Investing.com -- Hims&Hers Health shares are down over 8% premarket Thursday after a federal judge ruled in favor of the FDA in the tirzepatide compounding case.
Bank of America (NYSE:BAC) wrote in a note Thursday that, “Judge Mark Pittman ruled in favor of the U.S. Food and Drug Administration (FDA), denying the Outsourcing Facilities Association’s (OFA) motion for preliminary injunction in the case related to the tirzepatide shortage decision,”
While the order remains sealed, the ruling effectively upholds the FDA’s stance that the tirzepatide shortage has been resolved, meaning compounding pharmacies must cease production within the FDA’s designated grace period.
BofA explains that under the FDA’s updated policies, state-licensed pharmacies under 503A must discontinue compounding tirzepatide as of March 5, while outsourcing facilities under 503B have until March 19.
The OFA initially filed the lawsuit in October 2024, arguing that the FDA failed to provide sufficient notice or explanation before declaring the shortage over.
BofA views this ruling as a negative for 503B compounding pharmacies and a “modest negative for HIMS’ 503B compounding operation.”
Analysts noted, “Tonight’s news is an indirect negative for HIMS,” as the company does not compound tirzepatide, but similar legal challenges around semaglutide could impact its weight-loss business.
“Assuming tonight’s decision is a direct read-through to the court’s decision on semaglutide (which has the same Judge overseeing the case), HIMS is likely to continue focusing on 503A personalized semaglutide sales,” BofA said.
“HIMS’ ability (or inability) to operate through the compound exception for semaglutide is the most important dynamic related to HIMS shares over the next 6-12 months, in our view.”
BofA maintains an Underperform rating on HIMS stock.