Eli Lilly 's (LLY) attempt to receive accelerated regulatory approval for its Alzheimer's drug donanemab has been rejected. While the setback hit the stock Friday, it's not rattling our long-term belief in the company. What happened The Food and Drug Administration (FDA) told Eli Lilly that it doesn't have enough data right now to approve donanemab through its fast-track pathway, the company said late Thursday in a press release. Lilly had sought an expedited review under the FDA's Accelerated Approval Program, in hopes of bringing the drug to market quicker than the traditional licensing route. The company's submission was based on data from donanemab's Phase 2 clinical trial because the larger Phase 3 trial is still ongoing. Phase 2 trials are generally smaller than Phase 3 trials, and this ultimately factored into the FDA's decision. The U.S. regulator said it wants to see trial data covering at least 100 people who were treated with the drug for 12 months or more. Lilly's application didn't have enough patients who met that requirement. The FDA did not flag any other "deficiencies" with its application, Lilly noted. In the Phase 2 trial, 131 people were given donanemab and 126 received a placebo, according to study results posted on ClinicalTrials.gov . The results indicate that 94 patients who took the drug completed the trial — six short of the FDA threshold. (ClinicalTrials.gov is operated by the National Library of Medicine at the federal government's National Institutes of Health .) According to Lilly, the shortfall of patients was complicated by the fact many of them were able to stop dosing after as little as six months of treatment. People in the Phase 2 trial were able to complete treatment when they reached "a predefined level of amyloid plaque clearance," the company said. For some, this happened well before 12 months. Amyloid plaque is commonly found on the brains of people with Alzheimer's. However, the exact role it plays in the disease isn't clear. Donanemab tries to reduce amyloid plaque levels with the expectation that doing so would slow the progression of Alzheimer's. While clearing plaque quickly may bode well for the drug's efficacy, Lilly suggested it ended up limiting the available data for the FDA to review, which led to the denial of accelerated approval. Earlier this month, the FDA granted accelerated approval to lecanemab, an Alzheimer's drug similar to donanemab developed by Japan's Eisai and U.S.-based Biogen . In the past, Lilly has said that positive trial results for lecanemab, now being marketed as Lequembi, bolstered their overall confidence in the road ahead for donanemab. What now? Eli Lilly said it will keep working with the FDA to "evaluate the fastest pathway" for donanemab to reach patients. However, hopes for accelerated approval may be dashed. The reason: For Lilly to meet the FDA's 100-patient threshold, some aspects of the Phase 3 trial data would likely be required. Indeed, analysts at Barclays wrote in a note to clients Thursday that "we now see [accelerated approval] off the table." The spotlight will now shine even brighter on the Phase 3 donanemab data, which is expected at some point in the second quarter of this year. The timeline was not affected by the FDA's determination that Phase 2 data was insufficiently large, according to Lilly. That's important because the Phase 3 data — whether it shows the drug can slow the disease — carries the most weight on donanemab's ability to obtain full FDA approval. As of now, full approval is necessary for the drug to be a commercial success. "While we have ultimately viewed [accelerated approval] as a nice-to-have, the drug's fate has and will remain dependent upon the fate of the upcoming" Phase 3 results, Barclays analysts wrote. The firm has an overweight, or buy, rating on Lilly and a $400-per-share price target, which would represent a 13% increase from Thursday's close. Lilly still plans to apply for full approval shortly after its Phase 3 readout — assuming the data shows the drug effectively slows progression of Alzheimer's. Barclays now estimates that early 2024 is likely the soonest that donanemab could receive FDA clearance. 'Not a thesis-breaker' We think that's something investors can live with, as analysts were not expecting much of a revenue contribution from donanemab in 2023. Consensus estimates had potential sales at less than $200 million, small potatoes for a company expected to generate more than $30 billion in revenue this year. Also, Lilly did not change its 2023 financial guidance after the FDA decision. LLY 1Y mountain Eli Lilly (LLY) 1-year performance "It's definitely not a thesis-breaker," Bank of America analyst Geoff Meacham told CNBC on Friday. While Lilly's stock slumped in the final trading session of the week, down more than 1.5%, Meacham said plenty of investors look at declines in LLY shares as buying opportunities. We are among them. That's because both Wall Street and the Club like Lilly for Mounjaro, its new type-2 diabetes drug that may eventually be approved to treat obesity. Mounjaro, also known as tirzepatide, received FDA clearance for diabetes in 2022 . The treatment could get the green light for obesity in the second half of this year. "People use weakness to buy the stock, and it's really because the narrative on obesity and on the Mounjaro launch is just so strong," said Meacham, who has a buy rating and $390-per-share price target on Lilly shares. "The Mounjaro launch [for obesity] could really just blow numbers away this year." Bottom line The FDA's decision may have seemed bad at first glance, but digging deeper into the news reveals no reason to change the Club's outlook on Eli Lilly. Like many on Wall Street, Mounjaro holds the most weight in our investment thesis because we believe it could become the best-selling drug of all time . Success for Lilly's Alzheimer's drug is not an all-or-nothing situation . Far from it. The company has a resplendent drug pipeline. After an incredible run higher in last year's truly dismal market, Lilly shares have struggled at the start of 2023, including Friday, putting year-to-date losses at roughly 6%. That's because there's been a sector rotation away from health care as investors wade back into tech stocks, thinking they've suffered enough. But with our long-term conviction on Lilly intact, we're beginning to see the stock's decline as an opportunity. (Jim Cramer's Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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