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NeoStem Letter To Shareholders

In August, we engaged the services of three experts at the forefront of asthma research, William Busse, M.D., of the University of Wisconsin; Mario Castro, M.D., M.P.H, of the Washington University in St Louis; and Prescott Woodruff, M.D., M.P.H., of the University of California, San Francisco. Each of the consultants brings a breadth of experience in research to assist the Company in determining the appropriate clinical endpoints for a clinical trial in steroid resistant asthma.

In September, the Company announced the licensing of three families of patents from UCSF. NeoStem's worldwide exclusive license to these patents provides incremental protection for the Company's Treg platform. The three patent families cover methods to isolate, expand and use Tregs with therapeutic potential for autoimmune disorders, including U.S. patent 7,722,862, which claims a cellular immunotherapy for the treatment of type 1 diabetes. NeoStem's patent estate for its Treg program now includes exclusive rights to 22 issued patents in U.S. and major international commercial geographies and covers isolation, activation, expansion and methods of treating or preventing certain conditions and/or diseases using Tregs.

VSEL™ Technology

We continue to develop our very small embryonic like stem cell (VSEL TM Technology) platform in pre-clinical models and expect soon to advance into early clinical studies that assess the therapeutic potential of VSEL TM Technology in wound care, bone regeneration and/or macular restoration. NeoStem also continues to receive grant awards to develop this important technology, including a recent award of funds from the National Institute of Allergy and Infectious Diseases (NIAID) supporting the development of VSEL TM Technology for radiation exposure.

Recent pre-clinical data in animal models suggest that VSELs™ may be capable of developing into cells of all three germ layers which, if substantiated by further research, could imply significant potential for restorative healing. Unlike classically defined "pluripotent" stem cells, it is believed that VSELs™ do not contribute to teratoma formation.  Independent investigators in preclinical models have demonstrated the regenerative potential of VSELs™ and we will continue to support preclinical and early clinical studies to further assess the regenerative potential of VSEL™ Technology.

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