Bayer AG Teams Up with Evotec and Haplogen Amidst Monsanto Litigation Loss


Evotec AG and Haplogen GmbH have been long-term collaboration partners. The companies announced that Haplogen will enter into a multi-year drug discovery and development deal with Bayer AG to focus on pulmonary diseases like chronic obstructive pulmonary disease (COPD).

Haplogen and Evotec have been collaborating since 2012, and as a result, developed a deep portfolio of programs for pulmonary indications. Their target-based approach will broaden under the Haplogen collaboration with Bayer.

The companies indicate that one potential approach is disruption of the division of viruses that exacerbate COPD. As such, the companies will work to develop new antiviral compounds.

“Our alliance with Haplogen has proven that both companies and teams are united by the same spirit and objectives under a very efficient ‘virtual’ performance-based biotech business model,” said Werner Lanthaler, Evotec’s chief executive officer, in a statement. “With the addition of Bayer’s excellent expertise, we have high aspirations for this partnership and look forward to bringing new and better treatments to patients living with pulmonary diseases.”

No financial details were disclosed.

The news comes at the same time that a U.S. federal court jury in California delivered a verdict to a former school groundskeeper, Dewayne Johnson, who alleged that exposure to Monsantos Roundup and Ranger Pro weed killers caused his non-Hodgkin’s lymphoma. The jury awarded him $289 million. Bayer completed its acquisition of Monsanto on June 7, 2018, and indicates it will no longer use the Monsanto name. Bayer shares dropped 14 percent yesterday at the news.

Monsanto faces more than 5,000 similar lawsuits related to cancer risks and its glyphosate-based weedkiller, which includes Roundup. Bayer acquired Monsanto for $63 billion. Not surprisingly, Bayer indicates it will appeal the jury verdict. In a statement, Bayer said, “The jury’s verdict is at odds with the weight of scientific evidence, decades of real world experience and the conclusions of regulators around the world that all confirm glyphosate is safe and does not cause non-Hodgkin’s lymphoma.”

Analysts with Barclays called the decision a “litigious headache,” and noted, “Whilst an appeal is certain and may indeed likely result in the penalty being moderated at a minimum if not reversed altogether, a large number of similar pending cases will now likely multiply.”

Alistair Campbell, an analyst with Berenberg, believes that resolving these issues will cost Bayer about $5 billion, based on past product liability settlements, including Merck & Co.s $4.9 billion settlement over Vioxx, a painkiller, and Bayer’s settlement over Baycol, for cholesterol. In that case, Bayer paid $4.2 billion in total settlement costs.

Reuters writes, “Genetically modified (GM) crops that withstand glyphosate are a main source of cash for Monsanto, mainly generated in North and South America, where the technology is widely accepted. The health worries could further darken the outlook for a product category following the emergence of weeds that have grown resistant to the herbicide.”

“We think the risk of withdrawal is extremely low, but if it materialized it would be a major blow to the transaction value paid for the company,” Campbell stated.

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