History came back to haunt healthcare stock GlaxoSmithKline (NYSE:GSK) recently. New reports emerged about its once-popular Zantac heartburn drug. More specifically, the report talked about the potential cancer risks of Zantac and for how long GlaxoSmithKline kept quiet about it. Investors aren’t taking the news well, as GlaxoSmithKline is down slightly in Tuesday afternoon trading.
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Zantac was taken off the market back in 2020. That happened after concerns about cancer potential emerged around one of Zantac’s key ingredients, N-nitrosodimethylamine, or NDMA. As it turns out, NDMA is a carcinogenic substance in humans, or it has a connection to cancer. Reports noted that the FDA actually took cancer risks into account before ultimately approving the drug for sale. However, further reports also noted that GlaxoSmithKline kept key study data out of the FDA’s hands in the process.
Worse, GlaxoSmithKline promoted its own series of studies that were considered “flawed” in order to soft-peddle the potential cancer risks involved with NDMA. The amount of NDMA in the drug increased “even under normal storage conditions.” That’s based on studies from the 1980s. Thus, future releases of the drug needed refrigeration. GlaxoSmithKline executives noted that “refrigeration of the injection would not be acceptable to Glaxo marketing.” Ultimately, it decided not to change any of the plans connected with NDMA.
GlaxoSmithKline also has few friends in the hedge fund industry. Currently, hedge fund confidence stands at Very Negative, as they sold off 58 million shares of GSK in the last quarter.
