Market Commentary

Bayer Drug Trial Failure: A Major Setback for Michael McCaul

Jabran Kundi
24 Nov 2023 · 2 minutes read

Bayer AG (BAYRY:US), a struggling German pharmaceutical company, just announced that it was ending its phase trials for its experimental blood-thinning drug Asundexian. The company said the drug did not work as well as Bristol Myers Squibb’s Eliquis (BMY:US)

BAYRY shares lost about 20% of their value immediately after the announcement. Asundexian was poised to bring in $5 billion in annual revenues for the company so the announcement is a huge setback to the company and a disappointment for the shareholders. The development of the drug was ahead of its competitor Bristol Myers Squibb’s Milvexian, so the disappointment is justified. 

The CEO’s Job Gets Tougher

Bayer CEO Bill Anderson started at his post earlier this year. At the recent Q3 earnings announcement, he explained how the company was weighing its options of splitting the business and carrying out a management overhaul. Already busy on a mission like that, the CEO now has to deal with one more headache after this announcement.

The company already has nearly $43 billion of debt. And its cash-generating ability is not impressive. It recently lost a case in the U.S. and was ordered to pay over $1.5 billion to users who blamed the company’s weedkiller Roundup for their cancer. This has put the CEO under further pressure.

McCaul Continues to Buy Against All Odds

Amidst all the struggles, litigation, and setbacks the company is facing, there is one U.S. politician who continues to buy the stock relentlessly. Michael McCaul has bought $550,000 to $1,250,000 worth of BAYRY stock this year. He has been averaging down his holding since he initiated his position. 

The only other politician trading Bayer AG this year is Daniel Goldman, and even he is a net seller of the stock YTD. 

It will be interesting to see if McCaul continues to back the company now that it is trading at a nearly 40% discount on his first purchase. The shares were last closed at $8.92.