Hims & Hers (HIMS) stock plummeted around 30% in early trading Monday after Novo Nordisk (NVO) announced it was ending a collaboration to make its blockbuster weight-loss drug, Wegovy, available on Hims’ telehealth platform.
Novo Nordisk said that Hims & Hers was breaking the law by continuing to sell copycat semaglutide, the key ingredient in Wegovy, alongside Novo’s branded drugs.
“Hims & Hers … has failed to adhere to the law which prohibits mass sales of compounded drugs under the false guise of ‘personalization,'” Novo said in a statement Monday.
The duo announced a collaboration last month that would allow patients to directly purchase Wegovy through Hims’ telehealth platform. The agreement followed a growing trend among pharma companies, including Novo’s competitor Eli Lilly (LLY) to fill the access gap after copycat, or compounded, GLP-1s were forced off the market.
Compounded drugs were available when Lilly and Novo struggled to produce enough of their GLP-1s to meet the unexpected and unprecedented demand spike in the weight-loss market. The Food and Drug Administration (FDA) allows for copycats to be sold when a drug is in short supply without undergoing the same trial requirements as the branded drugs.
Since the shortage has ended for both companies’ drugs, some compounding pharmacies have continued to make copycats — mostly for Novo’s semaglutide. They intend to continue and are allowed to do so due to a loophole that allows patients to have access to “personalized” medicine if they need adjustments to a branded product for reasons like tolerability or allergies.
Lilly is also faced with how to manage some telehealth platforms that continue to offer compounded products, including Novo Nordisk’s, which Lilly included in its concerns.
Hims & Hers did not immediately respond to a request for comment.
In addition to the latest ding to the company’s stock, investors are expecting Hims & Hers to grow at a slower clip than in the recent past.
Hims has been riding the highs (and sometimes volatile swings) in GLP-1 news, especially as it relates to the availability of the copycat drugs. But it is also showing weakness in overall subscriptions to its telehealth platform, according to Bank of America analyst Allen Lutz.
Revenue growth year over year has slowed sharply from roughly 45% in the third quarter of 2024 to 29% in the first quarter of this year. In addition, the Federal Trade Commission (FTC) will implement a new rule in July making it easier for customers to cancel subscriptions with one click, which “could impact HIMS churn by simplifying subscription cancellations,” Lutz said.
