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One of the biggest concerns investors have with biotech firms is liquidity – whether a biotech has enough cash or near-cash equivalents to continue operating, even when revenues are scarce.

We ran a screen on biotech stocks with strong liquidity, with a current ratio (i.e. current assets/current liabilities) and a quick ratio (i.e. (current assets – inventory)/current liabilities) above 3, and for those that also have low debt, with long-term debt/equity below 0.3. We screened these stocks for those seeing significant net institutional buying over the current quarter.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬



We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

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Do you agree with the smart money on these names? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases as a percent of share float.

1. Amyris Biotechnologies Inc. (NASDAQ:AMRS): An integrated renewable products company that offers renewable compounds for a variety of markets. Market cap of $863.87M. Current ratio at 4.23, quick ratio at 4.09. Long-term debt/equity at 0.05. Net institutional shares purchased over the current quarter at 4.3M, which is 25.79% of the company's 16.67M share float. The stock is a short squeeze candidate, with a short float at 7.49% (equivalent to 12.16 days of average volume).

2. Optimer Pharmaceuticals, Inc. (NASDAQ:OPTR): Focuses on discovering, developing and commercializing hospital specialty products worldwide. Market cap of $488.37M. Current ratio at 13.97, quick ratio at 13.85. Long-term debt/equity at 0. Net institutional shares purchased over the current quarter at 7.0M, which is 16.56% of the company's 42.26M share float. The stock is a short squeeze candidate, with a short float at 15.59% (equivalent to 10.1 days of average volume). The stock has had a couple of great days, gaining 20.05% over the last week.

3. Sequenom Inc. (NASDAQ:SQNM): Provides products, services, diagnostic testing, applications and genetic analysis products that translate the results of genomic science into solutions for biomedical research, translational research, molecular medicine applications and agricultural and livestock research. Market cap of $546.48M. Current ratio at 5.7, quick ratio at 5.45. Long-term debt/equity at 0.04. Net institutional shares purchased over the current quarter at 11.4M, which is 12.73% of the company's 89.55M share float. The stock is a short squeeze candidate, with a short float at 19.41% (equivalent to 11.39 days of average volume). It has been a rough couple of days for the stock, losing 9.52% over the last week.

4. Immunogen Inc. (NASDAQ:IMGN): Engages in the research and development of antibody-based anticancer therapeutics in the United States. Market cap of $801.23M. Current ratio at 13.84, quick ratio at 13.8. Long-term debt/equity at 0. Net institutional shares purchased over the current quarter at 7.5M, which is 10.62% of the company's 70.64M share float. The stock is a short squeeze candidate, with a short float at 8.72% (equivalent to 8.68 days of average volume). The stock has gained 92.83% over the last year.

5. Pacific Biosciences of California, Inc. (NASDAQ:PACB):
Develops, manufactures and markets an integrated platform for genetic analysis. Market cap of $326.22M. Current ratio at 11.4, quick ratio at 10.49. Long-term debt/equity at 0.01. Net institutional shares purchased over the current quarter at 3.4M, which is 10.18% of the company's 33.39M share float. The stock is a short squeeze candidate, with a short float at 8.32% (equivalent to 9.57 days of average volume). It has been a rough couple of days for the stock, losing 11.31% over the last week.

6. 3SBio Inc. (NASDAQ:SSRX): Engages in the research, development, manufacture and distribution of pharmaceutical products in the People's Republic of China. Market cap of $279.73M. Current ratio at 14.88, quick ratio at 14.53. Long-term debt/equity at 0. Net institutional shares purchased over the current quarter at 1.0M, which is 7.80% of the company's 12.82M share float. It has been a rough couple of days for the stock, losing 5.6% over the last week.

7. Cadence Pharmaceuticals Inc. (CADX):
Focuses on in-licensing, developing and commercializing product candidates principally for use in the hospital setting in the United States and Canada. Market cap of $404.56M. Current ratio at 4.13, quick ratio at 3.87. Long-term debt/equity at 0.23. Net institutional shares purchased over the current quarter at 2.5M, which is 6.46% of the company's 38.71M share float. The stock is a short squeeze candidate, with a short float at 23.97% (equivalent to 42.61 days of average volume). The stock has performed poorly over the last month, losing 17.83%.

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 7 Highly Liquid, Low Debt Biotech Stocks Seeing Smart Money Buys