GSK reached a settlement with a man who claimed the drugmaker's blockbuster heartburn medication Zantac caused his cancer, heading off the first such case set to go to trial in the US.
The parties reached a confidential settlement and the case filed in a California state court will be dismissed, the British pharmaceutical giant said in a statement Friday. The company said it isn't admitting any liability in the settlement and will continue to defend itself in all other cases related to the drug. Shares of GSK rose as much as 4.8%.
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"This is a positive for GSK shares as it removes any negative headline risk from a potential judgment from a jury this year," wrote Emily Field, an analyst at Barclays.
The trial had been expected to start next month. James Goetz, a regular Zantac user for years, sued GSK after the drug was found in 2019 to contain a probable carcinogen called N-nitrosodimethylamine (NDMA). The US Food and Drug Administration forced Zantac and its generic versions off the market in 2020 after determining that NDMA hadn't been introduced into the drug, but formed in the medication itself, either during storage or at elevated temperatures.
Goetz's trial was the first of four bellwether Zantac cases that plaintiffs' lawyers Brent Wisner and Jennifer Moore were set to bring to court in California. Wisner and Moore are known for large verdicts they won against Bayer AG on behalf of people who claimed the company's herbicide Roundup caused their cancers.
The decision sets a precedent that might help lead to settlements in other cases, wrote analysts at Citi.
Boehringer Ingelheim GmbH, Pfizer Inc. and Sanofi also sold Zantac over the years and settled Goetz's case in December. GSK, which developed the drug more than four decades ago, had data since the early 1980s indicating the drug may be dangerous and has been accused of keeping quiet about it until 2019. Previously, Pfizer and Sanofi settled with Goetz late last year.
Wisner and Moore said in a statement they were pleased GSK settled. The amounts of all the settlements are secret. More than 70,000 Zantac lawsuits from around the country have been filed in Delaware state court against GSK and the other pharmaceutical companies that sold the drug.
In December, a judge in Florida rejected the scientific evidence behind claims heartburn drug Zantac can cause cancer, meaning the drugmakers don't have to face more than 5,000 lawsuits.
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District Judge Robin Rosenberg in West Palm Beach, Florida, concluded at the time that consumers used flawed science to back up lawsuits filed in federal court blaming Zantac for causing a variety of cancers. Rosenberg found plaintiffs' experts couldn't show legitimate links between the product and the diseases, which include lung, liver and kidney cancer.
Based on the share price, investors are assuming that GSK may face potential liabilities of $30 billion, which overstates the risk, wrote Sean Conroy, an analyst at Shore Capital.
"A worst-case scenario has been priced into the share, and the improving growth outlook at GSK is being overlooked," he wrote.
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