Orphazyme (ORPH) - Get Report slumped on Friday after the Danish biotech firm turned meme stock's treatment for Niemann-Pick disease type C failed to receive clearance from the Food and Drug Administration.
American depositary receipts of the Copenhagen company at last check were down 43% to $8.37. They have traded on Friday down as much as 46% at $7.85.
Bloomberg noted that at one point last week Orphazyme jumped nearly 1,400% after investors on social media platforms such as Reddit embraced the stock.
Orphazyme said it had received a complete response letter from the FDA after the agency reviewed the company's new-drug application for arimoclomol.
Niemann-Pick is a rare inherited disease that affects the body's ability to metabolize fat (cholesterol and lipids) within cells, according to the Mayo Clinic website. The cells malfunction and, over time, die.
The disease can affect the brain, nerves, liver, spleen, bone marrow and, in severe cases, the lungs. The disease can occur at any age but mainly affects children.
The FDA requested more qualitative and quantitative evidence to substantiate the validity and interpretation of the five-domain Niemann-Pick Type C clinical severity scale. That's a disease-specific, clinician-reported outcome measure of disease severity and progression.
The FDA asked for additional data "to bolster confirmatory evidence beyond the single Phase 2/3 clinical trial to support the benefit-risk assessment" of a new-drug application, according to the company.
The company said that the outcome of the FDA decision "has significant influence on Orphazyme’s outlook for full-year 2021."
Orphazyme may see losses seven times as deep as originally estimated. It expects to have about 50 million kroner, about $8 million, of cash by the end of 2021, one-seventh its previous guidance.
"We are disheartened by the outcome of the FDA’s review, given the urgent need for a new therapeutic option for NPC, but we remain committed to working with the regulators, with the goal of delivering arimoclomol to families managing this challenging disease,” Chief Executive Christophe Bourdon said in a statement.
Bourdon said the company "will focus our efforts on pursuing the European regulatory approval."
"In the short term, we will need to reduce our costs substantially and freeze all company efforts not related to clinical and regulatory activities to support approval for NPC," he said.
In September, Orphazyme filed to raise $100 million in an IPO of its American depositary shares representing underlying ordinary shares.
Denmark’s Financial Supervisory Authority says it won’t comment on Orphazyme specifically, Bloomberg reported, but the agency warned that it would step in should there be any indication of deliberate “price manipulation."