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There are many sources to find out what the market predicts the direction of stocks to be, but one of the most telling is the number of shares shorted. Shorting a share indicates a specific prediction that the stock's price will soon fall, and because shorting requires significant amounts of borrowing, short-sellers are given background checks to trade and are generally considered "smart money" investors.

We ran a screen on the biotech industry for those seeing 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.

Do you think these stocks will outperform like analysts expect? 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. Optimer Pharmaceuticals, Inc. (NASDAQ:OPTR): Focuses on discovering, developing, and commercializing hospital specialty products worldwide. Market cap of $571.0M. Shares shorted have decreased from 10.47M to 8.74M month-over-month, a change representing 4.34% of the company's 39.90M share float. The stock is a short squeeze candidate, with a short float at 19.24% (equivalent to 9.04 days of average volume). The stock has gained 8.22% over the last year.

2. Enzon Pharmaceuticals Inc. (NASDAQ:ENZN): Engages in the research and development of therapeutics for cancer patients with unmet medical needs. Market cap of $323.54M. Shares shorted have decreased from 6.58M to 5.97M month-over-month, a change representing 2.07% of the company's 29.43M share float. The stock is a short squeeze candidate, with a short float at 12.73% (equivalent to 22.65 days of average volume). The stock has lost 44.9% over the last year.

3. 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 $199.79M. Shares shorted have decreased from 7.98M to 7.10M month-over-month, a change representing 1.98% of the company's 44.42M share float. The stock is a short squeeze candidate, with a short float at 8.75% (equivalent to 11.7 days of average volume). The stock has performed poorly over the last month, losing 10.02%.

4. NPS Pharmaceuticals, Inc. (NASDAQ:NPSP): Engages in the development specialty therapeutics for gastrointestinal and endocrine disorders. Market cap of $567.27M. Shares shorted have decreased from 7.80M to 6.34M month-over-month, a change representing 1.70% of the company's 85.72M share float. The stock has recently rebounded, and is currently trading 5.11% above its SMA20 and 9.64% above its SMA50. However, the stock still trades 16.9% below its SMA200. The stock has had a good month, gaining 16.02%.

5. Theratechnologies Inc. (THER): Engages in the discovery and development of therapeutic peptide products with a focus on growth-hormone releasing factor peptides. Market cap of $164.90M. Shares shorted have decreased from 2.85M to 1.93M month-over-month, a change representing 1.70% of the company's 53.99M share float. The stock has had a couple of great days, gaining 9.72% over the last week.

6. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX): Focuses on the discovery and development of drug candidates for the treatment of various human diseases. Market cap of $435.47M. Shares shorted have decreased from 11.78M to 10.91M month-over-month, a change representing 1.57% of the company's 55.41M share float. The stock has had a couple of great days, gaining 13.16% over the last week.

7. Acorda Therapeutics, Inc. (NASDAQ:ACOR): A commercial stage biopharmaceutical company, involved in the identification, development, and commercialization of therapies for multiple sclerosis, spinal cord injury, and other nervous system disorders. Market cap of $945.73M. Shares shorted have decreased from 4.73M to 4.20M month-over-month, a change representing 1.56% of the company's 34.00M share float. The stock is a short squeeze candidate, with a short float at 10.6% (equivalent to 9.34 days of average volume). The stock has lost 12.55% over the last year.

8. BioSpecifics Technologies Corp. (NASDAQ:BSTC): Involves in the development of an injectable collagenase for various indications. Market cap of $105.70M. Shares shorted have decreased from 254.42K to 191.80K month-over-month, a change representing 1.53% of the company's 4.08M share float. The stock has had a good month, gaining 10.51%.

9. Jazz Pharmaceuticals, Inc. (NASDAQ:JAZZ): Develops and commercializes products for neurology and psychiatry primarily in the United States. Market cap of $1.63B. Shares shorted have decreased from 1.53M to 1.14M month-over-month, a change representing 1.48% of the company's 26.30M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.09). The stock has gained 96.29% over the last year.

10. Halozyme Therapeutics, Inc. (NASDAQ:HALO): Engages in the development and commercialization of recombinant human enzymes that transiently modify tissue under the skin to facilitate injection of other therapies or correct diseased tissue structures for clinical benefits. Market cap of $985.43M. Shares shorted have decreased from 6.13M to 5.30M month-over-month, a change representing 1.28% of the company's 64.95M share float. The stock is a short squeeze candidate, with a short float at 6.39% (equivalent to 7.42 days of average volume). The stock has gained 20.08% over the last year.

11. Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX): Engages in developing therapies targeting the molecular mechanisms causing cancer in the United States and internationally. Market cap of $2.80B. Shares shorted have decreased from 6.56M to 5.80M month-over-month, a change representing 1.28% of the company's 59.33M share float. The stock has had a couple of great days, gaining 5.32% over the last week.

12. Human Genome Sciences Inc. (HGSI): Operates as a biopharmaceutical company. Market cap of $1.47B. Shares shorted have decreased from 26.64M to 24.31M month-over-month, a change representing 1.18% of the company's 198.01M share float. The stock has lost 69.07% over the last year.

13. Momenta Pharmaceuticals Inc. (NASDAQ:MNTA): A biotechnology company, specializes in the in the characterization and process engineering of complex molecules. Market cap of $891.06M. Shares shorted have decreased from 5.70M to 5.25M month-over-month, a change representing 1.18% of the company's 38.08M share float. The stock is a short squeeze candidate, with a short float at 11.75% (equivalent to 5.72 days of average volume). The stock has had a good month, gaining 15.62%.

14. Complete Genomics, Inc. (NASDAQ:GNOM): Develops and commercializes a DNA sequencing platform for human genome sequencing and analysis. Market cap of $97.22M. Shares shorted have decreased from 1.73M to 1.53M month-over-month, a change representing 1.14% of the company's 17.55M share float. It's been a rough couple of days for the stock, losing 7.86% over the last week.

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

Source: Short-Sellers Expect These 14 Biotechs To Outperform