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Insider activity is often worth observing. While such activity is not a pure indicator of when to buy or sell a stock, it is a good starting point upon which to perform analysis or a method of validating analysis already performed. Insider activity might provide an accurate profile of business prospects, based on the insiders' knowledge of the company and industry.

This is a list of seven small-cap biotechnology and pharmaceutical companies that have experienced noticeable net stock purchases by insiders over the last six months. No matter the reason, insider activity is important news that the market must acknowledge. Insiders such as officers, directors, and beneficial owners may legally buy and/or sell stock in their organizations, provided they do not do so based upon privileged information and that they report their trades to the SEC within two business days.

Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)

  • Industry: Drug Manufacturers

  • Market Cap: $295 million

  • Insider Activity: Insiders purchased nearly 700,000 shares, or almost 10% of the float.

Anthera Pharmaceuticals, Inc. (NASDAQ:ANTH)

  • Industry: Drug Manufacturer – biopharmaceuticals

  • Market Cap: $269 million

  • Insider Activity: Insiders purchased about 280,000 shares, or over 1% of the float.

Ardea Biosciences, Inc. (NASDAQ:RDEA)

  • Industry: Drug Manufacturer - biotehnology

  • Market Cap: $635 million

  • Insider Activity: Insiders purchased nearly 500,000 shares, or over 2% of the float.

  • Note: Short interest is over 17%

Corcept Therapeutics Inc. (NASDAQ:CORT)

  • Industry: Drug Manufacturer - biotechnology

  • Market Cap: $369 million

  • Insider Activity: Insiders purchased over 550,000 shares, or about 1% of the float.

GTX Inc. (NASDAQ:GTXI)

  • Industry: Drug Manufacturer - biotechnology

  • Market Cap: $326 million

  • Insider Activity: Insiders purchased nearly 7 million shares, over 60% of the float.

  • Note: Short interest is over 15% and GTXI has more than doubled over the last two months

Synta Pharmaceuticals Corp. (NASDAQ:SNTA)

  • Industry: Diagnostic Substances - biopharmaceuticals

  • Market Cap: $216 million

  • Insider Activity: Insiders purchased over 1.5 million shares or about 6% of the float.

  • Note: Short interest is over 11%

ZIOPHARM Oncology, Inc. (NASDAQ:ZIOP)

  • Industry: Drug Manufacturer - biotechnology

  • Market Cap: $415 million

  • Insider Activity: Insiders purchased over 4.3 million shares, or about 8% of the float.

  • Note: Short interest is over 10%

Take these insider buys with a grain of salt. While many insiders seem to know what they are doing, many have lost money and also might even consider their insider purchase highly speculative. Also, some might argue that the medical insiders to such companies may not be the best investors to emulate. Additionally, several of these companies have significant short positions, indicating that many individuals in the market strongly disagree with this insider sentiment.

Source: 7 Small-Cap Biotechs With Bullish Insider Buying in 2011