- Canadian court dismisses proposed class action
- Lack of scientific evidence Zantac causes cancer
- Successful placing of £840 million Haleon shares
Shares in global biopharma giant GSK (GSK) jumped 1.7% to £14.68 on Friday following news that a Canadian Supreme Court has dismissed a proposed class action suit claiming heartburn drug Zantac causes cancer.
GSK also announced it has agreed to sell around £840 million worth of Haleon (HLN) shares at 335p per share, reducing its stake in the consumer healthcare firm to 10.3%.
Haleon shares ticked up 0.3% to 344.1p in early trading.
ANOTHER COURT WIN
The Canadian court’s decision was based on extensive peer-reviewed studies where the scientific consensus is that ‘there is no consistent or reliable evidence that ranitidine (Zantac) increases the risk for any type of cancer.’
The court said: ‘the plaintiff has failed to raise a bona fide triable issue regarding injury due to the ingestion and/or purchase of ranitidine.’
The decision follows a landmark decision in December 2022 by a Florida Multi-District litigation federal court which dismissed roughly 50,000 claims due to a lack of consistent scientific evidence that Zantac causes cancer.
Zantac was approved by regulators in 1983 and by 1998 it was the world’s best-selling drug and one of the first ever to top $1 billion of sales.
Other firms involved in the marketing of Zantac and therefore defendants include French pharma group Sanofi (SAN: EURONEXT), US pharma company Pfizer (PFE:NYSE) and German company Boehringer Ingelheim.
EXPERT VIEW
Russ Mould, investment director at AJ Bell, said: ‘Slowly, GSK seems to be winning the battle after a Canadian court dismissed a proposed class action, following a similar move in the US late last year.
‘While the legal fight is not over, the latest news gives investors a new reason to reappraise GSK, along with news that it has successfully sold a chunk of its shares in Haleon at a near-market price.
‘The business was created from assets owned by GSK and Pfizer, and the two drug companies remained shareholders when the demerger happened.
‘They both said they would sell down their positions in time, but the ease at which GSK has placed 240 million shares in Haleon would suggest it won’t have a problem selling the remaining 10.3% stake in the business.
‘Essentially that is also good news for Haleon and the perceived risk to its share price from the significant overhang – there is nothing worse than two major shareholders openly saying they don’t want to keep their shares for long.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (James Crux) own shares in AJ Bell.
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