

BelowaretheidentifiedmaterialentitiesintheCelltrionsystemandownershipstructure. CelltrionHoldingisaholdingcompanywhichholdssharesinCelltrionInc. CelltrionInc(980employees)andCelltrionPharm(335employees)aremanufacturersofdrugs.CelltrionPharmisalso

responsibleforthemarketinganddistributionofCelltrionIncsdrugsinKorea. CelltrionHealthcare(96employees)marketsandsellsCelltrionIncsproductsoutsideofKorea. CelltrionGSC(5employees)suppliesfiltersforR&Dandmanufacturespharmaceuticalproducts,referencedrugsfor

R&D,andcomparatorsforclinicaltrials,andprovidescoldchainservicesforpharmaceuticalproductswhichrequirespecifictemperaturecontrol.

CelltrionHealthcareleasesitswarehousefromCelltrionHoldings.CelltrionHealthcareisdownstairsfromCelltrionInc.andsalesarebookedassoonasproductsentertheCelltrionHealthcarewarehouse.

2.7%

OwnershipStructureoftheCelltrionSystem

11

AccountingIssues AConsolidatedViewWhenfinancialsareconsolidatedacrosstheCelltrionsystemofcompanies,itappearsthattheconsolidatedholdingproducesalargenegativecashflowstreamwhichisfundedbycashfromfinancing.

PositivenetincomeatCelltrionInc(listco)issupportedbygrowingleverageintheCelltrionsystem.

TheCelltrionsystemasawholeproducesalargenegativefreecashstream

12

AccountingIssues Inventory

1. Est35%avggrossmarginforCelltrionHealthcare/Est50/50splitofRemsimaretailpricewithHospira

ThemajorityofCelltrionIncssalesaretoCelltrionHealthcarebythecompanysownadmission.

AhugeamountofinventoryhasbeenbuildingintheCelltrionsystemwithverylittlesoldtotrueendcustomers.TheinventoryatCelltrionHealthcarealoneequatetoapproximatelyUSD3bnofendsales1.

ThemajorityofinventoryisatCelltrionHealthcare.

13

BullswouldarguethattherelationshipbetweenCelltrionIncandCelltrionHealthcareishealthybecauseCelltrionHealthcareisbookingpreapprovedsalestoendcustomerslikeHospira,CelltrionslargestworldwidedistributorinkeymarketsliketheUnitedStatesandEurope.However,newdisclosuresfromHospirashowverylittleinventoryreceivedfromCelltrionHealthcareaswellastinyamountsofcashpaidoutrelativetoCelltrionHealthcaresrecognizedrevenue,raisingdoubtsaboutthevalidityoftheprebookedsales.

Oddly,Hospiraappearedtotakeaninventorywritedowninthe3rd quarterof2014onitsinventoryreceivedfromCelltrionHealthcare,mostofwhichwasreceivedin2014.Inthesamequarter,HospirachangedtheirdisclosurearoundCelltrionadvancesandinventory.


Source:Hospirapublicfilings

ImputedwritedownoninventoryreceivedfromCelltrionHealthcare

14

Increaseininventoryreserveonequarterbeforewritedown


1. http://www.ema.europa.eu/docs/en_GB/document_library/EPAR__Public_assessment_report/human/002576/WC500151486.pdf2. http://www.ema.europa.eu/docs/en_GB/document_library/EPAR__Product_Information/human/000278/WC500074922.pdf

Despitethemassiveincreaseininventory,inventoryreserveisactuallydeclining(from10.5%ofgrossinventoryin2010to2.4%in2013).Meanwhile,thestockpileoffinishedproductisbuildingupandgettingolder.AssoonasCelltrionIncrecognizessalestoCelltrionHealthcare,theclockshouldstarttotickontheshelflifeofthebiosimilarproducts.TheEuropeanMedicinesAgencydeterminedtheshelflifeis36monthsforRemsima1 and48monthsforHerceptin2.

Usingpubliclyavailablesalescontracts,itappearsthatlargeportionsofinventorypurchasedbyCelltrionHealthcarefromCelltrionInciscurrentlyexpiredgiventheshelflifeofthedrugs.

15

Source:Celltrionpubliclydisclosedsalescontracts

2013Expiration 2014Expiration

2015Expiration

AccountingIssues InventoryIntheory,CelltrionHealthcareshouldhavewrittendown57%ofitsinventoryattheendof2014.ThiswouldhaveresultedinnegativeequityvalueforCelltrionHealthcare,whoisrumoredtobeseekingIPOintheKoreanmarket.

Webelievethiswritedownmayhavecripplingimplications fortheentireCelltrionsystemsinceCelltrionIncdependsonHealthcareasitslargestandeffectivelyonlybuyerat99%ofsales.CelltrionHealthcaresfinancialhealthiscrucialinraisingequityanddebtfinancingfromoutsidetheCelltrionsystem.AcollapseinHealthcaresfinancialmetricscouldcutoffitsexternalfundingandthereforecutoffthesourceforCelltrionIncssales.

16

CelltrionHealthcare


CelltrionGSC

Temasek

EquityInvestment

LOAN

Paymentforproductpurchases


OneEquity(JPMorgan)

ExistingInvestors(IncJJSeo)

EquityInvestment

EquityInvestment

AccountingIssues RevenueRecognition

17

Source:Celltrionpubliclydisclosedsalescontracts

ThesamesalescontractsshowthatCelltrionIncalreadyrecognized2.3yearsofRemsimaglobalsales assuming30%marketpenetrationata30%discounttothebrandeddrug1.Themagnitudeofthisisimportantbecause: Competitorbiosimilarswillhitthemarketinlate2017/2018,includingabiosimilarfromPfizer2.Pfizer/Hospirawillbehighly

incentivizedtofocusdistributiononthewhollyowned,internallydevelopedbiosimlar.Therefore,webelievethatCelltriononlyhasathreeyearwindowbetween20152018duringwhichtorealizeitsfullyloadedsales.

TheaboveassumptionlikelygivestoomuchcredittoCelltrion Inc.Typically,generics/biosimilarstakeyearstorampmarketpenetration.Forexample,inSouthKorea,ithastakenRemsima2yearstoreach20%marketpenetrationatapricingdiscountof2550%discounttoRemicade3.

1. HospiraestimatesmarketpotentialbasedonHospiradistributionfootprint.Assume50/50splitofproceedsbetweenHospiraandCelltrionHealthcareandaveragegrossmarginof35%onHealthcarepurchasesfromCelltrionInc.

2. Pfizerdisclosures3. MiraeAssetResearch2/24/15Report

AccountingIssues RelatedPartiesCelltrionHealthcaressalesaretorelatedparties,includingcompanieswhichwereconvenientlyrecentlydeconsolidated.

In2013,CelltrionHealthcaredeconsolidated100%ownedequitymethodsubsthathadbeenpreviouslyconsolidatedin2012(CTHCHungaryKFT,CTHCPhilippines,CTHCDistribuiodeProdutosFarmacuticosdeBrasil).Thisarbitrarydeconsolidationboostedrevenuesby236%in2013.In2013relatedentitiesincludingCelltrionPharmrepresented78%ofsales forCelltrionHealthcare.

18

IfHealthcarehadnotdeconsolidatedtheserelatedparties,HealthcarewouldhavenegativeEBITDAin2013.

AccountingIssues RelatedParties

Source:Hungariancompanyfilings.Additionally,KoreanfilingsconfirmthatCelltrionHungaryowesKRW45.5bntoCelltrionHealthcare.

Webelievetherecentlydeconsolidatedsubsidiariesarealsoinvolvedintheinventorystuffing.Celltrion Hungaryhasnotsoldanyofitsinventory.PurchasesarefundedusingpayablestoCelltrionHealthcare.

Additionally,intheHungariandisclosures,itisstatedthattheinventorywhichisattributedtotheHungariansubsidiaryisactuallystillsittinginSouthKorea,unshipped.

19

AccountingIssues RevenueDoubleCounting


In2014,CelltrionPharmwasconsolidatedintoCelltrionInceventhoughCelltrionInconlyowns32%ofCelltrionPharm.ThismeansCelltrionIncisliterallysellingproducttoitself.

TheconsolidationmeansthatCelltrionIncgetstorecognizerevenuetwice.CelltrionIncsellsproducttoHealthcarewhosellsittoPharm.WhenPharmsellsittothirdparties,CelltrionIncrecognizestherevenueagainbecausePharmisnowconsolidated.

JJSeo

CelltrionHealthcare


CelltrionHoldings


Productsale RevenueRecognized1x Productsale

32%/Consolidated

Thirdparties

Productsale RevenueRecognized2x

20


DisguisingLeverageasSales

ThisexampleisCelltrionsstandardfinancingapproachthatthepublicisfamiliarwith.CelltrionIncusesitsrelatedentitiestobringliquidityintotheCelltrionsystem.Here,CelltrionHealthcareactedasafinancingvehicleforCelltrionInc. InDecember2011OneEquity,theformerJPMorganprivateequityvehicle,investedKRW254billionintoCelltrion

Healthcare,thedistributioncompany. ExistinginvestorsincludingJJSeoinvestedKRW180billion. CelltrionHealthcarereceivesfinancingtopayforpurchasesfromCelltrionInc.The2011liquidityinjectionallowed

Healthcaretomake80%ofits20122013purchasesfromCelltrionInc.

JJSeo

CelltrionHealthcare


CelltrionHoldings


OneEquity(JPMorgan)

KRW254bnKRW180bn

ExistingInvestors(IncJJSeo)


Source:Companyfilings 21


Overtime,thisstandardfinancingmodelhasmushroomedinscaleandcomplexityasmoreinvestorsandintercompanyloansareintroduced.Inthisexample,CelltrionGSCactsasafinancingvehicleforCelltrionInc. InJune2013,TemasekHoldingspurchasedaKRW85.5billionstakeinCelltrionGSC. CelltrionGSCthenloanedKRW46.5billiontoCelltrionHoldings.ThisloanisalmostanexactplugforCelltrionHoldings

cashneedsin2013.CelltrionHoldingscashbalancedeclinedbyKRW44.4bnin2013toalmostzero.JJSeoprovidedaguaranteeforthisloancollateralizedby37,000shares ofCelltrionHealthcareshares.

CelltrionGSCalsoloanedKRW54.6billiontoCelltrionHealthcaretosupportfurtherpurchasesfromCelltrionInc.Thisloanfinanced~22%ofHealthcares2013purchases.

JJSeo

CelltrionHealthcare


CelltrionHoldings


CelltrionGSC

Temasek

KRW85.5bnInvestment

KRW46.5bnloan

KRW54.6bnloan


Source:Companyfilings 22


Inthemostegregiousexample,themoneytravelsfullcirclethroughtheentities.CelltrionIncloanedmoneytoCelltrionPharm,whopaysCelltrionHealthcare,whothenpaysitbacktoCelltrionInc(Q2Q32013).NotethatthistransactionoccurredbeforePharmwasconsolidatedintoCelltrionInc. CelltrionIncloanedKRW50bntoCelltrionPharmaswellaspurchasesKRW60bnofPharmsbondsandwarrants. CelltrionPharmusespartoftheseproceedstopayoffKRW63bnofpayablestoCelltrionHealthcarewhichHealthcare

usestomakefuturepurchasesfromCelltrionInc.

JJSeo

CelltrionHealthcare


CelltrionHoldings

CelltrionInc(public) KRW50bn

loan+KRW60bnpurchaseofbondsandwarrants

KRW63bninpayables

Paymentforpurchaseofgoods

23Source:Companyfilings

SharePledgesCelltrionIncsharesarebeingusedascollateralbytheChairmanandrelatedparties.

CelltrionHoldingsused10mmsharesofCelltrionIncascollateraltotakeout19loansworthKRW237billionfromWooriBank,DaewooSecurities,andNonghyupBankbetweenJune2006andMarch2013.

CelltrionGSCborrowedKRW174.7billionusing6.94mmofCelltrionIncsharesascollateral.

24

SharePledgesWebelievetheCelltrionsystemisthereforereliantonstockpriceperformancetoensurecontinuedinjectionofcashintoitssystem.ThisinterdependenceexplainstheactionsmanagementhastakeninthepasttopropupCelltrionIncsstockprice.Ifthestockgoesdown,thesharepledgesandtheassociatedliquiditywouldbewithdrawnandthesystemwouldcollapse.

TheseexcerptsfromCelltrionIncsownshareholderletterexpressesthecompanysdesperationtopreserveshareprice:

ThesystematicentanglementmayexplainwhyCEOJJSeowaswillingtofaceregulatoryactiontopropuptheshareprice.JJSeo alsopubliclyputhisCelltrion Inc stakeupforsaleinearly2013.Nostrategicbidderscameforwardaftertwoyears,evenafterRemsima wasapprovedintheEuropeanUnionin2013.

Source:CelltrionIncShareholderLetter11/23/12

Aproposedmeasureagainstshareholderswhoarelendingshares

Unsubstantiatedscaretacticstodiscouragesharelendingbyshareholders

25Source:KoreaHerald,10/8/13

Source:WallStreetJournal,4/26/13

AggressiveCapitalizationofExpensesEvenassumingallofCelltrion Incssalespracticesarelegitimatesalestorealendmarketcustomers,CelltrionIncsaggressiveaccountingstillneedstobeexamined.

ItappearsthatCelltrion IncusesanaggressivecapitalizationpolicytounderreportR+Dexpenseandinterestexpense.Accordingtoreported2013earnings,CelltrionIncistradingat68x2013EPS.IfthetrueR+Dandincomeexpenseswerereported,CelltrionIncwouldreportnegativenetincome andthemajorityofthereportednetincomefrom20092013wouldbewipedout.

26


EstimatedEconomicEarningsoftheEntireCelltrionSystemAnincomestatementbasedonCelltrionssalestoallNONRELATEDPARTIESpaintsanoutcomewhichismuchclosertothemagnitudeofthenegativecashflowsintheCelltrionsystem.Optically,CelltrionIncsenterprisevalueiscurrentlyamultipleof35x2013sales/17x2014sales.However,ifonlytrueendmarketsalesareconsidered,thismultipleskyrocketsto96x2013sales.

Additionally,thisanalysisactuallyovercreditsCelltionIncbecauseitgivescreditto100%ofCelltrionPharmsendsaleswhileCelltrionInconlyowns32%ofCelltrionPharm.

27

2014Update

28

Korea

Source:MiraeAssetResearch2/24/15Report

CelltrionPharmreportedsellingKRW5.366bnofRemsimainthefirst9monthsof2014.

Tonote,MerckwasforcedtodiscountRemicadeby30%whenRemsimalaunchedbasedonpricinglawsinKorea.

Additionally,patientsreceivesubsidiesontheRemsimafromtheKoreaMedicalAssistanceFoundation.Theslidingscaleof2550%discountforthesubsidyisshownbelow:

Source:MiraeAssetResearch2/24/15Report

Source:WooriInvestments9/3/2012Report

ThissubsidyactuallycomesfromCelltrionIncitself. CelltrionIncsignedanMOUin2012withtheKoreaMedicalAssistanceFoundationtomakedonationstothefoundationtobeusedtosubsidizeRemsima.

Optically,Remsimaisata5%discounttoRemicadeintheKoreanmarket.However,thetruemarketpricinghasactuallydeclinedbyatotalof5067%sinceRemsimalaunch,whichinpartexplainsthesmallmagnitudeofCelltrionPharmRemsimasales.Evenwiththissteepdiscount,Remsimaonlyachieved20%marketshare2yearsafterlaunch.

2014Update

29

Norway InNorway,Remsimawasintroducedin2014.In2014,thediscounttoRemicadewas39%.In2015,thediscountincreased

to72%1. In2014,the39%discounttoRemicadeallowedRemsimatoachievejustundera10%marketshare 2. InJanuary2015,afterthe72%pricediscount,Remsimasharerosetoonly29% 3.

Japan: RemsimaenteredtheJapanmarketinNovember,2014.BytheendofJanuary2015,Remsimahadachieved.5%market

share.PricediscountinJapantoRemicadeis33% 4.

Hungary: In2014,RemsimasalesinHungaryachieved4.6%marketshare.InJanuary2015,Remsimaachievedlessthan1%market

shareinHungary 5.

Hospira: InSeptember2014,HospiraenteredintoaconvertiblebondsubscriptionagreementwithCelltrionHealthcare.Hospira

purchasedaUSD200mmconvertiblebondwitha6%interestrate,injectingliquidityintoCelltrionHealthcare.CelltrionHealthcarecanpaytheinterestincashorinbiosimilarproduct.Inexchangeforthisloan,CelltrionHealthcaregrantedHospiraexclusiverightstomarketRemsimaandHerceptinbiosimilarsintheUS(usedtobecoexclusive)andothermajormarkets,includingthemajorityofEurope5.

1. BernsteinResearch2. JefferiesResearch3. IMSdata4. IMSdata5. IMSdata6. Hospirafilings,Q32014earningscall

SamsungInitiation3/13/15

30

DoesnotaccountforKRW846bn debtliability+KRW100bn ofminorityinterest

InMarch2015,SamsungSecuritiesinitiatedonCelltrion.Notonlydoestheanalystcompletelyignorethetwomajorissuesofprerecognizedrevenuesandexpiredinventory,buttheSamsunginitiationisfraughtwithmathematical errors.Onceweadjustedforthesematherrors,wereachedaDCFNAVforCelltrion whichis50%belowtheSamsungtargetprice.

TheanalystpresentedaDCFvaluationfilledwithobviouserrors:1. Hospiras revenuesplitisnotaccountedforatall.2. Koreancorporatetaxiscompletelyignored.3. ThecompanysdebtisnotsubtractedintheNAVcalculation.4. Itdoesnotaccountfor3yearsofrevenuethatwasrecognizedforproductssoldbutnotdelivered.Strangely,theSamsunganalyst

actuallyacknowledgesthis,evenifRemsima salesincreaseonafullscalethisyear,itwouldbeawhilebeforeCelltrion enjoyssalesgrowth.

Ifweadjustforthesesimpleassumptionerrors,wereachaNAVwhichis50%belowthetargetpricewhichispresentedinthis initiationreport.

CorporatetaxNOTincludedinNAVcalculations

SamsungInitiation3/13/15

31

Doesnotaccountfor50%Hospira revenuesplit

Doesnotincludetaxpayments

AccountingIssuesObscuredThroughAuditors

WebelieveCelltrion isabletohideitssystemicproblemsofinventorybuildup,crossfunding,andlackoftruethirdpartysalesthroughusingdifferentauditorsforeachentityineveryyear.

Notably,Samyoung,theauditorforCelltrionGSCandCelltrionHoldings,wastheauditorforOullimElses,OullimNetworks,andOullimInfoTech.Allthreecompaniesweredelistedduetofraudulentaccounting 1.

AuditorsbyYear2009 2010 2011 2012 2013

CelltrionInc DeloitteAnjin SamilPWC SamilPWC SamilPWC SamilPWCCelltrionPharma Lian Lian Lian Lian LianCelltrionHealthcare SamYoung SamYoung SamYoung DeloitteAnjin DeloitteAnjinCelltrionGSC SamYoung SamYoung SamYoung SamYoung SamilPWCCelltrionHoldings SamYoung SamYoung SamYoung SamYoung

32

1.http://www.hankyung.com/news/app/newsview.php?aid=2012082968471


Daewoo Celltrion

Strongrelianceondebtfinancing

Holdingcompany isnottheprofitcenter

Powerfulchairman/weak controls

Inflatedrevenues

Manipulationofassetsandrevenuesthroughoverseas subs

Improved balancesheetthroughrelatedpartytransactions

Scamsubstoskirtaccountingrules

False revenues

Falseinventories

Offbalancesheetdebt

RevisitingtheDaewooStory In1999,theDaewooGroupcollapsedinthebiggestaccountingfraudinhistory. Daewooschairman,WooChoongKim,livedasafugitiveoverseasfor6yearsandreturnedin2005tofacecriminal

charges.Kimwassentencedto8.5yearsinprisonanddisgorgementof$USD17.9billion. HallmarksoftheDaewoostory:

DaewoopursuedaggressiveexpansionintotheautomobileindustryduringtheheartoftheAsianfinancialcrisis. Inordertofunditsexpansion,Daewoosdebtballooned. DaewooCorp,theholdingcompany,directedtheuseofoffshoreentitiesasconduitsforaccountingfraudin

ordertoinflateassetvaluesbyKRW22.9trillion(USD19.1billion)andhideimpairedcapital. InKorea,Daewooutilizedonshoreaffiliatestopurchaseovervaluedassetsabovemarketprices.Scam

subsidiarieswerealsousedtobypassaccountingregulations. DaewoousedunreportedaffiliatestotakeonmoredebtwhichprovidedequityinjectionsintothekeyKorean

entities.

Source:NorthwesternJournalofInternationalLawandBusiness,AForensicStudyofDaewoo'sCorporateGovernance:DoesResponsibilityfortheMeltdownSolelyLiewiththeChaebolandKorea?

33

CelltrionManagementDaewooConnectionsandMisconduct JJSeostartedthecompanywith10formerDaewooexecutives1. JJSeo,ChairmanandCEOofCelltrionInc.

JJSeowastheStandingAdvisortotheGroupChairmanofDaewoo,WooChoongKim,from1993to1999.JJSeowasinchargeofDaewooMotors2.

JJSeoconvictedofstockmanipulationandinsidertrading.

TaeGuKim,ExecutiveDirectorofCelltrionPharm,PresidentofCelltrionGSC20082014,PresidentofCelltrionHealthcare20082010

ServedprisontimeforinvolvementinDaewoofraud.KimwasthepresidentofDaewooMotors3.

YJKim,theformerCEOofCelltrionPharm,wassentencedtothreeyearsinprisonforbreachoftrustduringhistenureasCEOwhichincludedtheembezzlementofKRW2.7bn4.

DaewooEngineeringandConstructionmanagedtheconstructionofCelltrionIncsfacilitiesin20022003.DaewoohadanagreementwithJJSeotocapitalizeCelltrionIncthroughbuyingsharesofCelltrionpreferredstock.Uponthecompletionoffacilityconstruction,Daewoowouldsellthesesamesharesbackatthepurchaseprice5.

1. TheFinancialTimesKoreasBiotechComebackKid2. BloombergBusinessProfiles3. NewYorkTimes,SouthKoreanCourtSentences7Daewood ExecutivestoPrison,7/25/014. Naver News,,12/11/095. Vaxgen 2007annualreport

34

Source:KoreaTimes,10/8/13

AdditionalRelatedPartyIssues

Tozai Holdings Samyoung,theauditorforCelltrionGSCandCelltrionHoldings,wasalsotheauditorofTozaiHoldings(037700KS)

1.Samyoungonlyaudits9companieswithanaggregatemarketcapitalizationof~USD900mm2. TozaiHoldingswasoriginallyaminingcompanywhichacquiredacompanycalledNovacell3. InFebruary2011,TozaisignedanagreementwithCelltriontoanalyzebiosimilars4. Laterin2011,Tozaiwasdelistedfromtheexchange,withchargesofaccountingfraudandstockmanipulation5. In2012,TozaichangeditsnametoProdizen.In2012,BrianKim,whowasanexecutiveatCelltrionfrom2009

2012,becametheCEOofProdizen6.

Tomato2SavingsBank In2010,Celltrion GSCmadeanequityinvestmentinTomato2SavingsBankandbecamea9.9%stakeholder.This

equityinvestmentwaswrittenoffin20137. In2009,Celltrion Inc hadaKRW14bn lineofcreditatTomato2SavingsBank7. In2009,Celltrion GSCtookaKRW11bn loanfromTomato2SavingsBank7. Tomato2SavingsBankwasshutdownbyregulatorsin2012duetoabankrunamidallegationsofillicitlending.

Oneofitscreditofficerscommittedsuicide8.

35

1. Companyfilings2. Bloomberg3. http://www.gobizkorea.com/catalog/about.jsp?blogId=tozaiholdings&pageNo=1&pageVol=6&listStyle=L4. http://www.prnewswire.com/newsreleases/theoutlookforpharmaceuticalsinnortheastasia130126873.html5. http://www.fsc.go.kr/info/ntc_news_view.jsp?menu=7210100&bbsid=BBS0030&no=28219 and

http://alrha.news1.kr/articles/?11635476. http://dailymedi.com/news/news_print.html?section=1&category=8&no=7541517. Companyfilings8. WallStreetJournal,ThirdApparentSuicideinKoreaSavingsBankScandal,1/12/12

AdditionalRelatedPartyIssues Freezone

Freezoneisafacilitiesmanagementandsecuritycompany1. FreezonesharesacorporateaddresswithCelltrionIncandCelltrionHealthcare1. CelltrionIncisFreezoneslargestcustomer,representing33%ofsales1. CelltrionWelfareFoundationowns30%ofFreezone1. ChoiSeungsikisthemajorityownerofFreezone,with35%1.HeisafriendandcollegeclassmateofJJSeo.Heis

theheadofsecurityattheBlueHouse,theofficialresidencyoftheKoreanheadofstate2.

CelltrionDBI WooshinSafetySystemsmanufacturesautoseatbeltsystems3. Upuntil2011,thebusinesswascalledCelltrionDBIandwas31%ownedbyCelltrionHoldingsand29%by

CelltrionInc3.ThemajorityshareholderwasitsfounderInpyoHong,whowasthechairmanoftheAssociationofVendorsforDaewooMotors.

Accordingtoinsiders,Celltrionboughtitsstakeinordertoimplantbiosensorsinseatbelts.Clearlytheywereaheadoftheirtime.

In2012,WooshinincreaseditsstakeinCelltrionIncfrom85kto121kshares.Asof2013itstillownedsharesinCelltrion Inc3.

36

1. CorporateFilings2. http://www.konkuk.ac.kr/do/MessageBoard/ArticleRead.do?forum=people&id=5b0b04b&sort=63. Corporatefilings

Source:OwnershipinFreezonefromSaramin.co.kr(http://www.saramin.co.kr/zf_user/recruit/companyinfo/idx/3208344)

AdditionalRelatedPartyIssues Celltrion Don

AsofQ32014,Celltrion Inc owns100%ofCelltrion Don,anagriclutural projectdevelopmentinRussia.Itisinthebusinessofsellingsquashesandgrains1.

371. CorporateFilings

Source:http://exclusivernd.ru/photos/1293

Source:http://www.perfectagro.ru/pdf/novosti/marga_2.pdf

Source:Vaxgen2007AnnualReport

Vaxgen Vaxgen isafailedAIDSandAnthraxvaccinedeveloperthatparticipatedinthefoundingofCelltrion. In2007,whenVaxgenwasstillreportingCelltrionIncasasegmentinitsSECfilings,Vaxgenreportednorevenuesfrom

CelltrionIncwhileCelltrionIncreportedpositiverevenuesinKoreaofKRW60bn1.

AdditionalRelatedPartyIssues Celltrion PharmaUSA

Celltrion PharmaUSAisawhollyownedentityofCelltrion Pharm1.ThecompanyslistingintheCaliforniacompanyregisterisbelow:

Asearchoftheaddressshowsthatitisaunitinaresidentialapartmentcomplex:


Source:http://kepler.sos.ca.gov/

Source:Googlestreetview

AdditionalRelatedPartyIssues IMMInvestment

In2014,Celltrion Inc madeaKRW2bn investmentinaventurefundcalledIMM1. SungBaeJi,CEOofIMMInvestmentisadirectoratCelltrion Inc asof2014.Hispreviousworkexperiencealso

includesSamil PriceWaterhouseCoopers,theauditorofCelltrion Inc andCelltrion GSC. Asitturnsout,IMMisinvestedinCelltrion Inc andCelltrion Healthcare.ThisVCfundholdsbothentitiesinits

currentportfolio.


Source:http://www.immvc.co.kr/c_port.asp

AdditionalRelatedPartyIssues

AppleSecuritiesandInvestments:Celltrion Inc hashelda9.5%stakeinAppleSecurities&InvestmentLtdsinceitsfoundationin2008.Appleliquidatedin2014.

CelltrionST:AcompanyownedbyCelltrionHoldingsthatstandsforCelltrion SmartTechnologyandisacompanythatspecializesinthefieldofdigitalbroadcastingserviceandbiopharmaceuticalinformationsystem.Ostensibly,thecompanymanufacturesTVs.Theequityofthiscompanyhasbeenwipedout1.

DreamE+M(EntertainmentandMusic):AcompanyownedbyCelltrionHoldingsthatproducesKoreanTVshows1.

Hanskin:Askincarecompanywhichis80%owedbyCelltrionGSC1.

40

Source:CelltrionSTWebpage(http://www.celltrionst.com/)

Source:HanskinWebpage(www.hanskin.com)

1.Companyfilings

RemsimasMarketOpportunity

TotalMarketSize: RemsimaistargetingthemonoclonalantibodyRemicade,producedbyJohnsonandJohnson.Hospira(Celltrionslargestdistributionpartner)estimatesthattheglobalmarketvaluefortheRemicadebiosimilarisUSD5.8billion,withUSD4billionintheUnitedStates1.

CelltrionsRemsimahasreceivedapprovalinEuropewhereRemicadepatentsrolloffin20152.Remicadespatentrollsoffin2018intheUnitedStates.

1. HospiraJPMorganConferencepresentation2. FiercePharmaHospira,CelltrionachievemilestoneinEUwithOKforRemicadebiosimilar

41

RemsimasMarketOpportunityMarketPenetration: SumantRamachandra,SVPandCSOatHospira(Celltrionslargestdistributionpartner)commentedontheshapeoftheadoptioncurveforRemsima.SumantexpectsbetteradoptionthanEpogen,butperhapsnotasstrongasNeupogen(GCSF)1.NotethatEpogenispriced3040%discounttobrandedandNeupogenispricedat~70%discounttobrandedandmarketshareissplitacross3largeplayers.

Source:BernsteinResearch

ImplicationforCelltrion:IfRemsimaislaunchedinbothEuropeandtheUnitedStates(USD5.8billioninannualmarketvalue)andRemsimaattains30%marketadoptionata30%pricediscountforthethreeyearsbetween20152018beforeothergenericshitthemarketCelltrionInc.wouldreceiveUSD426mmperannumfor3years(beforeothergenericcompetitorshitthemarket).CelltrionInc.hasalreadyprebooked2yearsofthefuture3yearsofsalesbetweentheyearsof2009and2013.

In2018,competitorbiosimilarsareslatedtoenterthemarket,includingPfizer/HospirasownproductwhichiscurrentlyinPhaseIII.PresumablyPfizerwillbeincentivizedtoprioritizetheirwhollyowneddrugatthatstagebecausetheyonlyreceive50%ofRemsimasalesundertheHospiradistributionagreement.

1. BernsteinResearch,Biosimilars:NotesfromLongViewonBiosimilarsConference;AtthePrecipiceDec9,201442

RemsimasMarketOpportunityGeographies+Timing:

RemicadepatentexpiredinEuropein2015.CelltrionproductsareenteringthemarketwithHospiraasprimarydistributor.

CelltrionisapplyingforUSFDAapprovaltoentertheUS.TheFDAisplanningtodiscussthebiologicslicenseapplicationinameetingonMarch17,2015.

CelltrionhasfiledasuitinafederalcourtseekingdeclaratoryjudgmentthatJ+JsremainingpatentsonRemicadeareinvalidandunenforceable.ThismoveispatternedafterasimilarSandozstrategytoclearthepatentpathforitsownEnbrelbiosimilar(amoveshutdownbyaCaliforniafederaljudge) 1.

WhilethemarketviewsthisupcomingFDAhearingasverypositive,webelievethatPfizer/Hospiras motivationstosupportCelltrionsentryintobothEuropeandtheUnitedStatesaredebatable.

1. http://www.bioworld.com/content/celltrionhopesblazepathfirstusbiosimilarmab043

PfizersIncentives BullsarenotconsideringPfizersincentiveswithregardstotheCelltrionrelationship.AsBernsteinResearchpointsout

HospirahasfourofitsownproductsandhalfadozenproductsfromCelltrion.Thetwointernalproducts(Neupogen,Neulesta,Epogen,Aranesp)willbecarriedoverandaccelerated.Rationally,thosewilldobettergloballyinPfizerhands.TheCelltrionproductsareessentiallyaonetoonereplicaofPfizerprogramsandinvolvematerialprofitsharing(undisclosedbutnotfarfrom50%)withCelltrion.Further,wewouldarguePfizer'sdevelopmentprogramismuchmorerobust.ItisverylikelytheregulatorswillaskPfizertodivest,oreveniftheydont wethinkPfizerwilllikelycutmostoftheCelltrionproducts.

PfizercurrentlyhasaRemicadebiosimilarproductunderPhaseIIIintheUnitedStates,withanestimatedlaunchattheendof2017.

InEurope,PfizerownsthedrugEnbrel,acompetitortoRemicadeforrheumatoidarthritis.PfizerisincentivizedtoavoidheavydiscountinganddistributionofRemsimatopreventcannibalizationofitsownbrandeddrug.

PfizereitherknowstoomuchortoolittleaboutCelltrion.

Ithinkjusttohighlight,[Hospiras]marketedrecombinantproductsarenotdependentonCelltrion.Theyweredeveloped,asweunderstand,byHospiraalone. JohnYoung,Pfizer

Wehaven'tsatdownwithCelltrionyet.WehavelookedatthecontractualrelationshipbetweenHospiraandCelltrion. IanRead,Pfizer

Pfizerismorelikelytotrustitsowndevelopmentandmanufacturingprocess.InPfizersownwords:So,wehavethreebiosimilarsthatareinongoingPhaseIIIstudies,rituximab,trastuzumaborHerceptinandHerceptinandinfliximaborRemicade.We'reusingourdecadelongexperienceinbiopharmaceuticalsciencetomakesurethathealthcareorganizationsandpatientwillfeelthattheyuseabiosimilarthathasthebestmanufacturingandanalyticaldatabehindit. PfizerattheCowenHealthcareConference3/3/15

44

MerckSponsoredCompetitor Recently,attheCowenHealthcareConference(3/2/15),Merckpresentedtheirownbiosimilar pipelineinpartnership

withSamsungBioepis.SamsungBioepisisresponsiblefortheR+DwhileMerckwillmanufactureandcommercializetheproducts.ThepipelineincludesbiosimilarsforBOTHRemicadeandHerceptin.Withfilingtimelinesin20152016.

PresumablyasMerckisthedeveloperoftheoriginalbrandedRemicade,thebiosimilarversionwillbewellfasttrackedintheapproval,manufacturing,andmarketingprocess.

Source:Merckinvestorrelations

45

HerceptinBiosimilarMarketOpportunity

1. Rochecompanyfilings2. http://www.roche.com/media/store/releases/medcor20121208.htmhttp://www.roche.com/media/store/releases/medcor20120611.htmhttp://www.roche.com/media/store/releases/medcor20130305.htm

TotalMarketSize: CelltrionsbiosimilartrastuzumabcandidateistargetingRochesblockbusterbreastcancerdrugHerceptin.Rochesannualworldwidesalesin2014ofHerceptinwasUSD6.856billion 1.

MarketPenetration: TheHerceptinbiosimilarpenetrationshouldbenegligibleduetochangeinstandardofcareforbreastcancer.Previously,thecombinationofHerceptinandchemotherapywasstandardforHER2positivebreastcancer.

RochesnewdrugPerjeta,whencombinedwithHerceptinandchemotherapy,hasbeenshowntoreduceriskofdeathby34%comparedtotreatmentswhereonlyHerceptinandchemotherapyareused 2.Perjeta+Herceptin+chemotherapywillpresumablybecomethestandardofcareforHER2positivebreastcancer.

Additionally,theHerceptinbiosimilarpipelineisquiterobust,withPfizer,Amgen,andSamsungallintestingphases(seenextslide).

46

Herceptinbiosimilarsfaceamplecompetition

Source:BernsteinResearch

47

ConclusionThepointsmadeinthisreportindicatethatCelltrion islikelytofacequestionsnotonlyfrominvestors whoreasonablymayaskwhetherthepossibilityofaFDAapprovalforRemsima isenoughtocompensatefortherisksofacompanywhichhasalreadyrecognizedthemajorityofsalesfromabestcaseregulatory,legal,andfinancialoutcome,andnowfacestheburdenofastaggeringandcomplexdebtloadsales butalsofromconsumers,regulators,partners,andtheKoreangovernment.

Consumersmaynotfinditagoodvaluetousemedicationwhichispotentiallyexpiredfarpastitsshelflife,andwhichtheavailablefactssuggestoriginatedinaconvoluteddistributionscheme,foronlya30%pricediscount.

Regulatorsmayquestionwhethertheycantrusttheclinicalresults,manufacturingprocess,andqualitycontrolofacompanythatthefactssuggestisproducingquestionablefinancials,engagingindeceptivepractices,andcreatingamassiveinventoryofexpireddrugs.

PartnerssuchasPfizer/Hospira mayquestionwhethertheyshouldcontinuetopartnerwithacompanyaboutwhichquestionsarebeingraisedaboutitsfinancialandoperationpractices.

AndtheKoreangovernmentmayconcludethatitdoesnotwishtocontinueprovidingsubsidiestoacompanyaboutwhichsubstantialquestionsarebeingraisedsuggestingthatitmaybedeceivinglocalshareholders.

481.Companyfilings

Documents

Celltrion Inc (068270): Fundamental Stock Analysis