(Reuters) -Johnson & Johnson shares fell more than 3% on Tuesday after a U.S. bankruptcy judge rejected its $10 billion proposal to end tens of thousands of lawsuits alleging that its baby powder and other talc products cause ovarian cancer.
This is third time that the healthcare conglomerate’s bankruptcy strategy has failed in court. J&J plans to “return to the tort system to litigate and defeat these meritless talc claims”, and does not plan to appeal the ruling.
The company is expected to hold a conference call to discuss the ruling later on Tuesday. Opponents of the deal, including attorneys for some cancer victims and a government bankruptcy watchdog, have argued the third bankruptcy, like the first two, should be dismissed as J&J is not in “financial distress”.
The company has claimed that its products are safe, do not contain asbestos and do not cause cancer. J&J stopped selling talc-based baby powder in the U.S. in 2020, switching to a cornstarch product.
Its shares were down 3.5% at $160.08 in premarket trading. They trade at 15.51 times of its expected earnings over the next 12 months, according to LSEG data, compared to 14.9 times for rival Amgen and 9.7 times for Merck.
So far this year, J&J’s shares have gained about 14.7% up to Monday’s close, giving it a market capitalization of roughly $400 billion.
(Reporting by Manas Mishra in Bengaluru; Editing by Arun Koyyur)
Comments