Editor's Note: This article has been corrected to remove mention of a stock -- Adaptimmune -- whose short interest was significantly overstated. The Fool regrets the error.

Short sellers have been piling into healthcare stocks this year, especially among companies with comparatively small market caps. While the global economic headwinds such as the Greek and Puerto Rican financial meltdowns have potentially been major factors behind this short selling bonanza, the unprecedented and sustained rise of pharma stocks over the last three years is probably another key reason why investors are starting to bet against this group. Put simply, those going short are assuming this rally can't last forever, or perhaps even that much longer. 

The really eye-catching part is that short sellers have taken out absolutely massive positions in companies like MannKind Corp. (NASDAQ: MNKD) and Northwest Biotherapeutics (NASDAQ: NWBO).

With such mind-boggling high short interests, you have to wonder if shorts firmly believe these three companies are on the verge of collapsing, or worse yet, filing bankruptcy. Let's dig deeper. 

MannKind's inhaled insulin product is off to a slow launch
MannKind is a favorite name among short sellers because the company's inhaled insulin product, Afrezza, is struggling commercially, and it has a boatload of debt due to the numerous regulatory setbacks that occurred during Afrezza's development. Unfortunately, these issues don't appear to be going away anytime soon.

Source: MannKind

Afrezza's second-quarter sales greatly underwhelmed investors' expectations at $2.2 million, bringing its grand sales total to $3.3 million for the entire first half of the year. Although Afrezza's marketing partner Sanofi is reportedly now putting greater resources behind the drug's commercial launch, sales will essentially have to grow exponentially for it to live up to its blockbuster potential.

The bigger problem, though, is that Afrezza's slow commercial launch has forced the drugmaker to sell shares to retire a portion of its Senior notes and kick the can down the road, via a note exchange, on another chunk of this debt. Eventually, Afrezza's going to have to start carrying its weight or MannKind could be in deep trouble. 

Northwest Biotherapeutics is in a precarious financial position
The clinical-stage biotech Northwest Biotherapeutics is making impressive strides with its experimental brain cancer vaccine DCVAX-L based on its dendritic cell immunotherapy platform. That being said, the company has a seriously worrisome cash problem. Per its second-quarter figures, for instance, Northwest is down to a mere $19.2 million in cash and cash equivalents, yet it's burning over $8 million a month. The drugmaker even racked up a net loss of a noteworthy $66.8 million in the second-quarter alone.

Northwest is therefore going to have to either find a partner willing to fork over a hefty upfront cash payment for its lead clinical candidate, or resort to more dilutive financing to keep its doors open. Unfortunately, big pharma hasn't expressed much interest in dendritic cell-based immunotherapies lately, leaving the company with few alternative financing options to meet its long-term obligations.  

Are either of these stocks a good contrarian buy?
Buying shares in the face of an avalanche of short selling may seem foolhardy, but sometimes it pays off via the so-called "short squeeze," where shorts get caught by an unexpected material event. In the case of these biotechs, you would have to imagine that such an event would be a buyout by a bigger pharma. Nonetheless, I don't see a compelling reason why either of these companies would be attractive to a buyer right now. MannKind and Northwest have problematic balance sheets. In short, it's probably not wise to bet against Wall Street on these two small-cap biotechs. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.