GSK: Zantac Delaware Ruling Increases Legal Risk Overhang

We are holding firm to our GSK fair value estimate of $54 and our wide moat rating following the Delaware State Court Daubert ruling that allows Zantac plaintiff experts in future litigation. The ruling opens the door to increased litigation risk. However, GSK plans to appeal the Delaware ruling. We expect a high probability of a favorable GSK appeals ruling for a number of reasons. These include a federal ruling that didn't allow Zantac plaintiff experts; 16 clinical studies showing no link between Zantac and cancer; the US Food and Drug Administration clearing Zantac to reenter the market; and recent litigation wins by GSK, including a case in Chicago that was hand-picked by the plaintiffs.