Novo Nordisk has dropped its legal case against telehealth provider Hims & Hers over patent infringement, after the two companies agreed Hims would sell Novo’s branded medicines through its platform. 

“We have decided to drop the current court proceedings and, of course, we reserve to bring that back if need be, but I don’t foresee that happening,” Novo Nordisk CEO Mike Doustdar told CNBC’s Charlotte Reed on Monday.

Under the agreement, Hims will offer access to injectable and oral semaglutide, sold as Ozempic and Wegovy, at the same price as other telehealth platforms, and Hims will no longer advertise compounded GLP-1 drugs on its platform or in its marketing, the companies said in statements on Monday. 

Shares of Hims soared more than 40% in morning trading while Novo’s Copenhagen-listed stock climbed 2.1%. The pan-European blue-chip index Stoxx 600 was trading 1% lower, while the S&P 500 fell 0.6%.

In February, Novo said it would sue Hims for what it called “mass illegal compounding” after the latter announced it would sell a copycat version of the Wegovy pill for $49, roughly $100 less than Novo sells the branded pill for through its direct-to-consumer platform NovoCare. 

Hims quickly pulled the pill after backlash from both Novo and the U.S. Food and Drug Administration. The FDA pledged to take “decisive steps” to restrict practises by compounding pharmacies, and referring Hims to the Department of Justice for potential violations of federal law.

FDA Commissioner Marty Makary said he was glad to see that Hims will stop advertising unapproved compounded drugs and instead sell FDA-approved products through the deal with Novo.

“Importantly, they will keep them affordable (no increase in price) and limit compounded GLP-1s for rare (FDA compliant) cases,” Makary wrote in a post on X.

Hims has profited hugely from selling copycat versions of the blockbuster weight-loss drug through a loophole in U.S. regulations that allows companies other than the patent holder to sell a drug if it is in shortage.

While semaglutide was in shortage in the early days of the medicine, Novo has since resolved supply restraints as it ramped up manufacturing. Hims, however, continued selling copycat versions of the drugs, arguing that its copies are “personalized” and therefore legal.

Semaglutide’s patent is protected in the U.S. until 2032.

Last year, Novo and Hims partnered to offer discounted weight loss jabs to the telehealth company’s customers. Novo ended the collaboration just two months later and said Hims used “deceptive” marketing that put patient safety at risk.

“It’s a very different situation than the last time we did this,” Doustdar told CNBC.

“Hims & Hers have agreed that upon receiving our products, they will no longer advertise, promote, market compounded products to the masses,” he said, adding that Hims has now agreed to change its business model to reserve the compounding versions “only to those rare cases where they’re needed.”

Novo now has more than 600,000 Wegovy pill scripts, Doustdar said.

Doustdar acknowledged that at the time of launching the Wegovy pill in January, there were question marks, “a bit fuelled by our competitor,” that certain food restrictions may limit the uptake of the pill.  

“Well, I have news for you, this has been absolutely not the case,” he said. “People are really interested because it’s the most efficacious pill right now in the market.”

Hims’ existing patients on compounding semaglutide “will have the opportunity to transition to FDA-approved medicines when determined clinically appropriate by their providers,” Hims said in a statement.

Speaking to CNBC’s Brandon Gomez, Hims CEO Andrew Dudum highlighted the rapidly shifting landscape for anti-obesity drugs.

“The demand will continue to accelerate with the new assortment that’s coming out, and the assortment really does serve the needs across affordability, personalization, form factor that historically, even just six months ago and 12 months ago did not exist,” he said.

Hims is also in conversation with anybody who can bring new therapies to the platform, he added, “whether that’s existing biotech or existing large drug companies.”

Zepbound-maker Eli Lilly is expected to launch a rival weight loss pill called orforglipron in the second quarter, pending FDA approval.

Novo Nordisk is investing 432 million euros ($506 million) in a facility in Ireland as it expands its production capacities to make the newly launched Wegovy pill, the Danish drugmaker said Monday.

The news comes about two months after Novo launched its blockbuster weight loss drug Wegovy in pill form in the U.S. market, in what has been described as one of the strongest launches ever. 

“With the investment in the Athlone facility, Novo Nordisk is expanding its production capacities for oral products, which will strengthen our ability to meet both current and future demand, outside the US,” said Kasper Bødker Mejlvang, Novo’s executive vice president of chemistry, manufacturing and controls and product supply.

It follows Novo Nordisk losing market share to Eli Lilly, and investors doubting that its pipeline holds enough promise to win it back. The stock has tumbled as a result, and currently trades at roughly a quarter of what it did at its peak in mid-2024.

“The investment is a sign of increasing focus and bet on the oral space from Novo Nordisk – an area where Novo has an edge,” Jyske Bank analyst Henrik Hallengreen Laustsen told CNBC Monday.

Novo enjoyed a first-mover advantage in the anti-obesity market and launched its GLP-1 drug semaglutide, sold as Ozempic and Wegovy, years before Lilly’s rival medicine. 

It did, however, misjudge the demand for its weight loss jabs. With semaglutide in short supply, compounding pharmacies were allowed to flourish through a loophole in U.S. regulations, which allows the legal making of patented drugs during a shortage. 

Supply issues have since been resolved as Novo ramped up manufacturing capacity. Even so, compunders continue to sell cheaper copycat versions of the drug, and it is still weighing on Novo’s sales. The company is involved in multiple legal battles over intellectual property.