Companies are understandably unhappy when short sellers pile into their stock, but there’s good news for seven biotech firms, according to the staff at Kapitall.com.

When considering stocks, it's always helpful to gauge what the rest of the market thinks. One source for that is the number of shares shorted. Companies seeing significant increases in shares shorted are being viewed more negatively, and vice-versa.

We ran a screen on the biotech sector for stocks seeing the most significant decreases in shares shorted month-over-month. This indicates that short sellers are less bearish on these names than they were before.

Do you think these stocks will outperform too? 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. Affymax, Inc. (AFFY): Engages in the development of drugs for the treatment of serious and life-threatening conditions. Market cap at $864.2M, most recent closing price at $23.25. Shares shorted have decreased from 4.22M to 3.51M over the last month, a decrease which represents about 2.22% of the company's float of 31.97M shares. Days to cover ratio at 4.19 days.

2. Cell Therapeutics, Inc. (CTIC): Engages in the development, acquisition, and commercialization of drugs for the treatment of cancer. Market cap at $1.11B, most recent closing price at $1.36. Shares shorted have decreased from 2.39M to 1.91M over the last month, a decrease which represents about 1.37% of the company's float of 35.16M shares. Days to cover ratio at 0.67 days.

3. Dendreon Corp. (DNDN): Engages in the discovery, development, and commercialization of therapeutics to enhance cancer treatment options for patients. Market cap at $729.93M, most recent closing price at $4.73. Shares shorted have decreased from 47.16M to 45.68M over the last month, a decrease which represents about 1.01% of the company's float of 146.27M shares. Days to cover ratio at 10.99 days.

4. MannKind Corp.(MNKD): Focuses on the discovery, development, and commercialization of therapeutic products for diabetes and cancer. Market cap at $508.76M, most recent closing price at $2.07. Shares shorted have decreased from 27.11M to 25.51M over the last month, a decrease which represents about 1.27% of the company's float of 126.38M shares. Days to cover ratio at 9.73 days.

5. Momenta Pharmaceuticals Inc. (MNTA): A biotechnology company, specializes in the in the characterization and process engineering of complex molecules. Market cap at $557.74M, most recent closing price at $10.79. Shares shorted have decreased from 4.44M to 3.01M over the last month, a decrease which represents about 3.84% of the company's float of 37.24M shares. Days to cover ratio at 8.33 days.

6. Obagi Medical Products, Inc.(OMPI): Develops and markets topical aesthetic and therapeutic prescription skin care systems. Market cap at $234.51M, most recent closing price at $13.47. Shares shorted have decreased from 1.23M to 1.01M over the last month, a decrease which represents about 1.27% of the company's float of 17.29M shares. Days to cover ratio at 5.01 days.

7. Threshold Pharmaceuticals Inc. (THLD): Engages in the discovery and development of drugs targeting the microenvironment of solid tumors for patients living with cancer. Market cap at $244.69M, most recent closing price at $4.35. Shares shorted have decreased from 7.87M to 7.18M over the last month, a decrease which represents about 1.53% of the company's float of 45.18M shares. Days to cover ratio at 4.83 days.

Find more stock analysis and screens at Kapitall.com.

Tickers Mentioned: AFFY, CTIC, DNDN, MNKD, MNTA

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