Talcum powder cancer claims target J&J’s new consumer carve-out
Johnson & Johnson’s newly shaped shopper enterprise has been focused by claims that its talcum powder may cause most cancers, days earlier than it makes an attempt to finish the biggest US preliminary public providing in virtually 18 months.
Kenvue, which began its IPO roadshow this week, has been named in not less than seven talc lawsuits filed because the begin of April, in response to regulatory filings and other people accustomed to the matter.
The patron carve-out will promote over-the-counter medicines and healthcare manufacturers equivalent to Tylenol and Band-Help, in addition to J&J child powder merchandise, whereas a few of those who comprise talc will probably be phased out. J&J had tried to protect Kenvue from a lot of the tens of 1000’s of talc claims already filed in opposition to the group.
One of many new circumstances naming Kenvue was filed on behalf of Justin and Kathryn Bergeron, a husband and spouse who dwell in Louisiana. It claims Justin Bergeron contracted mesothelioma because of utilizing J&J talc containing asbestos.
The case was filed in Middlesex county, New Jersey, and legal professionals working for talc claimants say it might be the primary of many claims filed in opposition to Kenvue and different J&J divisions not beforehand named in lawsuits.
J&J faces greater than 60,000 claims that its child talc causes most cancers and has proposed a $8.9bn settlement, which depends on the corporate’s efforts to realize claimants’ help for a controversial chapter scheme.
The corporate has mentioned its talc is asbestos free and had not induced cancers however argues that settling present and future claims within the chapter system could be preferable to preventing talc claims within the courts for many years.
Kenvue — whose model combines the phrase “ken”, a phrase utilized in Scotland meaning information, and “vue”, referencing sight — warned in an replace to its IPO prospectus this week that “varied events” had introduced claims in opposition to it immediately.
J&J has agreed to indemnify the carved out enterprise from any authorized prices associated to talc gross sales within the US and Canada, although Kenvue’s submitting famous that it couldn’t assure this indemnity could be adequate.
Kenvue was additionally topic to “a couple of” separate claims referring to abroad gross sales, which might not be coated by J&J, the prospectus mentioned.
Final week US chapter choose Michael Kaplan refused a request by J&J legal professionals to position a maintain on talc circumstances filed in opposition to Kenvue and Janssen, that are each named within the Bergeron lawsuit. Janssen is the pharmaceutical division of J&J.
The authorized points will not be anticipated to derail the IPO however any additional challenges to pricing will probably be unwelcome for Wall Road bankers, who’re watching the Kenvue deal as a take a look at of investor urge for food for brand new listings.
The US IPO market stays mired in one in every of its longest slowdowns for many years; simply $2.3bn has been raised in listings this 12 months, in response to Dealogic, down 22 per cent 12 months on 12 months and 96 per cent in contrast with the identical interval in 2021.
Les Funtleyder, a healthcare portfolio supervisor at E Squared Capital Administration, mentioned the litigation danger posed by the extension of talc claims to Kenvue may deter some buyers from investing within the J&J carve-out.
“There are in all probability folks sitting on the fence on this IPO, a bit like we’re. Possibly they’re fairly certain concerning the Kenvue manufacturers however a bit of cautious of the financial system after which they see this talc litigation danger. This might trigger them to carry fireplace. In spite of everything, the rationale you purchase a shopper inventory versus a healthcare inventory is since you don’t need a lot of these headline dangers.”
Jonathan Ruckdeschel, an asbestos trial lawyer, informed the Monetary Instances it was not shocking that Kenvue and Janssen have been now being sued by “talc victims” attributable to company restructurings undertaken by J&J to restrict its publicity.
“Earlier than J&J’s first bad-faith try to cover the belongings of its shopper merchandise enterprise within the chapter courts, that enterprise was price not less than $61bn. Because it grew to become obvious that the primary bad-faith chapter was more likely to be rejected, J&J doubled down and tried to cover these belongings by transferring the belongings into new corporations,” he mentioned.
J&J and Kenvue mentioned securities legal guidelines prevented them from commenting on the lawsuits or IPO plans.