Biotech founders sent to jail for stealing trade secrets

By Ben Hargreaves

- Last updated on GMT

© GettyImages/ftwitty
© GettyImages/ftwitty

Related tags: trade secrets, Biosimilars, US Department of Justice, JHL Biotech, Genentech

The two co-founders of JHL Biotech, Racho Jordanov and Rose Lin, were sentenced by the US Department of Justice for their roles in conspiring to commit trade secret theft and wire fraud.

The investigation into the behaviour of JHL Biotech has been on-going since 2018​, wherein the Taiwanese biotech had been accused of illegally obtaining information from Genentech, through both former and existing employees at the latter company.

In the latest development, Jordanov, previously CEO of JHL Biotech, and Lin, previously COO, were sentenced each to one year and one day in prison, followed by a supervised release of 36 months, after pleading guilty to the charges against them in August 2021.

According to the Department of Justice statement​, Jordanov hired former Genentech employees to work for JHL Biotech, who later brought with them confidential and proprietary documents from Genentech.

While Lin arranged for Xanthe Lam, a principal scientist working full-time at Genentech, to secretly work for JHL Biotech and paid her for this work through her husband, Allen Lam. In a related case, both Xanthe Lam and Allen Lam pleaded guilty to conspiracy to commit theft of trade secrets, in July 2021.

As a result of these actions, the information accrued by JHL Biotech “allowed the company to cheat, cut corners, solve problems, provide examples, avoid further experimentation, eliminate costs, lend scientific assurance, and otherwise help JHL Biotech start-up, develop, and operate its business secretly using the intellectual property and scientific know-how taken from Genentech,”​ the Department of Justice statement concluded.

The theft of trade secrets helped JHL Biotech to accelerate the development of its biosimilar pipeline to Genentech’s portfolio of cancer treatments. One of the major obstacles this allowed the biotech to surmount was in developing a set of standard operating procedures to apply for good manufacturing practices (GMP) certification for its manufacturing facility.

During this period, JHL Biotech was able to sign a deal with Sanofi​, which was worth $101m (€92.1m), to commercialise biosimilars to Genentech’s products.

Fresh start

The company at the centre of the case, JHL Biotech, still exists but has since changed its name to Eden Biologics. In 2019, the company reached a settlement​ with Genentech that included an agreement to forfeit development of the biosimilars related to the case.

Eden Biologics now offers contract development and manufacturing organization (CDMO) services, and has a pipeline of biosimilars assets. The most advanced candidate within the pipeline is EB1001, a denosumab biosimilar, which the company is progressing into Phase III trials.

On the charges that were filed against its former CEO and COO, Eden Biologics’ executive chairman, James Huang, stated: “Eden Biologics has been cooperating fully with the Department of Justice in its investigation for several years, and we are pleased that the Department of Justice formally agreed that the company will not face criminal prosecution in this matter.”

Related topics: Markets & Regulations, Biosimilars

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