- First Zantac trial win
- Second case dismissed
- Shares continue to recover
GSK (GSK) has won the first legal case to be heard in the ongoing Zantac litigation cases after a Chicago jury ruled in its favour and dismissed the plaintiff’s claim that the drug had caused her colorectal cancer.
Angela Valadez has taken Zantac and generic versions of the drug between 1995 and 2014 and was seeking $640 million in compensation for her suffering.
GSK said: ‘This outcome is consistent with the scientific consensus that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer, supported by 16 epidemiological studies looking at human data regarding the use of ranitidine’, (the active ingredient in Zantac).
The company reiterated it will continue to ‘vigorously’ defend itself against all other claims.
CASE DISMISSED
In a separate announcement, GSK said it welcomed news of a court ruling which dismissed a Zantac trial which was due to start on 23 May. The case was dismissed on the grounds that GSK was not the brand manufacturer of the generic over-the-counter drug at the time the plaintiff allegedly used it.
Shares in GSK ticked up 0.25% to £17.81 to continue their recovery and are within touching distance of the price levels they traded at before news of the Zantac litigation broke in July 2022.
Investment director Russ Mould at AJ Bell commented: ‘The threat of multi-billion-dollar payouts have hung over GSK for some time but slowly the clouds are parting.
‘A court in Illinois has rejected an individual’s claim that GSK’s heartburn drug Zantac caused them cancer. This follows approximately 50,000 cases being dismissed in December 2022 and a settlement last year, all relating to Zantac lawsuits.
‘The legal battle is still playing out, but GSK must be feeling more confident given the latest court ruling and the fact a second case in Illinois due to go to trial has been dismissed.
‘In a worst-case scenario, GSK will take a big financial hit and investors will stop fretting, such is how the market has reacted to other big companies when faced with large compensation payouts or settlements.’
Shore Capital’s Sean Conroy said: ‘Importantly, this is another step towards clearing the litigation-related overhang that has disproportionately weighed on the share since the demerger of Haleon and overshadowed the improving growth outlook we believe, GSK has been delivering.
Conroy noted recent settlements made by Sanofi (SAN:EPA) and Pfizer (PFE:NYSE) at $25,000 per claimant is a long way from the $200,000 he believes the market initially priced into GSK’s shares.
‘We still believe that a worst case, up to c.$40 billion downside scenario for litigation has been priced into the share’, added Conroy.
Disclaimer: Investment services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
