Hims stock popped Monday after the Food and Drug Administration reportedly said it would reconsider its decision to bar compounders from selling knockoff versions of Eli Lilly's obesity and diabetes drugs.
While it's doing so, compounding pharmacies and facilities will be allowed to sell their versions of Lilly's Zepbound and Mounjaro. Compounded drugs — like those sold by Hims & Hers Health — tend to be less expensive than the branded drugs.
At the close, Hims stock jumped 9.7% to 20.50. That pushed shares above a short-term high and the trendline around 20. Lilly stock dipped a fraction.
Hims Stock Takes A Hit As Tirzepatide Battle Unfolds
The active ingredient behind Zepbound and Mounjaro is tirzepatide. Mounjaro was added to the FDA's drug shortage list in 2022. Zepbound joined in April. But the FDA recently removed tirzepatide from its list of drugs experiencing shortages.
Hims stock took a nearly 10% hit on Oct. 3 after the FDA's decision.
In response, an industry group for compounders called the Outsourcing Facilities Association sued the FDA, claiming tirzepatide remains in short supply, according to Reuters.
It's important to note that compounders can make an "essential copy" of a drug that's in shortage to help bolster supply, the industry group said in its lawsuit. Removing tirzepatide from the shortage list could limit access to compounded versions of the drug.
"The agency's decision will have tremendous implications across the nation for patients and physicians, as well as the outsourcing facilities that made an enormous investment to meet patient demand in light of product shortages and delays," OFA Chairman Lee Rosebush said in a written statement.
FDA To Review Its Decision
On Friday, the FDA said it would review whether tirzepatide is in short supply.
The decision bolstered Hims stock. Hims & Hers sells injectable weight-loss drugs online for as little as $199 a month with a 12-month plan. In comparison, Zepbound costs roughly $1,060 a month without insurance.
Lilly has also created lower-cost versions of Zepbound that use a vial — rather than an auto-injector — and cost $399 to $549 a month. These aren't covered by insurance.
Hims stock has a strong Relative Strength Rating of 97, according to IBD Digital. This means shares rank in the leading 3% of all stocks in terms of 12-month performance.
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