nbs update 08 24-11
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NeoStem, Inc (NBS) Page 1
Market Data Share Data Most Recent Quarter
Price $0.65 Outstanding 98.0M* Revenue $18.5M
52-Week $0.60-$2.15 Cash/Share $0.21* Net Income ($10.8M)
Market Cap $63.7M* Book/Share $0.44* EPS ($0.13)
Avg. Daily Vol. 615,500 Price/Book 1.5x* Cash $20.4M*
% Short 3.0%* Debt/Share $0.40* Debt $38.8M
Financial Results and Projections
FYE Dec. 31 2009 2010 2011E 2012E 2013E
Revenue $11.5M $69.8M $82.9M $96.5M $112.4M
Net Income ($30.9M) ($23.5M) ($41.6M) ($38.8M) ($37.9M)
EPS ($2.38) ($0.46) ($0.52) ($0.38) ($0.31)
* Includes 13.8M shares for $15.5M net cash proceeds from 7/22/11 financing
Unlocking the Value of Science ™ Boca Raton San Francisco New York
NeoStem, Inc. (NBS)
UPDATE REPORT
August 24, 2011
Rating Target Strong Buy $4.00
Analyst Stephen M. Dunn
Sr. Managing Director Research
(954) 240-9968
William D. Dawson
Senior VP Research
(561) 504-5818
Symbol: NBS
Market: NYSE Amex Equities
420 Lexington Avenue,
Suite 450
New York, NY 10170
(212) 584-4180
www.neostem.com
CEO – Dr. Robin L. Smith
CFO – Larry A. May
AMR-001 Phase II Trial in AMI (Heart Attack) to Begin Q4
China Pharma Sales Down on Strategic Mix Adjustment
Continuing Transition to a Therapeutics-Focused Company
1.) AMR-001 to Begin Phase II Trial: Through the recent acquisition of
Amorcyte (private), NeoStem gained all rights to the company’s lead
development candidate AMR-001, an autologous, bone marrow derived,
pharmaceutical grade cell-based product. AMR-001, is expected to initiate a
Phase II trial in Acute Myocardial Infarction (AMI) by Q4’11 and initiate a
Phase I trial in congestive heart failure during 2012. The AMI Phase II trial is
expected to complete enrollment within 12 months with top-line data 6
months after the last patient is treated or mid-2013.
2.) Suzhou Erye Revenues Down for Q2 2011: China pharmaceutical
revenues for Q2 2011 were $16.2M as compared to $18.1M Q1 2011 and
$19.4M in prior year Q2. The lower sales are reflective of a strategic decision
by management to discontinue selling certain pharmaceutical intermediates, in
order to create capacity within the existing production lines for higher margin
products in the future. Management expects these decreases in sales to be
temporary. It is important for investors to note that management is presently
considering multiple strategies in respect to its majority interest in Suzhou
Erye Pharmaceutical Co. including its possible divestiture (see Possible Sale
of Eyre Pharmaceuticals)
3.) Transition to Cellular Therapeutics Company: While R&D efforts are
ongoing in the U.S., including VSEL™ technology (Very Small Embryonic
Like), AMR-001 therapy for AMI and Athelos T-cell therapy, NeoStem
already has commercialized adult stem cell therapies in China with
indications such as orthopedics, wellness, cosmetic & anti-aging. The
acquisition activity during the past year has highlighted managements desire
to transform NeoStem into a leading international provider (cont. next page)
Please see last two pages for important disclosures and analyst certification
NeoStem, Inc. (NBS) Page 2
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3.) Transition to Cellular Therapeutics Company (continued): …of cell based therapies and a premier stem cell
service provider through the Progenitor Cell Therapy division. The company is exploring different ways to achieve this
transition including the possible sale of non-core assets such as their majority interest in Suzhou Erye Pharmaceutical Co.
4.) We are maintaining our Strong Buy rating and 12-18 month Price Target of $4.00 based on a 35x multiple on
projected 2017 earnings and discounted 30% to adjust for risk: We have made changes to our financial model
reflecting management’s new business development goals moving forward. We are now including AMR-001 for Acute
Myocardial Infarction (AMI) in our model and accordingly we have raised our discount rate from 20% to 30% to account
for the clinical development risk. We have extended stem cell-based revenues into 2017 where we expect to see growth
driven by both Progenitor Cell Therapy services and approved stem cell therapies in China. Suzhou Erye Pharmaceutical
Co. continues to be a significant revenue generator for NeoStem while management is currently exploring the
monetization of the asset.
Company Description
New York, NY-based NeoStem is a multi-faceted, multinational medical company.
Among their business are adult stem cell collection, processing and storage in the
U.S., research and development for diagnostic and therapeutic applications using
autologous adult stem cells, including their VSEL™ technology (very small
embryonic-like stem cells) and several China-based, adult stem cell therapeutics
operational and R&D activities for adult stem cell therapeutics focused on regenerative medicine. In addition, NeoStem
and the Vatican's Pontifical Council for Culture announced a joint initiative with their charitable foundations to expand
research and raise awareness of adult stem cell therapies. A 3-day international conference at the Vatican on adult stem
cell research, including VSEL™ technology, is planned for 2011 and will focus on medical research presentations and
theological and philosophical considerations and implications of scientific achievements.
In addition to NeoStem’s adult stem cell business in the U.S. and China, NeoStem acquired 51% of Chinese
pharmaceutical company Suzhou Erye Pharmaceuticals in October 2009. Erye is over 50 years old and manufactures and
distributes generic antibiotic products with sales of $70 million during 2010. They have 160+ production certificates from
the Chinese State Food and Drug Administration (SFDA) for both antibiotic prescription drugs and active pharmaceutical
intermediates (APIs).
In January 2011, NeoStem completed their acquisition of Progenitor Cell Therapy (PCT), an internationally recognized
cell therapy services and development company that, through its cell therapy manufacturing facilities and team of
professionals, facilitates the preclinical and clinical development and eventual commercialization of cellular therapies for
clients in the United States and internationally. PCT offers cGMP-compliant cell transportation, manufacturing, storage
and distribution services and supporting clinical trial design, process development, logistics, and regulatory and quality
systems development services.
Finally, on July 14, 2011 NeoStem announced a definitive merger agreement to acquire Amorcyte (private). Amorcyte’s
lead development candidate, AMR-001 is an autologous, bone marrow derived, pharmaceutical grade cell-based product
that uses a CD34+CXCR4+ enriched cell population and is thought to limit the damage of heart muscle that develops
following Acute Myocardial Infarction (AMI). AMR-001 has completed Phase I safety studies and is currently scheduled
to start enrolling for a Phase II study in AMI in Q4, 2011.
AMR-001 (Amorcyte Acquisition)
On July 14, 2011, NeoStem announced a definitive merger agreement to acquire Amorcyte (private) whose lead
candidate, AMR-001, is expected to initiate a Phase II trial in Acute Myocardial Infarction (AMI) by Q4’11 and
initiate a Phase I trial in congestive heart failure during 2012. The AMI Phase II trial is expected to complete
enrollment within 12 months with top-line data 6 months after the last patient is treated or mid-2013.
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About AMR-001
AMR-001 is an autologous, bone marrow derived, pharmaceutical grade cell-based product that uses a CD34+CXCR4+
enriched cell population and is thought to limit the damage of heart muscle that develops following AMI.
Mechanism of Action
AMR-001 works by increasing microvascular blood flow in the myocardium via neoangiogenesis, thereby reversing post-
infarct ischemia and rescuing tissue from hibernation and preventing eventual death (apoptosis):
CD34+CXCR4+ cells are harvested from the patient’s own bone marrow and isolated to increase potency
The selected cells are infused via the infarct-related artery 6-10 days following the ST-Elevation MI (STEMI) –the
optimal time frame for cellular intervention, after the pro-inflammatory “hot phase” and prior to permanent scar
formation
The infused CD34+CXCR4+ cells home to the at-risk tissue via the SDF-1 (Stromal Cell-Derived Factor-1)
gradient, inducing neoangiogenesis and a resultant functional benefit
CD34+CXCR4+ Cells are a Natural Repair Mechanism
1.) A distress signal (hypoxia-inducible
factors or HIF) is induced by hypoxia in the
peri-infarct zone
2.) HIF induces synthesis of SDF and
VEGF, which mobilize CD34+CXCR4+
cells
3.) The mobilized cells are trophic to the
peri-infarct zone, preventing apoptosis and
effecting neoangiogenesis
Source: NeoStem Inc.
Phase I Clinical Trial Results
The Phase I clinical trial results of AMR-001 for Acute Myocardial Infarction (AMI) were published in the January 2011
issue of the American Heart Journal in a paper titled “CD34+ cell infusion after ST elevation myocardial infarction is
associated with improved perfusion and is dose dependent” which is summarized below:
Background: The objective of the study was to determine whether the effects of infarct-related artery (IRA) infusion of
autologous bone marrow–derived CD34+ cells after ST elevation myocardial infarction (STEMI) are dependent on the
dose (quantity and mobility) of the cells infused. Beneficial effects of IRA infusion of mononuclear cells after STEMI
have been inconsistent, possibly because of differences in timing, cell type, quantity, and mobility of infused cells.
Methods: Patients were randomized to bone marrow harvest (n = 16) or control (n = 15). At a median of 8.3 days after
coronary stenting for STEMI, CD34+ cells were infused via the IRA at 3 dose levels (5, 10, and 15 × 106) in cohorts of 5
patients each. Baseline and follow-up imaging and ex vivo CD34+ cell mobility were performed.
Results: Cell harvest and infusion were safe. Quantitative rest hypoperfusion score measured by single-photon emission
computed tomography improved at 6 months in the ≥10 million cohorts compared with controls (−256 vs +14, P = .02).
There was a trend toward improved ejection fraction at 6 months (+4.5%) in the ≥10 million cohorts compared with no
change in the controls and 5 million cohort (+0.7%). Improved perfusion and infarct size reduction correlated with the
quantity and mobility of the infused CD34+ cells.
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Conclusions: The effects of CD34+ cell IRA infusion during the repair phase after STEMI are dose dependent and,
at a threshold dose of 10 million CD34+ cells, associated with a significant improvement in perfusion that may limit
deterioration in cardiac function.
Note: for the complete clinical trial design see http://clinicaltrials.gov/ct2/show/NCT00313339
Positive Dose Response Demonstrated
Increasing Doses of AMR-001 Reduced the Size of the Infarct Region
Increasing Doses of AMR-001 Reduced RTSS (hypoperfusion)
Source: Quyyumi AA et al “CD34+ cell infusion after ST elevation myocardial infarction is associated with improved perfusion and is dose
dependent” 2011, American Heart Journal; 161(1) 98-105 http://www.ahjonline.com/article/S0002-8703(10)00894-X/abstract
Threshold Dose of 10 Million Cells Shows Significant Improvement in Perfusion
RTSS Cohort Baseline 6 Months Change % Change
Control 259.0 273.5 +14.5 +5.6%
5M Cells 714.2 722.0 +7.8 +1.1%
10M Cells 998.6 635.8 -362.8 -36.4%
15M Cells 584.0 462.0 -122.0 -20.9% Source: Quyyumi AA et al “CD34+ cell infusion after ST elevation myocardial infarction is associated with
improved perfusion and is dose dependent” 2011, American Heart Journal; 161(1) 98-105
http://www.ahjonline.com/article/S0002-8703(10)00894-X/abstract
Subgroup Analysis of ≥10 Million Cell Threshold on Additional Cardiac Functions
RTSS
% Change
Ejection Fraction
% Change
End Systolic Volume
% Change
Drop in Ejection Fraction
% Change
Control & 5M Cells +3.3% +1.3% +4.6% 30%-40%
10M & 15M Cells -31.4%* +9.4 -6.1% 0%
* Statistically Significant p=0.01 Source: Quyyumi AA et al “CD34+ cell infusion after ST elevation myocardial infarction is associated with improved perfusion and is dose dependent” 2011,
American Heart Journal; 161(1) 98-105 http://www.ahjonline.com/article/S0002-8703(10)00894-X/abstract
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Proposed Phase II Trial Design (subject to change)
The new clinical trial is to investigate the potential of AMR-001 to preserve heart muscle function post-AMI and
consequently improve both quality-of-life and longevity by reducing the incidence and severity of Major Adverse Cardiac
Events (MACE). The Phase II trial is expected to be a 150-patient U.S. multicenter, blinded, prospective, randomized,
controlled clinical trial to evaluate evaluate the efficacy and safety of a single intra-coronary infusion of ≥10 million cells
of AMR-001 after STEMI in subjects with ejection fraction of <48%, as determined by screening CMR 96 hours post
stenting.
PROPOSED PHASE II HUMAN CLINICAL TRIAL PROTOCOL
Title Intra-coronary Infusion of Bone Marrow Derived Autologous CD34+ Selected Cells in Patients With Acute
Myocardial Infarction
Trial Design Randomized 1:1, Double-Blind, Placebo-Controlled Phase II Trial
# of Patients 150 (male and female)
Ages 18 to 75 Years
Arm 1: Placebo
Arm 2: Intra-coronary infusion of an autologous bone marrow derived CD34+ stem cell product ≥10 million cells
Primary
Endpoints Increased Cardiac Perfusion (RTSS) measured by SPECT and preservation of LVEF by CMR
Secondary
Endpoints Reduction in cumulative MACE at 12 months and 18 months, KCCQ & SAQ improvement
Centers 25 Centers in United States
Primary Data 18 Months (RTSS 12 months enrollment plus 6 month post-treatment)
Secondary Data 24 through 48 Months (MACE 12 months enrollment plus 12, 18, 24 and 36 months post-treatment) Source: NeoStem Inc.
Progenitor Cell Therapy (PCT)
On January 20, 2011, NeoStem announced they had closed their acquisition
of Progenitor Cell Therapy (PCT) which will continue as a wholly-owned
subsidiary of NeoStem. PCT has served over 100 clients worldwide and has
experience with over 20 different cell based therapeutics. PCT has
performed over 30,000 cell therapy procedures in its cell therapy
manufacturing facilities and processed and stored over 18,000 cell therapy
products (including approximately 7,000 umbilical cord blood units, 10,000
blood and marrow derived stem cells and 1,000 dendritic cells) and arranged the logistics and transportation for over
14,000 cell therapy products for clinical use by over 5,000 patients. PCT Revenues for 2009 were $8.2M and $6.8M
($5.8M excluding NeoStem) YTD Q3 2010. (Investors should note that LifeTech Capital, a division of Aurora Capital
LLC, acted as financial advisor to NeoStem.)
We believe a merger with NeoStem could
provide the critical mass needed by PCT
to increase their clinical service revenues
in the future while reducing costs through
synergies with NeoStem. We also note
that NeoStem and Progenitor Cell
Therapy were already strategic partners for autologous adult stem cell processing
and storage services under current Good
Manufacturing Practices (cGMP) standards
and the construction of a Beijing Facility,
consisting of a clean room for adult stem
cell clinical trial processing, research and
development laboratory space, collection and stem cell storage area and offices, together with the furnishings and
equipment as well as quality control systems consisting of materials management, equipment maintenance and calibration,
PCT CELL THERAPY SERVICES
Source: Progenitor Cell Therapy
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environmental monitoring and compliance and adult stem cell processing and preservation which comply with cGMP
standards.
Stem Cell Banking Synergies
Investors should that NeoStem and PCT were already partners for stem cell processing and long-term storage. The
acquisition allows NeoStem to now have
these capabilities as cost. In addition,
NeoStem and PCT were already partners
in building a “Turn-Key” facility in
Beijing China which can also be done at
cost. But perhaps even more importantly,
NeoStem now has the expertise in-house
to leverage for increased scalability for
their projects.
Consulting Synergies
We believe the merger with NeoStem brings
credibility and financial stability to PCT.
With the backing of a sizable, publicly-
traded company with significant revenues
(generated by China pharmaceuticals), PCT
can now bid for contract work with new and
larger clients, which in turn provides more
long-term, complex projects with higher
gross margins. Of note is that PCT played
an instrumental role in manufacturing
Dendreon’s (Nasdaq:DNDN) Provenge®
autologous cellular immunotherapy
through their clinical trials to FDA
approval on April 29, 2010.
Stem Cell R&D Synergies
We believe PCT has the expertise to provide faster and cheaper development timelines for NeoStem’s stem cell therapies
including their VSEL™ development program. PCT brings considerable experience with the FDA and the regulatory
framework that will be needed to progress development.
PCT New Product & Process Development Services
Process development, optimization and scale-up Batch production record development
Cost of goods reduction Product shipping validation
Process validation Analytical test method development
Product comparability studies Product characterization
Stability studies Potency assays & Analytical test methods validation Source: Progenitor Cell Therapy
Details can be found at: http://www.sec.gov/Archives/edgar/data/320017/000114420410066939/v205571_424b3.htm
For a limited time:
Background information can be found at: http://www.progenitorcelltherapy.com
Corporate Presentation: http://www.progenitorcelltherapy.com/~DOCUMENTS/PCT_Corporate_Presentation_11-07.pdf
Transaction Summary
On January 19, 2011 NeoStem completed its acquisition of Progenitor Cell Therapy, LLC. NeoStem acquired all of the
membership interests of PCT, and PCT is now a wholly-owned subsidiary of NeoStem. NeoStem issued 10.6M shares of
common stock for the acquisition. In addition, there are warrants to purchase between 1M and 3M shares of NeoStem
Common Stock, based on the following:
PCT FACILITES (in Square Feet)
Manufacturing Facilities Developed Undeveloped Total
Mountain View, California 17,425 7,599 25,024
Allendale, New Jersey 22,000 8,067 30,067
Total 39,425 15,666 55,091 Source: Progenitor Cell Therapy
PCT CELL PRODUCT EXPERIENCE
Source: Progenitor Cell Therapy
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(i) common stock purchase warrants to purchase 1,000,000 shares of NeoStem Common Stock exercisable over a
seven year period at an exercise price of $7.00 per share (the “$7.00 Warrants”), and which will vest only if a
specified business milestone is accomplished within three (3) years of the closing date and
(ii) if the volume weighted average of the closing prices of sales of NeoStem Common Stock on the NYSE-Amex
for the three (3) trading days ending on the trading day that is two (2) days prior to the Closing Date is less than
$2.50, common stock purchase warrants to purchase 1,000,000 shares of NeoStem Common Stock exercisable
over a seven year term at an exercise price of $3.00 per share (the “$3.00 Warrants”); and
(iii) if the Parent Per Share Value is less than $1.70, common stock purchase warrants to purchase 1,000,000
shares of NeoStem Common Stock exercisable over a seven year period at an exercise price of $5.00 per share
(the “$5.00 Warrants” and, collectively with the $7.00 Warrants and the $3.00 Warrants, the “Warrants”).
Background: Prior Partnership Agreements with Progenitor Cell Therapy
In January 2009, NeoStem and Progenitor Cell Therapy (PCT) entered into a Cell Processing and Storage Customer
Agreement. Under the Agreement, PCT provides NeoStem autologous adult stem cell processing and storage services
under current Good Manufacturing Practices (cGMP) standards. Under the Terms of the agreement, NeoStem agreed to
use PCT for processing and storage services for commercial purposes on an exclusive basis after PCT completed certain
preliminary services, consisting of technology transfer, protocol review, revision to ensure that the processing and storage
services are cGMP compliant, and confirmation that PCT ready and able to start the processing and storage services. The
terms were met and NeoStem announced on April 15th, 2009 that they will be utilizing Progenitor Cell Therapy, LLC
exclusively for commercial adult stem cells processing and storage operations. PCT agreed to provide to NeoStem, stem
cell processing and long term storage services for NeoStem’s business on an exclusive basis. The services are provided at
both PCT’s California and New Jersey facilities. The agreement is for four years, and is subject to early termination given
a 1 year notice.
Another agreement between the companies was constructed to include NeoStem’s business operations in China. On
December 31, 2009 NeoStem, NeoStem (China), and PCT entered into an agreement where NeoStem and NeoStem
(China) engaged PCT to:
Construct a Beijing Facility, consisting of a clean room for adult stem cell clinical trial processing and other stem
cell collections, which will have the processing capacity on an annual basis sufficient for at least 10,000 samples,
research and development laboratory space, collection and stem cell storage area and offices, together with the
furnishings and equipment.
Effect the installation of quality control systems consisting of materials management, equipment maintenance and
calibration, environmental monitoring and compliance and adult stem cell processing and preservation which
comply with cGMP standards and regulatory standards that would be applicable in the United States under Good
Tissue Practices (GTP) standards, as well as all regulatory requirements applicable to the program under the laws
of the People’s Republic of China (PRC).
The aggregate cost of the program, including the phase 1 equipment purchases, is expected to be approximately $3
million. The project commenced on April 1, 2010, and is anticipated to take until the end of 2010 to complete. NeoStem
has the option to terminate the agreement without cause with 60 days written notice to PCT. Under these circumstances
NeoStem would be required to pay for any services performed up to the date of termination and certain costs and expenses
incurred by PCT. PCT has agreed to provide at least 90 days of support services to NeoStem for an additional fee after
completion of the project, which is renewable at NeoStem's request for an additional 90 days.
Athelos (Progenitor Cell Therapy)
Through it’s acquisition of Progenitor Cell Therapy, LLC, NeoStem gained 80% ownership in Athelos, a private company
developing regulatory T cells (T-reg) as a therapeutic to treat disorders of the immune system. Imbalance of the immune
system is attributed to multiple different diseases and disorders. T-reg therapy represents a new approach to treating these
diseases by restoring balance to the immune system by enhancing T-reg cell number and function. Athelos has a strong IP
position in the T-reg field and has established a consulting relationship with David Horowitz, MD, Chief of the Division
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of Rheumatology and Immunology at the University of Southern California Keck School of Medicine. Pre-clinical and
phase I studies are underway in multiple different indications including T-reg-based therapeutics to prevent and treat Graft
vs. Host Disease, solid organ rejection as well as a broad class of other autoimmune diseases, such as asthma. There are 2
different development initiatives:
Athelos 001- a cord blood or peripheral blood derived T-reg therapy to prevent and treat GvHD and solid organ
rejection
Athelos 002- a peripheral blood derived T-reg therapy for all autoimmune disease
Results from on going trials will determine the next steps in the development of these drug candidates. Though not
included in our model or projections, investors should note that future success in these initiatives could represent potential
upside for NeoStem.
What are Stem Cells?
Stem cells have the ability to grow into different cell types in the body and when a stem cell divides, each new cell can
either remain a stem cell or become another type of cell with a more specialized function, such as a muscle cell, a red
blood cell, or a brain cell.
The two types of stem cells are embryonic and non-embryonic (also called adult stem cells) differ from their origins.
Embryonic stem cells are derived from in vitro fertilized eggs. Because of their early-stage, they are theoretically more
capable of differentiating into any required cell type. The drawbacks to embryonic stem cells are potential for tumors or
teratomas (tumorigenicity) as well as the moral and ethical issues surrounding the source.
In contrast, NeoStem utilizes non-embryonic stem cells (adult stem cells), which are undifferentiated cells within
tissue or organs that can renew and differentiate into some, or all, of the major specialized cell types of the tissue or organ.
The primary roles of adult stem cells are to maintain and repair the tissue in which they are found.
In addition, adult stem cells can be either the patients own (autologous) or donated from someone else (allogeneic).
NeoStem utilizes autologous adult stem cells which eliminates the risk of immune system attack or Graft vs. Host
Disease (GvHD).
Non-Embryonic (Adult Stem Cell) Types and Indications
Stem Cell Type Indication
Hematopoietic These stem cells give rise to all the types of blood cells: red blood cells, B lymphocytes, T lymphocytes, natural
killer cells, neutrophils, basophils, eosinophils, monocytes, and macrophages.
Mesenchymal These stem cells give rise to a variety of cell types: bone cells (osteocytes), cartilage cells (chondrocytes), fat
cells (adipocytes), and other kinds of connective tissue cells such as those in tendons.
Neural These stem cells give rise to its three major cell types: nerve cells (neurons) and two categories of non-neuronal
cells—astrocytes and oligodendrocytes.
Epithelial These stem cells are in the lining of the digestive tract and occur in deep crypts and give rise to several cell
types: absorptive cells, goblet cells, paneth cells, and enteroendocrine cells.
Skin
These stem cells occur in the basal layer of the epidermis and at the base of hair follicles. The epidermal stem
cells give rise to keratinocytes, which migrate to the surface of the skin and form a protective layer. The
follicular stem cells can give rise to both the hair follicle and to the epidermis. Source: U.S. National Institutes of Health (NIH) Resource for Stem Cell Research
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Non-Embryonic (Adult) Stem Cell Differentiation
Source: U.S. National Institutes of Health (NIH) Resource for Stem Cell Research
NeoStem VSEL™ Technology
In the US, in addition to the company’s stem cell banking
business, NeoStem is engaged in research and development of
new therapies based on a specific type of bone marrow derived
adult stem cell called VSEL™ (Very Small Embryonic Like).
The research and development is being conducted in collaboration
with the Stem Cell Biology Program at the James Graham Brown
Cancer Center at the University of Louisville. The head of the
Stem Cell Biology Program, Dr. Mariusz Ratajczak, has shown
that bone marrow contains a natural population of stem cells that
have properties similar to those of embryonic stem cells, and that
these cells can be collected in the peripheral blood in substantial
quantity when a patient has been treated with granulocyte-colony
stimulating factor, also known as Neupogen®.
NeoStem’s VSEL technology identifies and collects circulating
stem cells in the blood that have many physical characteristics typically found in embryonic stem cells using apheresis
flow cytometry. These VSELs are very small in size, around 3.6 μm across. The cells also exhibit specific cell surface
proteins (Oct-4+CXCR4+SSEA-1+Sca-1+CD45-lin-) and possess large nuclei containing unorganized chromatin
(euchromatin). When these cells are place in co-cultures with C2C12 cells, they form embryoid body-like spheres (VSEL-
DSs) that contain primitive stem cells that are capable of differentiating into cells from all three germ layers (e.g.,
myocardium, neural tissue, and pancreas).1 Data from a study by the Univeristy of Louisville and collaborators published
at the 50th annual ASH meeting in late 2008 concluded that VSELs show a similar methylation pattern to progenitor germ
cells (precursors to embryonic stem cells) in very specific regions. It is this similarity that supports their ability to
VSEL™ (Very Small Embryonic Like Stem Cell)
Source: James Graham Brown Cancer Center, University of Louisville
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differentiate in ways analogous to embryonic stem cell differentiation. The scientist went on to further surmise that the
developmental origin of VSEL’s is directly form the epiblast/germ line, stating that that they are deposited during
embryogenesis in the adult
tissues as a backup for tissue
committed stem cells.1
Therefore, VSEL technology
seems to have the potential and
potency of embryonic stem cell
techniques without the moral
and regulatory hangs ups that
accompany the development of
them.
More published studies at the
University of Louisville have
shown that VSEL stem cells
have a role in cardiac
regeneration and may help
identify those at risk for
cardiovascular disease. Both
animal and human studies have
shown that the level or amount
of VSELs in the circulating peripheral blood increases after acute myocardial infarction and other stress inducing events
such as stroke. This suggests that VSELs may be the body’s natural way of repairing damage to many different types of
tissue when called upon by certain stresses and mobilized to the circulating bloodstream. This discovery supports the use
of VSEL’s in therapy for MI and other cardiac indications.
Congruent with the research being preformed and the University of Louisville, NeoStem is performing research of its
own. The Company opened an 8,000 square foot, state-of-the-art facility at the Riverside Technology Center in
Cambridge, Massachusetts on April 27th 2010. This facility will
focus on expanding the current VSEL™ technology; performing
detailed characterization, purification and expansion of the stem
cells. There will also be collection rooms for the harvesting of
Autologous VSELs for storage and private use. Research into the
use of VSEL technology for both therapeutic as well as
diagnostic purposes will be preformed on premises. One specific
diagnostic potential currently under investigation is a stem cell
biomarker screening panel. Such a test would use anti bodies to
quantify levels of several stem cell populations that are known to
be found circulating in the bloodstream, including VSELs. These
levels could then be compared to an age adjusted reference level
of circulating stem cells to give researchers a better indication of
the overall wellness of an individual.
There has been supporting evidence of VSELs effectiveness in treating conditions other than in cardiac indications. A
study published in the Perspectives of Stem Cells found the same correlation of VSEL mobilization to the peripheral blood
in patients following a stroke as previously mentioned in patients experiencing myocardial infarction. What is more is that
there was a positive correlation between the amounts of circulating VSELs found in the patient and the extensiveness of
the stoke, suggesting the possible use of prognostic type of test and the possibility of these cells importance in neural
regeneration.2 On August 11
th, 2010 NeoStem Announced a sponsored research agreement (SRA) with the Schepens Eye
Research Institute, a charitable corporation of Massachusetts and an affiliate of Harvard Medical School. Under the
agreement NeoStem will collaborate with Schepens in research focused on VSEL therapy for both age-related macular
degeneration (AMD) and Glaucoma. The principal investigators are Dr. Michael Young, Ph.D., Director of the Institute's
Minda de Gunzburg Center for Ocular Regeneration, and Dr. Kameran Lashkari, M.D. The research will examine the
VSEL Differentiation into all Three Germ Layers
Source: The National Institutes of Health: Resource for Stem Cell Research
Collection Room at Cambridge Facility
Source: NeoStem, Inc
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regenerative potential of VSEL™ Technology in the visual system through the engraftment of very small embryonic-like
stem cells in animal models.
Reference References 1Shin, Ph.D., Dong-Myung, Mariusz Z. Ratajczak, M.D, Ewa K. Zuba-Surma, Ph.D, and Magdalena Kucia. "The Unique Pattern of
Somatic Imprint in Oct-4+ Very Small Embryonic Like (VSEL) Stem Cells Isolated from Adult Tissues Further Supports Both Their
Epiblast/Germ Line Origin and Explains Quiescent Status: Potential Modification of Somatic Imprint as a Key to Longevity?" Online
Programs and Abstracts. 50th ASH Annual Meeting and Exposition, 8 Dec. 2008. Web.
http://ash.confex.com/ash/2008/webprogram/Paper8719.html 2Ratajczak, Mariusz Z., Ewa Zuba-Surma, Magda Kucia, Przemyslaw Nowacki, and Bogdan Machalinski. "Potential Application of
Very Small Embryonic Like (VSEL) Stem Cells in Neural Regeneration." Perspectives of Stem Cells (2010): 231-43. SpringerLink.
Web. 2 Sept. 2010. http://www.springerlink.com/content/h3nh4261663x1579/
Adult Stem Cell Business in the United States
NeoStem is a leading provider in the U.S. of adult stem cell collection, processing and storage services. The practice of
collecting and storing adult stem cells at a younger age for later autologous use should they be needed has been termed by
the company as a “Bio-Insurance” program. Autologous cells have many advantages to currently used allogenic
procedures most notably being that a patient would have a known quantity of cells that have no risk for rejection or Graft
versus Host Disease (GvHD). NeoStem has focused on a select group of customers initially, concentrating on people who
could potentially benefit from having a supply of their stem cells available for personal therapeutic use, including:
Individuals with a family history of serious diseases
Those at high risk for burns, wounds and other trauma, such as first responders and military personnel
Individuals at occupational risk from prolonged radiation or chemical exposure, such as healthcare
providers, laboratory personnel and nuclear power plant workers
Wellness, cosmetic and anti-aging focused individuals
Athletes and others who could benefit from regenerative therapies
NeoStem has collection center strategically positioned in Southern California and the Northeast, and plans to have 10
centers opened by the end of 2010. The procedure of stem cell collection and storage has both an upfront and a recurring
fee. They charge $7,500 dollars for the stem cell collection, which involves treating the patient with a low-dose, short-
course of mobilizing agent granulocyte-colony stimulating factor, also known as Neupogen™ (for an additional $1,000
fee). Neupogen™ stimulates the migration of the stem cells from the bone marrow into the peripheral blood stream where
they can be collected through a minimally invasive procedure called apheresis. The cells are then processed and sorted
using flow cytometry and stored in multiple vials containing different stem cell types. The process does not change or
alter the underlying cells and does not require expansion technology. There is a recurring fee of $750 per year (if paid
monthly or $699 if paid annually) for the storage of the stem cells. NeoStem uses Progenitor Cell Therapy (PCT) on an
exclusive basis for the storage of all stem cell samples. (see Partnerships)
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United States Department of Defense (DoD) Contracts
NeoStem continues to strengthen its ties to the Department of Defense (DoD) with another possible, and larger, grant for
using VSEL™ technology to treat osteoporosis. This follows their previous DoD contract for rapid wound healing.
Update:
On August 8, 2011 NeoStem announced that the Department of Defense, Peer Reviewed Medical Research Program of
the Office of the Congressionally Directed Medical Research Programs awarded NeoStem $1,780,049 to be applied
towards funding VSEL™ Technology. The award will support investigation of Very Small Embryonic-Like (VSEL) stem
cells, for its bone building and regenerative effects in the treatment of osteoporosis. The award is being made under the
NeoStem’s FY2010 Technology/Therapeutic Development Award application number PR101055.
On July 12th 2010, NeoStem announced it had been awarded a $700,000 contract from the U.S. Army Medical Research
and Materiel Command, Telemedicine and Advanced Technology Research Center (USAMRMC-TATRC). The U.S.
Army Medical Research Acquisition Activity contract number: (W81XWH-10-2-0039) is for the purpose of evaluating
the use of topically applied bone marrow-derived adult mesenchymal stem cells (MSCs) for rapid wound healing.
Development in this field could help save soldiers from amputations and immobilization due to injuries. This First step by
the Department of Defense could represent the beginning of more collaborative projects in regenerative therapy for
combat soldiers including spinal cord injury and retinal damage.
Adult Stem Cell Business in China
NeoStem has made significant progress in commercializing their approved stem cell therapies in China, including
additional sites, pricing and reimbursement allowances.
On December 9, 2010, NeoStem announced that an affiliated entity had entered into an agreement with Shijiazhuang
Third Hospital in the People's Republic of China (PRC) to offer NeoStem's licensed treatments for orthopedic
applications. Shijiazhuang Third Hospital is located in Shijiazhuang, Hebei Province, approximately 170 miles south of
Beijing. Shijiazhuang Third Hospital has 800 beds, 350 of which are dedicated to orthopedics. Shijiazhuang Third
Hospital specializes in orthopedics with extensive experience in spinal, joint, and hand and foot surgeries. It also boasts a
highly regarded orthopedic trauma emergency room.
This follows the November 2, 2010 announcement that Weihai Municipal Price Bureau, the local authority in charge of
pricing for public medical services in China, approved the pricing for single side and bilateral arthroscopic orthopedic
autologous adult stem cell based treatment being administered at Wendeng Orthopedic Hospital ("Wendeng Hospital"),
one of the leading specialist orthopedic hospitals in China based in Wendeng, Shandong Province, China. Additionally,
Weihai Municipal Labor Bureau Medical Insurance Office approved Wendeng Hospital's application for reimbursement
effective November 1, 2010, whereby patients are eligible to receive reimbursement for up to 80% of the cost of the
orthopedic procedure under the new technology category.
Update:
On May 17, 2011 Neostem announced that an affiliated entity has entered into an agreement with Tianjin Nankai Hospital
in the People's Republic of China (PRC) to offer NeoStem's licensed treatments for orthopedic applications. This new
agreement with Tianjin Nankai Hospital is now the third location where Chinese citizens can receive adult stem cell
treatments for arthritis and orthopedic conditions based on technology exclusively licensed by NeoStem for Asia. Nankai
Hospital is located in Tianjin, approximately 80 miles from Beijing, less than a 30 minute ride on the new high-speed
train. Tianjin is a city with a population of over 14 million and has over 400 hospitals. Tianjin Nankai Hospital has
approximately 1,100 patient beds, of which approximately 88 are dedicated to orthopedics. Following the completion of
its planned new hospital building, orthopedic beds are expected to be expanded to approximately 1,000 beds.
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China’s regulatory and scientific environment is more accepting of cellular based therapies. In addition to the more
relaxed regulatory framework, China also has a rapidly expanding upper and middle class that are interested in
regenerative medicine and have the means to pay for such therapies. In 2009, NeoStem began to address this potential
market by creating a separate stem cell business unit. Regulations in the Peoples Republic of China are restrictive to
foreign business. NeoStem created a wholly foreign-owned entity (WFOE), by the name NeoStem (China) Inc. to
alleviate some of these potential restrictions to their business. In addition to the creation of the WFOE the stem cell
business initiates are being conducted via two Chinese domestic entities to further comply with PRC law. Qingdao Niao
Bio-Technology Ltd. and Beijing Ruijieao Bio-Technology Ltd are the domestic entities and are controlled by the WFOE
through various contractual arrangements. All of the stem cell based initiatives in China are being led by US employees
who are utilizing Chinese experts in the respective applications and markets being pursued. The current focuses of the
company include the following initiatives in China:
Developing a pipeline of regenerative medicine therapies initially focused on orthopedic conditions utilizing
licensed procedure, Regenexx™.
Developing wellness, cosmetic and anti-aging applications through in-licensed technology from Vincent
Giampapa, M.D.
Participating in the medical tourism market for regenerative medical treatments.
Establishing a network of collection, processing and storage facilities through a partnership with Enhance
BioMedical Holdings Limited.
Engaging in research and development designed to improve and expand our service and product offerings
Regenexx™ Therapy and the Orthopedic Market
In March 2009, NeoStem acquired an exclusive license for Asia to use the Regenexx™ stem cell procedure, developed by
Colorado-based Regenerative Sciences, Inc. (see Partnerships). The patented procedure uses autologous mesenchymal
stem cell isolated from bone marrow for the treatment of a host of different orthopedic conditions including osteoarthritis,
meniscus tears of the knee, avascular necrosis and bulging lumbar discs. NeoStem plans to utilize there already proven
peripheral blood stem cell collection technique with the Regenexx™, which they feel will only increase the procedures
marketability in the Asian market due to the non-invasive nature of the collection. NeoStem is creating a network of
hospitals in China to provide the Regenexx™ procedure through Qingdao Niao Bio-Technology Ltd, the domestic entity
controlled by the WFOE (see China Corporate Structure). In June 2009, Wendeng Hospital and Qingdao Niao entered
into a five-year agreement to treat patients and conduct clinical research regarding the application of autologous stem cells
for the treatment of a variety of orthopedic conditions. Close to 90% of patients at Wendeng Hospital are seeking medical
attention in the orthopedic field and the hospital is considered to be one of the leading specialty orthopedic hospitals in
China. Personnel at the Wendeng have completed training by Regenerative Sciences, Inc. and operations began in the first
quarter of 2010.
Wellness, Cosmetic & Anti-Aging Applications
In February 2009, NeoStem entered into a world wide exclusive in-licensing agreement from Dr. Vincent Giampapa,
M.D. for autologous adult stem cell based skin rejuvenation therapies. The company plans to advance this regenerative
medicine business in both the United States and China. In the three year agreement, Dr. Giampapa agreed to provide
consulting services in the anti-aging giving guidance on a range of different cosmetic procedures. The procedures were to
be provided at Qingdao Second Sanatorium of Jinan Military Command through Qingdao Niao Bio-Technology Ltd.
Construction related delays at the hospital have prompted NeoStem to explore other options for the initial launch of these
therapies.
Medical Tourism
Medical tourism represents a significant potential source of revenue for NeoStem, as the trend of people traveling outside
of their country for access to medical therapies not currently available or affordable at home is projected to continue to
rise. In 2007, 750,000 Americans traveled outside of the US in order to undergo medical procedures. The World Bank
estimates that number could increase to 6 million by 2010 and the market world wide to be as large as 10 billion by 2011.
China has become and is continuing to become a desirable destination for patients seeking procedures in a diverse range
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of medical specialties. Both private and government hospitals in major Chinese cities have begun to capitalize on this
trend by establishing medical tourism departments to provide treatment to international patients using advanced Western
medical technology and techniques, including stem cell-based therapies. NeoStem plans to use this Chinese development
as both a driver for their stem cell collection business as well as their stem cell therapy businesses.
Stem Cell Collection and Storage Business
In June 2009, NeoStem entered into a ten-year, exclusive, royalty bearing agreement with Enhance BioMedical Holdings
Limited to develop an adult stem cell collection and treatment network of doctors and hospitals in Shanghai, Taiwan, and
the Chinese provinces of Jiangsu, Zhejiang, Fujian, Anhui and Jiangxi (Network Territory). Enhance BioMedical
Holdings Limited is a Shanghai corporation and a subsidiary of Enhance Holding Corporation, a multinational
conglomerate. Under the terms of the Agreement, NeoStem will provide Enhance BioMedical with the training, technical,
and other assistance required for it to offer stem cell-based therapies, for which the company will receive a six figure
technical assistance fee. After training is completed, the agreement gives Enhance BioMedical the exclusive right to
utilize NeoStem’s proprietary adult stem cell technologies to provide adult stem cell services and therapies in the
territories aforementioned. NeoStem will receive milestone payments and royalties on gross revenues derived from stem
cell based therapies from Enhance BioMedical. Subject to certain conditions, the agreement is renewable at the option of
Enhance BioMedical for an additional 10 years. The agreement also gives NeoStem the option to acquire up to a 20%
fully diluted equity interest in Enhance BioMedical until June 2014.
Enhance BioMedical already has relationships with doctors and hospitals in the territories covered in the agreement, and
also the Anti-Aging and Prevention Medical Center in Taipei, Taiwan. The Anti-Aging and Prevention Medical Center
focuses on the development of stem cell bases anti aging therapies and could principally benefit from the technology in-
licensed from Dr. Giampapa (See Wellness, Cosmetic & Anti-Aging Applications).
Research and Development
In May 2009, NeoStem through Qingdao Niao Bio-Technology Ltd., leased space from Beijing Zhongguancum Life
Science Park Development Corp., Ltd at the Life Science Innovation Center, Life Science Park, in Zhongguancum,
Beijing. The Facility is to be used for collection, processing and storage of adult stem cells as well as research and
development of cellular based therapies in China. The facility will support the development of the Regenexx™ procedure
at Wendeng Hospital. In addition to the therapies currently being pursued commercially in China, NeoStem will also be
conducting research on their VSEL technology at the Beijing Facility that could include their therapeutic use in neural,
cardiac and ophthalmic disease. In order to conduct cell-based clinical trials in collaboration with specialty hospitals,
NeoStem was required under PRC law to form a not-for-profit organization. In July 2009, NeoStem entered into a
cooperation agreement with their Chinese consultant, Shandong Life Science and Technology Research Institute (SLSI)
for assistance in the formation of the NPO. The organization was funded by NeoStem in the amount of 730,000 dollars
and another 500,000 dollars of funding is expected in the near future. NeoStem entered into an agreement Progenitor Cell
Therapy, LLC for the construction of the Beijing Facility on December 31, 2009 (see Partnerships)
China Corporate Structure & Suzhou Erye Pharmaceuticals Businesses
NeoStem China Corporate Structure
NeoStem has 2 business units in China, their China pharmaceutical business unit which owns 51% in Suzhou Erye
Pharmaceuticals Company and their China adult stem cell business unit conducted their wholly foreign-owned entity
(WFOE) NeoStem (China) with two Variable Interest Entities (VIE) Qingdao Niao Bio-Technology Ltd. and Beijing
Ruijieao Biotechnology Ltd.
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NeoStem China Corporate Structure & Ownership
VIE = Variable Interest Entities Source: NeoStem Inc. & LifeTech Capital
China Adult Stem Cell Business
Due to PRC restrictions on foreign entities from conducting certain activities, NeoStem operates the stem cell business
through NeoStem (China), a wholly foreign-owned entity (WFOE). To comply with China’s foreign investment
prohibition on stem cell research and development, this business is conducted via two Variable Interest Entities (VIEs)
Qingdao and Beijing Ruijieao under which NeoStem (China) is providing technical and management services to the VIEs
in exchange for substantially all net income of the VIEs. One VIE will be devoted to adult stem cell related research and
development activities and the other will be devoted to the commercialization of stem cell-based therapies in collaboration
with hospitals.
Also due to PRC restrictions, NeoStem (China) with their China consultant, SLSI, is forming a not-for-profit organization
to conduct various clinical trials in China. SLSI has taken responsibility for establishing and structuring clinical trials with
third parties, other research institutes and a number of partner hospitals.
China Pharmaceutical Business
On October 30, 2009, NeoStem completed a merger with China Biopharmaceuticals Holdings (CBH) resulting in a 51%
controlling interest in Suzhou Erye Pharmaceuticals Company (Erye). The remaining 49% ownership is represented by
Suzhou Erye Economy and Trading Co. (EET) through a joint venture agreement.
Suzhou Erye Pharmaceuticals Business
Suzhou Erye Pharmaceuticals (Erye) was founded over 50 years ago and is a vertically-integrated pharmaceutical
business, focused primarily on the manufacturing and sale of antibiotics. Specifically, Erye focuses on manufacturing and
distribution of generic antibiotic products and has received more than 160 production certificates from China’s State Food
& Drug Agency (SFDA) covering both antibiotic prescription drugs and active pharmaceutical ingredients (APIs). 2009
revenue was over $60 million (unaudited) with approximately 536 full-time and 209 part-time employees of December
31, 2009.
Update - Possible Sale of Eyre Pharmaceuticals
Following their January 2011 acquisition of PCT, NeoStem is pursuing strategic alternatives with respect to its 51%
interest in Erye. NeoStem is planning to devote its resources and management efforts to cell therapy manufacturing and
development, and other related activities, including adult stem cell collection and storage, and in further developing their
regenerative medicine business in China. NeoStem believes that the proposed acquisition of Amorcyte is in keeping with
NeoStem’s strategic mission. NeoStem also believes that if they could monetize Erye, NeoStem would have additional
capital needed to pursue the development of multiple cell therapies. As such, in June 2011, NeoStem engaged a financial
advisor to lead the effort to pursue the possible divesture of its 51% interest in Erye. Marketing efforts have commenced
however it is too early to determine whether such efforts will lead to a proposal to purchase at a price and on terms that
NeoStem would consider acceptable or whether, in the event a proposal or proposals on prices and terms acceptable to
NeoStem are received, whether a transaction would be completed. More information can be found in their 8-K (page 42)
at: http://www.sec.gov/Archives/edgar/data/320017/000114420411040514/v228561_8k.htm
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Pharmaceutical Products
Erye offers a highly diversified portfolio of pharmaceuticals with no single drug accounting for more than 10% of sales.
Erye’s top 10 products in sales for 2010 are shown below:
Erye Top Ten Drugs in 2010 (37% of Total Sales) % of Sales
Acetylspiramycin 5%
Cefamandole Natate for injection (0.5g) 4%
Oxacillin Sodium 4%
Amoxicillin/Sulbactum Sodium for injection 4%
Cefamandole Natate for injection (1.0g) 4%
Mezlocillin sodium for injection 4%
Amoxicillin & Clavulanate Potassium sodium 3%
Azlocillin sodium 3%
Ceftizoxime sodium for injection (0.5g) 3%
Ceftizoxime sodium for injection (1.0g) 3% Source: NeoStem Inc.
It should be noted that currently, approximately 70% of their drug products are covered by insurance, and which is
expected to grow in the future.
New Pharmaceutical Pipeline
Erye also has a pipeline of recently approved pharmaceuticals, submitted pharmaceuticals and candidates currently in
clinical trials as show:
ERYE PHARMACEUTICAL PIPELINE
Status Indication Drug
Approved – Launch Pending GERD Omeprazol Capsules
Approved – Launch Pending Anti-Infective Cloxacillin Sodium
Awaiting Approval Antibiotic Clindamycin Phosphate Injection
Awaiting Approval HBV/HIV Adefovi Capsules & API
Clinical Trials Anti-Infective Faropenem sodium API
Clinical Trials Anti-Infective Faropenem Sodium Tablets
Clinical Trials HBV Tiopronin Enteric-Coated Capsules Source: NeoStem Inc.
Distribution Channels
In China, pharmaceutical manufacturers are prohibited from selling directly to hospitals where the majority of
prescriptions are written. Erye has a distributor network that that covers all of mainland China’s provinces and
municipalities. Erye has over 40 internal sales and marketing personnel to supervise the distributor network through three
channels: exclusive distributors for newer higher-margin prescription drugs, non-exclusive distributors for mature, lower-
margin prescription drugs and exclusive distributors for active pharmaceutical ingredient sales to large pharmaceutical
manufacturers.
Manufacturing Erye currently operates a production facility in the City of Suzhou, containing approximately 33,490 square meters of
offices, dormitories, a food court, warehouse and production facilities, including 8 cGMP production lines certified by the
SFDA, workshops and laboratory areas. Erye is currently transitioning to a new, state-of-the-art production facility in the
Xiangcheng District of Suzhou. The new facility includes 12 buildings containing a total of approximately 53,000 square
meters of space, for which the external building construction has been completed and manufacturing equipment is being
assembled and tested. Erye began transferring its operations in January 2010 and received notification that the SFDA has
approved the cGMP certification to manufacture solvent crystallization sterile penicillin and freeze dried raw sterile
penicillin at the new facility. Erye’s goal is to become one of the largest antibiotics producers in Eastern China.
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Update:
On April 26, 2011 NeoStem announced their majority-owned Suzhou Erye Pharmaceutical Company received 2 awards at
the 4th annual Chempharm Brand Summit 2011 in China where companies in the pharmaceutical industry are recognized
for outstanding achievement in specific categories. Specifically, Erye Pharmaceutical was awarded "Top 10 Anti-Infection
Drug Award" and "Top 100 Brand Names Award".
On June 13, 2011 Neostem announced that Erye Pharmaceutical had received approval from the State Food and Drug
Administration (SFDA) in China for its lyophilized (freeze dried) powder for injection production line which is
responsible for the production of over 20 finished pharmaceutical products, 80% of which are on the National Insurance
Drug List. The combined production lines now certified by the SFDA are six of eight planned and were responsible for
approximately 99% of Erye’s 2010 revenues. Approvals for the 2 remaining product lines (the oral active pharmaceutical
ingredient (API) line and the capsule line) are expected by year end. The approval of this cGMP product line importantly
removes the capacity constraints associated with old Erye manufacturing facility.
Erye Pharmaceuticals Facilities and Planned Campus
Source: NeoStem Inc.
NeoStem and Vatican Pontifical Council Initiative on Adult Stem Cells
On May 19, 2010 NeoStem and the Vatican's Pontifical Council for Culture announced a joint initiative with their
charitable foundations to expand research and raise awareness of adult stem cell therapies. NeoStem's Stem for Life
Foundation and the Pontifical Council's STOQ (Science Theology and the Ontological Quest) International foundation,
will work on collaborative activities advancing scientific research on adult stem cells, exploring clinical applications in
regenerative medicine and the cultural relevance on theological and ethical issues. Reverend Tomasz Trafny, of the
Pontifical Council for Culture stated “We are particularly excited about NeoStem's VSEL™ technology and believe that
mutual collaboration between NeoStem and the Pontifical Council for Culture could lead to significant financial
commitment to support VSEL™ technology research."
A 3-day international conference at the Vatican on adult stem cell research, including VSEL™ technology, is planned for
2011 and will focus on medical research presentations and theological and philosophical considerations and implications
of scientific achievements.
Update:
NeoStem and the Vatican's Pontifical Council for Culture announced more details regarding their partnership designed to
advance adult stem cell research and their upcoming signature event, the international Vatican conference on adult
stem cells which will be held November 9th
– 11th
at the Vatican.
The conference will include the foremost experts in adult stem cell research and recognized leaders in medicine as well as
Church and scientific leaders, policymakers, ethicists, educators, Ministers of Health from around the world, ambassadors
to the Holy See, and representatives of the stem cell therapeutic business community. The conference goal is to create a
greater awareness of adult stem cells and their promise and discuss the latest research and developments along with the
implications for the future of culture, medicine, religion, and public policy. The event will also be broadcast via radio and
television. The conference website can be accessed at www.adultstemcellconference.org
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NeoStem's charitable organization, “Stem for Life Foundation” and the Pontifical Council's Foundation, STOQ
International (Science Theology and the Ontological Quest) are also sponsors of the efforts. More information on these
can be found at www.stemforlifefoundation.com and www.stoqinternational.org
The joint mission of the partnership, with the complete support of the Pontifical Council for Health Care Workers and the
Pontifical Academy for Life, will be to:
1) Foster the highest levels of scientific research on adult stem cells and to explore the cultural, ethical and human
implications of their use.
2) Seek to create awareness about the promise of scientific research in concordance with ethical values through the further
development of adult stem cell technology.
3) Determine short-term and long-term actions which political, scientific, educational, and religious leaders can take to be
part of the cultural paradigm shift arising from the next wave - regenerative medicine.
4) Lay the groundwork for a collaborative network of scientists and patrons who embrace the promise of adult stem cells
to reduce human suffering, advance scientific research on adult stem cells and explore their clinical application in the field
of regenerative medicine, as well as the cultural impact of such research.
5) Advance adult stem cell research and facilitate its safe transformation from the lab to the clinic.
Partnerships
University of Louisville
NeoStem is engaged in research and development of new therapies based on VSEL technology with the University of
Louisville Research Foundation, or ULRF, and has a worldwide exclusive license rights. The agreement was previously
made with Stem Cell Technologies, Inc. (SCTI). SCTI was acquired by NeoStem in November of 2007. Under the
License Agreement, The Company agreed to engage in a diligent program to develop the VSEL technology. Certain
license fees and royalties are to be paid to University of Louisville Research Foundation (“ULRF”) by NeoStem, and the
Company is responsible for all payments for patent filings and related applications. The Agreement has an initial term of
20 years and portions of the license may become non-exclusive if NeoStem does not diligently develop the VSEL™
technology. The Agreement can be terminated entirely if NeoStem chooses to not pay for the filing and maintenance of
any patents. The License Agreement calls for the following specific payments:
Reimbursement of $29,000 for all expenses related to patent filing and prosecution incurred before the effective
date (“Effective Date”) of the license agreement
Non-refundable prepayment of $20,000 creditable against the first $20,000 of patent expenses incurred after the
Effective Date
Non-refundable license issue fee of $46,000
Non-refundable annual license maintenance fee of $10,000 upon issuance of the licensed patent in the United
States
Royalty of 4% on net sales
Specified milestone payments
Specified payments in the event of sublicensing.
The agreement was amended February 2009 and items 2 and 3 were paid in March 2009. The License Agreement contains
certain provisions relating to "stacking," permitting NeoStem to pay royalties to ULRF at a reduced rate in the event it
is required to also pay royalties to third parties exceeding a specified threshold for other technology in furtherance of
the exercise of its patent rights or the manufacture of products using the VSEL technology.
Regenerative Sciences, Inc.
In March 2009, NeoStem acquired an exclusive license for Asia to use the RegenexxTM stem cell procedure.
RegenexxTM was developed by Colorado-based Regenerative Sciences, Inc. and is an innovative process that expands a
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patient’s own adult stem cells to treat a variety of musculoskeletal diseases. The licensed procedure uses autologous
mesenchymal stem cells extracted from bone marrow for the treatment of various orthopedic conditions, including
osteoarthritis, meniscus tears of the knee, avascular necrosis and bulging lumbar discs. Under the Terms of the
agreement, RSI must provide consulting services to NeoStem in the area of stem cell-based orthopedic therapies for the
Asia market. The company feels that the integration of peripheral blood collection processes (instead of invasive bone
marrow collection) into the RegenexxTM procedure will enhance its marketability in the Asian market.
Immuneregen Biosciences
On April 22, 2010 NeoStem entered into a Collaborative Research Agreement with ImmuneRegen BioSciences, Inc., a
wholly owned subsidiary of IR BioSciences Holdings, Inc. (IRBS.OB). The Agreement is focused on the development of
ImmuneRegen’s advanced, adult human stem cell product called Homspera®. Under the agreement, NeoStem will
investigate the effects of Homspera®, which has been shown to enhance stem cell activity, in combination with
NeoStem's VSEL technology. Under the collaboration, NeoStem has the right to execute an option agreement to negotiate
an exclusive license to resulting technology.
Enhance BioMedical Holdings Limited
In June 2009, NeoStem entered into a ten-year, exclusive, royalty bearing agreement with Enhance BioMedical Holdings
Limited, a Shanghai corporation and a subsidiary of Enhance Holding Corporation, a multinational conglomerate. The
Agreement is to develop an adult stem cell collection and treatment network of doctors and hospitals in Shanghai, Taiwan,
and the Chinese provinces of Jiangsu, Zhejiang, Fujian, Anhui and Jiangxi (Network Territory). Under the terms of the
Agreement, NeoStem will provide Enhance BioMedical with the training, technical, and other assistance required for it to
offer stem cell-based therapies, for which the company will receive a six figure technical assistance fee. After training is
completed, the agreement gives Enhance BioMedical the exclusive right to utilize NeoStem’s proprietary adult stem cell
technologies to provide adult stem cell services and therapies in the territories aforementioned. NeoStem will receive
milestone payments and royalties on gross revenues derived from stem cell based therapies from Enhance BioMedical.
Subject to certain conditions, the agreement is renewable at the option of Enhance BioMedical for an additional 10 years.
The agreement also gives NeoStem the option to acquire up to a 20% fully diluted equity interest in Enhance BioMedical
until June 2014.
Enhance BioMedical already has relationships with doctors and hospitals in the territories covered in the agreement, and
also the Anti-Aging and Prevention Medical Center in Taipei, Taiwan. The Anti-Aging and Prevention Medical Center
focuses on the development of stem cell bases anti aging therapies and could principally benefit from the technology in-
licensed from Dr. Giampapa (See Wellness, Cosmetic & Anti-Aging Applications).
In addition to being a partner with NeoStem, Enhance BioMedical is also a large share holder in the company as well. The
companies CEO, Jack Ling, invested $5M in an $11M April 13th, 2009 private placement financing. As of March 15,
2010, Enhance BioMedical owned approximately 16.7% of NBS common stock
Intellectual Property
NeoStem has a number of patents and patent applications as shown below. We expect additional patent applications will
be filed in the future as development progresses.
NUMBER DESCRIPTION FILED
Selected NeoStem UNITED STATES Intellectual Property Filings
7414021 Method and Compositions for Restoration of Age Related Tissue Loss
in the Face or Selected Areas of the Body
Granted
8/19/08
11/396,238 Elective Collection and Banking of Autologous Peripheral Blood Stem
Cells 3/30/06
11/763,655 Processing Procedure for Peripheral Blood Stem Cells 6/15/07
61/266,825 Mesenchymal Stem Cells Isolated from Mobilized Peripheral Blood 12/04/09
61/266,860 Method of Isolation of Stem Cell Populations from Peripheral Blood
Using Size-Based Separation 12/4/09
12/096,754 Very Small Embryonic-Like Stem Cells and Methods of Isolating and 11/02/06
NeoStem, Inc. (NBS) Page 20
www.LifeTechCapital.com August 24, 2011
Using the Same
12/261,958 Very Small Embryonic-Like Stem Cells and Methods of Isolating and
Using the Same 10/30/08
PCT/US2008/081832 Transplantation of Very Small Embryonic-Like Stem Cells for Cardiac
Repair Following Myocardial Infarction 10/30/08
PCT/US2009/005414 Methods for Isolating Very Small Embryonic-Like Stem Cells from
Cord Blood 9/30/09
61/039,941
Autologous Bone Marrow-Derived Cultured Mesenchymal Stem Cells
Delivered in a Fibrin Spray Accelerate Healing in Murine and Human
Cutaneous Wounds
3/27/07
12/413,250
Autologous Bone Marrow-Derived Cultured Mesenchymal Stem Cells
Delivered in a Fibrin Spray Accelerate Healing in Murine and Human
Cutaneous Wounds
3/27/09
PCT/US2009/038666
Autologous Bone Marrow-Derived Cultured Mesenchymal Stem Cells
Delivered in a Fibrin Spray Accelerate Healing in Murine and Human
Cutaneous Wounds
3/27/09
12/218,334 Method and Compositions for Restoration of Age Related Tissue Loss
in the Face or Selected Areas of the Body 7/14/08
61/175,275 Method and Composition for Restoration of Age Related Tissue Loss
in the Face or Selected Areas of the Body 5/04/09
60/761,441 Mesenchymal Stem Cell Isolation and Transplantation Method and
System to be Used In a Clinical Setting 1/24/06
PCT/US2007/60889 Mesenchymal Stem Cell Isolation and Transplantation Method and
System to be Used In a Clinical Setting 1/23/07
12/161,911 Mesenchymal Stem Cell Isolation and Transplantation Method and
System to be Used In a Clinical Setting 11/07/08
11/773,774 Methods and Compositions for Optimized Expansion and Implantation
of Menechymal Stem Cells 7/05/07
PCT/US2008/68202 Methods and Compositions for Optimized Expansion and Implantation
of Menechymal Stem Cells 6/25/08
61/014,987 Compositions to Promote Implantation and Engraftment of Stem Cells 12/19/07
PCT/US2008/87452 Compositions to Promote Implantation and Engraftment of Stem Cells 12/18/08
61/036,551 Compositions and Method for Cartilage Repair 3/14/08
PCT/US2009/037126 Compositions and Method for Cartilage Repair 3/13/09
61/120,098 Methods and Compositions for Intervertabral Disc Repair 12/05/08
61/154,874 Methods and Compositions for Intervertabral Disc Repair 2/24/09
Selected NeoStem EUROPE Intellectual Property Filings
07809600.95 Processing Procedure for Peripheral Blood Stem Cells 6/15/07
06827358.0 Very Small Embryonic-Like Stem Cells and Methods of Isolating and
Using the Same 11/02/06
07762515.0 Mesenchymal Stem Cell Isolation and Transplantation Method and
System to be Used In a Clinical Setting 1/23/07
Selected NeoStem CHINA Intellectual Property Filings
200780030328.6 Processing Procedure for Peripheral Blood Stem Cells 6/15/07
200680052508.X Very Small Embryonic-Like Stem Cells and Methods of Isolating and
Using the Same 11/02/06
Selected NeoStem CANADA Intellectual Property Filings
2548580 Elective Collection and Banking of Autologous Peripheral Blood Stem
Cells 4/05/04
2640185 Mesenchymal Stem Cell Isolation and Transplantation Method and
System to be Used In a Clinical Setting 1/23/07
Selected NeoStem HONG KONG Intellectual Property Filings
09103392.9 Mesenchymal Stem Cell Isolation and Transplantation Method and
System to be Used In a Clinical Setting 1/23/07
Source: NeoStem, Inc
NeoStem, Inc. (NBS) Page 21
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Recent Financing Activity
On July 22, 2011, NeoStem completed an underwritten offering of 13,750,000 units at a purchase price of $1.20 per unit
yielding gross proceeds of $16.5M with each unit consisting of one share of Common Stock and a five year warrant to
purchase 0.75 of a share of Common Stock (10,312,500 shares) at an exercise price of $1.45 per share.
On July 14, 2011, the NeoStem announced their intention to acquire Amorcyte, Inc. and will issue 6,821,283 shares of
common stock plus warrants to purchase 1,881,008 shares of NeoStem common stock. In addition, 4,092,768 shares of
NeoStem stock will vest upon achievement of AMR-001 milestones. Amorcyte shareholders will receive additional
consideration in the form of an earn-out upon commercialization. The closing of the merger is subject to approval by
NeoStem and Amorcyte stockholders.
On April 5, 2011, NeoStem completed a private placement with nine persons and entities of 1,244,375 shares of Common
Stock at a purchase price of $1.28 for gross proceeds of $1.6M.
On March 3, 2011, NeoStem completed a private placement of 2,343,750 shares of Common Stock at a purchase price of
$1.28 a share for gross proceeds of $3M. Five persons and entities were involved in the private placement including
Steven S. Myers, a NeoStem director who purchased 390,625 shares, and Dr. Andrew L. Pecora, Chief Medical Officer of
NeoStem’s subsidiary PCT who purchased 78,125 shares
PCT Acquisition Transaction Summary
On January 19, 2011 NeoStem completed its acquisition of Progenitor Cell Therapy, LLC. NeoStem acquired all of the
membership interests of PCT, and PCT is now a wholly-owned subsidiary of NeoStem. NeoStem issued 10.6M shares of
common stock for the acquisition. In addition, there are warrants to purchase between 1M and 3M shares of NeoStem
Common Stock, based on the following:
(i) common stock purchase warrants to purchase 1,000,000 shares of NeoStem Common Stock exercisable over a
seven year period at an exercise price of $7.00 per share (the “$7.00 Warrants”), and which will vest only if a
specified business milestone is accomplished within three (3) years of the closing date and
(ii) if the volume weighted average of the closing prices of sales of NeoStem Common Stock on the NYSE-Amex
for the three (3) trading days ending on the trading day that is two (2) days prior to the Closing Date is less than
$2.50, common stock purchase warrants to purchase 1,000,000 shares of NeoStem Common Stock exercisable
over a seven year term at an exercise price of $3.00 per share (the “$3.00 Warrants”); and
(iii) if the Parent Per Share Value is less than $1.70, common stock purchase warrants to purchase 1,000,000
shares of NeoStem Common Stock exercisable over a seven year period at an exercise price of $5.00 per share
(the “$5.00 Warrants” and, collectively with the $7.00 Warrants and the $3.00 Warrants, the “Warrants”).
On November 19, 2010, NeoStem, completed concurrent offerings of (i) an underwritten offering of 6,337,980 common
stock units at a purchase price of $1.45 per unit, with each unit consisting of one share of common stock par value $0.001
and a warrant to purchase 0.5 of a share of common stock with an exercise price of $1.85 per share, and (ii) a registered
direct offering of 10,582,011 preferred stock units at a purchase price of $0.945 per unit, with each unit consisting of one
share of Series E 7% Senior Convertible Preferred Stock, par value $0.01 per share, convertible at $2.0004, maturing May
20, 2013; a warrant to purchase 0.25 of a share of common stock with an exercise price of $2.0874 per share; and 0.0155
of a share of common stock.
As of June 30, 2011, there were 23.6 million warrants to purchase shares outstanding with a weighted average price of
$2.70, a weighted average remaining life of 3.7 years as shown in the table. Also as of June 30, 2011, there were 16
million stock options issued with a weighted average price of $1.76 and a weighted average remaining life of 7.7 years
under the U.S. Equity Plan. Of these, 8.1 million stock options were vested and exercisable as of June 30, 2011.
Additionally, as of June 30, 2011, there were 3.1 million stock options issued with a weighted average price of $1.95 and
a weighted average remaining life of 8.8 years under the Non-U.S. Equity Plan. Of these, 817K stock options were vested
and exercisable as of June 30, 2011. Finally, as of August 10, 2011, there were 98,048,447 shares common stock
outstanding.
NeoStem, Inc. (NBS) Page 22
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Management
Dr. Robin L. Smith, Chairman and CEO: Dr. Smith joined the Company as Chairman of its Advisory Board in
September 2005 and, effective June 2, 2006, became the Chief Executive Officer and Chairman of the Board. Dr. Smith,
who received a medical degree from Yale University in 1992 and a master's degree in business administration from the
Wharton School in 1997, brings to the Company extensive experience in medical enterprises and business development.
From 2000 to 2003, Dr. Smith served as President & Chief Executive Officer of IP2M, a multi-platform media company
specializing in healthcare. During her term, the company was selected as being one of the 10 fastest growing technology
companies in Houston. IP2M was sold to a publicly-traded company in February 2003. Previously, from 1998 to 2000,
she was Executive Vice President and Chief Medical Officer for HealthHelp, Inc., a National Radiology Management
company that managed 14 percent of the healthcare dollars spent by large insurance companies.
Dr. Smith has acted as a senior advisor and investor to both publicly traded and privately held companies where she has
played a significant role in restructuring and or growing the companies. Dr. Smith served on the Board of Directors of two
privately held companies, Talon Air and Biomega, and also served on the Chemotherapy Foundation Board of Trustees
and The New York Theatre Ballet. She currently serves on the Board of Trustees of the NYU Medical Center Board, is
past Chairman of the Board of Directors for the New York University Hospital for Joint Diseases where she headed up
new development efforts and board member recruitment, and served on the Board of Choose Living. Dr. Smith is the
President and serves on the Board of Directors of The Stem for Life Foundation.
Larry A. May, CFO: Mr. May, the former Treasurer of Amgen (NasdaqGS: AMGN), one of the world’s largest
biotechnology companies, initially joined NeoStem to assist with licensing activities in September 2003. He became an
officer upon our acquisition of the business of NS California in January 2006. For the last 25 years, Mr. May has worked
in the areas of life sciences and biotechnology. From 1983 to 1998, Mr. May worked for Amgen as Corporate Controller
(1983 to 1988), Vice President/Corporate Controller/Chief Accounting Officer (1988 to 1997), and Vice
President/Treasurer (1997 to 1998). At Amgen, Mr. May helped build Amgen’s accounting, finance and IT organizations.
From 1998 to 2000, Mr. May served as the Senior Vice President, Finance and Chief Financial Officer of Biosource
International, Inc., a provider of biologic research reagents and assays. From 2000 to May 2003, Mr. May served as the
Chief Financial Officer of Saronyx, Inc., a company focused on developing productivity tools and secure communication
systems for research scientists. From August 2003 to January 2005, Mr. May served as the Chief Financial Officer of NS
California. In March 2005, Mr. May was appointed CEO of NS California and in May 2005 he was elected to the Board
of Directors of NS California. He received a Bachelor of Science degree in Business Administration & Accounting in
1971 from the University of Missouri.
Joseph Talamo, VP Corporate Controller and Chief Accounting Officer: Mr. Talamo formerly held various senior
positions at OSI Pharmaceuticals, Inc., a publicly-traded biopharmaceutical company focused on discovering, developing
and commercializing products for the treatment of cancer, diabetes and obesity, and most recently served as its Vice
President and Corporate Controller. While at OSI from 1996 to 2010, Joe helped build the accounting and finance
infrastructure to support the clinical development and commercial launch of Tarceva®, OSI's targeted therapy approved
for the treatment of patients with non-small cell lung cancer and pancreatic cancer. Prior to OSI, Joe worked at Bristol-
Myers Squibb from 1995 to 1996 in the Financial Reporting and Consolidations Group, and at KPMG from 1993 to 1995
in the Health Care and Life Sciences Audit Group. Joe also served as Treasurer of OSI Pharmaceuticals Foundation from
2008 to 2010.
Catherine M Vaczy, VP and General Counsel: Ms. Vaczy joined NeoStem in April 2005 as Vice President and General
Counsel and is responsible for overseeing our legal affairs. From 1997 through 2003, Ms. Vaczy held various senior
positions at ImClone Systems Incorporated, a then publicly-traded company developing a portfolio of targeted biologic
treatments to address the medical needs of patients with a variety of cancers, most recently as its Vice President, Legal
and Associate General Counsel. While at ImClone (NasdaqGS: IMCL), Ms. Vaczy served as a key advisor in the day-to-
day operation of the company and helped forge a number of important strategic alliances, including a $1 billion co-
development agreement with Bristol Myers Squibb (NYSE: BMY) for Erbitux® and ImClone’s targeted therapy approved
for the treatment of metastatic colorectal and head and neck cancers. From 1988 through 1996, Ms. Vaczy served as a
corporate attorney advising clients in the life science industry at the New York City law firm of Ross & Hardies. Ms.
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Vaczy is Secretary and serves on the Board of Directors of The Stem for Life Foundation. Ms. Vaczy received a Bachelor
of Arts degree in 1983 from Boston College and a Juris Doctor from St. John’s University School of Law in 1988.
Dr. Alan G. Harris M.D., Ph.D., Vice President of Regenerative Medicine, Drug Development and Regulatory
Affairs: Dr. Harris has been NeoStem’s Vice President of Regenerative Medicine, Drug Development and Regulatory
Affairs since July 2009. In June 2009, Dr. Harris was a consultant to NeoStem, providing strategic advice in connection
with NeoStem’s research and development initiatives. Prior to joining NeoStem, he was Senior Vice President and Chief
Medical Officer of NPS Pharmaceuticals Inc, a Biotechnology Company focused on the development of therapeutics for
rare gastrointestinal and endocrine disorders with high-unmet medical needs. From February 2006 to December 2007 he
was Chief Medical Officer of Manhattan Pharmaceuticals, Inc., a specialty healthcare product company focused on
developing products for obesity and psoriasis. Prior to this, from January 2004, Dr. Harris was head of the Worldwide
Medical Endocrine Care group at Pfizer, Inc. (NYSE: PFE) in New York City, where he oversaw the Medical Affairs
clinical development of the growth hormone Genotropin® for the treatment of pediatric short stature conditions and of
GH deficiency in adults, Pegylated GH antagonist Somavert®, for the treatment of GH producing tumors. Prior to Pfizer
he served in a number of capacities at Schering-Plough Corporation (Kenilworth, NJ) from 1995 to 2003, most recently as
vice president, Global Healthcare Research & Outcomes, where he represented the Medical Affairs Department at
Schering Plough in the joint venture with Merck in the clinical development of the novel cholesterol absorption inhibitor
medication, ezetimibe (Zetia®). Other responsibilities at Schering-Plough included Medical Affairs research in products
(Claritin®, Nasonex®, Asmanex®) for the treatment of allergic conditions and asthma, Hepatitis C (Peg-Intron®) and
Cardiovascular and Metabolic diseases. During his tenure at Sandoz (Novartis) Pharmaceuticals in Basel, Switzerland
(1984-1991), Dr. Harris headed the clinical development of the first long-acting somatostatin analog, octreotide
(Sandostatin®), approved worldwide for the treatment of hormone producing gastrointestinal endocrine tumors
(carcinoids, VIPomas) and growth hormone producing tumors (acromegaly). Dr Harris received an M.D. degree cum
laude from the Louis Pasteur Faculty of Medicine, University of Strasbourg, France and a Ph.D. in Endocrinology from
Erasmus University, Rotterdam, The Netherlands. He is currently an adjunct professor of medicine at New York
University Medical School and visiting professor of medicine in the Department of Endocrinology at Liege University
Medical School, Belgium and in the Department of Pharmacology and Clinical Toxicology at the University Hospital of
Lausanne, Switzerland. Dr. Harris is a Fellow of the American College of Physicians, the Royal College of Physicians
(UK). Dr. Harris was Associate Professor of Medicine of UCLA School of Medicine, Director of the Division of Clinical
Pharmacology in the Department of Medicine with a joint appointment as Medical Director of the Department of
Technology Development and Transfer and Clinical Trials at Cedars-Sinai Medical Center/UCLA School of Medicine,
Los Angeles (1992-1994). He was co-chairman of the R&D Sub Committee of the Biotechnology Industry Organization
(BIO) (1992-1998) and has served on the NIH Center for Scientific Review Special Emphasis Panel for Clinical
Cardiovascular Sciences Study Section from 1998 – 2002. Dr. Harris served on the editorial boards of several
international peer reviewed medical journals and has authored 120 peer reviewed scientific papers.
Anthony Salerno, Vice President, Strategic Development and Academic Affairs: Mr. Salerno joined NeoStem in
August, 2009 and has more than 25 years of experience as an executive and entrepreneur in the life sciences industry.
From 2008 to 2009, he served as Vice President Strategic Business Development with GenomeQuest, Inc., where he was
responsible for guiding their entry into the next-generation DNA sequencing bioinformatics market. From 2002 through
2007, Mr. Salerno was Director, Market and Business Intelligence with Agilent Technologies, Inc. (NYSE: A) where he
built and managed a global team charged with providing strategic insights to their $2 billion Life Science and Chemical
Analysis division. Before joining Agilent, he was a successful entrepreneur with notable accomplishments in technology
planning, market development and strategy. Mr. Salerno was Founder and President of VectorObjects LLC, the earliest
commercial entrant in the emerging field of synthetic biology, and was Managing Director of BioDynamics Associates, a
life sciences marketing and strategy consulting firm. In addition, he was Senior Marketing Consultant at Vysis, Inc., now
part of Abbott Diagnostics (NYSE: ABT), and also the founding Vice President, Sales and Marketing at Tropix, Inc., now
part of Life Technologies, Inc. (NYSE: LIFE). He began his career in the clinical diagnostics industry, and managed
several product lines for Diagnostic Products Corporation, recently acquired by Siemens AG (NYSE: SI). Mr. Salerno
obtained his Bachelor of Arts degree from the College of the Holy Cross, and studied biochemistry and molecular biology
in the Graduate School of Arts and Sciences, Harvard University.
Jason Kolbert, Vice President of Strategic Business Development, MBA: Jason Kolbert was formerly a managing
director of National Securities where he founded the firm's research effort in emerging biotechnology companies. Mr.
Kolbert's coverage universe has been focused on cell therapeutic companies focused in oncology and regenerative
NeoStem, Inc. (NBS) Page 24
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medicine, where NeoStem was one of his covered companies. He has spent the past 16 years on Wall Street as an analyst
both managing biotechnology dedicated investments (buy-side) and covering biotechnology companies (sell-side). Prior
to his career on Wall Street he spent several years in the pharmaceutical industry with Schering-Plough in Japan where he
developed an extensive working knowledge of pharmaceutical operations in Asia. Mr. Kolbert has an undergraduate
degree in Chemistry (New Paltz) and an MBA in Finance (University of New Haven).
Jian Zhang, General Manager of Erye Pharmaceuticals: Ms. Zhang Jian has been the General Manager of Erye since
2003. She was elected the Chairwoman and a director of CBH on April 30, 2007. Prior to being the General Manager for
Erye, she served for more than 5 years as the deputy general manager of Suzhou Number 2 Pharmaceutical Company and
more than a year as the deputy general manager of Suzhou Number 4 Pharmaceutical Company after working in various
positions in charge of human resources and quality control. Ms. Zhang graduated from Central Television University
majoring in electronics and later graduated with a certificate in accounting from Suzhou Adult Education University and a
graduate degree in finance and accounting from the School of Finance and Economics of Suzhou University. Ms. Zhang
has extensive background and experience in the pharmaceuticals industry, having worked in various managerial positions
and various aspects of the industry. She is an expert in managing a growth company, having turned Erye into a successful
operation after taking it over from the PRC government with Mr. Shi Mingsheng and others in 2003. From the end of
2007 until the consummation of the Merger, Ms. Zhang Jian was the Chief Financial Officer (CFO) of CBH.
Ian Zhang, Ph.D., MBA, President and Managing Director of NeoStem China: Dr. Zhang is the former Head of Asia
Pacific Integration at Life Technologies, where he served on the steering committee managing the acquisition and
integration of Applied BioSystems. He is also the former Head of Corporate Development (Asia Pacific) for Invitrogen
responsible for growth strategy and acquisitions and integrations, where he had also managed the acquisition and
integration of BioAsia, Dynal, Zymed, and Caltech by Invitrogen. Dr. Zhang also served as the President and General
Manager for Dynal Biotech (Beijing) Ltd. (a wholly owned subsidiary of Invitrogen Corporation). Dr. Zhang received his
MBA at the University of Chicago, Graduate School of Business and holds a Ph.D. in biotechnology from Simon Fraser
University. He continued his education as a postdoctoral fellow at Yale University School of Medicine.
Peter Sun, General Manager of NeoStem China: Peter Sun has been General Manager of NeoStem (China), Inc. since
2009. Mr. Sun brings to NeoStem nearly twenty years of business experience in pharmaceutical, biotech and medical
sectors. He is a licensed physician in the PRC specializing in endocrinology. Previously, Mr. Sun was Vice President of
Operations at Sun Biomedical Laboratories, a U.S. based medical device manufacturing and marketing company that is a
leader in rapid test devices using saliva samples. He was also Chief Executive Officer and President at Panagin
Pharmaceuticals, a biotechnology research and development and marketing company based in Vancouver, Canada. It is
focused on saponin-based small molecules, including their pharmaceuticals clinical development and marketing. Mr. Sun
has a Master’s degree in Biotechnology and Pharmacology from the University of British Columbia.
Andrew L. Pecora, M.D., F.A.C.P. – Chief Medical Officer - PCT: Dr. Pecora was previously the Chairman and Chief
Executive Officer for Progenitor Cell Therapy and also served as PCT’s Chief Medical Officer. Dr. Pecora is a Professor
of Medicine at the University of Medicine and Dentistry of New Jersey. He is a scientific advisor for numerous state,
national, and international organizations, and serves on the Board of Directors for the American Society for Blood and
Marrow Transplantation (ASBMT). In addition, he has also served on the Board of Directors for the International Society
of Hematotherapy and Graft Engineering (ISHAGE), now the International Society for Cellular Therapy (ISCT); the
Accreditation Committee of the Affiliated Physicians Network; and as an Inspector for the Foundation for Accreditation
of Hematopoietic Cell Therapy (FACT). Dr. Pecora received his medical degree from the University of Medicine and
Dentistry of New Jersey, graduating with honors. He went on to complete his medical education in internal medicine at
New York Hospital and in hematology and oncology at Memorial Sloan-Kettering Cancer Center, both in New York City.
He is board certified in internal medicine, hematology, and oncology.
Robert A. Preti, Ph.D. – President – PCT: Dr. Preti was Progenitor Cell Therapy’s President, Chief Scientific Officer,
and a member of the Company's Board of Managers. Previous positions held by Dr. Preti include Scientific Director of
HUMC's stem cell laboratory and Scientific Director of the Clinical Services Division at the New York Blood Center
(NYBC). He is one of the country's leading authorities on hematopoietic stem cell engineering and the principal
investigator for a number of clinical trials relating to stem cell transplantation. He was a founding member and Treasurer
of the International Society for Hematotherapy and Graft Engineering (ISHAGE), now the International Society for
Cellular Therapy (ISCT), and is currently both an active member and speaker. Dr. Preti has authored numerous papers in
NeoStem, Inc. (NBS) Page 25
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the field of cell and tissue processing, cell production, and clinical research. He speaks at national and international
meetings related to the laboratory aspects of stem cell transplantation. In addition to serving as an inspector for the
Foundation for Accreditation of Cellular Therapy (FACT), Dr. Preti also serves on professional, state and federal
regulatory committees charged with the development of regulations for cellular therapy. Dr. Preti received his Doctor of
Philosophy degree from New York University, graduating with distinction.
George S. Goldberger: Mr. Goldberger was PCT's Chief Business and Financial Officer. Before joining PCT, Mr.
Goldberger was President and Chief Executive Officer of Goldberger & Associates Inc., an international management
consulting firm with offices in New York, Budapest, Bucharest and Kiev: they served multinational companies with a
focus on health care services. Through Goldberger & Associates, Mr. Goldberger assisted National Medical Care (now
part of Fresenius Medical Care) in establishing and developing dialysis center operations in Europe. Prior to that, Mr.
Goldberger was in charge of mergers and acquisitions at Figgie International Inc., a diversified conglomerate. Before
working at Figgie International Inc., Mr. Goldberger was Assistant to J. Peter Grace, then Chairman and Chief Executive
Officer of W. R. Grace & Co., with corporate development and financial management responsibilities in the United States
and the Far East. Mr. Goldberger began his career as a management consultant with Booz, Allen & Hamilton. Mr.
Goldberger holds an M.B.A. in Finance from the Wharton School of the University of Pennsylvania and a B.S. in Systems
Engineering
BOARD OF DIRECTORS
Dr. Robin L. Smith, Chairman and CEO: Dr. Smith joined the Company as Chairman of its Advisory Board in
September 2005 and, effective June 2, 2006, became the Chief Executive Officer and Chairman of the Board. (see
Management for full biography)
Drew Bernstein: Mr. Bernstein was appointed to NeoStem’s Board of Directors in June 2009 and serves as Chairman of
the Audit Committee. The Board of Directors has determined that Mr. Bernstein qualifies as an “audit committee financial
expert” as defined in applicable SEC rules. Mr. Bernstein co-founded Bernstein & Pinchuk LLP (B&P) in 1983, a fast
growing accounting firm headquartered in New York. His early recognition of the global marketplace and his extensive
travel in China resulted in the aggressive expansion of the firm’s services to the PRC where he has established associate
offices to better serve client needs. In addition, his diverse experience in retail, manufacturing, hospitality, professional
practices and real estate contributed to the expansion of the firm’s client base abroad. He is a frequent speaker at industry,
investment banking and university conferences. Mr. Bernstein provides business advisory and specialized auditing
services to clients throughout Europe including the Czech Republic, France, Germany, Switzerland and in Israel. Mr.
Bernstein serves as an accountant and advisor to numerous entities across the U.S., China and Europe and has been
responsible for more than 200 real estate transactions with an aggregate value in excess of US$3 billion. He is qualified to
perform accounting and auditing services for public companies and has qualified as an expert witness. He is an active
member of the board of directors and an officer of a prestigious foundation that was honored with the President’s
Voluntary Action Award by the late President Ronald Reagan. Mr. Bernstein received his BS degree from the University
of Maryland Business School, is licensed in the states of New York, Connecticut, California, Texas and Maryland and is a
member of the AICPA, the NYSSCPA and the NSA. Mr. Bernstein is the chairman of the audit committee for China
Wind Systems, Inc. (OTCBB: CWSI.OB), a leading supplier of forged products and industrial equipment to the
windpower and other industries in China. We believe that Mr. Bernstein’s diversified financial, accounting and business
expertise, including his extensive background in accounting and auditing services, his knowledge of the global
marketplace and his extensive work in China, give him the qualifications and skills to serve as a director.
Eric H.C. Wei: Pursuant to the terms of the Merger Agreement, Eric H.C. Wei was appointed to NeoStem’s Board of
Directors upon consummation of the Merger in October 2009. Eric H.C. Wei is one of the founders and the Managing
Partner of RimAsia Capital Partners, L.P., a private equity firm focused on the pan-Asian mid-market sector and a greater-
than-5% stockholder of NeoStem. Prior to establishing RimAsia in January 2005, Mr. Wei was a managing director of
Gilbert Global Equity Partners, a US$1.2 billion global private equity fund; a founding partner of Crimson Asia Capital
Partners, a US$435 million Asian private equity program; a founder and investment committee member of the US$800
million Asian Infrastructure Fund, and an investor and director of The Asian MBO Fund. Mr. Wei has also previously
been an investment banker with over 10 years of experience at Peregrine Capital, Prudential Securities, Lazard Freres and
Citibank. Mr. Wei received a Bachelor of Science degree in Math and Economics from Amherst College and a Master of
NeoStem, Inc. (NBS) Page 26
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Business Administration degree from the Wharton Graduate School of Management at the University of Pennsylvania.
We believe that Mr. Wei’s diversified financial and business expertise, including his background in investment banking,
his extensive experience in managing private equity funds, and his familiarity with the pan-Asian mid-market sector, give
him the qualifications and skills to serve as director.
Mingsheng Shi: Pursuant to the terms of the Merger Agreement, Mingsheng Shi was appointed to NeoStem’s Board of
Directors on March 11, 2010. Shi Mingsheng has been serving as chairman of the board of directors of Suzhou Erye
Pharmaceuticals Company Ltd. (“Erye”) (of which entity NeoStem has acquired a 51% interest) since 2003. Currently,
Mr. Shi is also the chairman of Suzhou Erye Economy and Trading Co. Ltd. (“EET”), which entity owns the remaining
49% ownership interest in Erye. Prior to these affiliations, Mr. Shi served for five years as the assistant director of Suzhou
No. 4 Pharmaceutical Limited Company, for seven years as the deputy director of Suzhou No. 4 Pharmaceutical Limited
Company, and for five years as the factory director of Suzhou No. 2 Pharmaceutical Limited Company, the predecessor
company of Erye. Mr. Shi has a bachelor’s degree in Economics & Management from the Party School of the CPC. Mr.
Shi holds a professional title of Senior Economist. We believe that Mr. Shi’s expertise in business and economics,
including his extensive management experience in the pharmaceutical industry in general and at Erye in particular, give
him the qualifications and skills to serve as director.
Richard Berman: Mr. Berman joined NeoStem’s Board of Directors in November 2006, serves as Chairman of the
Compensation Committee and until March 2009 and June 2009, respectively, served as Chairman of the Nominating
Committee and Chairman of the Audit Committee. Mr. Berman continues to serve as a member of the Audit Committee
and the Nominating Committee. Mr. Berman’s business career spans over thirty-five years of venture capital,
management and merger and acquisitions experience. Mr. Berman is on the board of directors of five additional public
companies: Broadcaster, Inc. (OTC: BCSR.OB), NexMed, Inc. (Nasdaq: NEXM), National Investment Managers, Inc.
(Chairman) (OTC: NIVM.OB), Advaxis, Inc. (OTC: ADXS.OB) and Easylink Services International, Inc. (Nasdaq:
ESIC). Previously, Mr. Berman worked at Goldman Sachs, and was Senior Vice President of Bankers Trust Company,
where he started the M&A and Leverage Buyout Departments. Mr. Berman helped create the largest battery company in
the world by merging Prestolite, General Battery and Exide to form Exide Technologies (Nasdaq: XIDE),helped create
what is now Soho (NYC) by developing five buildings, and advised on over $4 billion of M&A transactions. Mr. Berman
is a past director of the Stern School of Business of NYU, where he received B.S. and M.B.A. degrees. Mr. Berman also
has United States and foreign law degrees from Boston College and The Hague Academy of International Law,
respectively. We believe that Mr. Berman’s financial and business expertise, including his background in investment
banking and mergers and acquisitions, as well as his extensive and diversified experience as a director in the public
company context, give him the qualifications and skills to serve as director.
Steven S. Myers: Mr. Myers joined NeoStem’s Board of Directors in November 2006 and serves on the Compensation
Committee, Audit Committee and Nominating Committee. In March 2009, Mr. Myers became Chairman of the
Nominating Committee. Mr. Myers is the founder and, until his retirement in March 2007, was the Chairman and CEO of
SM&A (NasdaqGM:WINS), the world’s leading provider of Competition Management Services. SM&A helps businesses
win structured competitive procurements and design successful transitions from proposals to programs. Since 1982,
SM&A has managed over 1,000 proposals worth more than $340 billion for its clients. SM&A routinely supports clients
such as Boeing, Lockheed Martin, Accenture, Raytheon, Northrop Grumman, Motorola, and other Fortune 500
companies. Mr. Myers graduated from Stanford University with a B.S. in Mathematics and had a successful career in the
aerospace and defense sector supporting DoD and NASA programs before founding SM&A. He has a strong technical
background in systems engineering and program management. Mr. Myers is also founder, President and CEO of Dolphin
Capital Holdings, Inc, which owns, operates and leases business jet aircraft and does private equity investing in innovative
enterprises. A serial entrepreneur, Mr. Myers has spearheaded a number of business innovations in aerospace and defense
and in business aviation. He is a highly accomplished aviator. We believe that Mr. Myers’ technical background and
diversified entrepreneurial and business expertise, including his having established and managed innovative enterprises
(in the areas of proposal development for competitive procurements, aircraft leasing and private equity investment),
together with his technical experience in the aerospace and defense sector, give him the qualifications and skills to serve
as director.
Dr. Edward C. Geehr M.D.: Dr. Geehr was appointed to NeoStem’s Board of Directors upon the consummation of the
Merger in October 2009, at which time Dr. Geehr also was appointed to the Board’s Nominating Committee. Until 2009,
Dr. Geehr served as Executive Vice President of Operations for Abraxis BioScience, a fully integrated biotechnology
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company developing progressive therapeutics and core technologies for cancer and other clinical illnesses, where he was
responsible for global commercial operations. Prior to joining Abraxis in 2008, Dr. Geehr served as President of Allez
Spine, LLC in 2004, a developer, manufacturer and distributor of medical devices. Dr. Geehr was a co-founder and
executive chairman of IPC — The Hospitalist Company (NasdaqGM: IPCM) through 2001, which became a publicly-
traded company in 2008. Dr. Geehr received his undergraduate degree from Yale University and his medical degree from
Duke University. He trained in Emergency Medicine at UCLA and subsequently obtained Board certification. Dr. Geehr
is the author of many scientific articles and books and held a faculty appointment at the University of California, San
Francisco School of Medicine. We believe that Dr. Geehr’s diversified expertise in business and medicine, including his
executive experience in medical-based companies involving large-scale operations, and his medical knowledge and Board
certification (including writing and teaching engagements), give him the qualifications and skills to serve as director.
(Expected during 2011) Andrew L. Pecora, M.D., F.A.C.P. – Chief Medical Officer - PCT: Dr. Pecora was previously
the Chairman and Chief Executive Officer for Progenitor Cell Therapy and also served as PCT’s Chief Medical Officer.
(see Management for full biography)
SCIENTIFIC ADVISORY BOARD
Wayne A. Marasco M.D., Ph.D., Chairman, Scientific Advisory Board- Associate Professor, Department of
Cancer Immunology & AIDS at the Dana-Farber Cancer Institute, Associate Professor of Medicine at Harvard
Medical School
Roberto Bolli M.D., Chief of Cardiovascular Medicine and Director at the Institute of Molecular Cardiology,
University of Louisville.
Vincent Falanga M.D., Professor at Boston University School of Medicine, Chairman of the Department of
Dermatology and Training Program at the Roger Williams Medical Centre, Providence, Rhode Island
Douglas W. Losordo M.D., Professor of Medicine at Northwestern University, Director of the Feinberg
Cardiovascular Research Institute and Program in Cardiovascular Regenerative Medicine.
Mariusz Ratajczak M.D., Ph.D., D.Sci., Director of the Stem Cell Institute at James Graham Brown Cancer
Center, Professor in Department of Microbiology and Immunology, University of Louisville.
Jerome Ritz M.D., Director of the Connell-O'Reilly Cell Manipulation Core Facility (CMCF) and Professor of
Medicine at Harvard Medical School.
MEDICAL ADVISORY BOARD
Wayne A. Marasco M.D., Ph.D., Chairman, Scientific Advisory Board- Associate Professor, Department of
Cancer Immunology & AIDS at the Dana-Farber Cancer Institute, Associate Professor of Medicine at Harvard
Medical School
Thomas A. Einhorn M.D., Chairman of the Department of Orthopaedic Surgery and Professor of Orthopaedic
Surgery, Biochemistry and Biomedical Engineering at Boston University
Richard Goldfarb M.D., 20 years of surgical experience, including liposuction, and has been performing
Smartlipo since its inception.
Ron Rothenberg M.D., F.A.C.E.P., Fellow of the American College of Emergency Physicians (FACEP) and
founder of the California HealthSpan Institute in Encinitas, California.
George Smith M.D., Medical Director of Laboratory Operations
Joseph D. Zuckerman M.D., Chairman of the NYU Hospital for Joint Diseases Department of Orthopaedic
Surgery and the Walter A. L. Thompson Professor of Orthopaedic Surgery at the New York University School of
Medicine.
NeoStem, Inc. (NBS) Page 28
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Risks
Some of the operational and financial risks to NeoStem are:
FDA and Regulatory risks: All of NeoStem’s products are ultimately reliant on regulatory approvals by the
U.S. FDA, China SFDA and other national regulatory bodies. There can be no guarantee of timely or definite
regulatory approvals for any of their marketed or pipeline products.
Public Policy: NeoStem uses adult stem cells in their products. Although they are not embryonic stem cells, a
negative public policy shift could adversely affect some or all stem cell development companies.
Patent Litigation: The stem cell space is relatively new and patent issues could arise at any time, requiring
NeoStem to spend time and money on defending their intellectual property rights up to and including adverse
judgments against NeoStem.
Long Time-Horizons: Due to the nature of stem cell products, the development timelines may be significantly
longer than typical drug development programs.
China: In addition to foreign exchange exposure, the legal, regulatory and political landscape in China is
subject to potentially sudden and unexpected changes that may adversely impact NeoStem. In addition to
medical regulatory risks, the government of China sets regulatory restrictions on foreign-ownership and asset
transfers. Any changes to the current allowed foreign-ownership corporate regulatory framework may
adversely impact NeoStem.
Acquisitions: Although NeoStem appears selective in their acquisition strategy, such as Suzhou Erye
Pharmaceuticals Company (Erye), Progenitor Cell Therapy (PCT) and Amorcyte, significant and/or
unexpected issues may arise as these operations are integrated into NeoStem which could adversely impact
the projected benefits and synergies of their acquisitions.
Need to Raise Additional Funds: While NeoStem has sufficient cash for near-term development, we believe
that NeoStem will be required to raise additional funds through the issuance of stock which would be dilutive
to existing shareholders and could potentially affect the share price. We have included estimates of future
share issuance in our financial model but there can be no guarantee that our estimates are accurate.
Sector Rotation: NeoStem is a small biotechnology development company in the stem cell space often kept in
a portfolio with similar companies. In such cases, a significant event for one company may have a material
impact on the valuation of all similar companies regardless of their unique qualities.
NeoStem, Inc. (NBS) Page 29
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NeoStem, Inc. (NBS) Page 30
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DISCLOSURES
Ratings and Price Target Changes over Past 3 Years
Initiated September 10, 2010 – Strong Buy - Price Target $3.75
Updated January 21, 2011 – Strong Buy - Price Target $4.00
Analyst Certification: We, Stephen M. Dunn and William D. Dawson, the authors of this research report certify that a.) All of the views
expressed in this report accurately reflect our personal views about any and all of the subject securities or issuers discussed b.) No part of our compensation is directly or indirectly related to the specific recommendations or views expressed in this research report and c.) We may be eligible to receive other compensation based upon various factors, including total revenues of the Firm and its affiliates as well as a portion of the proceeds from a broad pool of investment vehicles consisting of components of the compensation generated by investment banking activities, including but not limited to shares of stock and/or warrants, which may or may not include the securities referenced in this report.
DISCLOSURES
Does the Analyst or any member of the Analyst’s household have a financial interest in any securities of the Company? NO
Does the Analyst or any member of the Analyst's household or Firm serve as an officer, director or advisory board member of the Company?
NO
Has the Analyst or any member of the Analyst’s household received compensation directly or indirectly from the Company in the previous 12 months?
NO
Does the Firm or affiliates beneficially own ≥1% of the Company’s common stock? NO
Has the Firm or affiliates received investment banking services compensation in previous 12 months? YES
Has the Firm or affiliates received non-investment banking securities-related services compensation in previous 12 months? NO
Does the Firm or affiliates expect to receive or intend to seek investment banking compensation in next 3 months? YES
Has the Firm or affiliates received non-securities services compensation in previous 12 months? YES
Does the Firm or affiliates make a market in the Company’s securities? NO
The Firm and/or its directors and employees may own securities of the company(s) in this report and may increase or decrease holdings in the future. The Firm, its officers, directors, analysts or employees may effect transactions in and have long or short positions in the securities (or options or warrants with respect thereto) mentioned herein. The Firm may effect transactions as principal or agent in the securities mentioned herein. Ratings Definitions: 1) Strong Buy: the stock is expected to appreciate and produce a total return of at least 40% over the next 12-18 months; 2) Buy: the stock is expected to appreciate and produce a total return of at least 20% over the next 12-18 months; 3) Strong Speculative Buy: the stock is expected to appreciate and produce a total return of at least 40% over the next 12-18 months but the volatility and investment risk is substantially higher than our "Strong Buy" recommendation; 4) Speculative Buy: the stock is expected to appreciate and produce a total return of at least 20% over the next 12-18 months but the volatility and investment risk is substantially higher than our "Buy" recommendation; 5) Neutral: the stock is fairly valued for the next 12-18 months; 6) Avoid/Sell: the stock is expected to decline at least 20% over the next 12-18 months and should be avoided or sold if held; 7) Under Review: the
previous rating and/or price target is suspended due to a significant event which now requires additional analysis and the previous rating and/or price target cannot be relied upon; 8) Not Rated: the stock has too much business or financial uncertainty to form an investment conclusion or is currently in the process of being acquired and 9) Restricted: coverage cannot be initiated or has been
temporarily suspended to comply with applicable regulations and/or firm policies in certain circumstances such as investment banking or an advisory capacity involving the company.
NeoStem, Inc. (NBS) Page 31
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LifeTech Capital Research
Research Coverage
Investment Banking
FINRA RULE 2711
Research Coverage
Investment Banking
Ratings Distribution % of Total % of Total Ratings Distribution % of Total % of Total
Strong Buy 17% 50% Buy 83% 50%
Strong Speculative Buy 67% 50% Hold/Neutral 8% 100%
Buy 0% 0% Sell 8% 100%
Speculative Buy 0% 0% Total 100% 58%
Neutral 8% 100%
Avoid/Sell 8% 100%
Under Review 0% 0%
Not Rated 0% 0%
Restricted 0% 0%
Total 100% 58%
Legal Disclaimer
THE INFORMATION IN THIS REPORT IS NOT INTENDED TO BE USED AS THE BASIS FOR INVESTMENT DECISIONS AND SHOULD NOT BE CONSTRUED AS ADVICE INTENDED TO MEET THE PARTICULAR INVESTMENT NEEDS OF ANY INVESTOR. THE INFORMATION IN THIS REPORT IS NOT A REPRESENTATION OR WARRANTY AND IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL ANY SECURITY. TO THE FULLEST EXTENT OF THE LAW, LIFETECH CAPITAL, AURORA CAPITAL LLC, OUR OFFICERS, ADVISORS, AND PARTNERS WILL NOT BE LIABLE TO ANY PERSON OR ENTITY FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THE INFORMATION PROVIDED IN THIS REPORT, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF INFORMATION PROVIDED TO ANY PERSON OR ENTITY (INCLUDING BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). Investors are expected to take full responsibility for any and all of their investment decisions based on their own independent research and evaluation of their own investment goals, risk tolerance, and financial condition. Investors are further cautioned that Small-Cap and Micro-Cap stocks have additional risks that may result in trading at a discount to their peers. Liquidity risk, caused by small trading floats and very low trading volume can lead to large spreads and high volatility in stock price. Small-Cap and Micro-Cap stocks may also have significant company-specific risks that contribute to lower valuations. Investors need to be aware of the higher probability of financial default and higher degree of financial distress inherent in the Small-Cap and Micro-Cap segments of the market. The information, opinions, data, quantitative and qualitative statements contained in this report have been obtained from sources believed to be reliable but have not been independently verified and are not guaranteed as to accuracy nor does it purport to be a complete analysis of every material fact regarding the company, industry, or security. The information, opinions, or recommendations are solely for advisory and informational purposes and are only valid as of the date appearing on the report and are subject to change without notice. Statements in this report that are not historical facts are “forward-looking statements” that involve risks and uncertainties. “Forward looking statements" as defined under Section 27A of the Securities Act of 1933, Section 21B of the Securities Exchange Act of 1934 and the Private Securities Litigation Act of 1995 include words such as “opportunities,” “trends,” “potential,” “estimates,” “may,” “will,” “could,” “should,” “anticipates,” “expects” or comparable terminology or by discussions of strategy. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of the company's or our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company's most recent reports or registration statements filed with the SEC. Investors should consider these factors in evaluating the forward looking statements included in this report and not place undue reliance upon such statements. Investors are encouraged to read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org. Copyright © 2011 LifeTech Capital. All Rights Reserved. LifeTech Capital is a division of Aurora Capital LLC member FINRA / SIPC
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