A research scientist from California pleaded guilty Friday in Philadelphia federal court to receiving trade secrets on anticancer research smuggled from pharmaceutical giant GlaxoSmithKline to bolster a fledgling but potential rival startup in China.
Tao Li, 45, of San Diego, admitted to receiving documents from Yu Xue, 48, of Wayne, who pleaded guilty last month to illegally taking proprietary information from GSK while she worked at the British drugmaker's suburban Philadelphia facility.
Li, a naturalized U.S. citizen who previously worked as a researcher for the Salk Institute in California and earned a Ph.D. in molecular biology from the University of North Carolina, had set up a cancer-research company in China called Renopharma with Xue and Yan Mei, a third scientist charged in the case.
Li used some of the information provided by Xue to promote Renopharma, which in this country was incorporated in Delaware, with the hopes of eventually making their own drugs in China.
Prosecutors said Xue "was regarded as one of the top protein biochemists in the world" and was involved in the research contained in the documents.
A pharmaceutical company can spend hundreds of millions of dollars to develop a drug that, if successful, can reap billions in return.
The value of the information contained in Xue's documents will be the subject of an evidentiary hearing before she and Li are sentenced. They each face a maximum 10 years in prison.
U.S. Attorney William M. McSwain said in a statement on Li's guilty plea: "The lifeblood of companies like GSK is its intellectual property, and when that property is stolen and transferred to a foreign country, it threatens thousands of jobs here in America. Not only is this a serious crime, but it is literally a form of economic warfare against American interests. Such criminal behavior must be prosecuted to the fullest extent of the law."
When the case broke in early 2016, a GSK spokesperson said: "While we're limited on what we can say about the ongoing investigation beyond the details of the indictment, we do not believe the breach has had any material impact on the company's business or R&D activity."
John N. Joseph, Li's lawyer, said in an emailed statement Friday night that Li, a married father of two, "deeply regrets his actions and is taking full responsibility for his mistakes."
Li received "certain proprietary information from his longtime friend Dr. Yu Xue. Initially he believed that the information was publicly available and related to patented discoveries by Dr. Xue. In marketing presentations and business plans, he touted the fact that he had access to Dr. Xue and the information from GSK to bolster the credentials of his startup business to attract potential investors," said Joseph, an attorney with Post & Schell in Philadelphia.
"Dr. Li did not intend to use the information for scientific purposes as evidenced by the fact that, even though he had access to this information for a number of years, he never used GSK's information for scientific research. He never sold it or disseminated it outside of Renopharma. Dr. Li's company pursued research on cancer fighting drugs unrelated to the information received from GSK," Joseph wrote.
McSwain said Renopharma was "financed by the Chinese government," but Joseph said the funding was from local government entities in China.
In a marketing email contained in court documents, Li said Renopharma's "major funding" was from two private investors. "We got some supports from the government, including some national awards and extra funding, tax waive, and a free 4,000 [square feet of] lab space," he added.
Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division, said in a statement: "GSK spends top dollar on research and development to bring new medications to market. The theft of valuable trade secrets threatens products in the pipeline, to the detriment of both the company and the patients those drugs might help. It adds insult to injury when that know-how is diverted for the benefit of a foreign economic rival. The FBI is determined to stand up for the innovators creating products that improve people's lives, by investigating and holding accountable those who would steal trade secrets."
A spokesperson for GSK could not be reached for comment Friday night.
Li's sentencing before U.S. District Judge Joel H. Slomsky is set for Jan. 4.