Shares of Orphazyme (ORPH  ), a biopharmaceutical firm and "meme stock" popular among casual retail traders, were sent cratering last week after the Food and Drug Administration (FDA) rejected the company's application for its drug candidate.

Orphazyme's drug candidate, Arimoclomol, was initially developed by CytRx (CYTR) but was sold to Orphazyme and further developed. Arimoclomol is a specialized drug intended for the treatment of Niemann-Pick disease, a series of metabolic disorders.

The decision by the FDA may have, at least in part, stemmed from topline data released earlier this year that showed Arimoclomol failing to meet its trial goals. At the time, Orphazyme commented that while the drug was unable to meet the necessary goals, a great deal of valuable data was nonetheless gained from the trial.

"We are disheartened by these results, as we had hoped Arimoclomol might represent a viable new approach against the formidable challenge of this devastating disease. We express our sincere thanks to the investigators, patients, and families for their participation and collaboration in our program," Thomas Blaetter, Chief Medical Officer at Orphazyme, said at the time.

The rejection isn't the end of the road for Orphazyme; instead, the FDA is simply seeking more information on the drug's efficacy before proceeding further. According to the response letter sent to Orphazyme, the FDA is requesting more evidence than what was provided in the unsuccessful clinical trial. Unfortunately for Orphazyme, this means more financial and time investment in developing its drug and a dimmer economic outlook for the near future, which is bad news for Orphazyme's many retail investors.

Like many "meme" stocks, Orphazyme attracted younger retail investors acting on guidance from social media sites. This trend began with the landmark success of the infamous r/WallStreetBets GameStop (GME  ) frenzy earlier this year. Unfortunately, like many meme stocks, the actions of these investors aren't driven by the economic realities of the firms. Many younger retail investors, believing that a short squeeze was to come with the pending decision, likely didn't account for the previous clinical trial data and may not have considered the impact that a negative outcome may have had on the firm's finances.

With the rejection and Orphazyme's subsequent revision of its guidance, shares of the firm have taken a nosedive as a result. Orphazyme's cliff dive in pre-market hours early Friday morning and continued downward after markets opened, with the firm losing just about half its value before trading ended for the week.