Pfizer Says Stolen Trade Secrets Founded New Eli Lilly Partner

Pfizer Inc. says two ex-employees secured a massive investment from Eli Lilly and Co. into their new company founded on stolen trade secrets, in a lawsuit filed in Connecticut federal court Wednesday.

Xiayang Qiu and Ming Zhong left Pfizer and founded Regor Therapeutics in 2018, and within months it was touting a diabetes-and-obesity treatment “strikingly similar” to one being developed at Pfizer, according to the U.S. District Court for the District of Connecticut complaint.

Computer forensic analysis confirmed the two had misappropriated confidential information after the company was tipped off by the May 2020 publication of a 2019 Regor patent application, Pfizer said.

Ripples from the case could extend beyond the litigants. Regor and Eli Lilly announced a strategic collaboration to develop novel therapies for metabolic disorders in December. Regor would receive an upfront payment of up to $50 million and up to $1.5 billion in potential payments for testing and sales milestones and royalties, according to the complaint and an Eli Lilly press release.

Pfizer’s complaint said Delaware secretary of state records show that Qiu and Zhong founded Regor in May 2018—before they left Pfizer in June 2018.

According to the complaint, Qiu worked on the discovery of new therapeutic compounds and how they interacted with proteins in the body. Zhong was a director of clinical outsourcing, working with third-party research vendors. Both had worked on Pfizer’s analysis of a how a key receptor interacted with certain compounds to aid research into the diabetes-and-obesity treatment.

By late 2017 the pair started sending emails expressing dissatisfaction with Pfizer and began to plot to start a business to compete with it, Pfizer alleged.

Qiu traveled to Beijing in early 2018 and eventually secured financial backing from Qilu, a company based there. Later the pair pilfered confidential documents that went beyond the drugs they helped research into research for other potential drugs, Pfizer said.

After the Regor patent was discovered, Pfizer launched an internal investigation. It found that the phone Zhong returned to Pfizer was not actually his company-issued iPhone, which hasn’t been recovered, the company said. Forensics revealed Zhong improperly downloaded various confidential documents and deleted several items from his company-issued laptop, Pfizer said.

Cause of Action: Misappropriation of trade secrets, breach of contract, breach of fiduciary duty, breach of loyalty, unfair trade practices

Relief: Actual damages, punitive damages, restitution, injunctive relief, declaratory relief

Response: Regor didn’t immediately respond to a request for comment.

Attorneys: Wiggin and Dana LLP represents Pfizer.

The case is Pfizer Inc. v. Regor Therapeutics Inc. et al., D. Conn., No. 22-190, 2/2/22