Why Novo Nordisk Stock Sank 5.6% Today
Key Points
Novo Nordisk's Phase II trial found that semaglutide did not slow Alzheimer's progression.
The setback comes as competition heats up in the obesity and diabetes drug market.
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Shares of Novo Nordisk (NYSE: NVO) fell on Monday, finishing down 5.6%. The drop comes as the S&P 500 and the Nasdaq Composite gained 1.5% and 2.6%, respectively.
The Danish drugmaker's stock slumped after the company announced that a Phase II trial had failed to show positive results.
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Novo's trial fails
Novo had been testing whether semaglutide, the key ingredient in its blockbuster diabetes and weight loss drugs, could be used to treat Alzheimer's disease.
The results did show some positive signs across certain biomarkers related to Alzheimer's, but that didn't translate into actually slowing the progression of Alzheimer's down -- the only result that mattered.
Despite Novo Nordisk's own caution regarding the trial -- the company has said the trial had a low likelihood of success -- the results still hit Novo stock hard, arriving at a time when the company faces increasing competition in the obesity and weight loss market.
Image source: Getty Images.
Novo Nordisk still has upside
While the company faces significant hurdles in trying to regain its footing, I think Novo is a solid pick. Growth could be bumpy in the near term, but long term, I think there is real value.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
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