Another heavily shorted stock that has the potential to rip higher is Avanir Pharmaceuticals(AVNR_), a pharmaceutical company focused on developing and commercializing therapeutic products for the treatment of central nervous system disorders. This stock is basically flat on the year, with shares up only about 1%. This biotech player recently received FDA approval for its drug Nuedexta, which treats the pseudobulbar affect or emotional liability seen in neurodegenerative diseases such as amyotrophic lateral sclerosis, multiple sclerosis and Alzheimer's. The drug obviously has great potential, and what's great about shares of Avanir is that since the drug is just starting to hit the market, you can get in early before its growth really kicks in. Of course, with all small-cap biotech stocks, there's a big risk as to whether or not management can execute its business plan around a new drug and gain acceptance among doctors and patients. Luckily for Avanir, the company has $117.66 million in cash on its balance sheet and zero debt, so it has ample resources to ramp up its sales force and marketing to create a buzz for the drug. Ultimately, though, the drug will sell only if it works, so I would advise following early prescription data as it hits the wires. One major positive for Avanir is their recent hiring of William Sibold to the position of senior vice president and chief commercial officer. This is a huge move because in the past Sibold has worked on such big drugs as Prozac, Avonex and Tysabri. Related: 4 Biotech Penny Stocks to Buy The current short interest as a percentage of the float Avanir is a ridiculously large 25.1%. The bears have also been increasing their bets from the last reporting period by around 2.5% or by 742,000 shares as of March 31. This stock could easily double or more from current levels if management doesn't drop the ball. I would be a big buyer of this stock if it trades above $4.40 to $4.53 a share, which marks some past overhead resistance levels where the stock has failed at recently. I would add heavily if the stock moves above $5.80, which is the price the stock hit right after the FDA approved Nuedexta. Any more above $5.80 should setup this stock for a run to $10 or possibly even higher.