The Promise of Stem Cells: Which Insider Executives Are Buying Into Their Own Technology?

Stem cell research has been pushing political hot buttons for over a decade now, provoking as least as much outrage as excitement over their applications. Stem cells have properties unique from any other type of cell -- they're not only immortal, but they can actually be programmed to replace damaged cells. Which means, at least theoretically, that they can be used to regenerate any living organ or tissue.

Back in 1998, researchers developed a technique to farm human embryonic stem cells in cell culture, an incredible breakthrough for the field. The problem? Isolating stem cells in this manner destroyed the fertilized embryo in the process.

For pharmaceutical companies, the ethical issues around embryonic stem cells created a risk that outweighed the possible rewards. But now, a new method of stem cell sourcing is making the technology a lot more palatable to big business, and it could present some interesting opportunities for investors with an eye to the future.

Last year, multiple laboratories produced results proving that adult cells could be programmed to become stem cells, by introducing them to four transformative genes via viruses. Here's why it works: Viruses don't reproduce by cell division, but rather, program host cells with their own genetic code.

Essentially, scientists trick the viruses into injecting stem cell code into adult cells, creating what's known as pluripotent, or iPS, stem cells.

Now, with contentious politics removed from the equation, pharmaceutical giant Pfizer (NYSE: PFE  ) is suddenly eager to jump on the stem cell research bandwagon. The industry leader's executive director, John McNeish, sees stem cells as playing a "tremendous" role in drug discovery, helping them to "understand personalized medicine, genetic variation, ethnic populations, what biomarkers to follow."

Down the line, the company will market stem cells to give new life to damaged or aging organs.

Insiders see Pfizer's change of heart as a tipping point that will lead to many industry partnerships with holders of stem cell patents.

So which stocks stand to gain from the stem cell trend? One way to look for clues is to see what insiders are up to. If company management is snapping up its own stock, it's a good sign that they're expecting to see upside sometime soon. And since they probably know more about their firm than anyone else, it may behoove you to pay attention to their trades.

Here's a list of five stem cell companies seeing insider buying over the last two years. Please be advised that there's a great deal of risk surrounding some of these names, so please use this list as a starting point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)

Insider data sourced from Fidelity. The list has been sorted alphabetically.

Company

Description

Average Insider Activity Per Year Over Last 2 Years

BioMimetic Therapeutics (Nasdaq: BMTI  )

BioMimetic seeks to become the leading company in the field of regenerative medicine by providing new treatment options for the repair of bone, cartilage, tendons and ligaments, thus helping patients recover faster from their orthopedic injuries. The company uses stem cell technology to aid in bone formation.

Purchased an average of 492,586 shares per year

Cleveland BioLabs (Nasdaq: CBLI  )

The company has leveraged its proprietary discoveries around programmed cell death to develop a robust pipeline of drugs for multiple medical and defense applications. CBLI's pipeline includes products from two primary families of compounds: Protectans and Curaxins. Protectans are being developed as drug candidates that protect normal tissues from acute stresses such as radiation, chemotherapy and ischemias. Curaxins are being developed as anticancer agents that could act as mono-therapy drugs or in combination with other existing anticancer therapies.

Purchased an average of 6,000 shares per year

China Cord Blood (NYSE: CO  )

The company is dedicated to the storage of umbilical cord blood stem cells. Leveraging the rapid developments in life sciences research and the increasing popularity and continuous new developments of clinical applications using stem cells, the Company endeavors to provide umbilical cord blood storage services for parents to save cord blood stem cells on behalf of their children, in China and the Asia Pacific regions, to safeguard the lives and health of their newborns.

Purchased an average of 243,821 shares per year

Cytori Therapeutics (Nasdaq: CYTX  )

The company sells regenerative medicine-based products that are directed toward serving unmet medical needs. The company develops its product pipeline for the treatments of cardiovascular disease, spinal disc degeneration, gastrointestinal disorders, liver and renal disease, and pelvic health conditions.

Purchased an average of 39,675 shares per year

Lydall (NYSE: LDL  )

Manchester-based Lydall Inc.'s bioscience-packaging division won approval from federal regulators to market a new type of biocontainer that drug makers and other health researchers can use to safely store and transport frozen stem cells.

Purchased an average of 6,000 shares per year

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.


Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

Pfizer is a Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 09, 2011, at 2:08 PM, 1alpha24 wrote:

    Significantly absent from your list is BTX (Bio Time) - what does your research indicate regarding their insiders activity?

  • Report this Comment On February 09, 2011, at 6:10 PM, Cre8tiveClyde wrote:

    Your writer is way, way behind the times. The IPS cells are shown to be defective in very important ways. Human embryonic stem cells (hESC's) are the gold standard. Advanced Cell Technology has developed a process that extracts ONE cell from an embryo that does not kill the embryo, which goes on to develop naturally. It is called a blastomere process and ACTC expects its patent this month (Feb).

    Meanwhile, ACTC has been given TWO IND's by the FDA in the past three months to begin clinical trials on Stargardt's Macular Degeneration (SMD) and Age-Related Macular Degeneration (AMD) using hESC's. These will be underway very soon. It is expected, from animal models using hESC's, that the blind will begin to see or that their progression will be arrested. At any rate, it will only take about six weeks after the start of trials to know whether or not it will work as expected.

    The other stem cell company with an FDA IND is Geron, focused on spinal cord injuries and their trial is already underway.

    There is a great Google site where ACTC, and stem cells in general, is discussed and it is loaded with up-to-the-minute information because the site is moderated and the folks there are mighty smart.

    Cre8tive Clyde

  • Report this Comment On February 11, 2011, at 2:36 PM, birdbebad wrote:

    I agree with Clyde regarding the timeliness of this report (or at least the writer's grasp of this field). The generation of adult-derived stem cells (iPSCs) was first reported in August 2006 (in mouse cells) and later that year in human cells. Also the field has moved beyond using viruses to introduce the reprogramming genes. While it's true that big pharma is getting over its reluctance to invest in cell therapy companies, this has been building for years. As for the relative utility of iPSCs vs ESCs (or mesenchymal stem cells, MSCs, for that matter), the jury is still out- only MSC trials have reported results and ESC-based trials are just beginning. Whether iPSCs (or, more likeely, iPSC-derived cells) ever make it into the clinic remains to be seen.

  • Report this Comment On March 04, 2011, at 2:41 AM, 110254545yy wrote:

    Motley Fools should not be your source of information.

    More NOISE than substance, SPAMMING the internet with useless and annoying write-ups on EVERY stock.

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