Novo Nordisk announced Friday that ziltivekimab failed to show a statistically significant reduction in major cardiovascular adverse events. The stock dropped. Retail traders who bought shares because they saw someone on YouTube pronounce "GLP-1" are now wondering if their Robinhood app has a customer service number.
The experimental heart medicine was supposed to prevent heart attacks and strokes. It did not do that in a meaningful way. This is called a Phase 3 trial failure. It's what happens when a drug company spends years and hundreds of millions of dollars testing whether a molecule does the thing it's supposed to do, and the molecule says no.
Analysts are calling this another blow to Novo's pipeline. The pipeline is a term drug companies use to describe all the experimental treatments that might work someday if the science gods smile upon them. Novo's pipeline just got shorter. The charts don't care. The 50-day moving average didn't wake up this morning and read the trial results. It just kept being a line on a screen that technical traders use to justify entries they already decided on.
Some investor bought Novo shares Thursday night because the RSI looked oversold. That investor is now learning that oversold can become more oversold when your heart drug fails to prevent hearts from failing. The beautiful thing about technical analysis is that it doesn't require you to know what ziltivekimab is or does. You just need to know where the support level sits. Turns out the support level was standing on a trapdoor marked "clinical trial data."
Novo still has Ozempic and Wegovy. Those print money. But retail traders didn't buy Novo for the drugs that work. They bought it because someone on r/wallstreetbets posted a chart with three arrows pointing up and the caption "trust me bro."
The stock will find a bottom. Someone will call it a buying opportunity. That someone will be holding bags until ziltivekimab's cousin clears Phase 3 in 2031.
Photo by on Unsplash
Leave a Comment