A US jury has sentenced the pharmaceutical and agricultural company Bayer to pay more than 1.5 billion US dollars in a glyphosate trial.
Three former users of the weed killer Roundup were awarded corresponding payments on Friday. They blamed the controversial product for their cancer. The federal court jury in Jefferson City, Missouri, awarded James Draeger, Valorie Gunther and Dan Anderson a total of $61.1 million in compensatory damages and $500 million each in punitive damages. In the United States, juries often award large sums to plaintiffs, which judges often later reduce.
“The verdict will not stand, we will definitely appeal against it,” said Bayer on Sunday when asked. The amount of punitive damages alone violates the American Constitution. “Unlike previous cases, the courts in recent cases improperly allowed plaintiffs to misrepresent the regulatory and scientific facts,” the group said in a statement.
Bayer has “strong arguments” to have the latest judgments revised. The group has won nine of the last 13 court cases and settled the majority of the lawsuits. “We will continue to defend the robust scientific and regulatory evidence in court, if necessary on appeal,” said the DAX group. Bayer remained convinced of the safety of glyphosate.
Bayer brought the problems surrounding the weed killer Roundup, which contains glyphosate, into its own hands in 2018 with its $60 billion takeover of Monsanto. In the same year, the first judgment against the DAX group followed, which set off a wave of lawsuits in the USA. In 2020, Bayer launched a billion-dollar program to settle the majority of the lawsuits – without admitting liability.
Bayer has already processed the majority of the lawsuits. In the spring, when the business figures for 2022 were presented, it was said that of the total of around 154,000 claims registered, around 109,000 had been compared or did not meet the comparison criteria. As of December 31, 2022, Bayer’s provision for settlements of existing and future glyphosate lawsuits still amounted to $6.4 billion.
Bayer stops study with hopeful Asundexian due to lack of effectiveness
Setback for Bayer: The pharmaceutical and agricultural group has canceled a study for the most important drug candidate in its pipeline of new developments. The phase III study (Oceanic-AF) to investigate Asundexian in comparison to the oral anticoagulant Apixaban in patients with atrial fibrillation and at risk of stroke was stopped, as Bayer announced ad hoc late on Sunday evening. Bayer is thus following a recommendation from the independent Data Monitoring Committee (IDMC) as part of ongoing study monitoring.
Asundexian was shown to be inferior to the control arm of the study. Bayer will analyze the data to better understand the result and publish the data. The clinical phase III of the Oceanic-Stroke sub-study, however, is to be continued.
Bayer has high hopes for Asundexian, which is expected to replace the previous bestseller Xarelto from 2026. Only recently, the ongoing studies on the product were expanded to include an additional indication. According to initial data, the novel factor XIa anticoagulant had shown a lower risk of bleeding than the investigational drug Eliquis (Apixaban). Bayer recently assumed that it would be able to achieve annual peak sales of more than 5 billion euros with Asundexian, making it the strongest drug in the pipeline.
Failures have pushed Bayer to its lowest point since 2006
Bad news from two divisions sent Bayer shares on a steep decline on Monday. The agar chemicals and pharmaceutical company not only received a new blow in the glyphosate dispute in the USA. Even more shocking, according to analysts, is the termination of the clinical trial with the hopeful Asundexian.
Bayer’s shares temporarily fell to 32.60 euros, their lowest level since the summer of 2006. Most recently, the loss was 19.79 percent to 33.25 euros, which puts Bayer behind Siemens Energy with a loss of 29 percent so far in 2023 is the weakest value in the leading index DAX, which includes 40 companies. This has so far increased by just over 14 percent.
At the weekend it became known that Bayer had been sentenced by a US jury to pay more than 1.5 billion US dollars in one of its still open glyphosate trials. On Monday night, Bayer announced that the phase III study with Asundexian had been terminated prematurely. This drug was previously seen as a hope for the successor to the drug Xarelto. The study examined asundexian compared to apixaban in patients with atrial fibrillation and at risk of stroke and ultimately found inferior effectiveness.
“The group is therefore in an extremely awkward situation,” stated Jürgen Molnar, capital market strategist at RoboMarkets. “On the one hand, potential sources of income are disappearing, but on the other hand, there are new potential costs.” Molnar therefore expects that this combination will continue to weigh on the share price in the coming weeks.
Both events were a financial setback for Bayer and also meant a further loss of trust, said DZ Bank analyst Peter Spengler. However, he expects that the amount of damage in the glyphosate dispute – as in the past – will be reduced “drastically”. In some cases the amounts have been reduced by more than 90 percent, he recalled. Meanwhile, he calculates the damage caused by Asundexian at around one to two euros per share.
“The announcement of the study termination is a complete surprise,” wrote Emily Field, analyst at the British bank Barclays. The hope of Asundexian’s success was the reason why she upgraded Bayer in April 2022. Since this has now been broken up, she sees significant challenges for the Leverkusen-based pharmaceutical business. Accordingly, she downgraded the share to “equal-weight” and reduced her price target from 65 to 40 euros. A deeper assessment is now appropriate, she argues, pointing to uncertainties about the way forward after the patent expirations of Xarelto and Eylea.
Other experts expressed similar views. Analyst Richard Vosser from the US bank JPMorgan spoke of a “serious blow” because Asundexian should actually have compensated for losses in sales at Xeralto and Eylea. The challenges for the new CEO Bill Anderson would be even greater, wrote Jefferies analyst Charlie Bentley. The pipeline is weak and investments are needed, while Bayer is also suffering from high levels of debt and further legal disputes regarding glyphosate are weighing on the company.
Jefferies leaves Bayer at ‘Buy’
The analysis house Jefferies has initially left Bayer’s rating at “Buy” with a price target of 60 euros after a study setback with the hopeful Asundexian. This is a bitter setback for the development pipeline of the chemical and pharmaceutical company, which is facing the “patent cliff” with its blockbuster Xarelto, wrote analyst Charlie Bentley on Monday morning. This would make the challenges for the new CEO even greater. The pipeline is weak and investments are needed, while debt is high. On top of that, the group continues to be plagued by legal disputes.
Dropping out of studies at Bayer shocks Barclays – back to ‘Equal Weight’
After the termination of an advanced clinical study on the pharmaceutical hopeful Asundexian, the British investment bank Barclays no longer sees much price potential for Bayer shares (Bayer).
“Asundexian’s promising prospects were the reason we upgraded Bayer shares to Overweight in April 2022,” wrote analyst Emily Field in a study available on Monday. However, the fact that the independent Data Monitoring Committee (IDMC) has now recommended the early termination of the Oceanic-AF study due to a lack of effectiveness is an “absolute surprise” for her. Field therefore promptly downgraded the agar chemicals and pharmaceutical company’s shares to “Equal Weight” and cut the price target from 65 to 40 euros. Given the current price collapse of around 20 percent, this still means a price potential of around a fifth.
Asundexian, now in the crucial phase III study, was studied in comparison to the competing drug apixaban in patients with atrial fibrillation and stroke risk as part of the entire Oceanic phase III development program and has now been terminated early. But this has dashed hopes that Asundexian would help Bayer get back on track for growth after the patents for the anticoagulant Xarelto and the eye drug Eylea expired, argues Field.
Accordingly, the Barclays expert sees significant challenges for Bayer’s pharmaceutical business. In January, Bayer forecast peak sales potential of more than 5 billion euros for Asundexian, which was advanced in key studies in both atrial fibrillation (Oceanic-AF) and stroke (Oceanic-Stroke). In her valuation model, she herself estimated peak sales of 6.5 billion euros in the area of atrial fibrillation.
But now a deeper valuation is appropriate again, even if Bayer “clearly still has the possibility of strategic options” for the company before the Capital Markets Day on March 5th, wrote Field.
Rated “Equal Weight”, the analysts at Barclays Capital expect the share to develop in a similar way to the other stocks in the observed sector in the next twelve months./ck/mne/jha/
Analyzing institute Barclays Capital.
JEFFERSON/LONDON (dpa-AFX) / FRANKFURT (Dow Jones)