Him & Hers’ announcement of a low-cost weight loss has jolted the pharmaceutical industry, but the company’s volatile stock failed to hold early gains.
The Danish drug manufacturer revealed plans to offer a compounded variant of Novo Nordisk’s Wegovy at an starting price of $49 per month, increasing from $99 after the first month for customers on a five-month plan.
The significantly reduced price initially sparked excitement among investors, raising the shares nearly 14% at the market open.
However, the rally quickly reversed, with the stock ending nearly 4% reduced and slipping further in after-hours trading.
Regulatory concerns exerted immense pressure after the head of the U.S. Food and Drug Administration issued a warning that this action could be taken against companies mass-marketing illegal copycat drugs similar to approved treatments.
Hims & Hers shares have been highly volatile, gaining significant short-seller interest even as the stock has exponentially raised over the past two years.
Trading volume significantly surged to the maximum level in months, suggesting some investors used the spike to exit positions.
As per a few credible analysts of the industry, the reaction to the seemingly positive news may hint towards weakening momentum.
Furthermore, options data hints traders expect sizable price swings in the near term, highlighting the uncertainty surrounding the company’s strategy and regulatory outlook in the competitive weight-loss drug market.
