Hims & Hers Health Inc (NYSE:HIMS), a telehealth company known for offering compounded alternatives to popular GLP-1 weight-loss treatments, has seen its shares soar over 120% since August 2023.
The surge surpasses gains by industry giants Eli Lilly And Co (NYSE:LLY) and Novo Nordisk A/S (NYSE:NVO), which have climbed 67% and 44%, respectively.
Related: Don't Promote Copycat Weight-Loss Drugs Amid Improved Supply, Eli Lilly Asks Doctors, FDA Evaluates.
The start-up's market cap under $3.5 billion contrasts starkly with Eli Lilly's $876 billion and Novo's $443 billion valuations.
Despite this disparity, the Financial Times notes that Hims' stock rally highlights a lucrative market opportunity driven by explosive demand and supply shortages for drugs like Wegovy, Ozempic, and Zepbound.
Hims, which initially focused on erectile dysfunction and hair-loss treatments, recently expanded into GLP-1 offerings.
The company capitalized on the scarcity of these weight-loss drugs by providing compounded alternatives—pharmacy-produced copies that do not have FDA approval.
Unlike generics, compounded drugs are crafted by specialized pharmacies and are legally permissible when the original medication is in short supply.
Its shares remained below the initial $10 price for much of 2021 through 2023 until the company announced in May that it would begin selling a version of Wegovy.
In August, Hims further boosted investor confidence by acquiring a compounded pharmacy to secure its supply chain.
The affordability of Hims' version, priced at $199 per month compared to over $1,000 for the branded alternatives, has driven consumer interest.
However, safety concerns and legal battles loom large. Novo Nordisk and Eli Lilly have filed multiple lawsuits to curb the sale of compounded versions.
Investors are also wary of what might happen once the branded drug shortage is resolved, potentially leaving Hims' stock vulnerable to a sharp decline.
Price Action: HIMS stock is up 0.82% at $15.71 during the premarket session at last check Monday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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