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Insider buying generally demonstrates that senior employees of a particular company believe the stock is undervalued and will appreciate. As a result, I screened 45 micro-cap, biotechnology stocks, selling for less than $4.00 per share on October 19th for insider buying over the past 12 months. The chart below gives the comprehensive results indicating how many shares were bought, the ratio of bought to sold shares, and most importantly, the percentage of shares bought relative to the number of outstanding shares.

Top Micro-Cap Biotechnology Stocks Under $4 Per Share In Self-Confidence
CompanyBoughtB/S Ratio

As % of Outstanding Shares

Amryis (NASDAQ:AMRS)7.88M11.6:113.41%
CytRx (NASDAQ:CYTR)2.12MAll Buy9.95%
Cell (NASDAQ:CTIC)4.28M2.7:17.55%
Corcept (NASDAQ:CORT)3.39M3:13.40%
StemCells (NASDAQ:STEM)960K18.8:13.15%
Codexis (NASDAQ:CDXS)946K9.5:12.55%
Pluristem (NASDAQ:PSTI)1.13M10.8:12.03%
Savient (SVNT)1.3M30.2:11.78%
Neostem (NBS)1.99M30.2:11.29%
Pacific BioS (NASDAQ:PACB)469K4.3:10.64%
Cytokinetics (NASDAQ:CYTK)512K2.7:10.38%
Galena (NASDAQ:GALE)233kAll Buy0.34%
Hemisphere Bio (NYSEMKT:HEB)434KAll Buy0.31%
Vanda Pharma (NASDAQ:VNDA)82K3.4:10.29%
Dyax (NASDAQ:DYAX)285KAll Buy0.28%
PharmAthene (NYSEMKT:PIP)140K4.2:10.28%
BioTime (NYSEMKT:BTX)138K13.8:10.27%
Novavax (NASDAQ:NVAX)309KAll Buy0.23%
Chelsea (NASDAQ:CHTP)138K11.5:10.20%
Geron (NASDAQ:GERN)208K3.1:10.17%
Cerus (NASDAQ:CERS)62KAll Buy0.11%
XOMA (NASDAQ:XOMA)60K13.3:10.00%
Peregrine (NASDAQ:PPHM)79KAll Buy0.00%
Aastrom Bio (ASTM)0N/AN/A
Discovery (NASDAQ:DSCO)0N/AN/A

Genetic Tech (NASDAQ:GENE)

Nabi Biopharma (NASDAQ:NABI)0N/AN/A
Neuralstem (NASDAQ:CUR)0N/AN/A
Oncolytics (NASDAQ:ONCY)0N/AN/A
NuPathe (PATH)0N/AN/A
Synthetic Bio (NYSEMKT:SYN)0N/AN/A
Transition (NASDAQ:TTHI)0N/AN/A
YM BioSciences (YMI)0N/AN/A
Cleveland Bio (CLBI)110K1.1:10.30%
Bacterin (NYSEMKT:BONE)6.15M1:114.48%
Progenics (NASDAQ:PGNX)16K1:30.04%
Zalicus (ZLCS)350K1:7.860.27%
Complete Genomics (NASDAQ:GNOM)367K1:10.860.93%
Inovio Pharma (NASDAQ:INO)386K1:12.40.28%
Albany Molecular (NASDAQ:AMRI)140K1:220.45%

I have de-emphasized insider selling because I don't believe it to be the opposite of insider buying in meaning. Rather, I believe people sell their stocks for a wide variety of motivations, but buy them for the singular purpose of turning a profit. In the interest of fairness, to those who might disagree with me, I have given insider selling a role in determining where a company sits within the final chart standings. If insider buying is at a buy to sell ratio of even, or less, the company's stock falls to the bottom of the heap.

The winner of this contest is clearly, Amyris which has purchased 7.88M shares over the last 12 months, representing 13.41% of the outstanding shares. Buyers out-numbered sellers, 11.6:1.

(click to enlarge)Amyris Wins!

It should be noted that the largest percentage of shares bought from the inside belonged to Bacterin International. Unfortunately, because their 6.15M shares purchased were matched share-for-share by the number sold, they fell to near bottom of the list.

The purpose of this exercise is to start a discussion on insider buying and what it really means. Can insider buying represent something other than employee confidence in the company? Our bronze award winner, Cell Therapeutics for example, could be using insider buying like a magician waving a wand over a box with your money in it and shouting; "Abracadabra" while your investment disappears.

I'm not too sure there aren't a myriad of other reasons for insider buying. I could see a simple scenario for instance, where a new management member comes on board and over commits to buying shares as a pledge of loyalty, while over-indulging at an executive cocktail party. Many things we do in a given day aren't the result of cool calculations, but rather impulses and desires.

In conclusion, there are several companies on this list that are worthy of your consideration and they tend, unsurprisingly, to be toward the top of the heap. I, for instance, have a large position in Novavax and am encouraged to find that employees of the company are as confident in their direction as I am. Regardless, it is my position that insider buying should be a very small part of your decision making process.

Is your company on the list? If so, tell us what you think in the comments section below.

Disclosure: I am long NVAX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: No information given herein shall be construed as an endorsement of any stock purchase. All individuals should use their own critical thinking skills, apply their own research and make their own investment decisions.