UNITED
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Soliciting Material Pursuant to §240.14a-12 | ||||
NEOSTEM,
INC.
(Name of Registrant
as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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2008
ANNUAL REPORT TO SHAREHOLDERS
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April
2009
Dear
Shareholders:
As
Chairman and CEO of NeoStem, Inc. (Amex: NBS), I am extremely pleased to
report to you on our 2008 strides, particularly as they continue into
2009.
China
Initiatives
In
2008, we began our expansion activities into the People’s Republic of
China with the signing of a separate merger agreement and share exchange
agreement to establish a NeoStem pharma division and stem cell therapy
division. Upon approval at our 2009 Special Meeting of
Shareholders, we will acquire a 51% ownership interest in Suzhou Erye
Pharmaceuticals Company, Ltd. (“Erye”) who had robust gross
revenues in 2008 of approximately $50 million. Separately,
beginning in early 2009 we embarked on other activities to expand our
operations into the PRC. As our sights turn to the PRC, we
believe this focus will enable us to accelerate stem cell therapy,
research and development activities and creation of intellectual property
positions in an environment that is more readily accepting of stem cell
therapies. The PRC has a large population with a rapidly
growing middle and upper middle class who are becoming focused on
regenerative medicine and can afford such services. We believe
that a collaboration involving these two countries will create immediate
commercial, financial and scientific opportunities.
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April
2009 $11,000,000 Private Placement Financing
On
April 13, 2009 we announced that we have completed a private placement
financing totaling $11 million from three Asia-based investors, including
a private equity firm operating in partnership with strategic investors
drawn from leading Asian families and businesses. We believe these funds
will substantially advance our company toward becoming a world-leading
provider of advanced autologous stem cell technologies and services to the
general public for future personal use in times of medical
need.
The funds received in our
April 2009 $11,000,000 financing will support our expansion activities in
China, further development of NeoStem’s VSEL technology and advance
medical tourism initiatives.
The
financing consists of units priced at $12.50 per unit, with each unit
consisting of one share of our Series D Convertible Redeemable Preferred
Stock and ten warrants each to purchase one share of common stock
(resulting in an equivalent price of $1.25 per common share plus an
attached
warrant). The warrants have a per
share exercise price equal to $2.50 and are callable by the
Company if the common stock trades at a price equal to
$3.50. Subject to the affirmative vote of the Company’s
shareholders and the rules of the NYSE Amex, the warrants will become
exercisable for a period of five years and each share of Series D
Convertible Redeemable Preferred Sock will automatically convert into ten
shares of Common Stock.
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The
investing firms are RimAsia Capital Partners, LP, a pan-Asia private
equity firm operating in partnership with a regional network of strategic
investors drawn from leading Asian families and companies, investing $5
million; Enhance Biomedical Holding Corporation based in
Shanghai, also investing $5 million and Elancrest Investments
Ltd., a Singapore-based firm, investing $1
million. RimAsia Capital Partners previously invested $1.25
million in NeoStem, as was announced on September 3, 2008.
The
funds will be used to support the development of NeoStem’s VSEL (very
small embryonic-like stem cells) technology licensed from the University
of Louisville and help advance NeoStem’s expansion activities in the PRC,
including those relating to its pending acquisitions and medical tourism –
defined as travel by people whose primary and explicit purpose is to
access in a foreign country medical treatment not yet available in their
own nation. Through its connections with leading physicians in
China and the U.S., NeoStem expects to connect U.S. citizens with advanced
therapies not yet available in the U.S., and attract people from other
countries to seek safe and effective regenerative therapies as they become
available here. A portion of the funds also will be used to expand
U.S.-based operations. In addition, a portion of the proceeds
are being used to repay $1,150,000 in bridge financing received from
RimAsia Capital Partners, LP in February and March, interest on the bridge
financing and other costs advanced by RimAsia in connection with the
Company’s expansion activities in China.
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This
substantial investment from a group of highly respected investors in Asia
demonstrates great confidence in our Company. Our relationships with our
business partners in China continue to deepen as we recognize increasing
areas of synergies among our innovative stem-cell technologies, products
and services, and business models. As our activities increase,
we anticipate NeoStem will benefit greatly from expanded new markets,
distribution channels and production capabilities for a growing pipeline
of regenerative drugs and procedures offered in the world’s two largest
economies.
Other
Recent Developments:
Expanding
Portfolio of Intellectual Property
In
the First Quarter of 2009, NeoStem continued to enrich its intellectual
property portfolio by acquiring exclusive worldwide license to several new
stem cell technologies:
In
February 2009, we obtained the exclusive worldwide license to innovative
stem cell technology and applications for anti-aging skin rejuvenation
therapies. This acquisition enhances our position in treatments for
physical aging, a core pursuit of the company. It is also
synergistic with NeoStem’s focus on “Medical Tourism.”
We
anticipate further acquisitions of key technologies to enhance our unique
portfolio as 2009 unfolds.
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NeoStem
Collection Centers Established within Metropolitan Multi-physician and
Multi-specialty Practices
NeoStem’s
platform business provides the infrastructure, methods and systems that
allow adults to have their stem cells safely collected and conveniently
banked through safe, minimally invasive processes that can take place in a
doctor’s office, clinic, academic medical center or hospital that is part
of a developing network of NeoStem Collection Centers.
NeoStem
has made significant progress in establishing centers at multi-physician
and multi-specialty practices in key metropolitan areas. In
March 2009, the Company signed an agreement to open a center at The Giampapa Institute for
Anti-Aging Medical Therapy in Montclair, New Jersey. One
of the first certified anti-aging medical physicians in the world, Dr.
Giampapa is Director of the Plastic Surgery Center Internationale as well
as The Giampapa Institute and is renowned for a non-surgical complete
facial rejuvenation procedure that involves the use of adult stem
cells. In June 2008, the Company signed an agreement with two
other important entites: ProHEALTH Care Associates in
the metropolitan New York City area, one of the largest and most
prominent multi-specialty practices in the region with over 100 doctors
and 250,000 patients. In addition, in December 2008, NeoStem opened its
first New York City
collection center operated by Dr. Bruce Yaffe of Yaffe, Ruden and
Associates, which provides medical care to 1200 patients per week
in midtown Manhattan. This followed the opening of two other
metropolitan Collection Centers in the Fall of 2008: a center located at
The Hall Center in
Santa Monica, CA
and another operated by Celvida LLC in Coral
Gables, a suburb of Miami, FL. We
also signed an agreement with New England Cryogenic Center,
Inc (NECC), one of the largest cryogenic laboratories to provide
extensive processing and storage capacity for our research activities and
in 2009 an agreement with Progenitor Cell Therapy,
LLC, who will provide processing and storage services at the cGMP
for our commercial business.
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We
are extremely optimistic about the growth opportunities for NeoStem in the
U.S. and our ability to capitalize on a growing PRC-based
network. We are very encouraged by the enthusiasm of investors
in Asia who recognize the huge market potential for stem cell therapies
in
the PRC, a field in which breakthroughs are developing at an accelerating
rate. We are grateful to you, our shareholders, for your recognition of
the extraordinary potential of this company and for your continued support
in this exciting endeavor.
Sincerely
yours,
 Robin
L. Smith, MD, MBA
Chairman
and CEO
NeoStem,
Inc.
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