11th Oct 2023 15:19
(Alliance News) - GSK PLC on Wednesday outlined another Zantac lawsuit settlement, in a move which may aid the pharmaceutical firm removing an "overhang" on its shares.
GSK said it has reached a confidential settlement in the Cantlay/Harper case filed in California state court.
The litigation related to its heartburn medication Zantac, also known as ranitidine. The case, which was set to begin trial on November 13, will be dismissed.
The company said it has also settled the three remaining breast cancer bellwether cases in California, with GSK being dismissed from the case. The pharmaceutical company said the settlements reflect its desire to "avoid the distraction related to protracted litigation".
The company does not admit any liability in the settlements and confirmed that it will continue to defend itself in all other Zantac cases. Zantac is the subject of numerous lawsuits, which allegedly link the heartburn drug with cancer.
Back in June, GSK said it a Zantac trial which was set to begin in July in California was dismissed after it reached a confidential settlement.
It explained that it has reached a settlement with James Goetz, a claimant in Zantac litigation. The case he filed in the California state court, which was set to begin in July, will now be dismissed. He had claimed that the heartburn drug Zantac caused him to develop cancer.
Analysts at Shore Capital Markets commented: "GSK has reiterated it will continue to defend itself vigorously against all other Zantac cases, but this decision further supports the view that the company is willing to make settlements on a case-by-case basis to try to clear the current overhang. We believe this news today should help some of the noise around Zantac further abate ahead of the Q3 results where we expect to see first lot of Arexvy sales booked, something which should help refocus people on the improving growth outlook for the company."
Shore believes GSK's valuation is reflecting fears of potential liabilities totalling up to USD30 billion. GSK shares were 0.1% higher at 1,522.80 pence each in London on Wednesday afternoon, but down around 10% since late-July 2022, before Zantac-related worries hurt its stock.
"All told, we understand GSK is named in 4,500 cases at both a federal and state level in the US covering 130,000 claimants. Working backwards from this implies individual settlements at USD225,000 which seems towards the higher end of pay-outs made in talc or glyphos cancer-related suits. Moreover, this would fully discount the dismissal of the federal MDL cases in December 2022 and assume GSK is solely liable when multiple co-defendants have been named in these suits (Sanofi, Pfizer and Boehringer Ingelheim). Volatility in the share is likely to persist until this issue is fully resolved, but we continue to feel that a worst-case scenario has been priced into the share and the improving growth outlook at GSK is being overlooked," Shore analysts added.
By Eric Cunha, Alliance News news editor
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