Today, investors in Orphazyme (NASDAQ:ORPH) and ORPH stock have a lot to cheer. Amid a couple important announcements, this biopharma company has gotten a lot of attention of late for its investigational treatment for Niemann-Pick disease.
Well, this drug was rejected by the U.S. Food and Drug Administration on June 18. Since then, shares of this biopharma company have roughly halved, trading below $8 today.
That said, a number of recent factors have provided support for ORPH stock in recent weeks. Reports that Goldman Sachs (NYSE:GS) took a stake of at least 5% in ORPH sent shares higher last week. This week, the company has a couple additional news items to report. Together, they appear to be buoying the stock, as it trades roughly 10% higher today.
Let’s dive into what was announced, and why investors are getting bullish once again on ORPH stock.
Two Announcements Provide Support for ORPH Stock
Today, Orphazyme announced the company’s 24-month interim results of an open-label extension trial for its arimoclomol drug aimed at Niemann-Pick disease. These data were presented as part of the Parseghian Scientific Conference on the rare disease.
The company points out some rather positive results from this trial. Accordingly, it appears investors are pricing in some increased likelihood the FDA may change its mind on this drug. While the outlook for the company’s arimoclomol drug remains unclear, these results seem to indicate some probability of success.
Additionally, Orphazyme also announced a restructuring plan. The company intends to cut its workforce by roughly two-thirds, as part of a cost-savings strategy. Indeed, its focus remains on pursuing regulatory avenues for approval in Europe and the U.S. Accordingly, while the recent FDA rejection was a step back, the company is in the process of refocusing its efforts. Investors seem to like what they’re seeing with the cost reduction strategy. Accordingly, ORPH stock is seeing some support as a result of these moves.
As with other early stage biopharma plays, ORPH stock carries significant risk. Accordingly, investors ought to practice proper portfolio discipline.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.