Tirzepatide news constrains Hims & Hers addressable market, says Citi

Citi keeps a Neutral rating on Hims & Hers (HIMS) after the FDA officially removed Eli Lilly’s (LLY) Tirzepatide from its shortage list and reminded drug compounders of the more restrictive rules that now come into effect. Compounding pharmacies will not be able to compound exact copies of the drug regularly or inordinate amounts and 503B facilities will not be able to compound drugs that are identical or nearly identical to an FDA-approved drug, the analyst tells investors in a research note. Citi says that while this will not impact Hims & Hers directly as the company only compounds Novo Nordisk’s (NVO) Semaglutide which remains on the shortage list, the news will constrain Hims & Hers’ future total addressable market and portends a faster than anticipated resolution to shortages. Last quarter Hims & Hers noted it would expand into compounded Tirzepatide, the firm points out. The company has maintained it will be able to continue to compound GLP-1s after shortages abate by changing the formulation and dosage for the clinical benefit of an individual, but this sets the company up for a legal battle in the coming months, adds Citi. Shares of Hims & Hers are down 12% to $16.65 in premarket trading.