Former Genentech staff accused of giving drug secrets to Taiwanese rival

  • Pharmaceutical companies vie for bigger share of booming Chinese market in biosimilar drugs
  • Genentech files its own civil suit against accused, saying their actions threaten innovation and fair competition
PUBLISHED : Wednesday, 31 October, 2018, 2:08pm
UPDATED : Wednesday, 31 October, 2018, 2:47pm

Former employees of US-based biotech firm Genentech were charged in the United States with stealing trade secrets from the company to help Taiwan-based JHL Biotech sell similar drugs.

Xanthe Lam, a principal scientist at the Roche subsidiary from 1986 until last year, is accused along with her husband, Allen Lam, of conspiring to steal data related to Pulmozyme, a treatment for the lung disorder cystic fibrosis, and Roche’s top-selling cancer drugs, Rituxan, Herceptin and Avastin.

Family friend John Chan – who was hired by JHL with help from Xanthe Lam – is also accused.

The charges, in the state of California, were made as China emerges as a profitable market for the drugs. Daniel O’Day, Roche’s pharma chief, said that while sales were falling in Europe as a result of cheaper formulations known as biosimilars, demand in China had increased.

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According to the charges, JHL Biotech is making biosimilars of the Genentech drugs. JHL Biotech, which was founded in 2012, is planning a Hong Kong shares sale as early as next year.

Xanthe Lam also allowed a fourth conspirator, James Quach, to gain access to Genentech documents to steal the company’s manufacturing protocols, prosecutors claimed.

All four defendants pleaded not guilty on Monday and were released on bail, according to the US attorney’s office in San Francisco.

In 2013, Xanthe Lam spent four weeks at JHL facilities in Taiwan with her Genentech-issued laptop, which gave her access to protected data, the charges said. She was not given approval by, and did not tell her Genentech managers about her time at JHL.

After she returned, “she continued downloading, collecting, and transferring Genentech confidential documents relating to formulation development and raw material management”, prosecutors said.

Xanthe Lam, Allen Lam and Chan face as long as 10 years in prison if found guilty of trade secret theft, while Quach faces a maximum five-year term.

“We don’t think the government will be able to sustain the charges” against Xanthe Lam, her lawyer William Osterhoudt said on Monday. “She is a brilliant scientist and has patents in her own name. She has been working hard to develop medicines to help people. We think this is not a good case.”

Lam, who was about to retire when she was charged, and the co-defendants “didn’t steal any trade secrets”, Osterhoudt said. “We’re looking forward to defending them.”

A lawyer for Chan said he was “frankly surprised” his client was charged. “I thought at most he was a witness,” said John Runfola. “I am confident we will be able to prove his innocence. He just got his PhD from the University of Sydney and got a job with the help of his father’s friend. The government sees some grand conspiracy.”

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Genentech filed a separate civil suit making similar allegations in San Francisco federal court.

“Dishonest and illegal actions such as these threaten scientific innovation, obstruct fair competition, and undermine the hard work of our employees and people throughout the industry who act with integrity and in the best interests of patients every day,” Roche said.