Orphazyme (NASDAQ:ORPH) stock is up more than 40% today on no news, raising speculation that investors are targeting shares as a meme play.
The rise in ORPH stock is especially curious given that the company, which is based in Copenhagen, Denmark, announced last week that it plans to delist from the Nasdaq exchange in the U.S.
Normally, investors don’t load up on a stock that they soon won’t have access to. Orphazyme also said that it is cutting its workforce by 50% as the company tries to conserve cash — another bad sign. Last summer, Orphazyme cut two-thirds of its workforce.
What Happened With ORPH Stock
Earlier in March, Orphazyme’s board of directors called for a court-mediated restructuring, prompting the announced staff layoffs. The company said the restructuring will allow it to determine whether Orphazyme can continue as a going concern or if it would be best to sell all or some of its assets.
Earlier this year, Orphazyme shuttered its commercial business in the United States, United Kingdom, and Germany, and it also plans to delist from the Nasdaq exchange by the end of this month.
The restructuring and delisting comes after Orphazyme announced that its lead drug candidate, a treatment for muscular disorders called arimoclomol, failed to improve disease progression in a clinical trial. The U.S. Food and Drug Administration (FDA) then rejected arimoclomol. With its lead drug candidate having failed, Orphazyme may now cease operations altogether.
Why It Matters
Given the litany of bad news and planned delisting from the Nasdaq, it is strange that ORPH stock would be up as much as 40% today. The stock closed trading in New York yesterday at 66 cents, down more than 70% year to date. However, this isn’t the first time that Orphazyme has been treated as a meme stock.
ORPH stock’s 52-week high is $77.77. The shares were targeted in a coordinated short squeeze in early 2021 by retail traders. Since then, the stock has collapsed. Today’s jump higher, which would bring its gains over the past week to more than 50%, certainly make it appear that the stock has again become a meme play.
What’s Next for Orphazyme
Why anyone would buy stock in a company that is going to be delisted within a few weeks and may not even exist in the near future is illogical. With expectations the delisting will be effective by March 31, investors should stay away.
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On the date of publication, Joel Baglole 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.