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Gene Copies and Deletions: How Decode Execs Allegedly Stole Secrets and Covered Their Tracks

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Decode Genetics last week disclosed that it has sued five former officials now working at the Center for Applied Genomics at the Children’s Hospital of Philadelphia for allegedly stealing trade secrets and trying to cover their tracks.
 
Relying on e-mail exchanges between the defendants, the suit and an accompanying court document also offer a glimpse of the inner workings of a large biotech with significant pharmacogenomic interests, and shed light on a deal that appears to have broken Decode’s conflict-of-interest rules.
 
The complaint, obtained by Pharmacogenomics Reporter, claims that between January and May this year the five former officials plotted to steal trade secrets in order to help kick-start CAG, which it calls a “commercial enterprise competing directly with” Decode.
 
This is noteworthy because the suit could take form as a battle between a corporation and a nonprofit academic center, a common dynamic fueled by finite government resources and fastidious pharma partners.
 
The suit also claims the defendants, led by Hakon Hakonarson, former vice president of business development, conspired to destroy evidence.
 
Decode said in the suit that among the stolen information were “strategic plans, work flow diagrams with respect to processing of genetic information, software, databases, methods, formulas, research plans, business development plans, and unpublished financial statements.”
 
These data, which Decode claims were stolen on large-capacity hard drives and smaller-capacity pen drives, include genetic data linked to prostate cancer, which the company calls its “crown jewels.”
 
Among other charges, Decode claims in the suit that CAG has benefited from this information, which the Icelandic company said could help it win patents, draw NIH funding, and lure pharma partners. CHOP is also a defendant in the suit.
 
Because of this, Decode has asked the US District Court for the Eastern District of Pennsylvania to bar the five men “or anyone acting in concert with them” from working at CHOP for two years; to prevent them from disclosing any “confidential information;” and to ensure that the defendants do not destroy any remaining evidence.
 
The company has also asked the court to forbid the men from recruiting other Decode staffers for one year, reward it as-yet undetermined compensatory and punitive damages, and force the defendants to pay Decode’s legal fees.
 
With Hakonarson the four other defendants are Struan Grant, Robert Skraban, Jonathan Bradfield, and Jesus Sainz. The complaint also accuses Hakonarson of lying about his new job description and recruiting the others before their non-compete agreement term expired.
 
Bradfield, Grant, and Skraban declined to comment and deferred questions to CHOP’s public affairs official. Sainz, who no longer works at CAG, could not be reached in time for this article. Hakonarson did not return an e-mail requesting comment.
 
In a statement, CHOP said the suit is “without merit” and said it “defends physicians to protect advanced research in childhood diseases.”
 
Gene Copies
 
In its suit, Decode accuses Hakonarson — the third-highest paid official at the company before his departure — of spending his last four months as an employee stealing documents and other information. The company also said he obtained help from certain other defendants to destroy the evidence.
 
For example, court documents accompanying the suit allege that on Jan. 15 Hakonarson used his desktop computer to copy more than 12,000 files onto a large-capacity hard drive. The company does not say what kinds of data were downloaded, and said he destroyed the hard drive in June.
 
According to this document, Hakonarson’s colleague Skraban copied 1,445 files onto another hard drive, among them folders named “Breast_cancer_candidate_genes_drug.targeted.xls;” “Breast_Cancer_pathways.xls;” “Breast_diff_exp_CancerGenoneAnatomyProject.xls;” “Cancer.gene targets vs drugas.combinedfile.xls;” “Combined data on asthma targets.xls;” “Diabetes market v7.doc;” “Prostate_diff_exp_CancerGenomeAnatomyProject.xls;” “Prostate_network_candidates.xls;” and “Valuation of Drug Discovery programs.xls.”
 
Skraban allegedly destroyed this evidence in August.
 
The document also accuses Bradfield of loading certain undisclosed gene-expression files onto his personal laptop computer that contained a large-capacity hard drive that Hakonarson “loaned” to him.
 
Bradfield allegedly gave this drive to Skraban to “hand-carry” to Hakonarson and allegedly destroyed this laptop in Iceland before he left the country for CHOP in May.
 
Decode accuses Sainz of copying 56,425 files, including Decode’s “most confidential scientific data,” which includes genetic information about prostate cancer.
 
The suit also claims that Hakonarson misled Decode about his impending responsibilities at CHOP. In its suit, Decode said Hakonarson submitted his resignation Jan. 30 and told the company of his planned move to CHOP, but was permitted to continue working at Decode until May 30 because he said his position at CHOP would be limited to academic duties and pediatric clinical research — areas that apparently do not compete with Decode.
 
But according to Decode, an e-mail Hakonarson sent in September 2005 to Philip Johnson of CHOP suggests that his plans at CHOP went beyond academic goals.
 
In that message to Johnson, who is the chief scientific officer and director of the Joseph Stokes Jr. Research Institute at CHOP, Hakonarson attached a document entitled “Research Plan RX-DX.doc,” which he describes as “a draft document on the GWA [genome-wide association] program we discussed; please keep as confidential between you and [CHOP President and CEO] Steve [Altschuler] at this stage; I’m sending this through my hotmail address for reasons you understand. …”
 
Decode said that document comprises a “detailed plan” to establish a pediatric genome-wide association project to “develop and commercialize” new drug targets — which apparently contradicts Hakonarson’s assurances to Decode that his research at CHOP would be solely academic.
 
Moreover, the suit claims that CHOP’s draft employment offer letter to Hakonarson “made clear that the CAG was intended by CHOP and Dr. Hakonarson as a commercial enterprise competing directly with deCODE and was not limited to pediatric diseases.”
 
The suit quotes the draft offer letter as saying CAG “could also be financed as a spin-off structure that would be owned by third party investors where CHOP will leverage its clinical resources and contribute IP related to targets and new diagnostics into the new entity, with third party shareholders contributing capital for launch and operation.”
 
In an e-mail sent in August to Eric Schadt, senior scientific director for research genetics at Merck, Hakonarson said “we should found a spin-off company in [20]07-[20]08 range where we as a faculty group can effectively commercialize our sciences and make this a real translational/developmental entity – as I believe I may have mentioned, we would need someone good to head it!”
 
Decode claims the defendants used this information while employed at CHOP, though it wasn’t immediately clear in what capacity or to what extent.
 
CHOP’s Johnson and Altschuler did not respond to an e-mail seeking comment. In an e-mail, Schadt said that “even though Merck is not a party to this suit, it is company policy not to comment on on-going litigation.” None of the men is named as defendants in this suit.
 
According to the suit, on June 1, Hakonarson’s first day on the job at CAG, he reported to Johnson, whom the suit says “was responsible for the creation of CAG,” that he “had begun to call on all of deCODE’s major commercial collaborators:”
 
Phil,
 
...I sent my departure note from the deCODE e-mail only to Lilly, Forest [Pharmaceuticals], Cephalon, Roche and Merck, and they have all responded back; I will send the PR to all of them and many more (Wyeth, J&J, GSK, Pfizer, Schering, Aventis BMS, etc) to the high level contacts I have next week. … “
 
Copy Deletions
 
According to the suit, after copying the files Hakonarson, Grant, Skraban, and Bradfield plotted to cover their tracks. Decode uses as evidence e-mail messages the defendants sent one another that appear to support the claim that they had something to hide.
 
For example, on May 29, shortly before Hakonarson was to start his employment at CHOP as head of the Center for Applied Genomics, Hakonarson wrote an e-mail to Bradfield saying, “just so you know, I terminated my appointment/contract with deCODE today – now they have access to all my e-mail and folders, but I don’t think there is any trail to you or anyone else; perhaps, just in case, it would be better if you would take the Hard drive home if it is at work– if you don’t need it, then it would be great if Robert [Skraban] would bring it when he arrives, since it is a couple of weeks before you.”
 
It was not immediately clear whether this message was related to the data Decode alleges was stolen.
 
The following day, in an e-mail to Grant, Hakonarson wrote: “[S]o I terminated my contract with deCODE and I am back in the US – they now have all my folders but I don’t think there is any trail with you or the others since I have been using the chop or hotmail e-mail.”
 
Later that day Hakonarson wrote Grant another e-mail saying, “My deCODE contract as you know blocks me from approaching co-workers, but as long as you decided to leave and you approach me, I’m ok and you of course start by telling about the other opportunities first – if you are approached….”
 
One day later, on May 31, Decode said Hakonarson sent a message to Bradfield’s e-mail address, though the message was addressed to Skraban. The message stated that “My computer was open yesterday and likely still is: It would be good if you would go in on my profile (you could use your laptop or any computer in the building) and double check that I had deleted all files/folders related to this new stuff at CHOP. …
 
“Folders with names of GWA [genome-wide association approaches] – delete those with all files in them (if I haven’t); this is particularly important for the one on Asthma and Conotruncal (there are multiple files and you would throw the whole folder and then empty trash). Also a grant or grant folder with the name John Maris (or maris or just john) – throw all out.”
 

“[S]o I terminated my contract with deCODE and I am back in the US – they now have all my folders but I don’t think there is any trail with you or the others since I have been using the chop or hotmail e-mail.“

According to Decode, Hakonarson and Maris, an associate professor of pediatrics at CHOP and the University of Pennsylvania, communicated via e-mail at least eight times between December 2005 and March 2006 about topics including genetic research and Decode employees who have potential as CHOP staffers, including Grant and Sainz. Also, Hakonarson, while still employed by Decode, allegedly helped Maris write an NIH grant proposal.
 
Maris did not respond to a request for comment.
 
In Hakonarson’s May 31 e-mail to either Bradfield or Skraban, he said that “there is a chop folder (old one) go in there and delete all that is from ca Nov 2005 until now – there may not be anything) Would greatly appreciate if you could do this to be on the safe side. If you could go into my lotus e-mail also and delete all e-mail from my wife (Maria Bjork Ivarsdottir) since they may include some comments on this – both email she sent me and I her.”
 
Dubious Liaisons
 
Decode’s suit also suggests that during the first few months of 2006, when Decode was deciding whether to invest in a high-throughput genotyping platform made by Affymetrix or Illumina, Hakonarson used his position at Decode to push Decode toward buying Affy’s technology while negotiating to buy an Illumina system from CAG. According to Decode, this is a conflict of interest.
 
According to Decode, Hakonarson “used deCODE’s Confidential Information in the form of its negotiating strategy with Illumina and Affymetrix for the benefit of CHOP in its negotiations with Illumina.” Decode did not elaborate.
 
According to the accompanying court document, Hakonarson sent an e-mail to Illumina CEO Jay Flatley in March that suggests Hakonarson believed that representing both Decode and CHOP in their hunt for a genotyping platform could be a conflict of interest:
 
Dear Jay,
 
Please keep this information confidential but as you may have heard from your local rep in Philadelphia, Children’s Hospital of Philadelphia (CHOP) is committed [to] building a Genomic Center for GWA Studies for various pediatric disorders. I have been offered to head this Center and I’m looking forward [to] moving to Philly in the Spring. I’m currently in a VP position at deCODE, working closely with [Decode CEO] Kári [Stefansson]. … I did not want to initiate this discussions with you about the operation in Philly until the agreement with deCODE was more or less completed, due to the possible COI [Conflict of Interest]….” 
In a telephone interview this week with Pharmacogenomics Reporter, Flatley stressed that Decode’s investigation of and suit against Hakonarson and the four colleagues, including Decode’s suggestion of a conflict of interest, “were unrelated to us; we were never a party to any of that. …
 
“We were just negotiating with a scientist who believed he had access to funds to buy an Illumina system,” Flatley added. “We didn’t know what his transition plan was out of Decode [and] we didn’t know if he was still an employee, we didn’t know when he became an employee of CHOP.”
 
Two months later, in May, Decode disclosed it chose Illumina’s genotyping technology. One month after that CHOP also said it went with Illumina.

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