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Bayer wins second Baycol case
FRANKFURT, Germany (Reuters) -- Shares in Germany's Bayer rallied on Friday after the company won a second U.S. lawsuit, raising hopes that liabilities from its recalled cholesterol drug Baycol may not be as high as expected. Bayer shares rose as much as 6.5 percent to 14.26 euros, outperforming the DJ Stoxx European chemicals sector which gained 0.4 percent. By 0910 GMT, the stock was 4.8 percent higher at 14.03 euros. "Bayer winning two out of two gives you the feeling that the kind of nightmare scenarios on compensation that were being talked about earlier may not happen,'' said James Knight, analyst at Merrill Lynch in London. Bayer said on Thursday that the company had been cleared of all liabilities in the U.S. case, which involved a woman in her seventies who had filed for damages related to the drug in Jackson, Mississippi. The case was the second to be decided of 8,400 lawsuits facing the drugmaker over Baycol, known as Lipobay outside the United States. Bayer withdrew the drug, which has been linked to more than 100 deaths worldwide, from the market in 2001. Bayer's chances improveAnalysts said Bayer's chances of defending the thousands of lawsuits pending in the U.S. had now improved after its second successful defence. "There are clearly many more cases to come, and Bayer should have a chance of winning most of them,'' Merril Lynch's Knight said. Bayer's bonds also advanced with the yield on its six percent bond due April 2012 standing 18.4 basis points lower at 162.9 basis points over safe-haven government debt. Bayer shares surged 40 percent on March 18 after its first U.S. court victory sparked a sharp relief rally in its shares and bonds, as fears that liabilities might reach as much as $10 billion receded. Last month's Texas court case, where the plaintiff had sought $560 million, saw the jury decide that neither Baycol's design nor instructions for use were defective. A Bayer spokeswoman said the next Baycol liability court case is scheduled to start April 21 in Fort Worth, Texas. The company is also fighting a court case in Minneapolis that aims to consolidate cases into a class action. Although Bayer has product liability insurance, it has admitted that Baycol charges could exceed its cover if plaintiffs "substantially prevail.'' Bayer has already settled claims out of court with around 500 patients for around 140 million euros and is in talks to settle more cases. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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