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NeoStem CEO's Letter To Shareholders

An initial assessment of enrollment data from the PreSERVE Phase 2 clinical trial found that one third of patients screened for enrollment who had suffered an ST segment elevation acute myocardial infarction (STEMI) have a persistent low ejection fraction 3-4 days post infarction. Based on this initial assessment of enrollment data and assuming that AMR-001 is ultimately approved by the FDA for use in the population NeoStem is studying and there are not further restrictions implemented in Phase 3 studies, the Company believes that there is a large eligible U.S. market for AMR-001 in the treatment of heart attack patients.

We also believe that the AMR-001 platform may be applicable to other conditions resulting from underlying ischemia and expect to file an IND in 2013 for the use of AMR-001 to arrest the progression of congestive heart failure.

Amorcyte Intellectual Property Portfolio –

AMR-001 now has the benefit of 3 (soon to be 4) U.S patents, 2 patents (soon to be 3) outside of the U.S. and 31 additional patents pending around the world. In brief, our granted U.S. patents are as follows:

U.S. Patent No. 7,794,705 covers a cell-based composition used to prevent deterioration of heart muscle post a heart attack.  The composition contains a therapeutically effective amount of autologous mononuclear cells enriched for CD34 cells which further contain a subpopulation of biologically active CD34+/CXCR-4+ cells. With the grant of U.S. Patent 8,088,370, the AMR-001 product's use was extended beyond heart attack to treatment for any vascular injury caused by vascular insufficiency. Amorcyte's claims in U.S. Patent 8,343,485 similarly cover a cell-based therapy to repair a vascular injury caused by vascular insufficiency, but the product's CD34+ cell content limitation was greatly expanded in this patent to cover purities of almost any amount, and the product serum content was also expanded.  Amorcyte's most recently allowed claims cover AMR-001 for the treatment of progressive myocardial injury due to vascular insufficiency, including the disease progression that leads to heart failure, and have added claims that cover freezing cells and using them in a treatment regimen that includes multiple doses over time.

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