Bayer AG faces an extraordinary challenge as it tries to settle tens
of thousands of claims that its Roundup weedkiller causes cancer: The
product remains on the shelves, making it almost impossible to put the
litigation to rest forever.
Experts say Bayer is in an unusual position compared with other
companies that have faced multibillion-dollar lawsuits over their
products. To end mass-tort litigation, other companies generally have
discontinued or altered their products or added warning labels — all of
which are problematic for the German pharmaceutical and agricultural
firm.
“If you’re still putting out a product that people claim injures
them, I don’t know how they can insulate themselves from future
liability,” said Carl Tobias, a University of Richmond law professor who
studies product-liability cases. “I think they’re in a bind.”
Bayer is moving closer to a settlement potentially totalling $10
billion, people familiar with the matter said, making it one of the most
complex and costly corporate litigation cases ever. Many investors are
demanding clarity and expect Bayer to deliver at least a partial
solution before the company’s next annual shareholder meeting in late
April.
But Bayer’s case is tricky because regulators including the U.S.
Environmental Protection Agency have said that glyphosate, the main
chemical ingredient in Roundup, doesn’t cause cancer. The agency said
last year that manufacturers like Bayer can’t put cancer warnings on
glyphosate-based herbicides like Roundup, and that states can’t require
such labels. The company also can’t alter the product to remove
glyphosate — which plaintiffs claim poses a cancer risk — because it is
the herbicide’s main weedkilling chemical.
Bayer has said repeatedly that glyphosate will remain an important
product and has applied for re-approval of the chemical in the European
Union, where some countries including Germany are banning sales.
Bayer Chief Executive Werner Baumann has said any settlement
framework must come “relatively close” to guaranteeing Bayer won’t face a
future wave of lawsuits. People familiar with Bayer management’s
thinking said the company would take its time to reach such a
settlement, even if it angers investors seeking clarity before the
annual meeting.
The settlement talks come after Bayer lost its first three trials
with juries awarding some $2.4 billion to plaintiffs — later reduced by
judges to about $190.5 million. Bayer has appealed, but those processes
could take years to play out.
“The trials have gone so spectacularly bad for Bayer that they don’t
want to go in front of another jury,” said Adam Zimmerman, a law
professor at Loyola Law School, Los Angeles.
Experts said they couldn’t identify another company that has settled
yet persisted in selling a product unaltered and without a warning
label. Johnson & Johnson has continued selling its talcum powders
while defending itself against some 17,000 lawsuits alleging they cause
ovarian cancer or mesothelioma, and that J&J failed to properly warn
consumers of this purported risk. The company will face similar
questions if it decides to settle the cases.
Roundup remains on many hardware store shelves, creating a vast pool
of home gardeners who could claim it caused their cancer. Pulling
Roundup from the consumer market would cost Bayer about $200 million in
annual sales, Bernstein analysts have estimated.
Roundup accounts for around 5% of Bayer’s total sales, the company
has estimated — sold mostly to farmers, who have stuck by Roundup
despite the cancer litigation.
The Roundup dilemma led investors last year to reject a confidence
vote in Mr. Baumann, whom some blamed for the legal problems that
followed Bayer’s $63 billion acquisition of biotech seed giant Monsanto
Co. in June 2018. Monsanto is the maker of Roundup.
Bayer lost about a third of its market value as the first jury
verdicts rolled in. The shares have bounced back since the company and
plaintiffs’ attorneys began settlement talks last summer and have agreed
along the way to postpone trials. If talks were to collapse and trials
resume, Bayer’s share price could get stuck in another rout, analysts
say.
Of the $10 billion under consideration in settlement talks, $8
billion would be used to pay current plaintiffs and $2 billion would be
set aside as a fund for future claims, according to people familiar with
the matter. That would exceed recent big-ticket payouts such as Merck
& Co. Inc.’s nearly $5 billion settlement over its painkiller Vioxx
and Takeda Pharmaceutical Co. Ltd.’s roughly $2.4 billion settlement
over allegations its diabetes drug caused bladder cancer.
Many analysts say a settlement in that range would still be a
positive outcome for Bayer. But even then, it is difficult to guarantee
such a figure wouldn’t eventually surpass $10 billion, academics and
lawyers say. They said the settlement under discussion couldn’t bar
future plaintiffs from attempting to sue if they deem the payouts from
the $2 billion fund insufficient or if it runs out, potentially exposing
Bayer to future liability.
Even if it decided to stop selling Roundup, partially or entirely,
plaintiffs could theoretically still sue a few years from now, experts
say. Non-Hodgkin lymphoma, the type of cancer plaintiffs say glyphosate
causes, can take years to develop.
Experts said certain measures could help discourage future litigants.
As part of the settlement, plaintiff attorneys could agree not to
advertise and recruit future litigants. The federal judge overseeing the
settlement could order that any future litigants each produce their own
expert report linking their cancer to Roundup when filing a case. That
would be a hurdle for attorneys who file large numbers of cases at once,
costing several thousand dollars per expert report.
Bayer could also eventually win its appeals, giving it an upper hand
that would discourage future plaintiffs from suing — or even wipe out
remaining lawsuits, if a higher court rules that the company can’t warn
about a cancer risk that regulators have determined doesn’t exist.
“There is a way to get more peace,” Mr. Zimmerman said. “I just don’t know if it will be global peace.”
https://www.marketscreener.com/BAYER-AG-436063/news/Bayer-Strives-to-End-Lawsuits-Over-Roundup-While-Still-Selling-It-29987691/
Wednesday, February 12, 2020
NeuroBo up 81%
Thinly traded nano cap NeuroBo Pharmaceuticals (NRBO +81.2%) is up on a 26x surge in volume, albeit on turnover of only 312K shares, on no particular news.
The company, a reverse merger
of publicly traded Gemphire Therapeutics and privately held NeuroBo,
began trading on December 31, 2019. Shares have rallied almost four-fold
since then.
Although no particular news accounts for the
action, investors should be wary of a capital raise. NeuroBo closed $24M
in Series B financing in July 2019. Gemphire only had $1.9M in cash and
equivalents at the end of September 2019.
Funding will be needed to support Phase 3
development of NB-01 for neuropathic pain and early-stage clinical
trials for NB-02 for Alzheimer’s disease and tauopathies.
https://seekingalpha.com/news/3541276-neurobo-up-81CDC tests for coronavirus may be flawed
The WSJ reports that some of the 200 coronavirus test kits developed by the CDC and shipped to U.S. and international laboratories may not work properly.
Some tests may generate “inconclusive” results. The CDC says it will ship new ingredients to labs that encounter problems.
U.S. tally as of today: 420 total suspected samples, 13 positives, 347 negatives and 60 pending.
https://seekingalpha.com/news/3541295-cdc-tests-for-coronavirus-may-be-flawed-wsjProthena EPS beats by $0.06, beats on revenue
Prothena (NASDAQ:PRTA): Q4 GAAP EPS of -$0.54 beats by $0.06.
Revenue of $0.26M (+36.8% Y/Y) beats by $0.06M.
https://seekingalpha.com/news/3541300-prothena-eps-beats-0_06-beats-on-revenueNu Skin -13% after soft guidance
Nu Skin (NYSE:NUS) reports revenue fell 15% in Q4 as its customer base remained “relatively” strong, but its sales leader count was down due to a drop in Mainland China.
Gross margin fell 40 bps to 75.9% of sales. G&A expenses were up 350 bps to 27.4% of sales off higher convention expenses.
Looking ahead, Nu Skin expects Q1 revenue of $480M to $510M vs. $596M consensus and EPS of $0.23 to $0.33.
Shares of Nu Skin are down 13.05% AH to $31.11.
Previously: Nu Skin EPS in-line, beats on revenue (Feb. 12)
https://seekingalpha.com/news/3541320-nu-skinminus-13-after-soft-guidanceFDA accepts Deciphera application for ripretinib for GI tumors
Under Priority Review status, the FDA accepts Deciphera Pharmaceuticals’ (NASDAQ:DCPH)
marketing application seeking approval to use ripretinib to treat
patients with advanced gastrointestinal stromal tumors (GIST).
The agency’s action date is August 13.
https://seekingalpha.com/news/3541333-fda-accepts-deciphera-application-for-ripretinib-for-gistQuidel Q4 beat fails to lift shares, down 1% after hours
Quidel (NASDAQ:QDEL) Q4 results:
Revenue: $152.2M (+15%); cardiac immunoassay: $65.8M (+5%), influenza: $50.3M (+44%).
Net income: $30.6M (-6%); non-GAAP net income: $43.5M (+26%); EPS: $0.71 (-9%); non-GAAP EPS: $1.00 (+23%).
Consensus was non-GAAP EPS of $0.82 on revenues of $140M.
Shares down 1% after hours.
https://seekingalpha.com/news/3541352-quidel-q4-beat-fails-to-lift-shares-down-1-after-hours
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