On Tuesday, a US federal court in San Francisco unanimously ruled that Roundup, a best-selling weed killer produced by Monsanto, company acquired by Bayer in a $63bn deal last summer, had been a “substantial factor” in causing the cancer of California resident Edwin Hardeman. The glyphosate-based herbicide most likely had a significant role in causing the man's non-Hodgkin's lymphoma, allowing the trial to proceed into a second phase on liability and damages. The decision of holding Bayer accountable for paying damages will be settled in the second phase of the trial, when Hardeman’s lawyers can present evidence showing the company may have influenced scientists, regulators and the public about the safety of its products. However, a relevant cost is already being paid by the company in terms of publicity and reliability. This result came after months of legal battle by Bayer, in the attempt of proving that the company was not responsible for the killing, stating that studies and regulatory evaluations on human exposure data have shown the weed killer is safe for human use. “We are disappointed in the jury’s initial decision, but we continue to believe firmly that the science confirms that glyphosate-based herbicides do not cause cancer,” Bayer said after the verdict. “We are confident the evidence in phase two [of the trial] will show that Monsanto’s conduct has been appropriate and that the company should not be liable for Mr. Hardeman’s cancer.”
The Hardeman case is considered a so-called “bellwether case”, intended to be used as a template to help quantify damages and settlement options for more than 760 similar claims regarding Roundup. Hardeman’s is only the second case that ended up going to trial among about 11,200 overall lawsuits Bayer received in the United States. In the first trial concluded in August last year, regarding the link between the herbicide and another California man’s cancer, the jury charged Bayer a damage bill of $289 million, which after further considerations was reduced to $78 million.
The first trial caused a strong fall in the share price just like the most recent one did. On March 20, the day after the news came out, Bayer’s shares lost over a tenth of their value in Frankfurt, drifting from about €70 to €62.4. Over the past 12 months, the German pharmaceutical and chemical group’s market value has dropped by more than a quarter — mostly due to investors’ concerns about the legal risk linked to glyphosate causes. The market’s incorporation in the share price of the litigation risks related to the latter have amounted to more than €20bn so far. On this matter Peter Verdult at Citi wrote: “While sentiment will clearly take a knock at the second Roundup trial going against Bayer, one has to keep in mind that both verdicts were delivered by juries in San Francisco-California and, by our calculation, that €22bn of litigation risk is already priced into the shares.” Mr. Verdult added that an incoming trial in St Louis, due to start next month, will provide a further test of Bayer’s glyphosate-related exposure, which he estimated at $1bn-$6bn.
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