Today, investors in Orphazyme (NASDAQ:ORPH) have seen absolutely massive gains. Shares of OPRH stock peaked as high as $9.35, representing a gain of nearly 57% from yesterday’s close. However, ORPH stock has since given up approximately half of these gains, trading 26% higher at the time of writing.
Today’s move comes on the heels of a massive regulatory setback last Friday. The company announced the FDA had rejected Orphazyme’s new drug application for its Niemann-Pick treatment. This rejection was based on the need for additional evidence to substantiate validity of this drug. Apparently, the Phase 2/3 clinical trial data wasn’t enough.
That news understandably halved OPRH stock from around $15 to the $7 level. Now, things may be looking up. It seems today’s recovery is an indication that this selloff went too far.
Let’s dive into the news that’s driving shares of ORPH higher today.
Announcement of Goldman Sachs Stake Buoying ORPH Stock
Today, Orphazyme released a major shareholder statement. In this statement, the company announced that Goldman Sachs (NYSE:GS) had briefly taken a stake of more than 5% in ORPH stock. According to regulatory requirements, this stake had to be disclosed to shareholders.
Now, Goldman Sachs happens to have some of the world’s smartest analysts and investors working at its trading desk. Such a move appears to indicate to the market that the smart money knows something retail investors don’t. Accordingly, it appears today’s buying pressure is an indication investors may want to trade this speculative name. After all, if the selloff was overdone, some nice upside could be on the table.
That said, today’s move in ORPH stock appears to be mainly speculative, especially with Goldman’s stake back below 5%. Like other small-cap stocks with high levels of short interest, Orphazyme is likely catching some tailwinds from retail investors. The question is — can these tailwinds be sustained?
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.