GSK stock jumped Friday after the British drugmaker said it settled one of thousands of claims that its heartburn drug Zantac caused cancer.
The case, brought by California resident James Goetz, was set to begin a jury trial on July 24. Instead, GSK said it reached a confidential settlement with Goetz and the trial will be dismissed.
"The settlement reflects the company's desire to avoid distraction related to protracted litigation in this case," GSK said in a written statement.
On today's stock market, GSK stock popped 5% to 36.40.
GSK Stock: 'Conveyor Belt' Of Cases
Goetz filed his case in Alameda County Superior Court, saying Zantac caused him to develop bladder cancer. In December, a U.S. court tossed out thousands of cases at the federal level. But that doesn't apply in states like California, Delaware, Illinois and others.
Evercore ISI analyst Umer Raffat says there are still thousands of cases ongoing at the state level. The Goetz trial was on deck as the first. He estimates there are 3,200 claims in California alone, with two potential "bellwether" trials in a few months, and four within a couple months of that.
"For coordination of multiple litigation, (the Judicial Council of California) is a case-by-case conveyor belt of cases, used to create pressure and provoke settlement dynamics," he said in a report.
Still, the news pushed GSK stock above its 50-day moving average, MarketSmith.com shows.
Raffat expects GSK to enter "a steady stream of settlements" to avoid jury trials. GSK says it doesn't admit liability and "will continue to vigorously defend itself based on the facts and the science in all other Zantac cases."
CFRA Research analyst Wan Nurhayati kept her hold rating on GSK stock.
"The market reacted positively to the news, though we highlight that this is just one of the cases related to Zantac and therefore Zantac's litigation remains a key risk in our view," Nurhayati said in a report.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
