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Hello Readers,

Since the last Newsletter, we closed three more positions, all were for gains that were below our 50%-plus standard because they were all buyouts, or soon-to-be acquired.

SALARY.COM (7/5/09). Closed position 10/1/10 at $4.06 for a 35% GAIN.

MICROTUNE (2/5/10). Closed position 10/15/10 at $2.92 for a 32% GAIN.

ACTIVIDENTITY (3/5/08). Closed position 10/15/10 at $3.23 for a 6% GAIN.

The acquisition by Kenexa went off without a hitch. We were going to hold Microtune a while longer to see if Zoran’s offer would be topped, but with lawsuits piling up, why hang around? And our thinking was the same with ActivIdentity that is now a takeover target of Assa Abloy, but within days of the announcement, the lawyers started running to the courthouse.

We do not have much to add about the markets other than what we have been saying for the last several months. This is a Fed-driven funny-money rally that very well could end quite badly. Enjoy it while it lasts.

Here are the headlines since the last Newsletter about companies in our Current Portfolio; dates in parentheses are when we first recommended them. We are not giving updates about companies on the “Endangered List” unless we feel the news to be very significant.

Advanced Analogic (AATI)(9/20/10). Slates earnings call for October 26.

ORBCOMM (ORBC)(9/5/10). Named Top 100 Technology Provider in M2M connected devices by Connected World Magazine.

U.S. Home Systems (USHS)(8/20/10). To present at the Southwest IDEAS Investor Conference on November 11.

Threshold Pharmaceuticals (THLD)(8/5/10). Presents follow-up data from a Phase 1/2 clinical trial of TH-302 in solid tumors.

Banner Corp (BANR)(8/5/10). Declares a one-cent quarterly dividend; expects 3rdQT loss of between $43M and $45M.

Aeterna Zentaris (AEZS)(6/20/10). Announces orphan drug AEZS-130 interim Phase 3 data analysis shows potential for 2011 filing as oral diagnostic test for adult growth hormone deficiency (AGHD).

Dusa Pharmaceuticals (DUSA)(6/5/10). To end skin drug deal with Stiefel Laboratories.

Novabay Pharmaceuticals (NBY)(4/20/10). To present at the 48th Annual IDSA meeting on October 22.

Novavax (NVAX)(4/5/10). To release earnings news on November 5.

Cerus Corp (CERS)(3/20/10). Schedules earnings news for October 28.

NIVS IntelliMedia (NIV)(1/20/10). Names new CFO.

Uranerz Energy (URZ)(11/20/09). Completes independent National Instrument 43-101 technical report for its Reno Creek property.

BioSante Pharmaceuticals (BPAX)(9/20/09). To present at the Cancer Immunotherapy Conference on October 21.

Anadys Pharmaceuticals (ANDS)(8/20/09). Proposes $25 million secondary stock offering, which put pressure on the stock.

BioClinica (BIOC)(8/5/09). Launches educational webinar series. Signs enterprise agreement for electronic data capture.

Performance Technologies (PTIX)(7/20/09). Partners with Velleros to offer carriers CMAS gateway, content delivery, and mobile marketing applications.

USA Technologies (USAT)(6/5/09). Hits record of nearly $25 million in transactions processed for customers in quarter ending 9/30/10.

Ligand Pharmaceuticals (LGND)(2/20/09). Announces market launch of Bazedoxifene in Japan and Spain for treating postmenopausal osteoporosis. To divest combinatorial compound library and screening technology for $1.8 million.

Market Leader (LEDR)(12/20/08). To release 3rdQT results on October 28.

U.S. Geothermal (HTM)(8/5/08). Drills prolific well at Neal Hot Springs.

Energy Focus (EFOI)(6/5/08). Awarded $1.5 million in additional lighting retrofit contracts.

Microvision (MVIS)(5/20/08). Collaborates with Capcom and Intel to introduce new gaming experience, Infinite Reality.

Move, Inc (MOVE)(1/5/08). Slates 3rdQT results for November 11.

LRAD Corp (LRAD)(10/5/07). To report record revenues of $17 million-plus for FY2010.

Inventure Foods (SNAK)(3/5/06). To discuss 3rdQT results on October 20. Introduces new T.G.I. Friday’s snack product.

8×8 (EGHT)(1/20/06). Partners with Polycom to offer IP telephony solutions to virtual office hosted VoIP subscribers. Releases Virtual Office 2.0.

Our selections for this Newsletter are a AMEX-listed biotech and a software and services company that trades on NASDAQ.

INOVIO PHARMACEUTICALS, INC. (AMEX: INO) – $1.20. Twelve-month hi-low has been $1.87 – 76 cents. Located in Blue Bell, PA, with about 40 employees, this biotech has 102.9 million shares outstanding, $27.31 million in total current assets, $60.27 million in total assets, little debt, and $8.94 million in total liabilities. Institutional ownership is around 9%. Three analysts rate the stock a “strong buy”.

It’s pretty easy to see why Inovio Pharmaceuticals, Inc. may be trading as low as it is. The company, at some point, went through a stock dilution in order to do a secondary so as to raise more money. And, that’s okay because its balance sheet is in decent shape and the company appears to be making some inroads on their products.

Founded in 1983, and public for nearly a dozen years, Inovio is developing DNA vaccines with a focus on cancers and infectious diseases. Its SynCon technology enables the design of DNA-based vaccines capable of providing cross-protection against evolving, unmatched strains of pathogens, such as influenza. The company’s proprietary electroporation DNA delivery technology uses controlled electrical pulses to enhance cellular DNA vaccine intake. Inivio’s clinical programs include trials for human papillomavirus/cervical cancer (therapeutic), avian influenza (preventive), hepatitis C, and human immunodeficiency virus vaccines. It is also advancing research for seasonal/pandemic influenza vaccine. The company’s partners and collaborators are the University of Pennsylvania, Public Health Agency of Canada, NIAID, Merck, ChronTech, University of Southampton, and the HIV Vaccines Trial Network.

Inovio has a non-vaccine, small molecule drug under development that is focused on inflammatory diseases including rheumatoid arthritis (RA), Type 1 diabetes (T1D), uveitis, and colitis. The company also owns a majority interested in VGX Animal Health, Inc., which markets LifeTide animal growth hormone for swine and has been granted marketing approval in Australia.

During September, Inovio had a flurry of news. It completed enrollment of its HIV clinical trial for DNA vaccine using electroporation; was awarded follow-on funding from the PATH Malaria Vaccine Initiative for DNA vaccine development; and claimed to have achieved unprecedented T-cell immune responses in human trial of DNA vaccine for cervical dysplasia and cancer caused by HPV.

Inovio is typical of many small biotechs in that its losses far exceed its revenues. For the first six months of the current FY, ending 6/30/10, revenue was $2.5 million with $9.91 million in losses.

This is a small company that seems to have a lot going on. Also, the stock could get a huge boost over any talk of a future flu epidemic or pandemic.

Our 24-month target for the stock is $2.00 to $2.25.

For more information, contact INO at 877-446-6846;

BLUE PHOENIX SOLUTIONS LTD. (NASDAQ: BPHX) – $2.24. Twelve-month hi-low has been $3.85 – $1.16. Based in Herzlia, Israel, with about 700 employees this software and services company has 23.2 million shares outstanding,$47 million in total current assets, $115.68 in total assets ($52.38 million is goodwill), and $35 million in total liabilities, of which $9.82 million are bank loans. Institutional ownership is around 10%. One analyst gives the stock a “moderate buy” and another has it on “hold”.

Over the years, we have done well with Israeli companies; sure, there have been one or two bombs but the rest panned out pretty well. BluePhoenix Solutions, Ltd., like many companies of its ilk has taken a pounding over the last several years, but a turnaround may be in the works.

Founded in 1987, and public since 1997, BluePhoenix bills itself as a leading provider of IT modernization software and services for enterprises. The company’s modernization solutions enable to automate the process of modernizing and upgrading mainframe and distributed IT infrastructure. Its solutions include BluePhoenix IT Discovery that provides access to application inventory, dependency, and operational information; and BluePhoenix LogicMiner, a recovery solution that mines COBOL and extracts business rules from the legacy code. The company offers enterprise IT migration solutions, such as BluePhoenix DBMSMigrator, an automated migration tool that converts applications from non-relational databases to relational databases; BluePhoenix PlatformMigrator tools that convert a range of platforms, including IBM mainframe to Unix, Linux, Windows, and .Net; BluePhoenix Rehosting that offers COBOL and RPG migrations, as well as System i and mainframe rehosting solutions; BluePhoenix LanguageMigrator, a set of automated migration tools for converting COBOL and fourth generation languages to COBOL, Java/J2EE, and C#/.Net; and BluePhoenix DataMigrator, a tool for migrating data between various data system environments.

Then there are the BluePhoenix Solutions enterprise IT remediation solutions that consist of BluePhoenix FieldEnabler, a rule based tool that enables modifications across an enterprise; and BluePhoenix StandardsEnabler, an automated solution for facilitating system consolidation into a set of naming standards. In addition, the company offers BluePhoenix AppBuilder, a development environment; and System i family of products; knowledge management solutions; and professional and consulting services.

For FY2009, ending 12/31/09, revenue was $77.77 million with $15.57 in losses. During the first six months of the current FY, ending 6/30/10, revenue has been $33.51 million with $3.24 million in losses.

The company is expecting a smaller company in the future but one with more profitability, which seems to be a trend, of sorts, lately.

Our 24-month target for the stock is $3.75 to $4.25.

For more information, contact BPHX’s Nir Peles at +972-9-9526110;

Look for the November 5, 2010 Newsletter to be posted on 11/16 or 11/17.

Thank you,

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