By Maggie Fick and Aby Jose Koilparambil (Reuters) -A California judge’s decision to allow expert testimony linking GSK’s heartburn drug Zantac to cancer wasn’t a surprise, analysts said Friday, though the litigation will likely weigh on the drugmaker’s share price until a trial in the summer. Thursday’s ruling by Alameda County Super Court Judge Evelio […]
California ruling on GSK’s Zantac litigation unsurprising, but case still weighs on shares
By Maggie Fick and Aby Jose Koilparambil
(Reuters) -A California judge’s decision to allow expert testimony linking GSK’s heartburn drug Zantac to cancer wasn’t a surprise, analysts said Friday, though the litigation will likely weigh on the drugmaker’s share price until a trial in the summer.
Thursday’s ruling by Alameda County Super Court Judge Evelio Grillo takes no view on the plaintiff’s expert opinion itself, analysts from Citi and UBS observed in separate research notes.
However, the decision did raise the prospect of a different outcome in the trial, scheduled for July, for the British drugmaker in the California state court system than that of a U.S. District Judge in December. The district judge threw out thousands of federal lawsuits against GSK and other drugmakers claiming Zantac caused cancer.
That judge found the claims were not backed by sound science. California, however, is known to be more “plaintiff friendly”, analysts say, pointing to past legal wins for plaintiffs against drugmakers such as Bayer AG over the company’s Roundup weedkiller.
“We’ve had some (investor) feedback who are disappointed here given that they were hoping a settlement would have been more likely,” said Barclays analyst Emily Field. “This obviously removes the blue sky scenario of the case being totally thrown out, but really that wasn’t people’s expectation.”
The plaintiff in GSK’s upcoming trial, California-based James Goetz, says he developed bladder cancer from taking Zantac sold by GSK and his lawyers want experts to testify in the trial.
The London-listed shares of the British drugmaker fell nearly 4% on Friday morning before paring some losses and were down 2.4% by 12:20 GMT. GSK said in a statement it disagreed with the ruling and would press additional defences and the plaintiff still needs to prove his case at the trial. It has repeatedly denied that the drug can cause cancer.
The trial in California is the first test of how Zantac cancer claims may fare in state courts, and Reuters reported last month that its outcome could depend heavily on what expert testimony Grillo allows.
But Citi analysts said the likely magnitude of any settlement for GSK is “likely very modest”, at less than $5 billion, and noted that the statute of limitations will somewhat restrict a mushrooming of cases. Tens of thousands of cases still remain in state courts, many consolidated before Grillo in California.
Zantac, first approved in 1983, became the world’s best selling medicine in 1988 and one of the first-ever drugs to top $1 billion in annual sales. Originally marketed by a forerunner of GSK, it was later sold successively to Pfizer, Boehringer Ingelheim and finally Sanofi.
Traders and analysts note the Zantac litigation has been an overhang for GSK’s share price since last summer, when uncertainty over the cases wiped almost $40 billion off the market value of GSK, Sanofi, Pfizer and Haleon.
(Reporting by Maggie Fick in London and Aby Jose Koilparambil in Bengaluru; editing by Shinjini Ganguli and Susan Fenton)
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Thu, May 25, 2023