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Analysts give a lot of attention to potential takeover/leveraged buyout (LBO) targets.

The reason why is when a company announces that it is being taken over or acquired by another firm, the acquisition target's stock price often jumps in value to reflect the takeover premium paid by the acquirer.

We compiled a list of rumored potential takeover/LBO targets from various sources including Minyanville and Seeking Alpha. We screened this list for those from the biotech industry that have also seen bullish sentiment from short sellers, with significant decreases in shares shorted month-over-month.

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.

Do you think these companies are likely to be acquired? Use this list as a starting-off point for your own analysis.

List sorted by decrease in shares shorted as a% of share float.

1. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY): Focuses on the discovery, development, and commercialization of novel therapeutics based on RNA interference (RNAi). Market cap of $333.95M. Takeover rumor sourced from Seeking Alpha. Shares shorted have decreased from 3.91M to 3.46M month-over-month, a change representing 1.38% of the company's 32.72M share float. The stock is a short squeeze candidate, with a short float at 10.56% (equivalent to 13.52 days of average volume). The stock has recently rebounded, and is currently trading 11.82% above its SMA20 and 12.21% above its SMA50. However, the stock still trades 14.23% below its SMA200. The stock has had a couple of great days, gaining 10.44% over the last week.

2. Seattle Genetics Inc. (NASDAQ:SGEN): Focuses on the development and commercialization of monoclonal antibody-based therapies for the treatment of cancer and autoimmune diseases in the United States. Market cap of $2.41B. Takeover rumor sourced from Minyanville. Shares shorted have decreased from 29.46M to 28.00M month-over-month, a change representing 1.29% of the company's 113.13M share float. The stock is a short squeeze candidate, with a short float at 24.7% (equivalent to 11.5 days of average volume). The stock has gained 23.91% over the last year.

3. Exelixis, Inc. (NASDAQ:EXEL): Engages in the discovery, development, and commercialization of small molecule drugs for the treatment of cancer, metabolic, and cardiovascular disorders. Market cap of $959.54M. Takeover rumor sourced from Minyanville. Shares shorted have decreased from 12.37M to 10.93M month-over-month, a change representing 1.15% of the company's 125.73M share float. The stock is a short squeeze candidate, with a short float at 8.69% (equivalent to 8.24 days of average volume). The stock has recently rebounded, and is currently trading 31.68% above its SMA20 and 19.5% above its SMA50. However, the stock still trades 16.46% below its SMA200. The stock has had a couple of great days, gaining 34.05% over the last week.

*Short data sourced from Yahoo! Finance, 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: 3 Biotech Takeover/LBO Targets With Bullish Short Trends