© Reuters. FILE PHOTO: Signage is seen outside the Food and Drug Administration (FDA) headquarters in White Oak, Maryland, USA, Aug. 29, 2020. REUTERS / Andrew Kelly / File photo
By Stine Jacobsen
(Reuters) – Orphazyme slashed its financial forecasts on Friday after US health regulators rejected its key drug candidate, causing first-action shares of so-called Denmark memes to drop 75% in the first operations.
Shares of the biotech company, which has not yet approved a drug or generated no revenue, have been on a roller coaster ride recently, as have other “meme stocks” influenced by social media chatter as investors took Positions ahead of US Food and Drug Administration (FDA) Decision.
Orphazyme said its application for FDA approval of arimoclomol, a treatment for the genetic disorder Niemann-Pick disease type C, had not been successful.
As a result, it predicted that revenue for the year would be lower than previously expected and its operating loss would be significantly higher, forcing the company to cut costs.
“Orphazyme has no money or substantial projects … Investors have put their money into a completely unrealistic scenario driven by ‘meme trends,'” wrote broker Nissan in a note to clients.
Orphazyme, which is listed in Copenhagen and New York, now expects an operating loss of 670-700 million crowns ($ 107- $ 112 million) in 2021, up from a previous forecast of a loss of 100-150 million crowns.
The company said the FDA in a letter had said that additional qualitative and quantitative evidence was needed to demonstrate the drug’s effectiveness.
“As a representative of Orphazyme’s shareholders and as a shareholder myself, I am extremely disappointed,” Board Vice Chairman Bo Jesper Hansen said in a statement.
The drugmaker said it will maintain dialogue with the FDA and continue to seek approval for the treatment in Europe.
($ 1 = 6.2456 Danish crowns)
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