Former Lilly scientists indicted for passing R&D secrets to Chinese drugmaker

Two former Eli Lilly ($LLY) scientists stand accused of passing laboratory trade secrets to a Chinese drugmaker. Guoqing Cao and Shuyu "Dan" Li are held without bail in Indiana, where they were indicted on charges of stealing Lilly's research info to share with Shanghai-based Jiangsu Hengrui Medicine Co.

Arrested Oct. 1, both men appeared in an Indianapolis court yesteday, wearing black-and-white prison jumpsuits and manacles, the Indianapolis Business Journal reports. During two-hour court proceedings, Assistant U.S. Attorney Cynthia Ridgeway argued that if Cao and Li's actions "could be wrapped up in one word, that word would be 'traitor.'" Both men are U.S. citizens.

Li's attorney disputed Ridgeway's comments, saying that prosecutors had failed to prove that the two men should be held in custody. He called the government's case an "overreach" and asked for their release, saying they would surrender their passports until the case is resolved. Magistrate Judge Mark Dinsmore ordered that they be held until trial.

Lilly's global head of product development, Bill Heath, said the secrets Cao and Li allegedly shared could help Hengrui copy Lilly's research. The secrets involved early-stage research on cardiovascular disease, diabetes and cancer, and are worth an estimated $55 million, the company said.

The indictment mentions a third person--Individual #1--who allegedly worked with Cao and Li; that individual remains under investigation but has not been arrested. Lilly worked with the government on the case, the IBJ says.

"Lilly will aggressively pursue every legal remedy to protect and safeguard its scientific discoveries," Lilly General Counsel Michael Harrington said in a statement.

- read the IBJ story