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.

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