Theft in open court: How a fight over lifesaving drugs led to charges of brazen industrial espionage

By Lukas I. Alpert

Cancer drug developer I-Mab says a key competitor stole its research by posing as an expert witness in an arbitration proceeding.

It may be the boldest kind of industrial espionage.

A Chinese developer of cutting-edge cancer drugs has accused a chief competitor of stealing its trade secrets by posing as an expert witness in an arbitration hearing as a way of surreptitiously getting a look at its proprietary research.

A federal lawsuit brought by Shanghai-based I-Mab (IMAB), against rival drug developer Inhibrx, Inc. underscores the often cutthroat-nature of scientific research, where even the slightest advantage can mean billions in extra funding and distribution deals.

Both the biotech companies focus on immunotherapy treatments for cancer and other tricky ailments, a red-hot area of science where trade secrets are zealously guarded and hundreds of millions of dollars are regularly spent on research.

I-Mab's suit, filed in Delaware federal court, says the theft came amid a years-long dispute it waged with its one-time partner, Tracon Pharmaceuticals over a development agreement I-Mab wanted to exit. Tracon had argued that I-Mab's move to leave the deal was illegal and sought $200 million in damages.

The matter eventually landed in arbitration in Delaware, and at one point, the San Diego-based Tracon sought the help of an expert witness to testify on its behalf.

So Tracon turned to Dr. Brendan Eckelman, an expert in the kind of antibody drugs I-Mab was working on. I-Mab's suit says Eckelman agreed to provide testimony for Tracon and signed a document saying he was not one of I-Mab's direct competitors.

But I-Mab says that wasn't true -- Eckelman was in fact the co-founder and chief science officer for Inhibrx (INBX), a San-Diego based biopharma firm that was working on the exact same kind of cancer-fighting drugs as I-Mab.

I-Mab says Eckelman was given access to much of their research in order to testify for Tracon in the arbitration proceeding in December 2021.

Under the rules of the arbitration hearing, Tracon wasn't required to tell I-Mab who they planned to use to provide expert opinion in the proceeding, so I-Mab said they only became aware of Eckelman's role after seeing his name on a report Tracon submitted.

I-Mab's suit, which was initially filed in early 2022, argues that by failing to disclose his position, Eckelman and Inhibrx violated the Trade Secrets Act. I-Mab did not name Tracon in the lawsuit.

"The competition between I-Mab and Inhibrx is particularly acute, given that both companies are currently developing cancer treatments that treat the exact same molecular targets," I-Mab argued in its complaint.

I-Mab says it has demanded to know exactly what information Tracon had given Eckelman, but said both parties were uncooperative.

A lawyer representing Inhibrx and Eckelman in the suit declined to comment. A message left with Tracon's chief executive, wasn't immediately returned.

Lawyers for Inhibrx and Eckelman had pushed to have the suit dismissed on several grounds, arguing that I-Mab had just been trying to discredit Eckelman's testimony in the Tracon arbitration proceeding and that the two companies weren't really direct competitors anyway.

In April, the matter between I-Mab and Tracon was settled by the arbitrator who ruled that I-Mab was allowed to leave the partnership if it paid a stipulated termination fee of $9 million, plus $13.4 million in interest and legal costs.

Then on June 13, U.S. Magistrate Judge Christopher Burke dismissed Inhibrx's motion to dismiss I-Mab's trade-secret theft claim. He said that the two companies not only were working on the exact same kind of therapies, but that I-Mab, a publicly-traded company, had listed Inhibrx as a direct competitor in its filings with the Securities and Exchange Commission.

Burke said Eckelman's argument that he was unaware of what I-Mab was working on prior to signing the document claiming he didn't work for a competitor rang hollow, as a simple Google search would have likely made it clear that was probably not the case.

"Dr. Eckelman did no such due diligence, which under the circumstances, is hard to understand," the judge wrote in his decision. "Dr. Eckelman made absolutely no effort to check on the status of -Mab's then-current activities."

-Lukas I. Alpert

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-27-23 0941ET

Copyright (c) 2023 Dow Jones & Company, Inc.