The Grow Your Dough Throwdown - May Update

In the beginning of the year I mentioned that I was investing in the Grow Your Dough Throwdown over at Good Financial Cents. Apparently after 3 or 4 updates over there they still don't list me as one of the competitors, I always seem to have to write in the comments, "Hey I'm participating too!"

But anyways, my last update related to this I talked about investing in Binary Events because that is essentially what I did with this challenge. I put my $1000 investment into a pharmaceutical company that has 1 product that was up for FDA approval back in April. That company was MannKind Corporation (MNKD), so how did it do....

Well, it was a bumpy ride. In the week before their FDA hearing the stock price went from just under $6 to about $4, overall an 18% drop in price. During this time, I felt like I might as well throw in the towel or try to take some extreme measures with penny stocks to see if I could get lucky. But after the FDA hearing, their drug was approved! The next day the stock jumped up to about $7 or a 74% increase.

Update: after re-reading this I realize that technically when the stock went down below $5 most people would consider it a penny stock already, so in essence I would be trading a penny stock for a smaller penny stock to try to get back in this?

If it hadn't taken such a huge plunge right before I might have possibly won this challenge. Here's a shot of my account:

MNKD

As you can see, the stock took quite a beating on the days leading up to April 1st. But things are bouncing back as you can see. And for the year I am up a whopping 25% Woohoo!!

Next month has another shakeup for this company though. On June 15th MannKind will be up for their Prescription Drug User Fee Act (PDUFA) review which basically means that the FDA will be starting the process for New Drug Approval, if this doesn't happen then everything stops, and most likely the stock tanks to under $1.... But if it is approved, then they will decide how much money they need to collect to start the New Drug Approval process, at this review they can also make decisions on how long ongoing studies need to take place to review any long term side effects.

So that is another make or break decision. But from the sounds of things, it's highly likely that it will be approved for their New Drug Application (basically since the FDA already approved it).

Once we get past that barrier, MannKind is also starting to run low on funds, so it's likely they will need to find another company to partner with to market the new drug. I expect that if the company makes it past June 15th with the approval for a New Drug Application, it is also highly likely that another larger company will come in to partner with them.

More updates to come on this, hopefully next time it will happen sooner, I was trying to wait until after June 15th, but I will probably just update again after that.

Related Posts:
The Grow Your Dough Throwdown - The Beginning
Part 2: The Grow Your Dough Throwdown - My Pick
Investing Tutorial: Binary Events

No comments:

Post a Comment