SAN FRANCISCO (CN) — Two biotechnology executives pleaded not guilty Wednesday to engaging in a decade-long scheme to steal trade secrets on cancer drugs from a rival pharmaceutical firm where they used to work.
A federal indictment unsealed Wednesday accuses Raco “Racho” Ivanov Jordanov and Rose Lin of using confidential information from their former employer, Genentech, to help their Taiwan-based company, JHL Biotech, accelerate product development and attract lucrative corporate partnerships.
Jordanov, a 73-year-old resident of Rancho Sante Fe, California, worked as an employee of Genentech developing key processes for drugs and medical devices from 1981 to 2011. He became CEO and president of JHL Biotech in 2012, according to a federal indictment.
Rose Lin, a 72-year-old resident of South San Francisco, worked in various roles for Genentech from 1987 to 2009, including as a biochemical project manager. In 2011, she co-founded JHL Biotech with Jordanov.
Jordanov and Lin allegedly stole secrets on treatments for cystic fibrosis, non-Hodgkin’s lymphoma, chronic lymphocytic leukemia, breast cancer, liver cancer and other types of cancer. The information they swiped included research on the best methods for testing treatments and manufacturing processes.
According to the indictment, Jordanov and Lin not only stole trade secrets themselves but also recruited other Genentech employees to share information with them. One of those employees, Xanthe Lam, and her husband Allen Lam, pleaded guilty Wednesday to conspiracy to steal trade secrets, conspiracy to commit computer fraud and obstruction of justice. Prosecutors say the husband-and-wife team started feeding JHL confidential information from Genentech starting in 2009.
The indictment says Jordanov and Lin used that information to “cut corners, reduce costs, solve problems, save time, and otherwise accelerate product development timelines.” The two executives are also accused of defrauding investors by concealing the extent to which they relied on stolen intellectual property for their business.
In 2014, Jordanov and Lin allegedly oversaw a project to convert Genentech’s confidential standard operating procedures into JHL operating procedures. This was accomplished by cutting Genentech’s logo and pasting JHL’s logo on the same set of documents, according to prosecutors.
“As alleged in the indictment, the defendants in this case increased their wealth by cutting corners and stealing valuable information from a competitor” said Craig Fair, special agent in charge of the San Francisco FBI field office, in a statement. “Rather than excelling at their own scientific research, the defendants instead attempted to excel at theft and fraud.”
JHL formed a partnership in 2016 with Sanofi S.A., a French multinational drug company, to manufacture and distribute biosimilars, or medical products that are similar to already approved medicines, in China. Sanofi allegedly paid JHL $101 million as part of that deal, and the business partnership was worth up to $337 million for JHL, according to the indictment. To obtain that lucrative deal, prosecutors say Jordanov signed false statements affirming that Biotech had not infringed or misappropriated intellectual property.
JHL’s value rose to about $916 million before allegations of criminal conduct led the company’s value to plummet in 2019.
“According to the indictment, JHL Biotech was a nearly $1 billion Taiwanese unicorn built on a foundation of lies,” Acting United States Attorney Stephanie Hinds said in a statement Wednesday. “The indictment alleges defendants used confidential documents and trade secrets stolen from Genentech to build a competitor and enrich themselves. 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."
Jordanov and Lin face charges of conspiracy to steal trade secrets and commit wire fraud, theft of trade secrets, wire fraud, international money laundering and conspiracy to obstruct justice. If convicted, each could be sentenced to up to 55 years in prison and have to pay up to $1.5 million in fines.
Genentech sued JHL Biotech, Jordanov, Lin and the Lams in October 2018 for stealing trade secrets.
In September 2020, JHL agreed to stop using Genentech’s intellectual property and to cover the company’s legal fees and costs of investigation.
Genentech and attorneys representing Jordanov and Lin did not immediately respond to emails requesting comment Wednesday.
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