Why Nio, Mersana Therapeutics, and Tandem Diabetes Care Slumped Today

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Monday was a tough day on Wall Street, as the Nasdaq Composite led the way lower among major benchmarks. With the market stuck squarely in the quarterly lull between financial reports from well-known companies, investors have little to go on other than macroeconomic and geopolitical news, and uncertainties related to trade and the political tides in Washington acted to weigh on sentiment to start the week. A few companies saw their shares take much larger hits than the overall market, and Nio (NYSE: NIO), Mersana Therapeutics (NASDAQ: MRSN), and Tandem Diabetes Care (NASDAQ: TNDM) were among the worst performers on the day. Here's why they did so poorly.

Nio investors tap the brakes

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Shares of Nio dropped 14% as the newly public electric car manufacturing specialist took a pause from large recent gains. Nio's IPO last Wednesday was a bit unusual, with the stock climbing just 10% from its initial price of $6, but Nio then soared more than 75% on Thursday before giving back some ground to close the week. Most market participants attributed today's drop to rising tariff concerns between the U.S. and China, but the big question for Nio is whether it can penetrate the Chinese electric vehicle market as effectively as -- or even better than -- its high-profile U.S. competitor has done in the U.S. premium EV market.

Mersana falls despite partial good news

Mersana Therapeutics stock plunged 22.5% despite the fact that the U.S. Food and Drug Administration lifted a partial clinical hold on a key treatment candidate. The biopharmaceutical company said that it and the FDA had agreed on changes to the protocol for its phase 1 study of XMT-1522, an antibody drug conjugate that Mersana is testing on patients with various forms of cancer. CEO Anna Protopapas expressed her pleasure with the resumption of trial enrollment as Mersana continues "to work with investigators to explore the full potential of both promising drug candidates in the solid tumor setting." Yet even with the hold lifted, some analysts expressed concerns about the timeline ahead for XMT-1522, and that left shareholders unsatisfied with the speed at which Mersana could realize its full potential.

Tandem's lock-up period expires

Finally, Tandem Diabetes Care stock lost nearly 16%. The high-flying healthcare specialist seemed at first to lose its upward momentum for no reason, but reports pointed to the expiration of a lock-up provision tied to a secondary offering that Tandem did last month that made today the first possible day on which certain shareholders could sell shares. Longer-term, Tandem will have to demonstrate that it can stay ahead of competition from much larger players in the industry, but if it does, a bounce from today's drop is a very real possibility.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.