JHL Biotech founders indicted for stealing Genentech trade secrets

The headquarter of Swiss drugmaker Roche Holding AG. REUTERS/Christian Hartmann
  • JHL founders were former Genentech employees
  • Trade secrets allegedly used to speed biosimilar production
  • Founders allegedly defrauded Sanofi out of $101 million

(Reuters) - The U.S. Department of Justice has announced the indictment of two co-founders of Taiwanese biopharmaceutical company JHL Biotech for allegedly stealing trade secrets from Roche Holding AG's Genentech Inc to copy its blockbuster cancer drugs and others.

A San Francisco federal court unsealed the indictment of former JHL chief executive officer Racho Jordanov, 73, and chief operating officer Rose Lin, 72, on Wednesday, which accused them of stealing thousands of Genentech documents to create biosimilars of Genentech's biologics and defrauding its planned manufacturing partner, French drugmaker Sanofi, out of $101 million.

Jordanov and Lin pleaded not guilty on all charges on Wednesday, according to DOJ. The defendants couldn't immediately be reached for comment.

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A former principal scientist for Genentech, Xanthe Lam and her husband, Allen Lam, indicted in 2018, pleaded guilty to stealing trade secrets from the company and passing them to competitors including JHL, the DOJ also said Wednesday.

The Lams' attorneys Bill Osterhoudt of the Law Office of William L. Osterhoudt, Michael Stepanian of the Law Office of Michael Stepanian, and Daniel Olmos of Nolan Barton & Olmos said in a Thursday statement that the Lams have "helped save countless lives through their work developing biologic medicines," take "full responsibility for the errors in judgment underlying the charges," and are cooperating with Genentech and the U.S. government.

"This kind of complex intellectual property theft and fraud not only harms victims, it threatens the intellectual property of an industry with strategic importance to the United States," Acting U.S. Attorney Stephanie M. Hinds said in a statement.

Genentech and JHL finalized a settlement in a related civil trade-secret misappropriation case in 2020 for an undisclosed amount of money and an agreement for JHL to stop using the technology.

"These events underscore that the allegations in the civil and criminal cases were well-founded and that JHL's co-founders and employees built the foundation of their biosimilar company using Genentech's proprietary and secret technical information," Genentech spokesperson Nadine Pinell told Reuters in a Thursday email.

JHL -- now known as Eden Biologics -- didn't immediately respond to a request for comment.

Biologics are a class of drugs created using genetically modified living cells, and biosimilars are their generic equivalents.

According to the indictment, from as early as 2008 -- when they were working at San Francisco-based Genentech -- Jordanov, Lin, and others including the Lams schemed to steal Genentech's trade secrets. They founded JHL in 2012, and allegedly used the secrets to speed the development of its biosimilars.

The secrets were allegedly used to develop biosimilars of Genentech's cystic fibrosis drug Pulmozyme and cancer drugs Rituxan, Herceptin and Avastin. The cancer drugs are some of Roche's most commercially successful, each bringing in over $4 billion in sales last year.

The co-founders also allegedly defrauded investors and strategic partners including Sanofi by "concealing the extent to

which JHL Biotech used stolen intellectual property to start, accelerate, and conduct its business."

The indictment says Sanofi paid JHL $101 million in 2016 and 2017 as part of a deal to make and sell JHL's biosimilars in China.

U.S. District Judge William Alsup is presiding over the case against the Lams. The case against Jordanov and Lin is sealed.

The cases are United States v. Jordanov, U.S. District Court for the Northern District of California, 21-cr-0227, and United States v. Lam, U.S. District Court for the Northern District of California, No. 3:18-cr-00527.

For Racho Jordanov: N/A

For Rose Lin: N/A

For Xanthe Lam: William Osterhoudt of the Law Office of William L. Osterhoudt

For Allen Lam: Michael Stepanian of the Law Offices of Michael Stepanian

Read more:

Genentech finalizes settlement in trade secrets fight with Taiwanese rival

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com