Bayer Crumbles on Cancelled Drug Trial

It's hit after hit for the chemical giant

BREAKING NEWS FOR BAYER

After being ordered to pay over $1.5 billion to settle a lawsuit, Bayer AG shares fell even harder thanks to a promising drug trial getting canceled due to a lack of efficacy. Let's break everything down. 

WHAT HAPPENED TO BAYER

Bayer has been in the headlines recently due to ongoing lawsuits stemming from their Monsanto Group. The agrichemical business has been facing a tidal wave of legal issues thanks to cancers caused by their Roundup weed killer. Recently, a Missouri Jury ordered Bayer to pay $1.56 billion to three victims of Roundup-related cancer. 
This was largely priced-in, but then news on Sunday dropped that a Phase III trial of a really great-looking blood thinner had been halted because the drug basically doesn't work.

A HUGE REVERSAL FOR BAYER

The drug, Asundexian, had been in development for years, so this was a huge blow. It takes a huge amount of effort to get a treatment all the way to Phase III trials, and usually, all the risks are baked out of a treatment if it makes it this far through the regulatory process. Sometimes a larger sample size can kill a drug though. The market had priced in Asundexian being strong enough to make it all the way to regulatory approval, so the cancellation of this trial came as a huge surprise that sent investors scrambling to sell German-held shares of Bayer stock.  

WHY IT MATTERS FOR BAYER

This is actually a pretty bad result for the wider pharmaceutical industry as several companies are working on a similar class of medication. Bristol-Meyers Squibb caught most of the tangential sell pressure as they have a similar treatment that also just entered phase III trials. BMY stock fell over 2% in the first few minutes of trading while Bayer's German shares gave in completely to sell pressure and collapsed by nearly 20%.