The FDA Ordered GLP-1 Vision-Loss Warnings For Some Products. Shares of Eli Lilly and Novo Nordisk Were Unfazed.

Eli Lilly and Novo Nordisk shares climbed Monday, outpacing the broader health care sector even as U.S. regulators ordered new warnings in some its biggest sellers about a rare eye condition that can cause sudden, permanent vision loss.

The Food and Drug Administration's decision includes Lilly's Mounjaro and Zepbound and Novo's Ozempic and Wegovy. Lilly gained 4.3% to close at $1,412.05, while Novo Nordisk's U.S.-listed shares rose 2.7% to $41.40. Both opened higher and finished above their opening prices.

The S&P 500 gained 2.3%, and the Health Care Select Sector SPDR ETF rose about 2%. The gains recovered much of the ground both stocks had lost since Wednesday. Lilly had fallen 3.8% Thursday and another 0.8% Friday before Monday's rebound. Novo fell 4.5% Thursday, was little changed Friday and still ended Monday below Wednesday's $42.18 close.

Two smaller developers of obesity drugs also rallied Monday. Viking Therapeutics gained 8% to $28.98, and Structure Therapeutics rose 5.2% to $21.41. Viking separately announced plans to present data on its experimental obesity drug at ObesityWeek.

Lilly said Monday that its weight-loss pill Foundayo reduced nighttime breathing interruptions by 43.8% after 52 weeks among trial participants who weren't using positive airway pressure therapy, compared with 6.3% on a placebo.

The company plans to seek FDA approval for moderate to severe obstructive sleep apnea by year-end. An expanded indication would give the company another way to grow sales of Foundayo, which is also covered by Monday's warning.

Lilly's latest earnings show how much it already relies on the drug class. Mounjaro brought in $10.7 billion in third-quarter sales, up 65% from a year earlier, and Zepbound generated $5.4 billion, up 49%.

Together, the two accounted for about two-thirds of Lilly's $24.4 billion in quarterly revenue. The company raised its full-year revenue forecast to $91 billion to $92 billion in late October. Lilly's worldwide sales volume rose 53% in the quarter, while the prices it received fell 15%. That gap shows how heavily its revenue growth depended on selling more medicine.

GLP-1 drugs for obesity and diabetes generated about 77% of its third-quarter sales, based on the company's earnings report. Its obesity drug sales grew 22% at constant exchange rates, helped by the launch of the Wegovy pill, while GLP-1 diabetes sales fell 7%.

Novo raised its full-year outlook last week but still expects adjusted sales growth to range from a 2% decline to a 2% increase at constant exchange rates. The FDA is requiring manufacturers to update prescribing information for a condition called non-arteritic anterior ischemic optic neuropathy, or NAION.

In a review of 126 clinical trials, the agency found 6.4 probable cases per 100,000 person-years among patients taking GLP-1 drugs, compared with 3.8 among those given a placebo or another diabetes medication. The FDA advised patients who experience sudden changes in vision in one eye to contact a health care professional immediately.

Lilly told Reuters it was reviewing the FDA's decision, while Novo said it remained confident in its drugs' benefit-risk profile. Citi analyst Geoff Meacham told Reuters he expected the rarity of the condition and the benefits of treatment to limit changes in prescribing. For investors, the next measure of the warning's commercial impact will be whether new prescriptions or refills slow once the revised labels reach doctors and patients.