ORPH Stock Price Forecast June 2021 – Is ORPH a Good Stock to Buy?
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Orphazyme (ORPH) stock gained 61% yesterday. What’s the forecast for ORPH stock and is it a good buy in June 2021?
ORPH stock spiked as high as $77.77 last week but soon tumbled. Currently, the stock is down almost 80% from the highs even as it is up over 60% for the year. The massive volatility in the stock wasn’t due to any company-specific news but due to speculative trading.
Reddit groups like WallStreetBets have been targeting several stocks and many of them including GameStop and AMC Entertainment have surged amid the short squeeze.
ORPH on the stock price volatility
Given the massive volatility in its stock, ORPH issued a statement. It said, “The company is not aware of any material change in its clinical development programs, financial condition or results of operations that would explain such price volatility or trading volume that has occurred since June 10, 2021.” The company also warned, “Investors who purchase the company’s ADS or shares may lose a significant portion of their investments if the price of such securities subsequently declines.”
Commenting on the spike, Per Hansen, an investment economist at retail broker Nordnet in Copenhagen said “It’s not just GameStop and AMC that are the subjects of strange, sudden and inexplicable” price developments.” He added, “Sometimes, there’s no logical explanation for what happens on the stock market,” and “the development in the share price of Orphazyme is an example of that.”
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Technical analysis
Looking at the technical indicators, ORPH stock has a 14-day RSI (relative strength index) of 63 which is getting near overbought levels. RSI values above 70 are seen as overbought while RSI below 30 is a sign of oversold positions. The stock is trading above its 50-day SMA (simple moving average) and 200-day SMA which is a bullish indicator.
Recent developments
Earlier this week, ORPH announced that Sunstone Life Science Ventures, which is among its largest shareholders has trimmed its stake and now holds less than 5% stake in the company. However, the company did not specify how many shares the group currently holds. Generally, the news of a top shareholder trimming the stake is negative for the company. However, the stock instead rallied on the news. Some investors saw it as a sign that the group is trimming its stake ahead of a possible buyout of ORPH.
FDA approval in the sight
ORPH is a clinical-stage company working on heat shock protein response for the treatment of rare diseases and arimoclomol is its lead candidate. “Arimoclomol is an investigational drug candidate that amplifies the production of heat shock proteins (HSPs). HSPs can rescue defective misfolded proteins, clear protein aggregates, and improve the function of lysosomes,” according to ORPH.
An FDA ruling for the product is expected today and according to ORPH, “Orphazyme’s applications for arimoclomol (to be branded MIPLYFFATM) for Niemann-Pick disease type C (NPC) are under priority review with the U.S. Food and Drug Administration, with an expected PDUFA action date of June 17 2021.”
The stock has been rising in anticipation that the FDA will take a positive view of arimoclomol. The product would compete with Zavesca from J&J. It is typical for clinical-stage companies to rise in anticipation of product approval. Also, such stocks are very volatile around the release of trial results.
Meanwhile, like all clinical-stage companies, ORPH is not making money and posting losses. Losses and cash burn are common for clinical-stage companies as they invest in research and development.
ORPH stock forecast
Not many Wall Street analysts are covering ORPH stock. Only two analysts cover the stock. While Bank of America has a underperform rating and a $5 target price, Guggenheim rates it as a buy and has assigned a target price of $27 according to MarketBeat. The stock’s average target price of $16 is similar to the current stock price.
Meanwhile, the company is a bet on the future of its products which are under development. The company is positive on an approval by the FDA and took it into account while proving its 2021 guidance. It expects the product to generate revenues between $10-$20 million in 2021 and is also expecting approval in Europe by the end of this year.
The company had over $56 million as cash and cash equivalents at the end of 2020 which can take care of its near-term cash needs. However, like other clinical-stage companies, it might need to raise more cash in the future.
All said, while ORPH has already run-up in the anticipation of an FDA approval, the stock might see more upside if it gets the approval today. Conversely, the stock might fall if it fails to get approval.
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