Reckitt (RKTLN; A3 Pos/ A-) Abbott faced a $495m court loss on Friday

Reminder Abbott (ABT; Aa3/AA-) produces the other main baby formula used in hospitals, Similac, and hence read-through on legal updates is very relevant for Reckitt.

A jury on Friday has awarded $495m for not warning of NEC risk in premature babies from use of its formula. The Jury gave $95m in compensatory damages, and $400m in punitive damages. The case in question saw the baby develop "Irreversible neurological damage" requiring long-term care. Reminder Reckitt's first loss (which it is appealing) involved a death and saw $60m verdict.

Abbott has responded with the same line Reckitt uses...which is formula for premature babies in hospitals is used as a last resort (which Reckitt claims has strong medical support from doctors on use as well).

As we have since since this first came up in March, the tail risk and lack of near term positive catalyst work against Reckitt; there are reportedly "close to 1000" lawsuits against Abbott and Reckitt and cases like the above continue to show science may not be all to consider. In the meantime Reckitt is marching ahead with equity pay-outs (£1.6b in 1H) and refusing to provision. It said it would sell home brands totalling 13% of the group revenue last week; unclear where cash will go. Nutrition (under which baby formula Enfamil sits) has also been tabled for sale but unclear who will be lining up for that.