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NeoStem Letter To Shareholders

PROGENITOR CELL THERAPY

NeoStem is capitalizing on the dramatic growth in the cell therapy industry both for its clients and for its internal pipeline by vertically integrating the collection, storage and processing of cellular material and by developing, manufacturing, distributing, and delivering cell therapy products. 

PCT has built a strong foundation of services that cater to the entire industry and offers NeoStem and PCT clients cell processing and development capabilities on both the East and West Coasts of the U.S. PCT is also pursuing plans to expand internationally. PCT currently provides services to over 30 clients and is the only contract development and manufacturing organization ("CDMO") to have worked with a client's product (Provenge®) through all of the phases of clinical trials and ultimately to FDA approval.

PCT completed three process development contracts in Q2 2013, triggering higher revenue recognition. PCT also recently signed two new clients, including a large pharmaceutical company that is entering the cell therapy sector. PCT's management team is focused on growing the CDMO business through increased services and product offerings, including automation technologies geared toward improving efficiencies and lowering cost of goods.

PCT's business model uniquely positions NeoStem to take advantage of revenues generated in a growing industry, while reducing its reliance on the success of NeoStem's internal development platforms. This unique revenue-generating CDMO business allows NeoStem to remain current on the most innovative developments in the sector, informing our decisions as we seek to co-develop and/or acquire new technologies. 

As the regenerative medicine market continues to grow, NeoStem is uniquely positioned to capture the value of this market and lead the industry. We appreciate your continued confidence in the Company's agenda and will continue to provide updates on our progress as we work to save lives and end suffering for the millions of people afflicted with chronic disease.

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