Shares of Hims & Hers Health (HIMS) witnessed a significant dip on Friday following the Food and Drug Administration's announcement that the shortage of the active ingredient found in weight loss treatments by Eli Lilly (LLY) and Novo Nordisk (NVO) - Wegovy and Ozempic, respectively - has been resolved. The ingredient, Semaglutide injections, are not only used for weight loss but are also a common treatment for Type 2 diabetes and have been identified as being in a shortage since 2022.
This development could potentially impact Hims & Hers, a company that creates compounded versions of weight-loss drugs by combining the key ingredient present in the patented version with other substances. They were able to do this legally due to an FDA rule known as 503B, which permits companies to mass-produce such drugs when the original versions are tough to get.
The FDA, however, has mentioned that it does not plan on taking action against 503B drug compounders for 90 days, or until May 22, to prevent unnecessary disruption to patient treatment.
Andrew Dudum, Hims & Hers Chief Executive Officer, reassured on Friday that the company intends to "continue offering access to personalized treatments as allowed by law" and is actively "monitoring possible future shortages."
This issue comes after the FDA's declaration in October that Mounjaro and Zepbound, Eli Lilly's weight-loss treatments that use tirzepatide as the active ingredient rather than semaglutide, were no longer on its list of drugs with supply issues.
Hims & Hers stock value dipped over 23% by Friday afternoon, wiping off earlier gains from the week following their announcement of plans to launch at-home blood testing in the coming year. Meanwhile, shares of Eli Lilly and Novo Nordisk experienced modest growth, with gains of less than 1% and more than 5%, respectively.