Hope Official Testifies Genentech Didn’t Disclose Licensing Details

Biotech giant Genentech Inc. never fully disclosed details of licensing agreements involving patents covered under a contract with City of Hope Medical Center that called for hundreds of millions of dollars in royalty payments, a hospital official testified Wednesday.

The Duarte-based medical center is suing the South San Francisco pharmaceuticals company for more than $400 million in unpaid royalties and interest from drugs made possible by work done at City of Hope facilities.

City of Hope President Gilbert Schwartzberg testified that City of Hope never had a clear idea of how much money it might be owed under the 1976 agreement until Genentech settled a lawsuit with another company in 1995 that raised questions about Genentech’s agreements concerning other licensing deals.

“No one ever communicated to us in clear terms [Genentech’s] position prior to 1995,” Schwartzberg testified.

Genentech lawyers contend the company disclosed its financial obligations in letters and documents, such as filings with the Securities and Exchange Commission.

The trial entered its second day Wednesday. At issue is the 1976 contract providing that Genentech would fund work at the City of Hope’s Beckman Research Institute. In return, Genentech would own whatever patents were issued and would pay the hospital a 2% royalty on the sales of certain drugs resulting from the research.