Novo Nordisk shares rallied on Friday in what’s still been a painful week as the Food and Drug Administration may weigh in on the side of the Danish drugmaker in its dispute over a copycat drug.
Novo Nordisk stock NOVO.B NVO gained 5%, but is still down 21% this week on concerns over profitability, after the head of the FDA suggested the agency might not let Hims and Hers sell the cheaper, compounded version of the new Wegovy pill that it announced on Thursday.
“FDA will take swift action against companies mass-marketing illegal copycat drugs, claiming they are similar to FDA-approved products,” said the commissioner, Dr. Marty Makary, on social media. “The FDA cannot verify the quality, safety, or effectiveness of non-approved drugs.” He didn’t specifically mention the Hims and Hers pill.
Hims and Hers HIMS meanwhile fell 11% in premarket trade and has seen its gains from the announcement of a $49 obesity drug pill more than erased. Novo Nordisk already had threatened its own legal actions.
Companies are allowed to make compounded drugs when there’s a shortage of branded drugs, and they can also make drugs on a personal basis with prescriptions customized to an individual patient’s needs, noted UBS analysts.
“If compounders can provide oral drug at scale, the manufacturing moat is also likely completely gone, raising the question again on where Novo’s terminal value will come from,” said Jefferies analyst Michael Leuchten, reiterating an underperform.
Novo this year launched the pill version of Wegovy, and takeup has been rapid, with 170,000 people already taking the drug.
The UBS analysts pointed out the Hims and Hers oral drug might not work properly.
“HIMS has disclosed that it is using a liposomal formulation of semaglutide, versus a patented SNAC oral formualtion from Novo in Wegovy pill. With liposomal, oral delivery is notoriously challenging as a delivery technology and there is a high chance, in our view, that the vast majority of the semaglutide in the compounded formulation will be digested in the gut,” said analysts led by Matthew Weston.
Eli Lilly, which has yet to launch its oral weight-loss drug, rose 3% in premarket trade.