GSK shares jump on win in Delaware court over ongoing Zantac battle

By Louis Goss

GSK shares jumped Wednesday on news Delaware's top court ruled in the pharmaceutical company's favor, by agreeing to review the admissibility of expert evidence that could play a part in the British firm's legal fight against claims its Zantac heartburn drug causes cancer.

The Delaware Supreme Court said it will review a decision by a lower court to let an upcoming trial hear evidence from an expert witness put forward by the plaintiffs. GSK says the expert witness lacks sufficient knowledge to provide expert testimony at trial.

GSK is seeking to overturn the lower court's decision on the basis that the expert witness failed to align with the 'Daubert standard' which requires that expert evidence meet certain scientific standards in order for it to be presented to a jury.

Shares in GSK (UK:GSK) (GSK), listed on the London Stock Exchange, increased 2% on Wednesday having gained 18% over the previous 12 months.

GSK is currently being sued by nearly 75,000 plaintiffs in the state of Delaware over claims its Zantac heartburn remedy increases the risk of users developing ten separate cancers including liver, pancreatic, breast, and lung cancer.

The pharmaceutical company says there is no consistent or reliable evidence that Zantac increases the risk of its users developing cancer. In a statement, the company pointed to 16 studies from 2019 onwards that support its position.

The Daubert standard, which was first established in 1993, rules that any scientific evidence presented to juries must have been subject to sufficient scientific scrutiny, via peer review studies and rigorous scientific testing.

Plaintiffs suing GSK are seeking to introduce expert witness from University of North Carolina, Chapel Hill professor William C. Zamboni, who is expected to offer his opinion on GSK's response to a study carried out by one of its former scientists, Richard Tanner, in 1981.

Zamboni is expected to say the 'Tanner study - which was not submitted to the FDA until 2019 - provides evidence that GSK knew about Zantac's potential health impacts, but failed to make the findings publicly available.

GSK is instead seeking to argue that Zamboni lacks sufficient expertise and experience in working with the FDA to make a sufficient judgment call on whether the 'Tanner study' should have been submitted to the regulator at an earlier point.

In a note, Shore Capital analysts, led by Sean Conroy, said that in a worst case scenario, the litigation GSK faces in Delaware - where the majority of Zantac claims have been filed - could cost the pharmaceutical company up to $30 billion.

The analysts said the Zantac litigation appears to have "disproportionately weighed" on GSK's share price and the stock has suffered a discount compared to its peers which is "largely attributable to misguided assumptions around the potential cost of litigation."

-Louis Goss

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08-28-24 0622ET

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