Bayer Battered After Suffering "Major Blow" From Second RoundUp Cancer-Trial Loss

First up, ZeroHedge: 

Wed, 03/20/2019 - 07:14
Bayer Battered After Suffering "Major Blow" From Second RoundUp Cancer-Trial Loss

Bayer AG shares are down over 12% in European trading - the biggest drop since 2003 - after a U.S. jury found the RoundUp weed killer was a substantial factor in a California man's cancer. This is the second case that has gone against manufacturer Monsanto, acquired by Bayer last year.

On Tuesday, a federal court jury in San Francisco ruled unanimously in a lawsuit against Monsanto. Attorneys say the trial, which will determine in a second phase whether the company is liable and if so, for how much, could help determine the fate of hundreds of similar lawsuits.

The plaintiff's attorneys said he developed non-Hodgkin lymphoma after 26 years of regularly using Roundup to tackle weeds and poison oak, according to the Wall Street Journal. The active ingredient in Roundup and Ranger Pro is glyphosate, a herbicide.

Hardeman’s case is considered a “bellwether” trial for hundreds of other plaintiffs in the US with similar claims, which means the verdict could affect future litigation and other cancer patients and families. Monsanto, now owned by the German pharmaceutical company Bayer, is facing more than 9,000 similar lawsuits across the US.

The decision strikes another blow to the German pharmaceuticals group. In August, a jury ordered its Monsanto unit to pay $289 millionafter determining it failed to warn customers of the potential cancer risks of two of its weedkillers, Roundup and Ranger Pro. The verdict was cut to $78.5 million on appeal.
Analysts are broadly negative on the news, BUT appear to be buyers of any dip... and today's a big dip.

News is a “major blow,” according to Baader (buy, PT EU123), which says Bayer shares might move towards EU60 in the short-term. If stock falls toward 2018 lows, probability of Bayer becoming a target for activists or a takeover will increase.

Morgan Stanley (overweight, PT EU82) says there was “budding enthusiasm” among investors for either a potential “surprise” verdict in favor, or a hung jury, given multiple days elapsing during deliberations.

Overhang on Bayer shares “could be significant” as outcome was considered by some investors to be a potential bellwether for ~765 outstanding glyphosate cases, Goldman Sachs analyst Keyur Parekh (buy, PT EU78) writes.

Citi says “steady heads required” as >EU20b of litigation risk is already priced into the shares. Says legal checks instruct bank to be more focused on the upcoming Hall vs Monsanto trial being held in St Louis from April 1. St Louis result will better determine whether the estimate of a potential settlement liability of $1-6b needs to be refined

Any extreme weakness is an opportunity to buy, according to Bernstein (outperform, PT EU86) as an ultimate liability well above the $5b is already “baked-in”...

...MORE

And from Bloomberg, March 20:

Bayer's Blind Spot on Monsanto's Roundup May Cost Billions

There’s one more tribunal in which Bayer AG’s efforts to defend its Roundup weedkiller are floundering: the court of public opinion.

Bayer says science shows that the herbicide, which the German company gained in its $63 billion acquisition of Monsanto Co., is safe. Now that a second U.S. jury has linked the product to cancer, the uphill battle Chief Executive Officer Werner Baumann is fighting just got steeper. The company has lost more than $30 billion in market value since the first defeat last August, raising fresh questions about a deal he spearheaded.

Roundup became the company’s leading headache after the June 7 completion of the Monsanto deal that Baumann entered to remain a global competitor in seeds and agricultural products. Bayer now faces some 11,000 suits from cancer patients and their families, and its second loss paints a dire picture. The shares fell as much as 13 percent Wednesday, the most since August, and were fetching 62.53 euros at 4:47 p.m. in Frankfurt.

Baumann began crafting the deal just days into his tenure in 2016, with backing from Chairman Werner Wenning, who had hand-picked the CEO and worked closely with him during the acquisition talks. Baumann was aware of the seed maker’s image problem, but believed that changing Monsanto’s name would help sway public opinion. Bayer’s reliance on scientific experts’ opinions that the main ingredient in Roundup, called glyphosate, was safe may have blinded it to the burden the giant transaction would bring.

After an earlier case went against the company, the latest verdict came as more of a surprise because the judge and trial setup appeared to favor Bayer. The judge split the proceedings into two parts, one focused on whether Roundup contributed to causing cancer, with the second phase examining the company’s conduct.

That was seen as an effort to remove some of the emotion that was thought to be behind the jury verdict from August, said Dennis Berzhanin, an analyst with Pareto Securities in Frankfurt.

“It seemed like this trial would go a little bit differently, it would be a little bit more fact-based, little bit more science-based,” Berzhanin said....MUCH MORE

As Der Spiegel said in January:

Safe Or Not, Monsanto's Roundup Is Toxic for Bayer—Spiegel