Hims & Hers Health’s stock, which saw a significant boost earlier this year due to its pivot into weight-loss medications, experienced a sharp decline of 10% on Thursday.
The drop came after regulators signaled potential new restrictions on the production of generic versions of Eli Lilly’s popular weight-loss and diabetes drugs, Zepbound and Mounjaro, both of which are based on the GLP-1 receptor agonist tirzepatide.
While Hims & Hers does not sell tirzepatide-based medications, it offers a compounded form of semaglutide, another GLP-1 drug used for weight loss and diabetes management, sold under brand names like Ozempic and Wegovy by Novo Nordisk. Despite the FDA’s move affecting only tirzepatide, the company’s stock remains sensitive to any headlines related to the GLP-1 market, as its recent valuation surge has been largely driven by its expansion into this sector.
The FDA’s announcement stated that Eli Lilly had sufficiently ramped up production of tirzepatide, leading to its removal from the agency’s shortage list. This change could bar compounding pharmacies from producing generic versions of the drug, fueling investor concerns that a similar situation could unfold for semaglutide, which remains on the shortage list.
Market analysts have noted that Hims & Hers’ stock has become particularly volatile due to high investor interest in its GLP-1 offerings.
“The recent valuation increase for Hims has been driven by its entry into GLP-1s… Any news related to the GLP-1 market can put that valuation at risk,” said Piper Sandler analyst Korinne Wolfmeyer.
Investors also fear that increased production from major pharmaceutical companies like Eli Lilly and Novo Nordisk could further challenge Hims’ market share in the weight-loss drug space. Hims’ compounded semaglutide injection, while still viable under current regulations, faces potential threats if production of branded versions increases and shortages ease.
Despite these concerns, Hims & Hers maintains that the FDA’s recent move does not directly impact its operations. A spokesperson for the company stated that the ruling does not preclude the continued compounding of semaglutide-based medications, as long as the products are not “essentially copies” of drugs currently available.
With input from Reuters, the Wall Street Journal, and USA Today.
