By Joseph Walker

Shares of obesity-drug maker Novo Nordisk rose Friday after the Food and Drug Administration declared that the company's popular medications Ozempic and Wegovy were no longer in shortage.

A shortage of the drugs' active ingredient semaglutide has allowed compounding pharmacies to produce and sell Novo and Eli Lilly's anti-obesity drugs at a fraction of their brand-name counterparts. Lilly's drug, Mounjaro, had the shortage designation lifted last year.

Telehealth company Hims & Hers has been among the more aggressive companies marketing compounded obesity drugs, including a recent Super Bowl ad, that has made it a popular name with retail investors. Shares of Hims & Hers plunged after the FDA's announcement.

With the shortage over, compounders will have up to 90 days before FDA starts enforcing rules against selling unapproved drugs, "adding additional pressure to remove counterfeit compounded medications from the market," said Evan Seigerman, a BMO Capital Markets analyst, in a note to clients.

Ozempic is approved to treat diabetes; Novo's sister drug Wegovy contains the same active ingredient but is approved specifically for obesity.

Novo shares rose 5.4% in afternoon trading; Lilly shares were up 2%.

Hims & Hers has been setting itself up to keep selling personalized doses of obesity drugs after the shortages are over, though the legal pathway forward is uncertain, said Michael Cherny, a Leerink Partners analyst.

"We do see potential for a reset in the stock after it had been clearly driven up by excitement over the broader weight loss opportunity," Cherny wrote.

Hims & Hers shares were down 22%.

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(END) Dow Jones Newswires

February 21, 2025 13:23 ET (18:23 GMT)

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