Quick Summary
- Shares of Eli Lilly declined 3% following a report from an analyst highlighting a liver failure incident in the FDA’s adverse event database connected to Foundayo, the company’s oral GLP-1 medication
- The incident concerned a 56-year-old patient; Eli Lilly quickly refuted the connection, stating the case was unrelated to Foundayo
- Several Wall Street experts characterized the market reaction as excessive and recommended purchasing shares at the lower price
- Since its debut last month, Foundayo has already been prescribed to 20,000 patients, with 80% being first-time GLP-1 users
- In its most recent earnings report, Lilly posted 125% revenue growth for Mounjaro at $8.6B and 80% growth for Zepbound at $4.1B
Shares of Eli Lilly experienced approximately a 3% decline Monday morning following a report from Evercore ISI analyst Umer Raffat, who identified a hepatic failure incident in the FDA Adverse Event Reporting System (FAERS) associated with Foundayo, the pharmaceutical giant’s recently introduced oral GLP-1 treatment.
The reported incident involved a 56-year-old male patient and potentially occurred on or prior to April 15. The submission to the FDA was made on April 30.
LLY traded around $934 during early Monday trading hours before experiencing a partial rebound. Competitor Novo Nordisk (NVO) saw its shares climb approximately 2% following the disclosure.
Raffat emphasized that examining this case independently would be inappropriate. He highlighted that hepatic failure reports have surfaced across various GLP-1 medications — with Ozempic showing 33 documented cases, Wegovy showing 15, Mounjaro showing 30, and Zepbound showing 2.
He stated the “onus is on LLY” to conduct thorough and expeditious reviews of liver-related cases to prevent misunderstandings, particularly considering previous liver toxicity concerns associated with other oral GLP-1 compounds, including a candidate from Pfizer.
Lilly responded swiftly to the situation. The pharmaceutical company refuted the report after conducting an investigation that concluded it had no connection to Foundayo.
Wolfe analyst Alexandria Hammond supported Lilly’s stance. She characterized the pre-market selloff as “overdone” and indicated she would purchase shares at the reduced price.
Bernstein’s Christian Moore shared a similar perspective. He argued that missing a liver toxicity signal seemed improbable considering the extensive clinical trial data compiled for Foundayo, and also stated his intention to buy during the price decline.
Foundayo’s hepatic safety profile has undergone evaluation in numerous studies, including the 2,800-participant ACHIEVE-4 trial, which examined hepatic safety at the FDA’s directive and identified no safety concerns.
Strong Initial Performance for Foundayo
Since debuting last month, Foundayo has already reached 20,000 patients. A significant finding: 80% of these patients represent individuals who have never used GLP-1 medications before, indicating the pill format is broadening the market instead of simply shifting patients from injectable formulations.
Foundayo possesses a convenience advantage compared to Novo Nordisk’s oral Wegovy — it doesn’t mandate taking the medication on an empty stomach, simplifying integration into patients’ daily schedules.
Lilly is also making headway in expanding prescriber awareness and securing availability through major pharmacy networks.
Lilly’s Fundamental Performance Stays Robust
The stock decline occurred despite Lilly delivering impressive quarterly results the previous week. Mounjaro revenue surged 125% to reach $8.6 billion while Zepbound increased 80% to $4.1 billion.
Lilly commands approximately 60% of the U.S. GLP-1 medication market share, supported partly by head-to-head clinical study results demonstrating superior weight reduction compared to rival medications.
The pharmaceutical company is actively developing additional weight loss drug candidates within its research pipeline.
