The Chief Executive of Johnson & Johnson (J&J), Alex Gorsky, was in a New Jersey court on January 27 over allegations that the company’s baby powder causes cancer.
Lawyers for four individuals who claim to have developed cancer from using the company’s products in their infancy questioned Gorsky over the timing of the sale of his company stock.
All four plaintiffs have mesothelioma, a type of cancer that occurs in the thin layer of tissue that covers the majority of one’s internal organs.
The four plaintiffs claim that their cancer, which is incurable, was caused by their exposure to asbestos in J&J baby powder as infants.
The court had previously awarded the victims $37.2 million US dollars in compensation in an earlier stage of the trials.
Gorsky sold company stock before news report on asbestos in talc was published
Lawyers argue that Gorsky sold the shares two days after Reuters, a news agency, had contacted him regarding documents that reveal J&J’s knowledge that small amounts of asbestos had been found in the company’s talc products since 1971.
Gorsky sold $38.6 million US dollars worth of company stock on November 16, 2018, after reportedly receiving an email sent by a Reuters journalist summarizing J&J’s failure to disclose the fact that small amounts of asbestos had been in its talc products for decades.
However, Gorsky testified under oath that the email had not been delivered by the time of the stock sale.
J&J has dismissed the Reuters’ report as “an absurd conspiracy theory” and said that the CEO did not have any prior knowledge of carcinogens found in the company’s talc products.
“My trade took place at a time when I did not have that kind of knowledge about the article,” Gorsky said.
Gorsky also said that he went through all of the necessary approval processes with the company’s board of directors and legal team regarding the sale of company shares after exercising stock options.
An unnamed J&J representative said that Gorsky had informed the company’s legal department about the planned sale on November 12, 2018, two days before the Reuters inquiry.
He stated that the reason for the stock sale was to purchase a house.
Sell-off wipes out at least $40 billion US dollars of stock value
After the Reuters report was published, a selloff wiped out more than $40 billion from the company’s market value.
J&J is handling more than 16,000 lawsuits alleging that those of its products containing powders are contaminated with asbestos.
The pharmaceutical company is also facing a federal criminal investigation into the safety of its existing products.
A Los Angeles court awarded $21.7 million US dollars to a woman who says the company’s products gave her cancer.
Another $4.7 billion US dollars have been awarded to 22 women and their families who claimed that J&J talc products caused ovarian cancer.
Cancer-causing asbestos found in baby powder
The plaintiffs all have cancer that they’ve said was caused by exposure to asbestos in baby powder when they were infants.
Asbestos has been classified as a known human carcinogen. A carcinogen is a substance that causes cancer.
In the 1800s, cosmetic companies began selling talc powder to get rid of skin irritations such as chafing and diaper rash.
Talc powder is also largely-known as “medicated powder” and “foot powder.”
Johnson’s Baby Powder was the most popular talc powder in the market and was first introduced to consumers in 1893.
Baby products recalled after asbestos found
J&J recalled 33,000 bottles in October 2019 amid lawsuits alleging that the company had knowledge the baby powder was contaminated with carcinogens.
The recall came after the US Food and Drug Administration (FDA) regulators found trace amounts of asbestos in J&J’s baby powder three months ago.
The company claims its products are safe to use
Gorsky maintains that the products are absolutely safe based on an investigation conducted by internal experts.
“I was told by experts in these fields that in fact we were using the most appropriate, most up-to-date methodologies to make sure our talc was safe,” Gorsky told a New Jersey state courtroom.
J&J confident in developing coronavirus vaccine
J&J recently claimed that its lab is “confident” that it will produce a vaccine for the new coronavirus that, as of January 29, has killed 130 people and infected thousands of others.
Dr. Paul Stoffels, J&J’s chief scientific officer, said in an interview with CNBC on January 27 that he believes the drugmaker can create a vaccine in the coming months to fight against the deadly coronavirus.
“We have dozens of scientists working on this so we’re pretty confident we can get something made that will work and stay active for the longer term,” Stoffels told CNBC’s “Squawk Box”.