Shares of Hims & Hers experienced a significant drop of up to 27% early Monday following a critical announcement from the Food and Drug Administration (FDA) on Friday regarding compounded GLP-1 drugs. The FDA revealed its intention to implement stringent measures to regulate the sale of these products, which include those offered by Hims & Hers. This regulatory shift comes at a time when the company is already facing challenges, including a lawsuit filed on Monday by pharmaceutical giant Novo Nordisk, the manufacturer behind the widely known weight-loss drug Ozempic.
The FDA’s statement emphasized its plan to restrict the use of GLP-1 active pharmaceutical ingredients (APIs) for non-FDA-approved compounded drugs. The agency directly referenced Hims & Hers along with other compounding pharmacies that have marketed these products as alternatives to FDA-approved medications. Popular GLP-1 medications include Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro, both of which are recognized for their effectiveness in weight management.
Hims & Hers has been selling less expensive compounded versions of these drugs directly to consumers. Although these compounded forms contain the same active ingredients as their FDA-approved counterparts, they differ slightly in formulation. The company has positioned itself in the market as providing affordable alternatives to these popular weight-loss medications, but the FDA’s recent actions raise significant concerns regarding the legitimacy of their marketing practices.
In its announcement, the FDA also highlighted its efforts to address misleading advertising that has been prevalent in the direct-to-consumer healthcare space. The agency stated that companies cannot claim that non-FDA-approved compounded products are equivalent to generics or that they share characteristics with FDA-approved drugs. Furthermore, they are prohibited from asserting that these compounded drugs are clinically proven to deliver results for patients.
As a result of the FDA’s announcement and the lawsuit from Novo Nordisk, Hims & Hers stock has seen a steep decline, now marking roughly a 50% decrease for the year. The stock, which reached a peak of $68 per share in late February of this year, is now trading below $17, highlighting the intense market reaction to the regulatory environment surrounding compounded drugs.
In light of these developments, investors are closely monitoring the ongoing situation as it unfolds, with analysts optimistic yet cautious about the company’s prospects in the rapidly changing landscape of healthcare and pharmaceuticals.
