GlaxoSmithKline's (GSK) shares climbed 2.2% in pre-market trading after a majority of the U.S. Food and Drug Administration's panel voted to keep its controversial type 2 diabetes drug Avandia on the U.S. market, albeit with new restrictions. The diabetes drug already carries a black box label warning on elevated cardiac risk.
The vote is not a decision. The regulatory authority still has to make the final call, although it usually follows the advice of its panels.
The British drugmaker also expects to record a £1.57 billion ($2.37 billion) charge in the second quarter to settle cases including an investigation by the U.S. government into the company's former manufacturing site at Cidra, Puerto Rico; product liability and antitrust litigation relating to Paxil, and product liability cases regarding Avandia. GSK said, it has now fully resolved the Paxil antitrust litigation and the vast majority of the product's liability cases. It also settled the substantial majority of the product liability cases relating to Avandia.
The charge will nearly wipe out all of its second quarter earnings, but as it represents "a substantial portion" of its outstanding legal liabilities, it clears the path going forward.
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