Hims & Hers shares tumble as FDA resolves obesity drug shortage

Investing.com -- Shares of Hims & Hers Health, Inc. (NYSE: HIMS) fell sharply by 15% after the U.S. Food and Drug Administration (FDA) announced the resolution of the tirzepatide injection shortage. The FDA's decision, based on a comprehensive analysis, marks the end of a period where certain pharmacies could compound, distribute, or dispense the drug without facing repercussions for violations related to the drug's shortage status.

The FDA's re-evaluation, announced on Thursday, December 19, 2024, reverses its previous position from October 2, 2024, stating that the tirzepatide shortage has ended. The agency has set grace periods until February 18, 2025, for state-licensed pharmacies, and until March 19, 2025, for outsourcing facilities to continue compounding the drug. However, the FDA has made it clear that it may take action against any other statutory or regulatory violations, which could include substandard quality or unsafe products.

The market's reaction reflects concerns over the impact on Hims & Hers Health, which, along with companies like WW International (NASDAQ:WW ) (WeightWatchers), has been offering compounded versions of obesity drugs like Novo Nordisk (NYSE:NVO )'s Wegovy (semaglutide). The FDA still lists semaglutide and other GLP-1 products as in shortage, with varying availability reported by manufacturers.

Investors had been closely monitoring the FDA's report on the shortage status of Eli Lilly (NYSE:LLY ) & Co’s blockbuster compound, tirzepatide, with expectations set for a December 19 update. The FDA had previously removed tirzepatide from the shortage list in October but agreed to reevaluate after a lawsuit from a compounding trade association.

The FDA's latest decision could reshape the market dynamics for obesity drugs, as compounded versions were allowed under U.S. regulations during the shortage. Hims & Hers Health's stock movement today is a direct response to the FDA's announcement, signaling the end of an advantageous period for the company's compounded drug offerings.

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Source: Investing.com