British pharmaceutical GSK (GSK.L) settled a U.S. lawsuit alleging its discontinued heartburn medicine Zantac caused cancer.
The corporation announced a private settlement with California resident James Goetz, who claimed the medicine caused bladder cancer. The Zantac cancer trial was scheduled to begin on July 24.
The settlement might affect thousands of cases scheduled for trial next year. The drugmaker’s (GSK.L) shares gained about 5%, leading London’s blue-chip FTSE 100 (.FTSE).
More than 5,000 California and 73,000 Delaware lawsuits remain against the corporation. Trials aren’t scheduled.
“It was this headline risk with a trial date right around the corner that was keeping investors on the sidelines in GSK,” Barclays analyst Emily Field wrote in a note.
GSK claimed the deal avoided distraction from protracted litigation. It denied guilt and promised to fight any other Zantac lawsuits.
Goetz’s lawyers said the corporation “agreed to settle and finally bring closure to Mr. Goetz.”
Pfizer (PFE.N), Boehringer Ingelheim, Sanofi (SASY.PA), and generic drugmakers sold the medicine after a precursor of GSK promoted it.
In December, a federal judge dismissed tens of thousands of Zantac complaints in U.S. federal courts after concluding that science did not support the plaintiffs’ expert witnesses’ cancer claims.
According to JM Finn investment director Lucy Coutts, the Goetz deal could set a precedent.
“It also removes the distraction of any protracted litigation as the company must focus on its future pipeline which is where value will be created for shareholders,” she said.
Adam Zimmerman, a University of Southern California law professor who studies mass tort lawsuits, said it was “way too early to say anything” about the settlement’s impact.
On Friday, Bank of America analysts maintained that Zantac’s lawsuit risk was modest, predicting that GSK would have spent “low hundreds of millions” to settle the Goetz case.
They wrote that Delaware lawsuits were unlikely to get to trial and that GSK’s approach of avoiding big public damages in “plaintiff-friendly courts as sensible as litigation is inherently unpredictable.”
Pfizer and Sanofi settled with Goetz late last year.
Over a week in August, GSK, Sanofi, Pfizer, and Haleon lost over $40 billion due to legal disputes and compensation concerns.
One of the first pharmaceuticals to sell over $1 billion was Zantac, approved in 1983.
Some manufacturers and pharmacies stopped selling Zantac in 2019 due to worries that ranitidine deteriorated to generate NDMA. Research has shown that higher levels of NDMA in food and water promote cancer.
The FDA recalled all brand-name and generic Zantac in 2020, sparking a surge of lawsuits. Zantac firms have disputed cancer links.
In March, a California judge denied GSK’s request to exclude expert testimony on the drug’s cancer risk. Friday’s settlement follows that setback.
