Jury Selection to Start in Genentech Retrial

Jury selection begins Thursday in the retrial of City of Hope National Medical Center’s $445-million breach-of-contract suit against Genentech Inc.

The Duarte-based cancer treatment center has accused Genentech of hiding lucrative licensing deals to avoid paying City of Hope royalties under a 26-year-old research contract. The pact led to the discovery of a method to produce human insulin, the world’s first biotechnology drug.

Genentech, based in South San Francisco, denies the allegations.

A Los Angeles Superior Court jury in October deadlocked 7 to 5 in favor of Genentech after six days of deliberations.

Genentech has paid City of Hope more than $285 million in royalties on human insulin and human growth hormone under the 1976 contract. Under the deal, City of Hope gave Genentech the patent on a method of producing drugs from bacteria. Genentech, in turn, provided City of Hope with research funding and royalties.

The two sides have different interpretations of the research agreement, formed when Genentech, now the second-largest biotechnology company, had one full-time employee. City of Hope claims Genentech owes it royalties on sales of drugs produced by third parties that licensed the patent from Genentech. City of Hope calculates that Genentech owes it $332 million in royalties and $114 million in interest in 22 drugs sold by third parties, including hepatitis B vaccine.

Genentech contends that City of Hope is wrong. It said that the medical center is entitled to royalties only on drugs that meet two conditions: that they use the discovery covered by the patent and that City of Hope scientists helped invent the drugs. The only products sold under those terms are human insulin and human growth hormone, Genentech said. The royalty agreement on human insulin expired in 1998.

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Denise Gellene