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Many biotech firms produce little to no revenue, relying on sources of equity investment until they gain drug approval or a lucrative research deal. Because of this, one of the biggest concerns investors have about biotech companies is whether they have sufficient liquidity to continue operations.

With this in mind, we ran a screen on the biotech industry for stocks with consistently increasing liquidity, measured by the current ratio (current assets/current liabilities) increasing over the last four years.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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 can continue operations indefinitely? Use this list as a starting point for your own analysis.

List sorted by market cap.

1. VIVUS Inc. (NASDAQ:VVUS): Engages in the development and commercialization of therapeutic products for underserved markets in the United States. Market cap of $1.07B. Current Ratio increased from 1.89 to 3.11 during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, the Current Ratio increased from 3.11 to 9.92 (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, the Current Ratio increased from 9.92 to 11.73 (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31).

The stock is a short squeeze candidate, with a short float at 18.2% (equivalent to 9.28 days of average volume). The stock has had a good month, gaining 22.98%.

2. Immunogen Inc. (NASDAQ:IMGN): Engages in the research and development of antibody-based anticancer therapeutics in the United States. Market cap of $1.04B. Current Ratio increased from 5.39 to 6.91 during the first time interval (12 months ending 2009-06-30 vs. 12 months ending 2008-06-30). For the second time interval, the Current Ratio increased from 6.91 to 8.47 (12 months ending 2010-06-30 vs. 12 months ending 2009-06-30). And for the final time interval, the Current Ratio increased from 8.47 to 13.83 (12 months ending 2011-06-30 vs. 12 months ending 2010-06-30).

The stock is a short squeeze candidate, with a short float at 8.98% (equivalent to 13.64 days of average volume). The stock has had a couple of great days, gaining 10.16% over the last week.

3. Micromet, Inc. (NASDAQ:MITI): Engages in the discovery, development, and commercialization of antibodies for the treatment of cancer, inflammation, and autoimmune diseases. Market cap of $754.89M. Current Ratio increased from 1.85 to 2.19 during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, the Current Ratio increased from 2.19 to 2.29 (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, the Current Ratio increased from 2.29 to 4.91 (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31).

The stock is a short squeeze candidate, with a short float at 8.28% (equivalent to 12.58 days of average volume). It's been a rough couple of days for the stock, losing 7.13% over the last week. The stock has had a good month, gaining 21.3%.

4. QLT Inc. (NASDAQ:QLTI): Engages in the development and commercialization of therapies for the eye. Market cap of $334.64M. Current Ratio increased from 1.15 to 2.91 during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, the Current Ratio increased from 2.91 to 19.82 (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, the Current Ratio increased from 19.82 to 20.43 (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31).

The stock has lost 3.68% over the last year.

5. Enzon Pharmaceuticals Inc. (NASDAQ:ENZN): Engages in the research and development of therapeutics for cancer patients with unmet medical needs. Market cap of $330.79M. Current Ratio increased from 2.67 to 4.92 during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, the Current Ratio increased from 4.92 to 5.81 (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, the Current Ratio increased from 5.81 to 23.63 (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31).

The stock is a short squeeze candidate, with a short float at 11.88% (equivalent to 22.4 days of average volume). The stock has lost 41.05% over the last year.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 5 Biotech Stocks With Consistently Rising Liquidity