WeightWatchers Share Surge Following Weight-Loss Drug Announcement

Shares in WeightWatchers surged nearly 38% in after-hours trading on Wednesday, continuing the sharp gains from the previous session. This follows the announcement that the company would offer a compounded version of Novo Nordisk's popular weight-loss drug, Wegovy.

Major pharmaceutical companies, including Denmark's Novo Nordisk and Eli Lilly, have struggled to meet increasing demand for their renowned GLP-1 obesity medications, which can help patients lose an average of up to 20% of their weight.

Due to this shortage, US regulators permit businesses, including telehealth companies like Noom and Hims & Hers Health, to create compounded versions of brand-name medicines. Compounding involves combining or altering drug ingredients to formulate a medication tailored specifically for an individual patient's needs, as stated by the US Food and Drug Administration (FDA).

WeightWatchers, also known as WW International, announced its compound offering would start at $129. CEO Tara Comonte emphasized the company's commitment to ensuring members have access to effective alternatives during ongoing shortages of Novo's Wegovy and Ozempic.

WeightWatchers shares had already risen over 46% on Tuesday. Analysts at Morgan Stanley noted, "WeightWatchers announced its long-anticipated entrance into the compounded GLP-1 space, a needed step to restart clinical growth" following recent weaknesses in its exclusively branded segment. They believe that while it may not be too late for the company to regain market share, successful execution of the new offering is crucial as the peak season approaches.

This announcement follows the FDA's recent statement that tirzepatide — marketed by Eli Lilly as Zepbound for weight loss and Mounjaro for diabetes — is no longer in short supply in the US, concluding the shortage classification enacted in 2022. However, Wegovy and Ozempic continue to be on the FDA's shortage list.