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NeoStem Letter To Shareholders

Stocks in this article: NBS

The following are some of the important collaborations and updates in the Company's research and development:

Amorcyte

We are very excited and encouraged by the enrollment progress of the PreSERVE Phase 2 clinical trial, investigating the Company's most advanced product candidate, AMR-001, in preserving heart function after a severe heart attack. We are on track to complete patient enrollment for this trial in 2013 with data read out 6-8 months after the last patient is infused.

The Amorcyte intellectual property portfolio continues to grow and AMR-001 now has the benefit of 4 granted U.S patents, 8 patent grants outside of the U.S. and 24 additional patents pending around the world. We are beginning the process of expanding applications for AMR-001 into other ischemic conditions such as congestive heart failure and traumatic brain injury.

Athelos

Human Regulatory T cells ("Treg") therapy represents a novel approach for restoring immune balance by enhancing T-regulatory cell number and function. NeoStem continues to advance its T cell program with the goal of developing treatments for immune-mediated diseases such as type 1 diabetes, and inflammatory conditions such as steroid resistant asthma.

In July, the Company executed agreements with the University of California, San Francisco ("UCSF") and the laboratories of Jeffrey Bluestone, PhD, and Qizhi Tang, PhD, to collaborate on the development of a therapy for the treatment of type 1 diabetes. This collaboration will advance the Company's Treg program towards a Phase 2 trial to evaluate the efficacy of autologous Tregs in type 1 diabetes, effectively advancing the Company's pipeline more quickly than if it had developed a program for this clinical indication independently. Under the agreements, NeoStem will manufacture a Treg product consisting of polyclonally expanded Tregs for the planned Phase 2 trial to treat patients newly diagnosed with type 1 diabetes and will also collaborate with Dr. Bluestone on allo-specific Tregs for organ transplant tolerance in another anticipated clinical study. The collaboration also includes the research effort to develop the next generation of Treg products for therapeutic use.

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