Hims & Hers Health Inc stock is up 10% today, here is why

Hims & Hers Health Inc (HIMS) stock is up 10% after the FDA announced today that it has reversed its decision to remove the weight-loss drug Tirzepatide from the shortage list. The FDA has allowed compounders to continue manufacturing and selling the drug while it reviews if there is a shortage.

On Oct 2, the FDA announced that the drug Tirzepatide is no longer in shortage. Made and sold by Eli Lilly (LLY) under the brand names Mounjaro and Zepbound, the injectable drugs are used to treat type 2 diabetes and for weight loss. Hims stock fell 10% at the time of this announcement. So how are these decisions affecting Hims & Hers Health Inc?

When the FDA puts a drug on the shortage list, this allows third-party compounders to compound the drug and basically make a copycat version to sell. Today's reversal came after the Outsourcing Facilities Association (OFA) filed a lawsuit against the FDA for removing Tirzepatide from the shortage list, arguing that the decision was made suddenly without proper notice and that the shortage still exists.

Hims is one of the beneficiaries of the shortage as they sell compounded Semaglutide injection, which is used for weight loss. However, while also on the shortage list, Semaglutide is not the same drug as Tirzepatide. Hims Semaglutide is a copycat of the drugs Ozempic and Wegovy that are made by Novo Nordisk. So while the latest decisions allow so, Hims is not currently offering Tirzepatide nor have they in the past, and it's not yet clear if they plan to do so.