Credit Suisse is bullish on Eli Lilly and Co (NYSE: LLY), saying the recent FDA delay on rheumatoid arthritis drug baricitinib is only a short-term setback for the pharma major. But, the brokerage acknowledges the stock could see some modest weakness on the news.

Eli Lilly along with its partner Incyte Corporation (NASDAQ: INCY), announced that the FDA is going to take three additional months to decide on the new drug application for baricitinib, with an action date now expected in mid-April.

Eli Lilly said the delay does not affect its previously-issued financial guidance for 2017.

Delay Is Not Unusual

Credit Suisse said it is not that unusual to have delays like this when the FDA requests additional data analyses while reviewing a product’s application.

“We continue to expect ultimate approval for the product and do not think a short delay should impact its long-term potential,” analyst Vamil Divan wrote in a note.

Divan now expects a U.S. approval in mid-April while the drug is expected to be approved in the EU in late February/early March following the positive recommendation from the CHMP last month.

“Once the product is approved and gains coverage, we continue to see it holding peak sales potential of >$2 billion given the size of the rheumatoid arthritis market, baricitinib’s strong clinical profile, and its oral route of administration,” Divan highlighted.

Shares of Eli Lilly closed Friday’s trading at $77.40. Divan has an Outperform rating and $87 price target on Eli Lilly shares.

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