Novo Nordisk A/S (NVO) shares surged 6.63% in pre-market trading on Monday, following news that telehealth company Hims & Hers has abandoned its plan to launch a low-cost competitor to the Danish drugmaker's blockbuster weight-loss medication.

The sharp gain comes after Hims & Hers reversed its decision over the weekend to offer a $49 compounded version of Novo Nordisk's Wegovy pill. The reversal followed legal threats from Novo Nordisk and a warning from the U.S. Food and Drug Administration (FDA), which indicated it would take action against the product for potentially violating drug regulations.

The FDA's stance against unauthorized compounded versions of GLP-1 medications, which include the key ingredient semaglutide found in Wegovy and Ozempic, strengthens Novo Nordisk's market position by removing a significant near-term competitive threat and protecting its pricing power in the lucrative weight-loss drug market.