In Agreement With Genentech, JHL Must Destroy Its Biosimilar Cell Lines and Banks

Genentech has reached a memorandum of understanding with JHL Biotech in its civil lawsuit related to the theft of Genentech’s trade secrets.

According to Genentech, the formal settlement, which remains to be executed, requires JHL to stop developing its biosimilars referencing Genentech’s products: rituximab (Rituxan), dornase alfa (Pulmozyme), trastuzumab (Herceptin), and bevacizumab (Avastin). JHL will also be required to destroy all cell lines and cell banks that are associated with these products, and the biosimilar developer must cease using or sharing any of Genentech’s confidential information. Several of the proposed biosimilars had already entered phase 3 development.

The agreement stems from allegations that Xanthe Lam, formerly employed as a scientist at the Roche Holding AG unit from 1986 until 2017, downloaded, collected, and transferred proprietary information to her husband, Allen Lam, and others at the China-based JHL. She also allegedly secretly consulted for JHL while still employed at Genentech.

In its civil complaint, Genentech pointed to the existence of documentary evidence, “including emails, text messages, Skype logs, and audit records…as well as admissions from [2] of the named defendants,” all of which “make clear that former Genentech employees and others at JHL conspired to give JHL an illegal and corrupt advantage in the biotechnology industry.” The complaint includes a screenshot from Xanthe Lam’s Genentech-issued computer, which shows a folder titled “JHL” that contained subfolders, 4 of which were named for Genentech medicines for which JHL was in the process of developing biosimilars.

Sean Johnston, senior vice president, general counsel, and chief compliance officer of Genentech, said in a statement concerning the agreement, "we're pleased to have secured the return of our property and the prevention of any further dissemination and illegal use. The agreement points to the significance of defending and protecting one's intellectual property rights, trade secrets and other confidential and proprietary information.”

Johnson added, “Leveraging trade secrets and confidential and proprietary information from an employer or a competitor to create an unfair and illegal competitive advantage is a serious crime. Dishonest and illegal actions such as these threaten scientific innovation, obstruct fair competition, and undermine the hard work of our employees and people throughout the industry who act with integrity and in the best interests of patients every day.”

JHL’s executive chairman and chief executive officer, James Huang, said in a statement that “after careful consideration, we determined the settlement provides the best path forward for the company to focus exclusively on delivering high-quality and affordable biosimilar medicines to patients in need. It also removes the costs and uncertainty associated with protracted litigation.” He added that JHL will be able to continue to develop “the remainder, and majority” of its biosimilar pipeline, which includes omalizumab, pertuzumab, denosumab, ipilimumab, ustekinumab, and ramucirumab.

The trade secrets theft is also the subject of a criminal case, and Genentech continues to pursue a civil lawsuit against the individuals involved in the matter. A Genentech representative told The Center for Biosimilars^® in an email that the settlement reached does not impact the government’s criminal case, and Genentech is currently on hold with its suit regarding the individual defendants until the criminal case has been resolved. The case is scheduled for trial in April 2020.