Shares of Orphazyme (ORPH) skyrocketed 24.6% as of the market close on Wednesday after rising as much as 56.6% earlier in the day. The big gain came after the drugmaker announced that Goldman Sachs (GS 0.84%) temporarily increased its stake to 5.58% on Jun. 16, 2021, but then reduced its position to less than 5% the following day.
What does the "major shareholder announcement" made by Orphazyme today mean for investors? Pretty much nothing.
It would be one thing if a major investment firm like Goldman Sachs had materially increased its position in Orphazyme and held on to the shares. That could have at least hinted that the small drugmaker's prospects were improving. However, in this case, Goldman Sachs' move was only temporary.
More importantly, Goldman Sachs briefly increased its stake in Orphazyme before the announcement on Jun. 18 that the U.S. Food and Drug Administration (FDA) didn't approve arimoclomol in treating rare disease Niemann-Pick Disease Type C (NPC). This FDA rejection was a huge setback for Orphazyme and caused the biotech stock to plunge last week.
Orphazyme still hopes to win European approval for arimoclomol in early 2022. The company is also evaluating a potential path to still move forward with seeking FDA approval for the experimental drug.