ORPH Falls From Speculative Surge After FDA Rejection

The shares of Orphazyme A S ADR (NASDAQ:ORPH) are dramatically lower this morning, slammed by news that the Food and Drug Administration (FDA) rejected the firm's experimental genetic disorder drug candidate, arimoclomol. The Danish biotech has recently been dubbed a meme stock, surging to an unprecedented high of $77.77 earlier in the month. One analyst from Nordnet now calls the situation "hopeless," as the FDA's decision has left ORPH with no money or documentable projects, adding that its "game over for 'meme speculation'."

The security was last seen down 38.9%  at $8.40, putting it even closer to its lows near the $5 level. ORPH just breached its 70-day moving average, too, which looked for a second like it could support the stock's pullback from its early June surge. Orphazyme stock is still up 57.5% in the last month, however. 

This drop could lead to price-target cuts. The 12-month consensus price target of $10.50 is a whopping 45.8% to last night's close. Meanwhile, of the three analysts in coverage, there is only one "buy" rating  on the books. 

While short interest has waned from its March highs, it shot up in the last reporting period to 35,295 shares sold short. There's a good possibility more short sellers will pile on, should this negative price action continue, as these shares only make up 0.1% of the stock's available float. It should be noted, however, ORPH has landed on the short-sell restricted (SSR) list today.