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Small-cap stocks can offer investors huge growth opportunities for their portfolios, but can also add new levels of risk. This is especially true in the biotech arena. One strategy for reducing that risk is to seek out small caps that won't stay small for much longer - those that are projected for long term growth. Keeping this idea in mind, we focused on small cap biotech stocks that not only have strong growth projections, but that have also received votes of confidence from industry analysts. We arrived at an interesting list of stocks that warrant more research and analysis.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

We first looked for small cap biotechnology stocks. We next screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We next screened for businesses with estimated high-growth, with 1-year projected EPS growth above 25%.

Do you think these small-cap stocks are worth more than the market currently says? Use our list to help with your own analysis.

1) Exact Sciences Corporation (EXAS)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$638.83M
Beta:1.39

Exact Sciences Corporation has a Analysts' Rating of 1.90, and a 1-Year Projected Earnings Per Share Growth Rate of 25.70%. The short interest was 12.13% as of 07/04/2012. Exact Sciences Corporation, a molecular diagnostics company, focuses on developing a molecular diagnostic technology for the early detection and prevention of colorectal pre-cancer and cancer. The company develops the Cologuard, a non-invasive stool-based DNA colorectal cancer screening test that is designed to detect each of the four stages of colorectal cancer, as well as pre-cancerous lesions. Its test includes proprietary and patented methods, which isolate and analyze the trace amounts of human DNA that are shed into stool every day from the exfoliation of cells that line the colon.

2) Santarus, Inc. (SNTS)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$447.66M
Beta:1.18

Santarus, Inc. has a Analysts' Rating of 2.00, and a 1-Year Projected Earnings Per Share Growth Rate of 212.50%. The short interest was 5.35% as of 07/04/2012. Santarus, Inc., a specialty biopharmaceutical company, engages in acquiring, developing, and commercializing proprietary products that address the needs of patients treated by physician specialists. The company sells metformin hydrochloride extended release tablets under the Glumetza name and bromocriptine mesylate tablets under the CYCLOSET name, which are indicated to treat type 2 diabetes; and omeprazole/sodium bicarbonate capsules and powder for oral suspension under the Zegerid name primarily to pharmaceutical wholesale distributors. Its products under development include Budesonide MMX, which completed two Phase III clinical studies for the treatment of ulcerative colitis; Rhucin (recombinant human C1 inhibitor) under Phase IIIb clinical study for the treatment of acute attacks of hereditary angioedema, and under Phase II proof study for the treatment of early antibody mediated rejection; Rifamycin SV MMX, a Phase III clinical program for the treatment of patients with travelers' diarrhea, as well as for other diseases with a bacterial component in the intestine; and SAN-300 under Phase I clinical study for the treatment of rheumatoid arthritis.

3) Merrimack Pharmaceuticals, Inc. (MACK)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$679.22M
Beta:-

Merrimack Pharmaceuticals, Inc. has a Analysts' Rating of 1.30, and a 1-Year Projected Earnings Per Share Growth Rate of 46.50%. The short interest was 1.34% as of 07/04/2012. Merrimack Pharmaceuticals, Inc., a biopharmaceutical company, focuses on discovering, developing, and preparing to commercialize medicines paired with companion diagnostics for the treatment of cancer in the United States. The company uses its proprietary Network Biology discovery platform to integrate the fields of engineering, biology, and computing to discover and develop therapeutics and diagnostics. Its product candidates include MM-398, a novel, stable nanotherapeutic encapsulation of the marketed chemotherapy drug irinotecan, is in multiple ongoing Phase I and Phase II clinical trials for various cancers; MM-121, a fully human monoclonal antibody that targets ErbB3, a cell surface receptor implicated in cancer, is in multiple ongoing Phase I and Phase II clinical trials; and MM-111, a bispecific antibody designed to target cancer cells that are characterized by overexpression of the ErbB2 cell receptor, is in multiple ongoing Phase I and Phase II clinical trials.

4) Threshold Pharmaceuticals Inc. (THLD)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$422.92M
Beta:1.73

Threshold Pharmaceuticals Inc. has a Analysts' Rating of 1.80, and a 1-Year Projected Earnings Per Share Growth Rate of 88.10%. The short interest was 12.40% as of 07/04/2012. Threshold Pharmaceuticals, Inc., a development stage company, focuses on the discovery and development of drugs for the microenvironment of solid tumors and the bone marrows of hematologic malignancies as novel treatments for patients living with cancer. Its clinical development products include TH-302, a novel drug candidate, which is in Phase I, Phase II, and Phase III clinical trials for the severe hypoxic regions present in various solid tumors and hematologic malignancies. The company has a license and co-development agreement with Merck KGaA for the development and commercialization of TH-302.

5) Cadence Pharmaceuticals Inc. (CADX)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$320.78M
Beta:1.34

Cadence Pharmaceuticals Inc. has a Analysts' Rating of 2.20, and a 1-Year Projected Earnings Per Share Growth Rate of 56.00%. The short interest was 7.31% as of 07/04/2012. Cadence Pharmaceuticals, Inc., a biopharmaceutical company, focuses on acquiring, in-licensing, developing, and commercializing proprietary product candidates principally for use in the hospital setting in the United States and Canada. It holds rights to OFIRMEV injection, a proprietary intravenous formulation of acetaminophen for the management of pain and reduction of fever in adults and children. The company in-licenses rights to OFIRMEV from Bristol-Myers Squibb Company, which sells intravenous acetaminophen in Europe and other markets for the treatment of acute pain and fever under the Perfalgan brand name.

6) Acorda Therapeutics, Inc. (ACOR)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$1.03B
Beta:0.50

Acorda Therapeutics, Inc. has a Analysts' Rating of 2.40, and a 1-Year Projected Earnings Per Share Growth Rate of 87.04%. The short interest was 6.95% as of 07/04/2012. Acorda Therapeutics, Inc., a commercial-stage biopharmaceutical company, engages in the identification, development, and commercialization of novel therapies for multiple sclerosis (NYSE:MS), spinal cord injury (NYSE:SCI), and other central nervous system disorders primarily in the United States. Its marketed products include Ampyra (dalfampridine), a potassium channel blocker for improving walking in patients with MS; and Zanaflex Capsules and Zanaflex tablets (tizanidine hydrochloride), a short-acting drug for the management of spasticity. The company also markets products for the improvement of walking in adult patients with MS with walking disability under the Fampyra name internationally.

7) Nektar Therapeutics (NKTR)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$940.95M
Beta:0.54

Nektar Therapeutics has a Analysts' Rating of 1.90, and a 1-Year Projected Earnings Per Share Growth Rate of 57.40%. The short interest was 16.76% as of 07/04/2012. Nektar Therapeutics, a clinical-stage biopharmaceutical company, engages in developing a pipeline of drug candidates that utilize its PEGylation and polymer conjugate technology platforms. Its product pipeline consists of drug candidates across various therapeutic areas, including oncology, pain, anti-infectives, anti-viral, and immunology. The company's proprietary drug candidates in clinical development comprise NKTR-118, a peripheral opioid antagonist that is in Phase III clinical trail for opioid-induced constipation; BAY41-6551 that has completed Phase II clinical trail to treat gram-negative pneumonias; and NKTR-181, a mu-opioid analgesic molecule, which is in Phase I clinical trail for chronic pain.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.

Source: 7 Fast Growing Small Cap Biotech Stocks With Analyst Confidence