28th Aug 2024 15:53
(Alliance News) - While Zantac worries are not completely resolved, the latest bit of good news for GSK PLC should give investors some reassurance, analysts said on Wednesday.
The London-based pharmaceutical company welcomed the Delaware Supreme Court's decision to review the Delaware Superior Court's decision allowing the introduction of plaintiffs' expert evidence at trial regarding heartburn drug Zantac, which had been pulled off the market in 2020 at the request of the FDA.
The Delaware Supreme Court will review the Delaware Superior's Court decision according to the Daubert standard, which in the US provides criteria for evaluating whether expert testimony is admissible.
Zantac had been pulled off the market after low levels of a "probable carcinogen" were found in samples. The carcinogen, known as NDMA, is not harmful in very small amounts. However, tests showed that there were excessive quantities of NDMA in ranitidine, otherwise known as Zantac. Multiple litigations have followed.
GSK said Wednesday: "The scientific consensus remains that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer. Since 2019, there are 16 epidemiological studies looking at human data regarding the use of ranitidine, including outcomes for more than 1 million patients using ranitidine, supporting this consensus."
GSK shares rose 1.7% to 1,645.00 pence each in London on Wednesday afternoon.
AJ Bell analyst Russ Mould commented: "Legal issues around the Zantac heartburn drug continue to dominate the news agenda for GSK. The saga has been full of twists and turns, with investors trying to second guess if GSK will win or lose tens of thousands of lawsuits claiming Zantac caused cancer. The market has reacted positively to news that Delaware's highest court will hear an appeal by GSK and other drugmakers who sold the product. It's a positive step forward for the pharmaceutical giant but by no means the end of the story.
"The matter has become a major distraction for GSK's management and many investors will be hoping it can agree a settlement and move on. GSK is adamant that it has done no wrong, saying there is no evidence that the product caused cancer."
Shore Capital Markets described the news as "positive".
"By no means does this news today clear the Zantac overhang, but we view this as a another positive for GSK. We believe this helps to support the view that there is no reliable evidence that Zantac caused certain cancers and GSK has strong grounds to continue defending itself in ongoing litigation. The vast majority of outstanding cases in the US reside in Delaware state court and has been a focal point for Zantac related litigation. We believe the potential for further settlements in 2024 had increased as a result of June's Daubert ruling so this review should help allay some of these concerns and we anticipate some recovery in the share price," Shore added.
"We continue to believe Zantac litigation has disproportionately weighed on the share since the demerger of Haleon and overshadowed the improving growth outlook we believe GSK has been delivering."
By Eric Cunha, Alliance News news editor
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