Shares of the telehealth company Hims & Hers declined during early trading on Friday, influenced by legal threats from pharmaceutical firm Novo Nordisk.
The online telehealth provider announced on Thursday its plan to launch a lower-cost generic version of Novo Nordisk's weight loss pill. This move prompted an immediate legal response from Novo Nordisk.
Following the initial announcement, Hims & Hers' stock price surged by as much as 15% during Thursday's session. However, those gains were quickly erased after Novo Nordisk labeled the action as "potentially unlawful." The stock ultimately closed down 3.8%, hitting a new 12-month low. The sell-off continued into Friday's early trading, with shares falling an additional 6.5%.
Hims & Hers stated it would offer a generic pill equivalent to Wegovy, containing the same active ingredient, semaglutide, as the branded drug. For subscribers, the initial month's supply is priced as low as $49, after which the cost increases to $99 per month.
This price is significantly lower than Novo Nordisk's direct-to-consumer pricing on its platform, NovoCare, where the starting dose of Wegovy is listed at $149.
Semaglutide is currently under patent protection in the United States until 2032, yet Hims & Hers is proceeding with the launch of its generic version.
Previously, the telehealth company experienced rapid business growth by offering a compounded injectable version of semaglutide. It justified this by citing a regulatory loophole in the US that allows competitors to legally sell formulations of a patented drug when there is a supply shortage.
While demand for injectable Wegovy initially far exceeded supply, Novo Nordisk has since significantly increased production capacity, resolving the shortage issue. There is currently no supply shortage for the oral version of the drug.
Hims & Hers argues that its generic pill is legal because the dosage is adjusted based on individual patient needs, making it a "personalized" formulation. Conversely, Novo Nordisk contends the action is potentially illegal and poses risks to patient safety.
In a statement released on Thursday, Novo Nordisk said, "This is another instance of Hims & Hers attempting to mislead US consumers with GLP-1 weight loss drug copycats. The US Food and Drug Administration has previously warned the company about its misleading promotion of GLP-1 copycat products."
The stock of Hims & Hers is known for its high volatility, with its performance closely tied to market expectations regarding its ability to sell weight loss drugs like generic versions of Wegovy. Over the past 12 months, the company's shares have traded as high as $69 and as low as $23.
Michael Cherny, an analyst at Reinck & Partners, who rates the stock as "Market Perform," suggested that the telehealth firm might also be planning to launch a generic version of a competing weight loss drug from Eli Lilly. As of now, Eli Lilly has not responded to a request for comment.
Meanwhile, Barclays analyst James Gordon views the $49 generic Wegovy pill as a "new concern" for Novo Nordisk.
He added, "While these compounded generics may attract price-sensitive patients in the short term, significant questions remain regarding their regulatory compliance and the consistency of their clinical efficacy."
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