UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported): January 9, 2008
NEOSTEM,
INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
0-10909
|
22-2343568
|
|
(State
Or Other
|
(Commission
|
(IRS
Employer
|
|
Jurisdiction
Of
|
File
Number)
|
Identification No.)
|
|
Incorporation)
|
|
420
Lexington Avenue, Suite
450
|
|
|
New
York, New York
|
10170
|
|
(Address
of principal executive
offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (212)-584-4180
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
8.01. Other
Events.
NeoStem,
Inc. (the “Company”) is furnishing investor materials, including the
presentation and investor letter appearing as exhibits to this report, which
will be used by the Company to send to and/or meet with
investors.
Item
9.01. Financial
Statements and Exhibits.
(d)
Exhibits.
Exhibit
99.1 Letter
to
Investors
Exhibit
99.2 Presentation to
Investors
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
NEOSTEM,
INC.
By:
/s/ Catherine M.
Vaczy
Catherine
M. Vaczy
Vice
President and General Counsel
|
Dated:
January 9, 2008
EXHIBIT
INDEX
| Exhibit Number | Description |
| Exhibit 99.1 | Letter to Investors |
| Exhibit 99.2 | Presentation to Investors |
January
10, 2008
Dear
Investor,
If
you
are interested in an investment opportunity in the rapidly developing stem
cell
market, then you should know about NeoStem,
Inc. (AMEX: NBS).
NeoStem
is managing a growing nationwide network of adult stem cell collection centers,
enabling people to donate and store their own (autologous) stem cells when
they
are young and healthy for their personal use in times of future medical need.
The Company has also recently entered the research and development and
therapeutic arenas, through the acquisition of a worldwide exclusive license
to
an early-stage technology to identify and isolate rare stem cells from adult
human bone marrow, called VSELs (very small embryonic-like stem cells), which
have been shown to have several physical characteristics that are generally
found in embryonic stem cells.
Investment
Thesis
The
ability of people to readily harvest and store their own stem cells is the
backbone of the fast growing area of regenerative medicine. Today, adult stem
cells are the standard of care in treating over 40 diseases including bone
marrow cancers, such as leukemia, lymphomas, and multiple myelomas. Other
diseases such as radiation sickness or bone marrow deficiencies from
chemotherapy have successfully been treated as well.
The
issues faced by recipients of such therapy is that more often than not they
must
rely on non-self donors and they thereby can face difficulties in finding a
“match,” as well as severe rejection issues. The NeoStem method of self
collection and storage, while one is healthy and before his/her stem cells
may
have had a chance of becoming compromised by disease, solves these issues.
Autologous donation is particularly meaningful because approximately 1 in 100
of
us will develop one of the 40 aforementioned diseases by the time we are
50.
The
future of NeoStem’s autologous stem cell collection and storage business also
appears promising. The National Institutes of Health lists more than 1,500
clinical trials currently underway in the US investigating adult stem cell
use
as potential breakthrough therapies for a myriad of diseases, including, cancer,
diabetes, heart and vascular disease, and autoimmune disorders such as lupus,
multiple sclerosis and arthritis. More than 500 of these are for autologous
use,
meaning the stem cells come from your own body for your own use. Frost &
Sullivan predicts that the market
for stem cell therapy worldwide is expected to be $20 billion by
2010.
This is
roughly the equivalent of 20 "blockbuster" drugs.
NeoStem
is the first company to provide adult stem cell collection and banking services
to the general population for their future medical use, and the process it
uses
is minimally invasive and efficient. Following two shots of a mobilizing agent,
adult stem cells are extracted by a blood draw, separated and collected through
a relatively painless and safe procedure (with the non-stem cell blood
components returned to your bloodstream) and prepared for long-term storage
preservation utilizing NeoStem's proprietary methodologies. Individuals may
access their stored stem cells in times of future medical need.
Revenue
and Business Models
NeoStem
generates revenue and earnings through three basic
avenues:
(1)
patient
collection fees,
(2)
processing
center collection fees
and (3)
storage
fees,
which
represent recurring revenue paid each year or month. We have established a
relationship with CareCredit, a GE Financial Services Company and the nation's
leading patient financing program to assist our patients who wish to pay for
our
services over time—which we believe opens up a broader client base to
us.
During
2007, we were focused on establishing a nationwide network of collection centers
in the major metropolitan areas of the US to drive growth, which should allow
us
to begin generating revenue early in 2008:
| · |
New
York Metropolitan Area: The Company signed an agreement to open an
adult
stem cell collection center with ProHEALTH Care Associates, one of
the
largest and most prominent multi-specialty practices in the region,
with
over 100 doctors and 250 patients. The Company also signed an agreement
for a New York City facility with WOR Radio Medical Community’s
Dr.
Richard Ash of the Ash Center for Comprehensive Medicine. Subject
to the
receipt of appropriate licensure, the facilities are expected to
open in
Q1 2008.
|
| · |
California
and Colorado: The Company signed an agreement with Stem Collect LLC,
entitling that entity to open adult stem cell collection facilities,
expanding NeoStem’s network throughout much of California and launching
the Colorado market. One of the California centers is to be in the
Beverly
Hills environs. NeoStem has an existing facility in Encinitas,
California.
|
| · |
Nevada:
The newest adult stem cell collection facility has been opened in
Las
Vegas, Nevada. The Las Vegas location offers a high level of potential
customer traffic (both U.S. and international) and an exciting destination
center for those seeking a potentially powerful way to protect their
long-term health.
|
| · |
Northeast
Region: The Company expanded its collection network into Pennsylvania
in
2007. The Company also formed a strategic alliance with New England
Cryogenic Center, Inc. (NECC), one of the largest cryogenic laboratories,
to provide extensive processing and storage capacity for consumers
on the
East Coast.
|
We
have
structured our business to be characterized by a high degree of operating
leverage, whereby a small number of MDs, performing a modest number of
procedures each month, should enable us to reach operating profitability. For
example, for demonstration purposes only, if one assumes that NeoStem earns
$1,750 per donor and that the Company’s overhead approximates $4 million
annually, each doctor that joins our network would contribute approximately
$20,000 to operating profits each year if it performed one collection per month.
In other words, at this assumed collection rate and level of overhead, NeoStem
could reach breakeven with only about 200 physicians in our network—just double
the number we have in ProHealth alone.
New
Opportunities and Potential Value Drivers
In
addition to our stem cell collection business, we are expanding our intellectual
property portfolio with applications relating to early-stage stem cell
technologies for potential therapeutic use. In November 2007, we acquired the
exclusive worldwide rights to technology developed by researchers at the
University of Louisville involving Very Small Embryonic-Like Stem Cells
(“VSELs”), which have been shown to have several physical characteristics
generally found in embryonic stem cells.
VSELs
have the ability
to grow
in the laboratory and multiply into clusters of cells that then can
differentiate into specialized cells found in different types of tissue
including cardiac, neural, endothelial, muscle, pancreatic and hematopoietic
cells.
However,
unlike controversial embryonic stem cells, VSELs can be harvested
from adult peripheral blood.
The
significance of VSEL technology is that each of us has a population of very
primitive embryonic stem cells that have remained in our bodies since before
birth, and should stem cell expansion technology become available, these
naturally occurring regenerative cells may have the potential to be used for
future therapeutic repair of degenerative, diseased or damaged tissue.
We
are
also exploring entering the stem cell supply business for research, which we
believe has the potential to be a significant business in its own
right.
Concluding
Remarks
With
the
enhanced infrastructure, intellectual property portfolio and alliances we have
put in place over the past year, we believe NeoStem is well positioned to enter
the revenue stage in 2008 and grow even further in the years ahead. The company
has 4.8 million primary shares outstanding and a market capitalization that
is
less than $10 million. Given the opportunities in our marketplace and potential
for achieving profitability with a relatively low number of patients, we hope
you will find NeoStem to be a compelling investment opportunity and encourage
you to learn more about us. For additional information, please visit our website
at www.neostem.com,
or
contact us at 212-584-4180.
Sincerely,
Robin
Smith
Chief
Executive Officer
NeoStem,
Inc.
Forward
Looking Statements
Certain
statements in this letter constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, including
statements concerning the ability of NeoStem, Inc. ("the Company") to develop
the adult stem cell business, to develop the VSEL technology, the future of
regenerative medicine and the role of adult stem cells and VSELs in that future,
the future use of adult stem cells and VSELs as a treatment option and the
potential revenue growth of the Company's business. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. The Company's ability to enter the adult stem cell arena, its
success in such arena and future operating results are dependent upon many
factors, including but not limited to (i) the Company's ability to obtain
sufficient capital or a strategic business arrangements to fund its expansion
plans; (ii) the Company's ability to build the management and human resources
and infrastructure necessary to support the growth of its business; (iii)
competitive factors and developments beyond the Company's control; (iv)
scientific and medical developments beyond the Company's control; (v) the
Company's inability to obtain appropriate state licenses or any other adverse
effect or limitations caused by government regulation of the business; (vi)
whether any of the Company's current or future patent applications result in
issued patents; and (vii) other risk factors discussed in the Company's periodic
filings with the Securities and Exchange Commission which are available for
review at www.sec.gov
under "Search for Company Filings." Investors are also reminded that the
financial assumptions and information provided under the heading “Revenue and
Business Model” are presented for demonstration purposes only and may not bear
any relation to among other things, the actual margins, breakeven points, level
of operating leverage, individual physician profitability or other inputs that
may comprise the metrics upon which NeoStem’s actual profitability will be
based.
