It was developed as one of many proposed weapons to fill the U.S. Army’s desire for a squad level weapon that could be fired from inside a building, and packed more anti-armor punch than a 40mm.
Think about the time period and planners thinking about how to stop hypothetical hoards of BMPs rolling through West Germany.
This, along with other weapons, weren’t adopted because the Army pivoted doctrine away from focusing on new squad level weapons that could damage IFVs, to larger weapons like the TOW that could take out MBTs. The change in thinking traded lightweight and abundance organically to infantry on the move, for better performance per system.