2 GSK scientists indicted in secrets case involving China

Posted: January 22, 2016

Two GlaxoSmithKline scientists and three others were charged by a federal grand jury in Philadelphia on Wednesday with conspiracy to steal promising cancer research secrets from the pharmaceutical giant and market them to companies in China backed by the Chinese government.

U.S. Attorney Zane David Memeger said Yu Xue, 45, of Wayne; Tao Li, 42, and Yan Mei, 36, both of Nanjing China; Tian Xue, 45, of Charlotte, N.C.; and Lucy Xi, 38, of West Lake Village, Calif., were named in the indictment.

If convicted on all charges, each defendant faces possible prison terms, fines, restitution orders, and other penalties, Memeger said.

Yu Xue was a senior-level manager at GSK's sprawling research lab in Upper Merion, where she clandestinely downloaded GSK trade secrets and confidential research data concerning the development of cancer-fighting monoclonal antibodies, according to the indictment.

Yu Xue allegedly emailed information "potentially worth hundreds of millions of dollars or more" relating to a dozen or more products and drug development processes from her work email account to her personal email, and then forwarded the information to others in the conspiracy, according to an affidavit.

The accused, according to the indictment, then formed a Delaware-based corporation, Renopharma, to eventually market the stolen trade secrets. One of Renopharma's major investors was the Chinese government, according to federal investigators. The conspirators allegedly used two China-based companies to assist in that scheme, Shanghai Renopharma and Nanjing Renopharma Ltd.

GSK spokeswoman Sarah Spencer said that despite the criminal charges, the company remained confident that the alleged breach had no discernible impact on the company's business nor its research and development initiatives.

"We are aware of this issue and have been cooperating fully with the U.S. authorities," Spencer said. "While we're limited on what we can say about this ongoing investigation beyond the details in the indictment, we do not believe the breach has had any material impact on the company's business or R&D activity," she said.

Yu Xue has hired Peter R. Zeidenberg as her lawyer. He formerly represented Temple University professor Xiaoxing Xi, an expert in superconductor research, who was cleared after federal prosecutors accused him of selling sensitive U.S. defense technology to the Chinese.

"Xue has pled not guilty and we'll be contesting these charges," Zeidenberg said. "It's one of many cases brought against Chinese Americans in the last several years, some of which have proved to be vastly overstated. I would just remind everybody that these are just allegations."

Yu Xue is identified in the indictment as "one of the top protein biochemists in the world" with a doctoral degree in biological chemistry from the University of North Carolina.

The world's major pharmaceutical companies have long wrung their hands about the theft of trade secrets in China and the unwillingness of Chinese authorities to protect the companies' intellectual property.

The accused often sent emails to one another with news stories about scientists arrested at other drug companies for stealing trade secrets, according to court documents.

The indictment alleges that Yu Xue and Lucy Xi, also a GSK scientist, had received training in the need for trade-secret confidentiality and had been warned that storing sensitive trade data on personal computers breached company policy.

Much of the alleged data theft focused on GSK's development of a monoclonal antibody or protein designed to link up with HER3 human cell receptors that can under certain conditions spur the development of cancer. The antibody under development at GSK, and about which the conspirators allegedly stole trade secrets, was intended to destroy the cell receptors as a means of halting cancer's spread.

Herceptin, an anticancer drug developed by Genentech that targets a different set of receptors called HER2, has generated billions of dollars in revenue for the company.

Pharmaceutical companies assert that the development of one such drug typically costs shareholders $1 billion or more.

cmondics@phillynews.com

215-854-5957@cmondics

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