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Shares of Hims & Hers Health tumbled more than 23% on Friday after the U.S. Food and Drug Administration announced that the shortage of semaglutide injection products has been resolved.
Semaglutide is the active ingredient in Novo Nordisk’s blockbuster weight loss drugs Wegovy and diabetes treatment Ozempic. Those medications are part of a class of drugs called GLP-1s, and demand for the treatments has exploded in recent years. As a result, digital health companies like Hims & Hers have been prescribing compounded semaglutide as an alternative for patients who are navigating volatile supply hurdles and insurance obstacles.
Compounded drugs are custom-made alternatives to brand-name drugs designed to meet a specific patient’s needs, and they can be produced when brand-name treatments are in shortage. The FDA doesn’t review the safety and efficacy of compounded products.
Hims & Hers began offering compounded semaglutide to patients in May, and it owns compounding pharmacies that produce the medications.
Compounded medications are typically much cheaper than their branded counterparts. Hims & Hers sells compounded semaglutide for less than $200 while Novo Nordisk’s Ozempic and Wegovy both cost around $1,000 without insurance.
The FDA said Friday that it will start taking action against compounders for violations in the next 60 to 90 days, depending on the type of facility, in order to “avoid unnecessary disruption to patient treatment.”
“Now that the FDA has determined the drug shortage for semaglutide has been resolved, we will continue to offer access to personalized treatments as allowed by law to meet patient needs,” Hims & Hers CEO Andrew Dudum posted on X Friday. “We’re also closely monitoring potential future shortages, as Novo Nordisk stated two weeks ago that it would continue to have ‘capacity limitations’ and ‘expected continued periodic supply constraints and related drug shortage notifications.'”
The company’s weight loss offerings have been a massive hit with investors. Shares of the company climbed more than 200% last year, and the stock is already up more than 100% this year despite Friday’s move.
Even before adding compounded GLP-1s to its portfolio, the company said in its 2023 fourth-quarter earnings call that it expects its weight loss program to bring in more than $100 million in revenue by the end of 2025.
Despite the turbulent regulatory landscape, Hims & Hers has showed no signs of slowing down.
On Friday, the company announced it has acquired a U.S.-based peptide facility that will ” further verticalize the company’s long-term ability to deliver personalized medications.” Hims & Hers will explore advances across metabolic optimization, recovery science, biological resistances, cognitive performance and preventative health through the acquisition, the company said.
That move comes just days after Hims & Hers also bought Trybe Labs, the New Jersey-based at-home lab testing facility. Trybe Labs will allow Hims & Hers to perform at-home blood draws and more comprehensive pretreatment testing.
Hims & Hers did not disclose the terms of either deal.
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