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For a look at the market’s sentiment on a stock, changes in shares shorted can be a great indicator.

We ran a screen on the biotech industry for stocks seeing the greatest decreases in shares shorted month-over-month. This indicates that short-sellers have become less pessimistic on these names.

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 agree with short-sellers’ new optimism? Use this list as a starting point for your own analysis.

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

1. Complete Genomics, Inc. (NASDAQ:GNOM): Develops and commercializes a DNA sequencing platform for human genome sequencing and analysis. Market cap of $145.99M. Shares shorted have decreased from 1.99M to 1.53M month-over-month, a change representing 4.21% of the company's 10.92M share float. The stock is currently stuck in a downtrend, trading 11.64% below its SMA20, 23.7% below its SMA50, and 56.76% below its SMA200. It's been a rough couple of days for the stock, losing 11.47% 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 $1.76B. Shares shorted have decreased from 25.28M to 22.86M month-over-month, a change representing 2.13% of the company's 113.41M share float. The stock is a short squeeze candidate, with a short float at 20.14% (equivalent to 9.42 days of average volume). It's been a rough couple of days for the stock, losing 7.57% over the last week.

3. Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR): Provides prescription drugs for central nervous system and inflammatory disorders. Market cap of $2.67B. Shares shorted have decreased from 5.99M to 4.93M month-over-month, a change representing 1.91% of the company's 55.62M share float. Exhibiting strong upside momentum--currently trading 5.07% above its SMA20, 26.06% above its SMA50, and 72.44% above its SMA200. The stock has had a good month, gaining 30.45%.

4. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN): Develops and commercializes biopharmaceuticals for serious diseases and medical conditions. Market cap of $3.50B. Shares shorted have decreased from 9.62M to 7.81M month-over-month, a change representing 1.59% of the company's 113.63M share float. The stock is a short squeeze candidate, with a short float at 6.85% (equivalent to 8.12 days of average volume). The stock has gained 15.9% over the last year.

5. Medivation, Inc. (NASDAQ:MDVN): Focuses on the development of small molecule drugs for the treatment of castration-resistant prostate cancer, Alzheimer's disease, and Huntington disease. Market cap of $1.46B. Shares shorted have decreased from 2.68M to 2.32M month-over-month, a change representing 1.56% of the company's 23.13M share float. Exhibiting strong upside momentum--currently trading 37.58% above its SMA20, 83.61% above its SMA50, and 104.12% above its SMA200. The stock has had a good month, gaining 144.89%.

6. Xenoport, Inc. (NASDAQ:XNPT): Focuses on developing and commercializing internally discovered product candidates that utilize the body's natural nutrient transport mechanisms to enhance the therapeutic benefits of drugs. Market cap of $161.30M. Shares shorted have decreased from 3.36M to 2.89M month-over-month, a change representing 1.45% of the company's 32.40M share float. The stock is a short squeeze candidate, with a short float at 8.44% (equivalent to 8.85 days of average volume). It's been a rough couple of days for the stock, losing 9.36% over the last week.

7. Incyte Corporation (NASDAQ:INCY): Focuses on the discovery and development of proprietary small molecule drugs for hematologic and oncology indications, and inflammatory and autoimmune diseases. Market cap of $1.54B. Shares shorted have decreased from 16.72M to 15.06M month-over-month, a change representing 1.33% of the company's 124.82M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.24). The stock is a short squeeze candidate, with a short float at 12.06% (equivalent to 8.68 days of average volume). The stock has lost 20.71% over the last year.

8. Momenta Pharmaceuticals Inc. (NASDAQ:MNTA): Specializes in the in the characterization and process engineering of complex molecules. Market cap of $776.80M. Shares shorted have decreased from 5.34M to 4.86M month-over-month, a change representing 1.26% of the company's 38.07M share float. The stock has had a good month, gaining 17.07%.

9. BioSpecifics Technologies Corp. (NASDAQ:BSTC): Involves in the development of an injectable collagenase for various indications. Market cap of $92.22M. Shares shorted have decreased from 252.43K to 203.28K month-over-month, a change representing 1.20% of the company's 4.08M share float. The stock is a short squeeze candidate, with a short float at 5.58% (equivalent to 17.27 days of average volume). It's been a rough couple of days for the stock, losing 6.57% over the last week.

10. Sangamo Biosciences Inc. (NASDAQ:SGMO): Engages in the research, development, and commercialization of zinc finger DNA-binding proteins (ZFPs) for gene regulation and gene modification in the United States. Market cap of $142.72M. Shares shorted have decreased from 6.57M to 5.99M month-over-month, a change representing 1.16% of the company's 49.82M share float. The stock is a short squeeze candidate, with a short float at 12.02% (equivalent to 9.08 days of average volume). It's been a rough couple of days for the stock, losing 15.79% over the last week.

11. Insmed Incorporated (NASDAQ:INSM): Focuses on the development of inhaled pharmaceuticals for the site-specific treatment of serious lung diseases. Market cap of $72.75M. Shares shorted have decreased from 1.61M to 1.42M month-over-month, a change representing 1.08% of the company's 17.55M share float. The stock is a short squeeze candidate, with a short float at 5.82% (equivalent to 8.3 days of average volume). The stock has lost 58.73% over the last year.

Short data sourced from Yahoo Finance; all other data sourced from Finviz.

Source: 11 Biotech Stocks With Bullish Short Trends