Former Genentech Employees Charged With Stealing Trade Secrets for Biosimilar Competitor JHL

According to a statement issued October 29 by the United States Attorney’s Office in San Francisco, former Genentech employees were charged with conspiring to steal trade secrets to assist biosimilar developer JHL Biotech.

According to the statement, Xanthe Lam, a principal scientist at the Roche Holding AG unit from 1986 until 2017, conspired with her husband and fellow former employee Allen Lam, and John Chan, another former Genentech employee, to steal trade secrets over the course of 5 years related to the biopharmaceutical dornase alfa (Pulmozyme) and some of Roche’s top-selling cancer drugs: rituximab (Rituxan), trastuzumab (Herceptin), and bevacizumab (Avastin).

JHL is currently in the process of developing biosimilars for all 3 of the branded products. In fact, both of its potential biosimilars for trastuzumab and rituximab are about to enter phase 3 trials, while its potential bevacizumab biosimilar was cleared for a phase 1 trial in February 2018. JHL also indicated in March 2018 that it would commence a phase 1 clinical trial of its dornase alfa biosimilar.

The indictment alleges that Xanthe Lam downloaded, collected, and transferred to Allen Lam and others at JHL “certain confidential Genentech documents relating to the processes by which the company formulated drugs and managed raw materials. Xanthe Lam also allegedly secretly consulted for JHL while still employed at Genentech.”

According to prosecutors, Xanthe Lam also allowed a fourth conspirator, James Quach, employed by JHL, to gain access to Genentech documents in efforts to steal the company’s proprietary manufacturing protocols. Specifically, the indictment alleges that she allowed Quach to gain access to Genentech’s secure document repository from which he subsequently stole the company’s proprietary manufacturing protocols.

“We don’t think the government will be able to sustain the charges,” said Xanthe Lam’s lawyer, William Osterhoudt, Bloomberg reported. “She is a brilliant scientist and has patents in her own name. She has been working hard to develop medicines to help people,” he said.

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

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

All 4 defendants were arraigned earlier this week before a federal magistrate judge and pleaded not guilty. If found guilty of trade secret theft, Xanthe Lam, Allen Lam, and Chan face as long as 10 years in prison. Quach could face as many as 5 years. All 4 defendants were released on bond and are due back in court on November 2.