When Emisphere's (EMIS) news release entitled "Emisphere Technologies Reports DMC Recommendation to Proceed with Phase 3 Clinical Trials with Oral Calcitonin for Osteoporosis and Osteoarthritis" hit the wires last week, it was the single biggest event in the company's history. If you weren't already totally up on the story the significance probably would have been lost on you. The Data Monitoring Committee based their recommendation to proceed upon "an assessment of safety and efficacy parameters."

Translation: that the drug is safe (should come as no surprise to anyone that read my previous articles) and that we are hitting our primary endpoints in both trials. This was absolutely huge news, which we greeted with open buy orders. It is my opinion that it is no longer a question of whether Oral Calcitonin will be approved for both indications or not; it is merely a question of timing, and the timing of approvals might be sooner than most are expecting.

China Wind Systems (CWSI.OB) recently completed a reverse stock split, which was the final step in preparing for a near term move to the Nasdaq.

When we first invested in the company, I think that some people questioned whether a company with its roots in the garment dying equipment business could successfully transform itself into a leading manufacturer of windmill components. Well, as the saying goes, it is hard to argue with success.

The FDA's clinicaltrials.gov website has some really interesting information on the European Phase III trial of Emisphere’s (EMIS) Oral Salmon Calcitonin for Osteoarthritis that is being run by Nordic Bioscience for Emisphere’s partner, Novartis (NVS).

One of the Primary Outcome Measures is Joint Space Width in the knee (along with Pain and Functional Disability). For the Secondary Outcome they are measuring “changes in biochemical markers of bone and cartilage metabolism.” Novartis is, in my opinion looking to prove that Oral Salmon Calcitonin is a disease modifying treatment for Osteoarthritis, that is why they are looking at joint space width and cartilage metabolism rather than just pain and functional disability.

There has been a huge positive development in the Emisphere story that hasn’t really filtered out yet. A friend stumbled upon a patent application filed by Novartis (NVS) entitled “Use of Calcitonin for the Treatment of Rheumatoid Arthritis.” The patent application can be viewed here.

2. A method according to claim 1 for inhibiting inflammation of the joints associated with rheumatoid arthritis in a patient in need thereof comprising administering orally to said patient a therapeutically effective amount of a calcitonin in free or salt form and a delivery agent for calcitonin.

We recently finished buying a position in Emisphere (EMIS). We have done a ton of due diligence and networked with some of the smartest biotech minds on the street and think that the stock should be trading at $5 now and that it will be well above $50 within a couple years.

A couple weeks ago, news came out that Emisphere had been granted provisional GRAS (Generally Regarded as Safe) approval for their SNAC carrier to use with vitamins, supplements and minerals. They will get the full approval this summer when the the two articles are published in medical journals. This eliminates the need for any approval from the FDA for putting vitamins, minerals and supplements into the Eligen oral formulation and opens up big opportunities for Emisphere to commercialize Eligen very soon.

In my last article I spoke of why we are so excited about one of our holdings, Linktone (LTON). They announced a great quarter, highlighted by a return to profitability (not bad for a company that at the time was trading at ½ of cash value). The stock is breaking out (thanks in part to a shout out by James Altucher on a TheStreet.com video). My reason for writing this follow-up is not to toot my own horn, but really to recommend that anyone that liked the Linktone story take a look at another one of our holdings, BroadVision (BVSN.OB).

We recently finished acquiring a new position in Linktone (LTON). The investment has a huge margin of safety because the company is trading at half of its cash value ($104mm cash and only a $51mm market cap), and has significant upside potential because there are some good things going on with the company. When the company reported Q3 Earnings several months back they gave the following guidance:

Have you read through Pacific Capital Bancorp’s 10Q? I have, and in addition to more detail on the huge increase in non-performing loans and the woefully inadequate loss reserves, I found another red flag that I would like to bring to everyone’s attention:

Computer Software Innovations (CSWI.OB) reported another impressive quarter with operating income growing 42% year over year. The growth in margins and earnings is a testament to management’s solid operational performance.

So, in my last article I was completely right in predicting that Pacific Capital Bancorp (PCBC) would have a huge spike in delinquent loans in Q1, but the stock is not down much. What gives? Investors are ignoring the danger signs and evaluating the stock solely based on earnings estimates. In this case, earnings guidance is the sirens’ sweet singing luring your ship ever closer to the perilous rocks.

Is Pacific Capital Bancorp (PCBC) immune to the housing crisis? That is the question I have been asking myself after spending a lot of time digging through PCBC’s SEC filings, their FDIC filings and re-listening to their latest conference call.

The overlooked news out Wednesday from BroadVision (BVSN.OB) is more proof that their new Software as a Service (SaaS) business is gaining momentum. The stock is currently trading at a valuation of 3.9 times e/v to earnings. The sales and earnings are largely attributable to the company's enterprise e-commerce software offering.