GSK gets a boost after ruling on new Zantac cancer lawsuits

The highest court in the U.S. state of Delaware will hear an appeal by GSK and other drug companies seeking to end more than 70,000 lawsuits claiming Zantac, the discontinued heartburn drug, caused cancer.

Pharmaceutical drugmakers, which also include Pfizer and Sanofi, are challenging a lower court ruling that allowed expert testimony claiming Zantac caused cancer, a link they say is not credible.

GSK investors had been concerned that the June ruling would force the group to pay more damages, but analysts said on Wednesday that the latest development should limit that risk.

Welcoming the Delaware Supreme Court’s decision to review the ruling, GSK said in a statement: “The scientific consensus remains that there is no consistent or reliable evidence that ranitidine increases the risk of cancer.

‘As of 2019, there are 16 epidemiological studies analyzing human data on ranitidine use, including outcomes from over one million patients using ranitidine, supporting this consensus.’

The group added that it will continue to “vigorously defend itself” against the allegations.

It said: ‘In addition to review by the Delaware Supreme Court, the Company will raise additional defenses in the litigation, including failure to provide proof of use and the Court’s recently ordered diagnostic testing requirements.’

GSK shares rose 1.7 percent or 27.5 pence to 1,645.50 pence on Wednesday, having risen around 17 percent over the past year.

The litigation arose after the U.S. Food and Drug Administration pulled Zantac from the market in 2020 over concerns that its active ingredient, ranitidine, could break down into the carcinogen NDMA under certain conditions.

Dr Sean Conroy, research analyst at Shore Capital, said: ‘We believe the potential for new deals in 2024 had increased as a result of the Daubert ruling in June, so this review should help allay some of these concerns and we anticipate some recovery in the share price.

‘We continue to believe that the Zantac litigation has weighed disproportionately on the stock since the Haleon spin-off and has overshadowed the improving growth prospects we believe GSK has been delivering.’

He added: “We still believe the current discount to peers is unjustified and largely attributable to flawed assumptions about the potential cost of litigation.

‘Our thesis remains that GSK offers a decent period of near-term growth with a realistic prospect of meeting its long-term ambitions, which together seem entirely unbecoming of a single-digit earnings multiple.’

On Wednesday, GSK also announced that Japan’s Ministry of Health, Labour and Welfare had granted Senku designation for bepirovirsen, an investigational antisense oligonucleotide for the treatment of hepatitis B.

Japan’s health ministry also approved GSK’s mepolizumab, known as Nucala, for the treatment of adults with chronic rhinosinusitis with nasal polyps, a condition characterized by nasal obstruction, facial pressure, loss of smell, sleep disturbance and runny nose.