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By Natalie Grover and Eva Mathews

(Reuters) -GSK agreed its first settlement over a U.S. lawsuit alleging its discontinued heartburn drug Zantac caused cancer, the British pharmaceutical giant said on Friday, preventing the first such case from going to trial next month.

The company said it had reached a confidential deal with Californian resident James Goetz who says he developed bladder cancer from taking the drug.

GSK on Friday said the settlement reflected its desire to avoid distraction related to protracted litigation in this case. It did not admit any liability and said it would vigorously defend itself in any other Zantac cases.

The trial was due to start on July 24, the first test of how Zantac cancer claims would fare before a jury.

The British drugmaker’s shares were up 5.3% at 0824 GMT, making it the best performer on London’s blue-chip FTSE 100 and set for its best day since December.

“Our recent investor conversations suggested that it was this headline risk with a trial date right around the corner that was keeping investors on the sidelines in GSK,” Barclays analyst Emily Field wrote in a note.

A small number of cases is pending in California, and roughly 78,000 cases in the state court in Delaware.

First approved in 1983, Zantac became one of the first drugs to top $1 billion in annual sales.

Originally marketed by a forerunner of GSK, it was later sold by several companies, including Pfizer, Boehringer Ingelheim and Sanofi, as well as generic drugmakers.

Pfizer and Sanofi settled with Goetz late last year.

Concerns about protracted legal wrangling and compensation wiped almost $40 billion off the market value of GSK, Sanofi, Pfizer and GSK-spin-off Haleon over roughly a week in August.

Friday’s settlement follows a setback for GSK in March, when a California judge disallowed the company’s attempt to keep expert testimony on whether the drug is linked to cancer out of the trial.

Companies facing litigation scored a major victory in December, when a federal judge threw out all the Zantac cases in U.S. federal courts, some 50,000, after finding the opinions of the plaintiffs’ expert witnesses linking the drug to cancer were not backed by science.

In 2019, some manufacturers and pharmacies halted Zantac sales over concerns that its active ingredient, ranitidine, degraded over time to form a chemical called NDMA. While NDMA is found in low levels in food and water, research has found it causes cancer in larger amounts.

The FDA in 2020 withdrew from the market all remaining brand name Zantac and generic versions, triggering a wave of lawsuits. The companies involved have repeatedly denied that Zantac can cause cancer.

(Reporting by Eva Mathews in Bengaluru; Editing by Dhanya Ann Thoppil and Barbara Lewis)