Key Takeaways
- Shares of Eli Lilly declined 3% Monday following an analyst’s discovery of a hepatic failure case in FDA adverse event records connected to Foundayo, its oral GLP-1 medication
- The reported case involved a 56-year-old man; Eli Lilly quickly refuted the connection, stating the incident was unrelated to Foundayo
- Several Wall Street analysts characterized the market reaction as excessive and indicated they view the pullback as a buying opportunity
- Foundayo debuted last month and has already been prescribed to 20,000 patients, with 80% being first-time GLP-1 users
- The company posted impressive results with Mounjaro revenue surging 125% to $8.6B and Zepbound climbing 80% to $4.1B in the most recent quarter
Shares of Eli Lilly experienced a roughly 3% decline Monday morning following a report from Evercore ISI analyst Umer Raffat, who identified a hepatic failure case in the FDA Adverse Event Reporting System (FAERS) associated with Foundayo, the pharmaceutical giant’s recently introduced oral GLP-1 medication.
The identified case concerned a 56-year-old man and likely took place on or prior to April 15. The FDA received the submission on April 30.
LLY traded around $934 during early Monday trading before staging a partial rebound. Competitor Novo Nordisk (NVO) gained approximately 2% following the development.
Raffat emphasized that examining this case in isolation would be inappropriate. He pointed out that hepatic failure reports exist across various GLP-1 medications — Ozempic has 33 documented cases, Wegovy records 15, Mounjaro shows 30, and Zepbound has 2.
According to Raffat, the responsibility falls on LLY to conduct thorough and prompt reviews of hepatic 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 safety question. The pharmaceutical company rejected the report following an internal review that concluded the case had no connection to Foundayo.
Wolfe analyst Alexandria Hammond supported Lilly’s assessment. She characterized the pre-market response as excessive and stated she would purchase shares during the weakness.
Bernstein’s Christian Moore shared this perspective. He indicated that missing a liver toxicity signal would be improbable given the extensive clinical trial data compiled for Foundayo, adding that he was taking advantage of the price decline.
Foundayo’s hepatic profile has undergone evaluation in numerous studies, including the ACHIEVE-4 trial with 2,800 participants, which examined hepatic safety following an FDA request and identified no concerning signals.
Strong Early Performance for Foundayo
Foundayo entered the market last month and has already been prescribed to 20,000 patients. A significant finding: 80% of these individuals are first-time GLP-1 medication users, indicating the oral formulation is attracting new patients to the category rather than simply shifting demand from injectable options.
Foundayo offers a convenience advantage compared to Novo Nordisk’s oral Wegovy — patients can take it without fasting requirements, simplifying integration into daily schedules.
Lilly has also been expanding access by increasing provider awareness and securing placement in major pharmacy networks.
Robust Fundamentals Support Lilly’s Position
The share price decline occurred despite strong quarterly performance reported by Lilly the previous week. Mounjaro revenue soared 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, supported partly by head-to-head clinical study results demonstrating superior weight reduction compared to alternative treatments.
The pharmaceutical company maintains an active pipeline with additional weight loss drug candidates in various development stages.
