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If growth opportunities spark your interest, small-cap stocks are ripe with potential. Especially in biotechnology - a sector that intrigues both novices and experienced investors due to its high level of innovation. Today we focused specifically on small-cap biotech stocks with substantial growth projections, meaning they are predicted to expand significantly in the next five years. From there we narrowed down our search to companies that have received recent ratings of 'Buy' from industry analysts. We came up with a short, but compelling list for your review.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS Growth Rate is a long term 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 are considered high-growth, with 5-year projected EPS growth above 25%. We next screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3).

Do you think these small-cap stocks have strong operations? Please use our list to assist with your own analysis.

1) Idenix Pharmaceuticals Inc. (IDIX)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$1.10B
Beta:0.42

Idenix Pharmaceuticals Inc. has a 5-Year Projected Earnings Per Share Growth Rate of 29.00%, and a Analysts' Rating of 2.50. The short interest was 14.38% as of 08/01/2012. Idenix Pharmaceuticals, Inc., a biopharmaceutical company, engages in the discovery and development of drugs for the treatment of human viral diseases in the United States and Europe. Its primary research and development focus is on the treatment of patients with hepatitis C virus (HCV). The company's HCV discovery program focuses on various classes of drugs, including nucleoside/nucleotide polymerase inhibitors, protease inhibitors, non-nucleoside polymerase inhibitors, and NS5A inhibitors.

2) Affymax, Inc. (OTCQB:AFFY)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$586.07M
Beta:1.22

Affymax, Inc. has a 5-Year Projected Earnings Per Share Growth Rate of 27.50%, and a Analysts' Rating of 1.60. The short interest was 17.40% as of 08/01/2012. Affymax, Inc., a biopharmaceutical company, engages in the development of drugs for the treatment of serious and life-threatening conditions in the United States. It offers OMONTYS (peginesatide) Injection for the treatment of anemia in chronic kidney disease in adult patients on dialysis. OMONTYS is a synthetic, peptide-based erythropoiesis stimulating agent designed to stimulate production of red blood cells.

3) Sequenom Inc. (SQNM)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$321.86M
Beta:0.31

Sequenom Inc. has a 5-Year Projected Earnings Per Share Growth Rate of 27.50%, and a Analysts' Rating of 1.90. The short interest was 26.94% as of 08/01/2012. Sequenom, Inc. provides products, services, diagnostic testing, applications, and genetic analysis products that translate the results of genomic science into solutions for biomedical research, translational research, molecular medicine applications, and agricultural and livestock research. The company operates in two segments, Molecular Diagnostics and Genetic Analysis. The Molecular Diagnostics segment researches, develops, and commercializes noninvasive molecular diagnostic tests for prenatal genetic disorders and diseases, women's health related disorders and diseases, ophthalmology, oncology, infectious diseases, and autoimmunity.

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

Source: 3 Analyst Endorsed Small Cap Biotech Stocks Slated For Growth