Bayer must calm angry investors
A disastrous study, billion-euro lawsuits in the USA and high debts. The shares of the pharmaceutical company Bayer are flying low. Investors are wary after a billion-euro bond issue and fear losses.
Investors in the pharmaceutical and pesticide group Bayer are unsettled: legal disputes over glyphosate, high debts and, most recently, the weakening pharmaceutical division are causing the company problems. Bayer held a conference call with concerned investors on Monday, according to people familiar with the matter.
In the call, the shareholders had demanded clarity on whether the bad news would have a significant impact on the company's profits, said one of the insiders. Bayer responded by stating that it had set aside provisions for the Roundup weedkiller litigation. A Bayer spokesman declined to comment.
Investors questioned whether the German company had been honest about its prospects before issuing a $5.75 billion bond. "From our conversations with clients, many of them are angry and seriously questioning whether Bayer management rushed the transaction," said Andrew Brady of CreditSights.
The Leverkusen-based group had set the price for the bond on Thursday last week and the transaction was completed on Tuesday. On Sunday, however, the company suffered a severe setback in drug development: Until now, Bayer believed that its new drug Asundexian against blood clots had a peak sales potential of more than five billion euros - more than any other of its drugs. However, a decisive phase 3 trial with the drug was terminated prematurely on the recommendation of an independent monitoring committee due to a lack of efficacy.
In the wave of US lawsuits over the alleged carcinogenic effects of the herbicide Roundup, Bayer was ordered to pay 1.56 billion dollars in two separate trials on Friday, followed on Monday by a further judgment to pay 165 million dollars to employees of a school northeast of Seattle. It is rare for investment-grade bonds to be withdrawn after pricing, insiders said. Bayer offered bonds with maturities between three and 30 years. According to Informa Global Markets, it was the tenth-largest bond issue by an investment-grade industrial company this year.
Bayer's investments in glyphosate-related lawsuits have led to significant financial losses, causing concern among medication investors. Some investors are accusing Bayer of investment fraud, claiming the company misrepresented its financial health before issuing a billion-euro bond. With the failed drug trial for Asundexian, the company's share trading has taken a downward turn.
Source: www.ntv.de
