By Mackenzie Tatananni

Eli Lilly stock took a hit Wednesday after the Food and Drug Administration requested more safety data on the pharmaceutical giant's weight-loss pill. The response may have been exaggerated.

Lilly's once-daily pill, sold under the brand name Foundayo, secured FDA approval earlier this month. The drugmaker has positioned it as a contender to Novo Nordisk's oral Wegovy, which became available in January, in a bid to deepen its lead in the market for GLP-1 drugs.

Now, regulators are directing Lilly to conduct an additional trial to evaluate the risk of drug-induced liver injury and potential for major adverse cardiovascular events in patients taking Foundayo.

It's one of several studies the FDA is requesting to monitor safety, which have been designated as post-marketing requirements.

The development drove Lilly down 2.1% on Wednesday and sparked a rally in shares of its weight-loss rival. Novo's American depositary receipts rose 3.6%, outstripping a 0.7% gain for the benchmark S&P 500.

However, the selloff may have been misguided. As BMO Capital Markets analyst Evan Seigerman pointed out, the FDA's requirements appear to be "a reflection of conservatism" rather than an underlying risk to Lilly's drug program.

It's a fair point. The letter contains other demands, including a request to conduct a study assessing Foundayo's risks to pregnant women and infants, as well as a study monitoring a possible link between medullary thyroid carcinoma and the use of orforglipron.

While a request for several studies following approval of the drug is notable, "we do not expect these studies to have any meaningful impact on the competitive positioning of Lilly's asset," Seigerman added.

Citi Research analyst Graham Parry noted that subsequent study requirements for both cardiac and liver safety were absent from the FDA's approval letter for the Wegovy pill, though the agency requested similar cancer and pregnancy studies.

Post-marketing requirements are both routine and common, "and an additional check on rare or long-term signals from clinical trials that couldn't be fully resolved but not serious enough to prevent approval," Parry explained.

In a Phase 3 clinical trial, two patients out of a total 2,000 recorded high levels of alanine aminotransferase and bilirubin, typically a strong predictor of liver failure. However, as Parry noted, both had alternative causes and weren't linked to drug-induced liver injury.

Lilly itself pointed out that there had been no indications of liver damage associated with Foundayo in late-stage testing, adding that the FDA's demands were "consistent with the agency's standard approach to ongoing safety evaluation of newly approved medicines."

Healthcare data and analytics firm IQVIA Holdings separately released its first data for Foundayo this week. The firm recorded 25 total prescriptions on Monday, which Bernstein analyst Courtney Breen views as "a major understatement for a number of reasons."

The figure only reflects retail pharmacies and excludes mail pharmacy like the drugmaker's own LillyDirect platform. Selling through online pharmacies and telehealth providers including Amazon Pharmacy, GoodRx, and Ro appears to be an integral part of Lilly's go-to-market strategy for Foundayo.

Weekly data, due out on Friday, will include twice as many pharmacies as well as both long-term care facilities and mail, making it a more comprehensive measure.

"However, there is always volatility in capture rates early in launch," Breen said.

While Monday's number looks underwhelming, there's a chance Foundayo's early data appears stronger than that for the Wegovy pill as more becomes available. Lilly has been "laser focused on reducing friction," Breen said, as evidenced by success of LillyDirect and same-day delivery over Amazon for Foundayo.

Alternatively, interest in GLP-1s may have peaked already. Online searches for GLP-1s reached a record high in late December through early January, Breen pointed out, coupled with the fact that the Wegovy pill has the benefit of brand recognition.

Still, starting second with a new brand name "didn't stop Lilly with Zepbound," the analyst wrote.

Although Lilly has been a later entrant to the weight-loss drug market than Novo, it nonetheless has overtaken its competitor in recent months, as Lilly's Zepbound injection continues to pull ahead of Wegovy.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 15, 2026 16:05 ET (20:05 GMT)

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