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Temasek loses close to S$2B less than 1 yr after investing in Bayer while 3rd Roundup lawsuit proceeds

Two weeks ago (19 Mar), a federal jury in San Francisco found Monsanto’s Roundup weed killer was a substantial factor in causing cancer in a Californian man, Edwin Hardeman. Mr Hardeman was the first person to challenge Monsanto’s Roundup in a federal court. During the trial, the 70-year-old testified that he had use the weed killer for a long period of time and at one time got it on his skin before he was diagnosed with cancer.

The ruling at the federal court followed a historic verdict last August in which a California state court ruled that Roundup caused the terminal cancer of Dewayne Johnson, a former school groundskeeper. In Mr Johnson’s case, the jury found Monsanto had “acted with malice or oppression” and awarded him US$289 million in damages. The damages were later reduced to US$78 million.

After the federal court found Monsanto’s weed killer was responsible for Mr Hardeman’s cancer, the jury deliberated on the damages to be awarded to Mr Hardeman last Wed (27 Mar) and decided on the amount of US$80 million. The jury found the German pharmaceutical giant Bayer liable because its subsidiary, Monsanto, did not warn the plaintiff of the herbicide’s alleged cancer risks.

Not surprisingly, Bayer share price dropped. It has been steadily sinking since the first adverse verdict in the Roundup lawsuit was announced last August. The drop in share price has pushed Bayer’s value down to about US$58 billion since then. It is now trading at below 60 EUR.

In fact, it was Singapore’s Temasek Holdings which helped Bayer to acquire Monsanto. It was reported in Apr last year that Bayer sold 3.6 per cent stake to Temasek for 3 billion euros at 96.77 euros per share. The money is used as part of Bayer’s plan to takeover Monsanto. Together with its existing holding in Bayer, Temasek would then own about 4 percent in Bayer after the transaction. By Jun, with Temasek’s help, Bayer successfully acquired Monsanto to become the biggest seed and agricultural chemical maker in the world.

As of Friday’s (29 Mar) closing, Bayer’s share price was 57.60 euros. Since Temasek bought 3 billion euros worth of shares at 96.77 euros in Apr last year, that means it has lost 39.17 euros per share or 40.5% of the 3 billion euros investment. So, in less than a year, Temasek has lost at least 1.2 billion euros or S$1.85 billion.

Bayer continues to deny that Roundup could cause cancer, “This (second) verdict does not change the weight of over four decades of extensive science and the conclusions of regulators worldwide that support the safety of our glyphosate-based herbicides and that they are not carcinogenic.”

Third trial against Monsanto started

The Hardeman trial is only the second of more than 11,200 Roundup lawsuits set to go to trial in the US.

A third Roundup lawsuit started in California’s Superior Court in Oakland last Thu (28 Mar). It was brought by California elderly couple Alva and Alberta Pilliod who were diagnosed with non-Hodgkin’s lymphoma in 2011 and 2015 respectively.

Alva was diagnosed with systemic non-Hodgkin lymphoma in 2011 and has been in remission since, after undergoing aggressive chemotherapy treatment that degraded his cognitive function. Alberta was diagnosed with the same cancer in 2015 after doctors found a tumor in the middle of her brain. She was declared cancer-free in 2016 following a round of chemotherapy that left her with extensive brain damage, but relapsed the next year. A second round of treatment stabilized the tumor.

The probability that both Alva and Alberta would get non-Hodgkin lymphoma is 1 in 20,000, the plaintiffs’ lawyer told the jury. Their treating physician said it was so unlikely they would both develop the same cancer that an environmental factor like Roundup was the likely culprit.

The plaintiffs’ lawyer also revealed new evidence in court, alleging that Monsanto planted one of its employees at a contract lab called Industrial Bio-Test Laboratories (IBT) in the 1970s to fake negative mouse carcinogenicity data for Roundup’s active ingredient glyphosate. The alleged fake data would then be used to win regulatory approval for the weed killer in 1975. The lawyer also alleged that Monsanto had planned an attack to discredit the World Health Organization’s (WHO) cancer research agency, anticipating that it would classify glyphosate as a probable human carcinogen in 2015.

Furthermore, the lawyer intended to show that Monsanto had exploited “deep connections” within the US Environmental Protection Agency (EPA) to classify glyphosate as non-carcinogenic. In fact, a toxicologist in the University of California at Berkeley, was “so outraged” by the EPA’s failure to follow its own herbicide-assessment guidelines that she recently resigned from an EPA glyphosate-review panel to conduct her own study of the chemical. That study, released this past February, found that glyphosate exposure increases the risk of developing non-Hodgkin lymphoma.

The lawyer told the jury in the third trial that Monsanto has known for 40 years that Roundup causes tumors in rodents and for 20 years that it causes non-Hodgkin lymphoma in humans, but refused to include a cancer warning to safeguard the enormous profits generated by the most widely used herbicide in the world.

“You give the consumer the right to make a choice” about a chemical that “causes cancer before they buy it,” he said. “Because that failure means people get hurt, and they have to deal with the consequences. That’s how it works.”

The latest new evidence against Monsanto in the third trial was not presented in the previous two trials, where both juries found Monsanto liable nonetheless.

Meanwhile, Monsanto’s lawyer argued that the elderly couple already have several known risk factors for non-Hodgkin lymphoma. Alva has a history of skin cancer – he has been diagnosed with multiple forms of it 22 times – the autoimmune disorder ulcerative colitis, and five bouts of meningitis. The lawyer said that auto-immune conditions like ulcerative colitis increase the risk of developing non-Hodgkin lymphoma. And meningitis is “an extremely rare condition” that weakened Alva’s immune system, he said.

Monsanto’s lawyer also pointed out that Alberta had bladder cancer before, which more than doubles the risk of non-Hodgkin lymphoma and Hashimoto’s disease, a condition in which the immune system attacks the thyroid gland. With this condition, the risk of non-Hodgkin lymphoma is tripled, he said.

He rounded out his remarks by noting that 100 countries have deemed Roundup safe to sell since the herbicide was developed in 1974. He added that regulators in the US, Canada and Europe re-reviewed glyphosate after the WHO’s cancer agency announced its findings and again concluded that glyphosate is safe.

“When you see the EPA’s determination,” the Monsanto’s lawyer said, “it is backed by solid science.”

Other than California, Monsanto’s Roundup weed killer trials are also expected to start in other States soon. For example, at least two trials are scheduled to take place in St. Louis, Missouri state court in the second half of this year.

Even as more cases are waiting to be heard in US courts, more cancer sufferers are also queuing up to file suits against Monsanto. Do expect Bayer’s share price to tank further if Monsanto continues to lose more Roundup lawsuits.