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Biotech execs who pinched Genentech trade secrets headed to prison

Top execs at Taiwanese biosimilars outfit JHL Biotech are headed to prison after pleading guilty last August to stealing trade secrets from Roche’s Genentech.

Racho Jordanov, co-founder and former CEO at JHL, and Rose Lin, another co-founder and the company’s ex-chief operating officer, have each been sentenced to one year and a day in prison. Both Jordanov and Lin will be on supervised release for 36 months after serving their time, with Jordanov required to spend nine months in home confinement.

The JHL execs were indicted on multiple counts including money laundering and obstruction to justice. By pleading guilty to conspiracy to commit trade secrets theft and wire fraud, Jordanov and Lin got the remaining charges dismissed.

Jordanov and Lin’s guilty pleas last August came weeks after ex-Genentech employees Xanthe Lam and her husband, Allen Lam, admitted to pinching trade secrets on blockbuster cancer drugs Avastin, Herceptin and Rituxan, plus cystic fibrosis therapy Pulmozyme.

Between 2011—before JHL’s founding the following year—and 2019, former CEO Jordanov obtained and possessed “confidential, proprietary, and trade secret information from Genentech,” which he used to speed up and reduce costs on the development and production of Genentech biosimilars, according to a release from the United States Department of Justice (DOJ).

Using “various means,” Jordanov purloined “many confidential and proprietary documents from Genentech without authorization, some of which contained trade secret information,” the DOJ release continues.

Specifically, according to last year’s plea agreement, Jordanov hired former Genentech staffers and discovered several had “surreptitiously brought, without authorization, confidential and proprietary documents with them from Genentech to JHL Biotech.”

The company didn’t use all the stolen documents, but according to the DOJ’s release, Jordanov “tolerated” this practice and made no effort to discourage JHL staffers from using the documents or information they had brought with them.

This information ultimately allowed JHL to, at times, “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 release states.

Jordanov admitted he had suspicions about the provenance of the stolen information, but “made no effort to verify” whether the info had been brought to the company in violation of Genentech non-disclosure agreements and employee contracts.

The DOJ release specifically highlights the actions of Xanthe Lam, a principal scientist working full-time at Genentech. In 2014, Lin arranged for Lam to “secretly” work as head of formulation at the biotech. Lin apparently told other JHL scientists to ask Lam for help or information when they ran into problems.

“Throughout this time, Lin knew that Xanthe Lam continued to work for Genentech and was not authorized to work for JHL Biotech,” the DOJ release says. “Lin also knew that Xanthe Lam did not want Genentech to learn of her work for JHL Biotech.”

To obscure their actions, Lin agreed to pay Lam’s consultancy fee through her husband, Allen Lam. Meanwhile, JHL never entered a direct contract with Lam in a bid to “further conceal Xanthe Lam’s work for the company,” the DOJ said.

JHL allegedly “always” paid Lam through her husband. Meanwhile, Lin directed JHL staff to use Lam’s husband’s email address to email her questions and to address her by her husband’s name in these email communiques.

Also in 2014, Lin learned that JHL employees were using Genentech trade secrets to create a set of standard operating procedures, which it needed to apply for FDA manufacturing certification at a production plant in Taiwan. Lin was in charge of making sure JHL met deadlines for the certification process. In that role, she was copied on emails where JHL employees discussed using Genentech documents to create the biotech’s standard operating procedures.

“Lin knew the JHL Biotech employees did not have the right to use Genentech’s documents and that their actions constituted theft from Genentech,” the DOJ release argues.

Meanwhile, between 2014 and 2018, Jordanov “sometimes personally used and instructed others to use confidential, proprietary, trade secret Genentech documents and information relating to Genentech’s complex technology transfer procedures and processes,” the release goes on to say. Jordanov used this info in the development, construction and operation of new JHL facilities including a manufacturing plant in Wuhan, China.

The former CEO allegedly told employees to whom he sent the documents not to share them with others at the company. In 2018, after the criminal investigation had begun, Jordanov asked the employee using the Genentech tech transfer documents to delete the email containing the information.

This scheme ultimately helped JHL defraud French pharma Sanofi into a roughly $101 million licensing agreement. In December 2016, Jordanov and Lin inked a Rituxan biosimilar collaboration deal with Sanofi in China. To pen the $101 million pact, JHL concealed the trade secrets theft and falsely claimed that its biosimilar operations didn’t infringe upon rights of other companies.