Hims & Hers Faces a Double Blow as FDA Warnings and Novo Nordisk Patent Suit Stack the Deck Against Growth

The immediate trigger for the downturn was the failure of a low-cost attempt to replicate Wegovy, Novo Nordisk?s blockbuster obesity drug. In early February, Hims & Hers rolled out a compounded version of the weight?loss medication priced at just $49 per month, a fraction of the original price. By February 7, the program was abruptly suspended.

The move came on the heels of a FDA intervention. U.S. regulators issued strong cautions about mass?marketed, unapproved GLP-1 mixed formulations and referred the matter to the Department of Justice. The FDA emphasized that there are no safety or efficacy guarantees for these compounded products, striking at the core of Hims & Hers? strategic premise.

Novo Nordisk escalates the confrontation

The regulatory pressure was only one front in the pressure cooker. On February 9, Novo Nordisk filed a lawsuit in a Delaware federal court accusing Hims & Hers of infringing intellectual property related to semaglutide, the active ingredient in Wegovy. The Danish pharma giant seeks damages and a permanent injunction to stop the distribution of competing products.

Analysts recalibrate

Should investors sell immediately? Or is it worth buying Hims & Hers?

The combination of significant legal risk and the fading hype around the weight?loss sales opportunity prompted a swift rethink on Wall Street. TD Cowen downgraded the stock to Hold and slashed its price target from $30 to $20. Bank of America also trimmed its target to $21.

The market reflected the shift in sentiment: the shares dropped another 5.33% on the session and closed at $15.80.

What?s ahead

Uncertainty is likely to linger until the company reports its next set of quarterly results. On February 23, management is expected to outline how it will address the strategic gap left by the failed weight?loss unit and detail the financial reserves it plans to set aside for the ongoing legal matter.

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