Glaxo settles first Avandia cases -- sources

LONDON, May 10 (Reuters) - GlaxoSmithKline Plc GSK.L has agreed a first round of settlements for some 700 cases brought by patients alleging its Avandia diabetes drug caused heart attacks, people familiar with the matter said on Monday.

A spokesman for the British-based drugmaker declined to comment.

News agency Bloomberg said Glaxo would pay about $60 million to resolve the suits filed by three attorneys -- a relatively small amount compared with the total liabilities some investors fear it could face.

Morgan Stanley analysts said in a note last week they believed Glaxo’s stock was discounting a $6 billion liability risk from Avandia ahead a court case in Philadelphia that will hear some 5,000 of 13,000 consolidated cases.

Commercially, Avandia is no longer a major product for Glaxo, with sales declining sharply following controversy over the drug’s heart risks in 2007, and the medicine is set to lose exclusivity in the United States in 2012.

But worries about liability claims have spiked up since February, when two U.S. Senators published a highly critical report on Avandia. A Food and Drug Administration advisory panel will consider possible further restrictions on the drug in July.

In its first-quarter financial report last month, Glaxo increased the reserves budgeted for legal matters by 210 million pounds ($325 million), some of which is expected to go towards settling Avandia cases. (Reporting by Ben Hirschler; editing by Andre Grenon)