TheChek News Flow

Bluebell Capital Partners calls for conglomerate’s break-up and boardroom reshuffle ahead of AGM

Activist investor Bluebell Capital Partners is pushing for the break-up of Bayer and a supervisory board reshuffle, increasing the pressure on the incoming chief executive one week ahead of the conglomerate’s annual shareholder meeting.

In a presentation sent to Bayer earlier this week, the small activist investor, which says it holds an undisclosed stake, welcomed Bayer’s appointment of Bill Anderson, former head of Roche’s pharmaceutical business, who will formally become chief executive in June.

But Bluebell said Bayer needs to go further, committing now to ensuring that the four supervisory board members whose term expires next year will not seek re-election. It argues that this would send a “strong signal of discontinuity” for the underperforming company, which should be split into its crop science and pharmaceutical divisions.

The investor’s intervention comes at a critical moment for Bayer as chief executive Werner Baumann will leave the company next month. Shares in Bayer have risen by more than 20 per cent this year but are still trading more than a third lower than they were five years ago.

Chief executive-elect Anderson acknowledged this month that the group was facing “unique challenges”, saying that he would consider all options including a potential break-up to address Bayer’s issues. However, he stressed that a split is not a foregone conclusion.

Baumann is resigning a year early after persistent investor pressure over the ill-fated Monsanto takeover that included a vote of no confidence in management in 2019. Bayer shares have underperformed because of billions in litigation costs from its 2016 acquisition of US agrichemical group Monsanto.

Bluebell argued in its presentation that there are “no synergies” between the two divisions and estimated that a separation could generate about €15bn to €30bn, which it suggested should be used to pay down debt and reinvest in pharmaceuticals. It added that the company should explore monetising its consumer health division, which sells over-the-counter medicines.

Marco Taricco, founding partner of Bluebell, said he has heard from other shareholders with similar concerns.

“If you appoint a new chief executive when the supervisory board is the same monolith, they don’t want to do anything, then the CEO is not going to have an easy job,” he told the Financial Times.

Jeff Ubben, managing partner of Inclusive Capital Partners and founder of the hedge fund ValueAct Capital, has also taken a stake in Bayer to lobby for change, including raising questions about whether the company should be split into two groups.

Bluebell said its stake in Bayer is the biggest it holds but did not disclose its size. The small activist fund, launched in 2019, made waves when it was instrumental in the removal of the chief executive of the French yoghurt maker Danone. It also lobbied for change at UK drugmaker GSK, but did not succeed in changing the company’s management.

Bayer said it was aware of Bluebell’s letter and presentation and was “always open for a constructive dialogue”, adding that Anderson was currently familiarising himself with the company and, together with the team, would discuss priorities for the future. 

Treasury secretary to give a speech laying out Biden administration’s China policy

WASHINGTON—Treasury Secretary Janet Yellen plans to say Thursday that the U.S.’s policies toward China will give priority to addressing national-security concerns over preserving economic growth.

In prepared excerpts of a speech she will give, Ms. Yellen listed three goals for the U.S. relationship with China: protecting human rights and national security, establishing healthy economic ties and cooperating on major global issues. She criticized subsidies the Chinese government offers to its industries and said the U.S. will remain the world’s dominant economic power.

The Biden administration is pushing to reorient the U.S. economy—as well as the economies of its close allies—away from China. Western officials are concerned about their dependence on China for materials such as minerals used in electric-vehicle batteries, worried that Beijing could cut them off in a conflict.

Police in northern California last month arrested Igor Babuschkin, Elon Musk’s first known hire for a new company that aims to compete with artificial intelligence startup OpenAI, for domestic battery, public records show. A representative for the Santa Clara County District Attorney’s office, Lisa Buuck, said the office had reviewed the case and had no plans to charge Babuschkin with a crime.

The arrest, which took place in Palo Alto, Calif., in the heart of Silicon Valley, could complicate Babuschkin’s efforts to get the company off the ground and recruit talent. Babuschkin was an AI researcher at OpenAI as well as Alphabet’s DeepMind unit before joining Musk to create what Musk has referred to as a chatbot stripped of political correctness—an “anti-woke” version of OpenAI’s trailblazing ChatGPT, The Information reported in February.

Babuschkin and Musk didn’t respond to requests for comment.

Around 9:30 a.m. on March 6, local police responded to a report of a domestic violence battery at 588 Webster St., a luxury apartment building in downtown Palo Alto, near Stanford University, according to public records and a police spokesman. The alleged victim has not been publicly identified.

“Following an investigation, police arrested the suspect (Igor Babuschkin) for misdemeanor domestic violence and booked him into the Santa Clara County Main Jail,” Palo Alto Police Department spokesperson Brian Philip said in an email. Bail was set at $10,000 and he posted bond and was released at 5:46 p.m. that day, Philip said.

Three days later, X.AI, Musk’s new company, was incorporated in Nevada, according to state filings. X.AI is part of the same Musk holding company that owns Twitter.

Babuschkin and Musk have discussed assembling a team to pursue AI research to improve the “reasoning abilities and the factualness of these language models,” Babuschkin previously told The Information, referring to machine-learning models that can generate elaborate text in response to simple prompts. Musk told Fox News host Tucker Carlson in a recent interview that he was “going to start something, which I call ‘Truth GPT,’ or a maximum truth-seeking AI that tries to understand the nature of the universe.” (GPT stands for generative pretrained transformer, a type of machine-learning model known as a large-language model that is behind the OpenAI chatbot.)

Musk co-founded and previously funded OpenAI as a counterweight to Google and its Alphabet subsidiary, DeepMind. Musk hinted in a recent tweet that he may sue OpenAI because it started as a nonprofit and later created a for-profit unit that has raised billions of dollars from Microsoft—a development Musk recently said went against his original intentions. In 2018, Musk parted ways with OpenAI and tried to recruit some OpenAI researchers to join him at another company he runs, Tesla. (Ironically, Musk told employees at OpenAI, which was then still a nonprofit, that Tesla had a better shot at developing complex software because it was a for-profit firm with access to capital.)

Musk has since criticized ChatGPT for producing results that appeared to avoid inflammatory subjects or that reflected a left-leaning political bias. OpenAI President Greg Brockman recently told The Information that such criticisms were “legitimate” and “the system we implemented did not reflect the values we intended to be in there.” He said OpenAI staff “want the default personality of OpenAI to be one that treats all sides equally.”

At DeepMind, Babuschkin was co-author of a 2019 paper demonstrating a machine-learning model that could play the videogame StarCraft II at the same level as the game’s highest-ranked humans. He left DeepMind in February. Babuschkin also previously worked at OpenAI for a year and a half between 2020 and 2022.

Researchers at DeepMind and OpenAI have created software that can ace videogames as a step toward developing software that can solve more practical tasks for humans. Such advances have paved the way for apps, including ChatGPT, that can solve more-practical tasks for humans. The companies’ ultimate goal is to create artificial general intelligence, software systems that can think and learn on their own. For now, DeepMind is putting aside longstanding grudges with Google as the two Alphabet units jointly develop software that could rival ChatGPT.

Perceptions have shifted dramatically in the past few years on the therapeutic value of illicit drugs such as ecstasy. But questions still linger about what FDA approval might look like.

For Rick Doblin, 2023 could be a landmark year: the year that the US government decides whether it will allow the use of hallucinogenic drugs to treat mental illness.

Doblin, who is based in Belmont, Massachusetts, is the founder and president of the non-profit organization Multidisciplinary Association for Psychedelic Studies (MAPS). He has spent nearly 40 years researching whether the experience produced by the psychedelic drug MDMA — also called ecstasy or molly — can help people with post-traumatic stress disorder (PTSD). In 2021, MAPS’s phase III clinical trial of 90 people with PTSD found that those who received MDMA coupled with psychotherapy were twice as likely to recover from the condition as were those who received psychotherapy with a placebo1 (see ‘Response to MDMA therapy’).

MAPS has now completed a second, larger trial that it says has also produced positive results. After that study is published in the coming months, MAPS plans to ask the US Food and Drug Administration (FDA) to approve the drug as a legal treatment for PTSD, probably by October. FDA approval would mark a turning point for psychedelic drugs, which have long been illegal and thus difficult to study. With MAPS nearing the finish line, Doblin is optimistic that things will go smoothly. “I don’t think there’ll be tricky questions or anything, the results are great,” he says.

This shift towards taking psychedelic therapy seriously is happening outside the United States as well. In February, Australia approved MDMA as a treatment for PTSD, although the drug will remain highly restricted. Doblin and others hope that the changing attitudes will open the door for other therapeutic psychedelics, including ketamine, ayahuasca, LSD (acid), psilocybin (the active ingredient in magic mushrooms) and many synthetic chemicals currently in development. One analysis has projected that the psychedelics market could be worth more than US$8 billion by 2028.

But many questions remain in the short term, chiefly how MDMA will be administered and by whom. MAPS officials say that the drug must be given in concert with a psychotherapy protocol developed by the company’s scientists, but the FDA does not typically regulate such treatments. And it’s unclear whether approving MDMA on the basis of MAPS’s data would ease the way for other companies hoping to study and develop the drug, or whether anyone would even want to. MDMA has been around since 1912 and cannot be patented, creating little financial incentive. And if problems arise after the drug is approved, researchers worry that political and public sentiment could turn against psychedelics, setting the whole field back.

But Doblin still envisions treatment centres sprouting up around the world — he predicts that more than 6,000 will emerge in the United States alone — where people with PTSD and other psychiatric illnesses can safely and legally use MDMA and other psychedelics under the guidance of therapists. Beyond this, he hopes ultimately for full legalization that would allow anyone to take the drugs however they wish. “MAPS has been the beacon to kind of take on this work,” says neuroscientist Amy Kruse, who is chief investment officer at venture capital firm Satori Neuro and is based in Annapolis, Maryland. “There are many people that can benefit from this treatment, and I think it shows a pathway for the potential rescheduling of other molecules.”

Doblin, who has spoken openly about his own experiences taking psychedelic drugs, founded MAPS in 1986, a year after the US government banned MDMA. The goal was to revive research that had begun in the 1960s, which suggested that MDMA and LSD could treat a number of psychiatric conditions, including PTSD. The theory holds that MDMA allows people to confront their trauma by dampening the fight-or-flight response much in the way alcohol does, but without the confusion and forgetfulness. Whereas many PTSD therapies direct a person to concentrate on a traumatizing event — potentially retraumatizing them in the process — MDMA elevates positive emotions and allows people to make connections that might not have otherwise seemed obvious, according to proponents. Therapists had administered it to thousands of patients before the ban, only some of them under the auspices of clinical trials.

After the drug was outlawed, psychiatrists remained sceptical about its efficacy for decades. Still, the twentieth-century data allowed MAPS to skip early safety trials and immediately begin phase II trials to assess MDMA’s efficacy as a PTSD treatment in half a dozen countries.

The intense experiences that come with taking MDMA created a unique problem for regulators. The FDA typically requires at least two double-blind, placebo-controlled studies. But there has typically been little doubt among participants and therapists about who is receiving the drug.

Without a true placebo control, a trial of a psychiatric drug will almost certainly produce positive results, says Erick Turner, a psychiatrist at Oregon Health & Science University in Portland, who has served on FDA advisory committees. “Patients know what they’re getting and believe in it,” he says. “They’re going to be biased by that knowledge.”

Doblin anticipated this issue — and, in 2017, the FDA approved a ‘special protocol’ for MAPS. After the treatment sessions, each participant’s symptoms were evaluated by psychologists who did not administer the drug and did not know who was in each group. With this protocol in place, the FDA has agreed to base its decisions on the reported efficacy and not take issue with the study design. Outside advisers to the FDA can still raise concerns, however.

Doblin worries what the regulators will do about the psychotherapy component. In trials, the drug is administered by a pair of MAPS-trained therapists who guide the participant’s experience through scripted sessions that also allow for improvisation. The FDA does not regulate the guided-therapy component, only the drug — but Doblin says that the two are inseparable. “What we believe is that the results that we got were not from MDMA,” Doblin says. “They were from highly trained therapists who are then using MDMA.”

A MAPS spokesperson says that the organization expects that the drug’s prescribing label will state that MDMA needs to be administered in combination with therapy. The FDA has done this previously with some other psychiatric drugs, including naltrexone. Because the FDA does not oversee behavioural-health interventions, the spokesperson adds, insurers or government payers are likely to enforce this requirement.

MAPS is also sponsoring trials of different types of psychological co-treatment, including cognitive therapies and group therapy, to see whether these are better or more efficient.

The unscripted component of the guided therapy also concerns Turner, because it introduces another variable that could influence efficacy. “The psychotherapy is a moving target, and changes depending upon the patient’s response,” he says. A person who gets the placebo would have a therapy experience very different from that of someone who gets MDMA. An FDA spokesperson says the agency is “generally unable to discuss existing or potential applications”.

Safety problems, not necessarily with the drug itself, are also a concern. A woman enrolled in MAPS’s phase II study reported that she had been assaulted by her therapists; videos show them lying in bed with her and kissing her during a 2015 MDMA session. One of the therapists later started a sexual relationship with her, and she eventually reported him to the police and sued him in civil court. In his response, the therapist said that the relationship was consensual. The case was settled out of court.

MAPS fired the therapists and updated its consent forms to inform participants that such behaviour could happen but is not permissible. Doblin says that puts the burden on the therapist. “It’s a general problem, it happens with or without MDMA,” he says. In surveys, a small percentage of therapists admit to having been sexually involved with clients during or after therapy, despite the ethical guidelines of psychology associations2.

There are strong signs that the government is leaning towards approval. In 2022, The Intercept published a letter from an official at the US Department of Health and Human Services saying that it anticipated that the FDA would approve MDMA by 2024. And in 2017, the FDA granted ‘breakthrough’ status to both MDMA and psilocybin, putting the drugs on a regulatory fast track to approval.

Organizations such as the American Psychological Association (APA) have been cautiously optimistic: a 2022 statement said that, although current scientific evidence is inadequate for the use of psychedelics outside clinical trials, “APA supports continued research and therapeutic discovery into psychedelic agents.” Still, the organization has warned that treatments should be approved by regulators instead of “by ballot initiatives or popular opinion”.

Racing to approval

Some worry that premature approval of the drugs could frustrate scientific progress. In 2020, the state of Oregon voted to legalize psilocybin for therapeutic use. And in February, researchers around the world were shocked when Australia’s Therapeutic Goods Administration announced that it would legalize MDMA as a PTSD treatment as of 1 July. The administration has not yet provided details on what kind of training will be required to administer the drug. So far, only one person has been treated with MDMA as part of an Australian study, and he dropped out of the trial. “We don’t have anything to indicate this is safe and effective,” says Stephen Bright, a psychologist at Edith Cowan University in Perth, Australia, who is running the MDMA trial and is currently recruiting more participants. He worries that the reclassification could halt trials because no one would want to end up in a placebo group.

Even Doblin was taken aback by Australia’s decision. “I’m nervous about what’s going on and about the level of training that will be required,” he says. MAPS is planning to train several dozen Australian practitioners later this year, but Doblin worries that other training programmes will be insufficient.

Australia’s move could put pressure on the FDA to approve MDMA and open a larger market in the United States. But Mason Marks, a law professor at Florida State University in Tallahassee who studies drug policy, isn’t convinced that approving MAPS’s application will open the door for other psychedelic drugs or providers, at least not any time soon. In 2018, the agency approved an epilepsy drug called Epidiolex, which is developed from a non-psychoactive component of cannabis. But all other medical cannabis formulations remain federally illegal. Marks suspects that the agency will similarly approve MAPS’s protocol and specific MDMA capsule formulation, rather than reclassifying the drug and effectively making it legal.

Such a move would essentially leave MAPS as the only source of legal MDMA treatment outside clinical trials, which Marks worries could hamper innovation. “It does create an asymmetry between MAPS and other groups that might want to do research that could help us understand the safety,” he says.

Kruse thinks that FDA approval would nevertheless foster innovation. “The PTSD landscape is quite broad, and I don’t think this is a winner-take-all environment,” she says. If MAPS is the only one allowed to develop MDMA and administer treatment, she says, it could incentivize other companies to develop and patent similar, alternative chemicals.

MAPS intends to commercialize MDMA for profit, but its long-term plans are unclear. In 2014, the organization created a public-benefit corporation (PBC) — a company that attempts to balance shareholders’ financial interests and the public interest. A spokesperson for MAPS PBC declined to answer whether it plans to patent its formulation, or to speculate on future plans. “We think we will be the first to bring MDMA-assisted therapy to patients,” the spokesperson says, which should mean that MAPS can market the formulation exclusively for five and a half years.

Beyond that, Doblin says, MAPS PBC hasn’t decided what its future will look like. The company says that its therapist training programme has made millions of dollars from therapists, medical practices and donors paying to train practitioners in the clinical trials. But if MDMA therapy is integrated into standard psychiatry and psychology training programmes, which is Doblin’s goal, that revenue stream could dry up. He would also like to see MDMA fully legalized, which would make it more difficult to sell for profit. “I’m on the knife’s edge between capitalism and altruism,” Doblin says.

Regardless of MAPS’s financial future, he is cheering for researchers developing other psychedelic drugs, such as psilocybin, or repurposing MDMA as a treatment for depression and traumatic brain injury. Even if the FDA approval takes longer than anticipated, he says, the groundwork has been laid.

“The endgame is mass mental health,” he says. “But it will take several generations.”

The commission launched unannounced inspections of companies including Gucci for collusion and "secret cartel" practices.

PARIS — The European Commission is once again taking aim at the fashion sector with several investigations into anti-competitive practices.

Antitrust regulators on Tuesday conducted unannounced inspections on a number of undisclosed companies in several countries of the 27-member bloc to investigate business practices that could lead to fragmentation in the single market. Among the companies inspected was Gucci, parent company Kering said on Wednesday after Reuters reported the brand was among those targeted.

Price fixing, collusion and limiting production are among the infractions being investigated, the EC said in a statement.

“The Commission has concerns that the companies concerned may have violated EU antitrust rules that prohibit cartels and restrictive business practices including certain horizontal and vertical restrictions,” it said.

“Unannounced inspections are a preliminary investigative step into suspected anti-competitive practices,” it added. Investigators are looking for evidence of collusion and operating as a “secret cartel” among associated companies.

In a separate statement, Kering said: “In the scope of an inspection carried out as part of a preliminary investigation into the fashion sector in several countries under EU antitrust rules, the European Commission has started on April 18, 2023, an inspection at the Italian premises of Gucci, a subsidiary of Kering. The group is fully cooperating with the Commission in the context of this investigation.”

The Commission also sent requests for information to several companies across the sector, but did not release information about the firms being investigated, or the countries where the raids took place. It specified that the investigations were new and not related to prior inquiries conducted in May 2022 and June 2021.

The 2021 raid targeted French fashion house Pierre Cardin and its licensing and distribution deal with German clothing-maker Ahlers. Six months later, the commission opened a formal investigation into Pierre Cardin and Ahlers for blocking cross-border and online sales as well as restricting sales to specific consumer groups.

The EC is the executive arm of the European Union, in charge of implementing the regulations of the European Parliament and the EU.

It has been increasingly active in pursuing suspected anti-competitive practices. The price fixing practices fall under the anti-trust regulations that prohibit agreements between companies that distort competition within the single market trading bloc. In recent years, it has stepped up its efforts to enforce rules against curbs on cross-border imports and online sales.

In March, the EC launched unannounced investigations into several beauty and fragrance companies linked to the supply of fragrance or fragrance ingredients.

Companies that breach the EU anti-trust rules face fines of up to 10 percent of their global turnover.

The EC said inspections being carried out doesn’t mean companies are guilty and that they do not prejudge the investigation’s outcome.

Decision comes less than eight months after social media platform’s head Adam Mosseri relocated to UK

Instagram is relocating most of its staff, including the social media platform’s head Adam Mosseri, from London to New York as part of a widespread restructuring effort at parent company Meta.

The photo app had been building a new hub in the UK in recent months, where its engineering and product teams are based, but is now asking workers to move to the US, according to three people aware of the plans. Mosseri moved from California to London less than eight months ago.

Instagram will instead be primarily based in New York, according to two people familiar with the plans, where it already has large teams of staff who work on engaging with the platform’s content creators.

London was Instagram’s first international office, established in 2013. Last year, the city was Meta’s largest international engineering base outside the US, with about 4,000 staff.

Since then, the social media company has announced it would be axing more than 20,000 jobs as part of a cost-cutting exercise across the business, including closing offices worldwide. Cuts were announced in November and March, and further lay-offs are expected next month, according to two people familiar with the restructuring.

Meta did not immediately respond to a request for comment on the moves, first reported by Bloomberg.

The retreat from London signals a desire for Meta chief executive Mark Zuckerberg to bring Instagram, its most popular app with younger users, back under centralised control.

Mosseri joined the company in 2008 and led the team that developed Facebook’s news feed. He was made head of Instagram in 2018 when the app’s original co-founders quit the company.

His ambitions for London, where he anticipated building a large team with several layers of seniority in the city, have been crushed by Meta’s cost-cutting, according to two people with knowledge of the operation.

As Zuckerberg slashed jobs, explicitly targeting “middle managers . . . to make decisions faster”, the Instagram team was sporadically restructured and often reported back to the US for instructions, one person added.

The news comes as Meta prepares to report its first-quarter earnings next week. After its full-year results in March, the company recovered $88bn of the previous $89bn drop in its market value, caused by its third-quarter results and by investor anxiety over a decline in advertising and a costly bet on the metaverse.

Analysts predict its outlook will improve due to a pick-up in the advertising market and increasing regulatory pressure on its rival, Chinese-owned TikTok.