Orphazyme’s vertiginous decline is over. Having briefly commanded a market cap of $2.7 billion in June 2021, the Danish meme stock is now selling substantially all of its assets and business activities to KemPharm for $12.8 million in cash.
Last summer, day traders, spurred by chatter on Reddit, piled into Orphazyme ahead of an FDA decision about whether to approve its heat shock response amplifier arimoclomol in a rare lysosomal disorder. The activity dragged Orphazyme from relative obscurity, but the decline was as rapid as the rise, with the stock going from $5 to $77 and back down to $15 even before the FDA rejected the therapy.
A rejection for arimoclomol in the EU in Niemann-Pick disease type C (NPC) followed earlier this year, driving Orphazyme to make further cuts and later landing it in the Danish bankruptcy court. As part of the bankruptcy process, Orphazyme has found a buyer for its assets.
KemPharm has agreed to pay $12.8 million and take on $5.2 million in liabilities to acquire Orphazyme’s assets. The specialty pharmaceutical company plans to hire most of the 20 employees that are still at Orphazyme and to pursue approval of arimoclomol as a treatment for NPC.
Orphazyme found regulators wanted more data on the benefits and risks before approving arimoclomol, a candidate that achieved a 1.34-point improvement over placebo on the 5-domain NPC-Clinical Severity Scale in a phase 2/3 clinical trial. The improvement left the FDA with questions about the endpoint and the risk-benefit profile. KemPharm thinks it can address the concerns.
“We believe the efficacy signal for arimoclomol is convincing, and that there is a viable regulatory pathway to obtain regulatory marketing approvals,” KemPharm CEO Travis Mickle, Ph.D., said in a statement. “KemPharm has had significant experience with challenging regulatory situations, and we welcome the opportunity to work together with the team to resubmit the regulatory applications and make arimoclomol available to all who could benefit from the treatment.”
Orphazyme sees the deal as a way to satisfy its obligations to creditors as part of the court process. Those creditors and the Danish bankruptcy court still need to sign off on the agreement, which Orphazyme said will “result in full or very high coverage to creditors with undisputed claims based on the claims filed during the restructuring.” The biotech expects to complete the deal by June 1.