Stock Reaction to Legal Threat

The stock of Hims & Hers dropped 8% in premarket trading on Friday following a legal threat from Novo Nordisk.

The decline came after the telehealth company announced plans to launch a cheaper, copycat version of Novo's weight loss pill, triggering Novo's legal action.

Initial Stock Surge and Subsequent Decline

On Thursday, Hims & Hers stock spiked as much as 15% after the announcement.

However, the gains were short-lived, and the stock ended the trading session down 3.8%, hitting a 12-month low. By Friday morning, shares fell another 6.7% in premarket trading.

Details of the New Pill Offering

Hims plans to launch a Wegovy-style pill that contains the same active ingredient, semaglutide, as Novo's original product.

The company will offer the pill at a starting price of $49 for the first month when customers subscribe. After the first month, the price will rise to $99. In comparison, Novo Nordisk sells its starting dose for $149 on its direct-to-consumer website, NovoCare.

Legal Implications and Patent Issues

Hims is proceeding with its pill launch despite the fact that semaglutide is under patent protection in the United States until 2032.

The company previously thrived by selling compounded semaglutide in an injectable format, using a regulatory loophole when there were shortages of the drug. However, Novo Nordisk has since resolved supply issues, and there are currently no shortages reported for the pill version.

Concerns Raised by Analysts

Analysts have raised concerns regarding Hims' new product. Michael Cherny from Leerink Partners rated Hims stock as 'Market Perform' and suggested that the company might consider launching copycat versions of Eli Lilly's weight loss drugs.

Meanwhile, Barclays analyst James Gordon described Hims' $49 Wegovy copy as a 'new concern' for Novo Nordisk. He noted that while the lower-priced alternatives may attract cost-sensitive patients, there are questions about their regulatory sustainability and clinical consistency.

What Lies Ahead for Hims & Hers

The future of Hims & Hers remains uncertain amid these legal challenges and market reactions.

As the company navigates the complexities of launching its Wegovy-style pill, investors will be closely monitoring both the legal developments and the broader implications for its stock performance.