Hims stock skidded Thursday after the Food and Drug Administration determined that Eli Lilly's tirzepatide — which sells as a weight-loss drug called Zepbound — is no longer in shortage.
The decision is a blow to compounding pharmacies that sell knockoff versions of popular diabetes and weight-loss drugs that mimic the GLP-1 hormone to control hunger and improve blood sugar. Hims & Hers Health makes a compounded version of semaglutide, the active ingredient behind Novo Nordisk's diabetes drug Ozempic and obesity treatment Wegovy.
The compounders have until Feb. 18, 2025, or March 19, 2025, depending on their licensing, to wind down their tirzepatide operations. The wind-down period is to avoid "disruption to patient treatment," the FDA said in its announcement.
Hims stock slumped 7.7% to 26.36. Shares rank fourth on the IBD 50 list of elite growth stocks. Hims stock undercut its 50-day moving average, erasing much of its recent breakout. The compounding stock broke out of a cup-with-handle base with a buy point at 23.74 on Nov. 6, according to MarketSurge.
Hims stock has a nearly perfect IBD Digital Relative Strength Rating of 97, meaning it ranks in the top 3% of all stocks when it comes to 12-month performance.
Hims Stock: Compounders To Wind Down Tirzepatide
The FDA's decision wraps up a battle that began on Oct. 2. Then, the agency removed Eli Lilly's tirzepatide from its drugs shortage list, stoking fury and panic among patients, doctors and pharmacies. The decision meant that compounders could no longer sell their copycat versions of tirzepatide.
An organization representing compounders, called the Outsourcing Facilities Association, later filed a lawsuit and the FDA said it would reconsider its decision.
In two months during the third quarter, nearly 80,000 people struggled to find branded versions of the popular diabetes and weight-loss drugs, Hims said in a recent letter to shareholders.
But the FDA said Thursday "the tirzepatide injection product shortage is resolved." Tirzepatide landed on the drugs shortage list in December 2022. Semaglutide is still listed in shortage on the FDA Drug Shortages list, but all dosages of Wegovy and Ozempic are listed as "available."
Variability At Particular Pharmacies
On its website, the FDA notes "even when a medication is available, patients may not always be able to immediately fill their prescription at a particular pharmacy." The agency cited factors like ordering practices and incentives, cold-chain logistics and retailer capacity constraints. "Patients may experience variability at a particular pharmacy location regardless of whether a drug is in shortage."
Thursday's decision means compounding pharmacies with a 503A distinction have 60 days to Feb. 18, 2025, to unwind their tirzepatide operations. The 503B compounders have 90 days to March 19, 2025. The latter group makes batches of medicines and is subject to stricter regulations than 503A groups.
Strive Pharmacy, a specialty compounding pharmacy, is a 503A company. It sells knockoff versions of both semaglutide and tirzepatide.
"GLP-1s have expanded Strive's footprint pretty large during the time period," Matthew Montes de Oca told Investor's Business Daily in a recent interview. De Oca is the company's chief clinical officer. "It's a decent amount of business for us, so (removing tirzepatide from the shortage list) would be a hit."
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