Biotech Industry Born with 

Stolen Genetic Material From UCSF in 1978 Stolen Gene 

Haunts a Biotech Pioneer 

Justin Gills / Washington Post 17may99

SAN FRANCISCO –– The men with foreign accents trod carefully through desolate hallways. They weren't supposed to be there, but the University of California at San Francisco had something they wanted, and they knew just where to find it.

It was an hour before midnight on New Year's Eve and nobody was around to see the deed unfold. The men took the elevator to a ninth-floor laboratory. They retrieved vials and beakers, hauled the material downstairs, put it in their car and raced south toward the offices of a tiny new company not far from the azure waters of San Francisco Bay.

A police officer pulled them over as they got to the doors of that company, Genentech Inc. They waved their employee badges and got past him. By the time the clock struck midnight on that evening two decades ago, Genentech's laboratory was freshly stocked with genetic material from the university.

A few months later Genentech announced it had pulled off one of the most dazzling feats of modern science -- inserting human genes into harmless germs and getting them to produce a precious and much-needed substance, human growth hormone. Genentech was the first biotechnology company, founder of an industry, and this feat more than any other demonstrated the potential of the new science. Yet if testimony unfolding in federal court here is true, that early milestone was tainted from the outset and the biotechnology industry was born amid thievery and scientific fraud.

The university is suing Genentech for patent infringement in a case that has taken nine years to come to trial. In a coup, the university's lawyers persuaded one of the scientists involved in the "midnight raid" -- Peter Seeburg, one of the world's most eminent molecular biologists -- to testify on their behalf.

Not only did he and a colleague swipe material from the university, Seeburg testified, but Genentech later used that material to achieve its big breakthrough while pretending in scientific presentations and patent applications to have done the work on its own.

"It was dishonest," Seeburg said recently on the witness stand. "I regret it, but that's the way we did it 20 years ago. I really am sorry."

No one is bothering to contest that material was lifted from the university in a New Year's Eve raid. Genentech does deny making use of that material, however, claiming its scientists, Seeburg among them, independently isolated the gene for human growth hormone.

Seeburg's account, backed by the testimony of colleagues and a pile of circumstantial evidence, is that Genentech tried to do that and failed, then resorted to using a purloined gene from the university's stocks.

Given the importance of this early achievement in spurring the growth of an industry now poised, 20 years later, to transform the worlds of medicine and agriculture, Seeburg has outlined what amounts to a scientific version of original sin.

Seeburg's account is flatly denied by another eminent scientist, David V. Goeddel, chief executive of Tularik Inc. Goeddel worked with Seeburg at Genentech, served as chief scientist on the growth-hormone project, and still is closely allied with his former employer. His account, too, is backed by the testimony of former colleagues.

Thanks mostly to his pioneering work at Genentech, Goeddel was elected to the National Academy of Sciences, an honor roll of the nation's brightest researchers, becoming the first biotechnologist so honored. When he was inducted in 1995, the academy said his early experiments, including those with growth hormone, "revolutionized protein therapeutics and ushered in the age of biotechnology and molecular medicine."

According to Seeburg, he and Goeddel made a secret pact two decades ago never to tell anyone outside Genentech about using the stolen genes in their research, a pact Seeburg now has broken in the courtroom.

According to Goeddel, Seeburg is fantasizing. "I think after I figured out it wasn't just a quick practical joke," Goeddel said on the witness stand, "I couldn't believe that he could come up with such a story."

Courtroom Showdown

The events of two decades ago are coming to light in a case in federal court here. The university, which owns a patent for its work on growth hormone, is suing Genentech, claiming that company's product infringes on the university's discovery.

That discovery -- the precise order of genetic building blocks for human growth hormone -- was made by none other than Peter Seeburg himself, while he was a university researcher. By leaving the university in late 1978 to join Genentech, he gave up rights to his materials. But by his own account, he went back and retrieved them in the midnight raid and handed them over to Genentech.

Genentech fought for years to keep the case, filed in 1990, from coming to trial. But U.S. District Judge Charles A. Legge pushed forward. A jury of nine Californians has been hearing arguments and testimony since April 13. The case could wrap up as early as this week.

The stakes are enormous. The university has claimed damages of $400 million, and if the jury finds that Genentech willfully infringed the university's patent, the judge could triple that amount to as much as $1.2 billion. That would be nearly seven times Genentech's 1998 earnings of $182 million. If everything were to go against Genentech, the case could conceivably cripple the company.

On top of that, testimony coming out in the case has cast serious doubt on important sections of a key paper in Nature, the world's leading scientific journal, and on eight Genentech patents. Applications for those patents were submitted under oath to the U.S. patent office by, among other scientists, David Goeddel.

The outcome of the case is far from certain. It turns on the complex details of patent law. Even if the jury finds Seeburg credible -- and Genentech's attorneys argue that he has motives to lie, money among them -- it could well decide that his testimony is of no legal relevance.

Conversely, the university's lawyers have suggested that Goeddel's continuing ties to Genentech give him a motive to lie, too. Genentech's founder is chairman of Goeddel's new company, among other links. And Goeddel's reputation as a scientist is on the line.

In the courtroom, Goeddel has labored to explain why his meticulous laboratory notebooks grow vague at a crucial point in the growth-hormone research. That happens to be the very point at which Seeburg says theft was committed.

Genentech has admitted in court that work Goeddel described at length in Nature and in his patent applications was never performed. Goeddel claimed on the witness stand that it was performed, but acknowledged he could not back that up with written evidence.

However the case turns out, it's clear that some strange goings-on happened by the waters of San Francisco Bay at the dawn of a modern scientific revolution.

Commercial Possibilities

The world of biology entered a state of turmoil in the mid-1970s. Scientists were closing in on new techniques for manipulating deoxyribonucleic acid, or DNA, the substance the regulates all life. They were learning to slice and dice DNA at will and to stick genes from one organism into others.

This "recombinant DNA" technology offered breathtaking possibilities, including potentially unlimited supplies of substances important to human health.

Nowhere was the ferment greater than in the first-rate universities scattered around San Francisco Bay. The heart of the action was the University of California at San Francisco, a huge teaching hospital and research institution where a biologist named Herbert Boyer had pioneered genetic techniques. A venture capitalist, Robert Swanson, saw the commercial potential of the new technology and convinced Boyer to join him in 1976 in founding a new company in South San Francisco. They named it Genentech.

At the time, there wasn't much precedent for doing biology of that sort in commercial settings, and many of the most talented scientists stayed at university laboratories. These included a group of young hotshots who had been lured to San Francisco from as far away as Germany and Australia to work on the new biology.

One of those men was Peter Seeburg, a German who worked in a lab at UCSF. In early 1978, he and several colleagues pulled off a huge coup. They isolated the gene for human growth hormone, the substance that turns children into adults and that, at lower levels, remains vital to the body's functioning throughout life. They also published the complete genetic sequence -- in effect, a sketchy recipe -- for this substance.

Up until then, human growth hormone could be made for use as a drug only by extracting it from the pituitary glands of dead people. There wasn't enough to treat all the children suffering from dwarfism, much less to try it for other ailments. And the product was prone to contamination by germs.

Seeburg's coup offered another possibility: The chance that the gene for human growth hormone could be inserted into harmless bacteria, tricking them into making huge supplies of the stuff. People at Genentech were working on doing this for small proteins like insulin, needed by diabetics, but nobody had yet tackled a protein as large and complex as human growth hormone.

The importance of Seeburg's work was not lost on the people at Genentech. They began recruiting him heavily. He hesitated, but finally left the university and joined the company in late 1978. Under an agreement he had signed when he joined UCSF, all rights to his prior research remained with the university. Indeed, UCSF had already applied for a patent on the growth-hormone work.

By Seeburg's account, a series of frustrations attended his first months at Genentech. All attempts to duplicate the UCSF work -- in effect, to re-isolate and re-sequence the growth hormone gene -- ended in failure, he said. The technology at the time was finicky at best, and according to court testimony and documents, Genentech's scientists couldn't get it to work.

On top of this, Seeburg by his own account had developed a serious addiction to cocaine and liquor. Goeddel was brought into the project, some witnesses testified, in part because Seeburg was dysfunctional much of the time. "I wasn't in top form," Seeburg testified.

Midnight Raid on New Year's Eve

Genentech was then a young, thinly capitalized company, and a Swedish firm with an interest in growth hormone was paying for much of its research. Deadlines loomed -- unless it made progress, the university's lawyers have argued, Genentech faced the threat of losing funds.

It was in this environment, Seeburg testified, that he decided to go back to UCSF with a colleague, Axel Ullrich, on New Year's Eve and retrieve samples of his growth-hormone gene and other materials. Thus occurred the midnight raid.

Seeburg apparently intended to hold his materials in reserve, hoping not to have to use them. But through the early months of 1979, according to testimony and laboratory notebooks, Goeddel, Seeburg and their Genentech colleagues kept running into roadblocks in their efforts to isolate the gene for growth hormone.

At the end of their rope, Seeburg testified, he and Goeddel secretly agreed to use the gene from the university's stocks and never tell anyone. According to Seeburg, they pretended to isolate a new version of the gene at Genentech, gave it a new name and put together a chart showing the order of genetic units -- the sequence -- of the gene. In reality, Seeburg testified, they were using the university's material and copying work he already had done a year earlier at the UCSF lab.

It is here that Goeddel's account differs markedly from Seeburg's. Far from using purloined material, he said, he and his colleagues managed to isolate their own version of the gene from human pituitary tissue, and then they unraveled the genetic sequence.

Genentech pointed in the courtroom to some references in laboratory notebooks as supporting Goeddel's claim about isolating the gene, but these were cryptic and their meaning much disputed. The second step, determining the exact sequence of the gene, has become a particular bone of contention, since no record of it can be found in any Genentech laboratory notebook. This is striking, given that this step was reported in detail in Nature and in many Genentech patents over the years. Genentech has admitted in court that the sequencing work was never done, though Goeddel has continued to dispute the point.

However they got the gene, Goeddel, Seeburg and their colleagues subsequently managed to insert it into a sort of genetic container, stuck it into the bacterium Escherichia coli, and induced that germ to produce large quantities of human growth hormone.

These were by no means trivial steps. They had never been done before for such a complex gene. The researchers' triumph complete, they reported their success to the world on Oct. 18, 1979, in the pages of Nature.

That paper proved the new biology could achieve its most ambitious goals in a commercial setting. More than any single piece of research, it can be said to have launched the biotechnology revolution now sweeping the world.

Bitter Battle Over a Breakthrough

As this work was unfolding, university officials got word of the midnight raid. They began to suspect Genentech was making unauthorized use of their property. Acrimonious negotiations ensued. Eventually, Genentech paid the university $2 million to make the theft accusations go away.

But that deal explicitly excluded any patent royalties the university might be due if Genentech turned growth hormone into a commercial product. In 1985 the Food and Drug Administration approved Protropin, Genentech's formulation of growth hormone, for sale in the United States. As time passed, the drug turned into a blockbuster and it became clearer that the university had missed out on significant royalties.

The university sued in 1990 and the case turned into a blood feud. Proud of their role in creating a new industry, Genentech's scientists did not take well to the suggestion they did it by thievery and fraud.

At Genentech's request, the case was moved from San Francisco to Indianapolis. The university eventually got it moved back to San Francisco. The combatants appealed various rulings to higher courts on at least four occasions. Legal bills in the case are conservatively estimated to exceed $20 million. A law firm working for the university has dedicated an entire floor of a downtown San Francisco office building to maintaining records in the case.

Perhaps the biggest coup for Gerald P. Dodson, the aggressive litigator heading up the university's legal team, was to convince Seeburg to testify on the school's behalf. Seeburg, now an accomplished researcher in Germany, explained that he had made mistakes in his youth and could not continue lying about them.

Genentech's attorneys have given no quarter. They pointed out that Seeburg stands to benefit if the university wins patent royalties from Genentech -- as an inventor on the UCSF patent, he would be entitled to somewhat less than 10 percent of the total, potentially a large sum. Seeburg also was forced to acknowledge that he had shaded the truth about growth hormone in various sworn statements over the years, but insisted he is telling the truth now.

In principle, the university does not need to prove a direct theft of materials to prove a patent violation. It may be enough to show that university researchers came up with a fundamental idea -- namely, the genetic sequence for growth hormone -- and that Genentech swiped it.

Genentech doesn't deny that Seeburg made important breakthroughs while at UCSF, but claims it did so much additional, creative work to turn growth hormone into a commercial product that there was no patent violation.

If the university were to prove a violation, however, the theft of materials could then become a crucial exhibit. The judge and jury would have to decide whether the violation was willful, meriting triple damages.

In that event, a surreptitious raid on the university's laboratories late on a New Year's Eve might have some bearing on their judgment.

The Dawn of the Biotech Era

Genentech Inc. was founded in 1976 to take advantage of new genetic techniques developed in university laboratories. It was the first biotechnology company and its success spurred the creation of an industry. One of the company's earliest achievements was the development of Protropin, or human growth hormone. Now Genentech is in court defending itself from charges that it stole that invention from the University of California at San Francisco.

• 1976: Herbert Boyer, a UCSF researcher and pioneer in genetic techniques, founds Genentech with Robert Swanson, a venture capitalist.
• Early 1978: Peter Seeburg, another researcher, and colleagues isolate the gene for human growth hormone and determine the sequence of its biochemical units. UCSF files for a patent. Genentech recruits him later that year.
• Dec. 31, 1978: Seeburg and a colleague go back to UCSF in a "midnight raid" and remove genetic material.
• 1979: Genentech announces it has isolated the gene for growth hormone, inserted the gene into bacteria and made the germs produce the human protein.
• 1980: Genentech sells stock to the public, raising $35 million.
• 1982: A bioengineered version of human insulin, created by Genentech and sold by Eli Lilly and Co., goes on sale.
• 1985: Genentech receives U.S. Food and Drug Administration approval to sell Protropin, the first genetically engineered drug to be manufactured and marketed by a biotech company.
• 1990: UCSF files a patent infringement suit against Genentech.
• 1999: Genentech pays $50 million to settle federal charges it inappropriately marketed Protropin. Patent-infringement suit goes to trial.

SOURCE: Genentech company reports; court documents

If you have come to this page from an outside location click here to get back to mindfully.org