Shares of Eli Lilly (LLY) - Get Report  are down 2% Monday and down roughly 12% since its negative announcement last Wednesday regarding its failed late-stage Alzheimer treatment.

This was a "true gaffe" by Eli Lilly, TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said on CNBC's "Stop Trading" segment.

This disease is hard to treat and very complex. Eli Lilly was "far too bullish" about its treatment, Cramer said, which built up too much false hope.

The company tried to release the news around a time where perhaps investors wouldn't be focused on it. But for something as big as this, it's hard for a company to get by without investors noticing.

This was a "major disaster for Eli Lilly and there's no minimizing it," Cramer reasoned. The company shouldn't build up that type of false hope and perhaps they will learn from this mistake.

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At the time of publication, Cramer's Action Alerts PLUS had no position in companies mentioned.