GSK Shares Surge as Delaware Supreme Court Reviews Zantac Cancer Claims

The decision by a U.S. court to review the evidence on whether the heartburn drug Zantac is carcinogenic has buoyed GlaxoSmithKline (GSK.US) shares, which rose nearly 3% in early trading in London on Wednesday. Over the past 12 months, GSK's stock has increased by approximately 18%.

GlaxoSmithKline announced that the Delaware Supreme Court will review an earlier ruling by a lower court. This ruling allowed the evidence submitted by plaintiffs to be heard in the upcoming trials. According to GSK, the Delaware Supreme Court’s review was granted under "exceptional circumstances."

This review by the Delaware Supreme Court will proceed concurrently with ongoing litigation involving over 70,000 consumers who have filed lawsuits in the state against Zantac's former manufacturers. These plaintiffs claim that the heartburn medication, produced by GSK, Pfizer, and other companies, caused their cancer.

Delaware Superior Court Judge Vivian Medinilla’s ruling in June posed a significant setback for GSK and other pharmaceutical companies, who had hoped that Medinilla would follow the footsteps of a federal judge in Florida. That judge had dismissed the cancer evidence in 2022, citing it as unreliable.

GlaxoSmithKline has denied allegations that Zantac causes cancer. Plaintiffs argue that the companies were aware that the active ingredient, ranitidine, could convert into the potential carcinogen NDMA under certain conditions. In 2020, the U.S. Food and Drug Administration required the withdrawal of all ranitidine-containing drugs from the U.S. market.

The litigation has significantly impacted GSK’s stock price, with investors concerned about potential settlement amounts. Analysts estimate that settlements could range from $3 billion to $6 billion, with GlaxoSmithKline expected to bear 50-60% of the liability.