- Court rules 70,000 plaintiffs can present evidence
- GSK to seek appeal
- Blood cancer drug receives positive results
Shares in GSK (GSK) fell 10% to the bottom of the FTSE 100 after a Delaware judge on Friday (31 May) allowed more than 70,000 Zantac cases, which claim the discontinued heartburn drug caused cancer, to proceed to trial.
French pharmaceutical firm Sanofi (SAN:EPA), which is also embroiled in the Zantac litigation, saw its shares cheapen 2% to €88.9 on the news.
GSK said it will immediately seek an appeal as it runs counter to the Federal court’s Multidistrict litigation ruling in December 2022 which dismissed thousands of cases pursuing a class action claim on the basis they lacked scientific evidence.
The company explained: ‘Following the 16 epidemiological studies looking at human data regarding the use of ranitidine,(the active ingredient in Zantac) the scientific consensus is that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer’.
WHAT DOES THE DECISION MEAN?
Management was quick to point out that the litigation in Delaware remains at an early stage and the ruling relates only to the question that the methodology used by plaintiff’s experts is ‘sufficiently’ reliable to allow them to present their case at trial.
GSK added: ‘Alongside immediately seeking an appeal to the Delaware Supreme Court, the company will file motions for dismissal pressing additional defenses, severance of cases, and proof-of-use by claimants; and, at the same time, the company will progress to trials of individual cases.’
On 24 May, GSK won the first Zantac trial to be heard in court 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.
EXPERT VIEW
Russ Mould, investment director at AJ Bell, commented: ‘Investors had reached a point of some comfort with GSK’s Zantac issue as a series of US lawsuits linking the heartburn drug to cancer appeared to be running out of steam.
‘However, a judge in Delaware has thrown a significant spanner into the works by giving the green light for 70,000 cases to go forward and by allowing expert witnesses to testify in court that the drug may cause cancer.
‘GSK and the other parties involved, Pfizer (PFE:NYSE) and Sanofi, have made clear they disagree with the ruling and GSK has said it will mount an appeal.
‘However, in the short term this just pours more uncertainty over the investment case. An uncomfortable comparison for GSK management can be drawn with AstraZeneca (AZN), which has left its counterpart for dust in recent times and is forging ahead with ambitious growth targets’.
Today’s setback overshadows news over the weekend that GSK’s blood cancer drug Blenrep showed positive results from a late-stage clinical trial, presented at a cancer conference in Chicago.
Disclaimer: Financial 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.
