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): March 15, 2007
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)-584-4814
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:
[_] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 7.01. REGULATION FD DISCLOSURE.
NeoStem, Inc. is furnishing herewith the transcript made
available on March 15, 2007 of an investor call held on March 14, 2007, included
as Exhibit 99.1 to this current report and incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS.
Exhibit 99.1 Transcript from March 14, 2007 investor call.
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
VP and General Counsel
Dated: March 16, 2007
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
Exhibit 99.1 Transcript from Investor call held on March 14, 2007.
Exhibit 99.1
TRILOGY CAPITAL
MARCH 14, 2007
12:00 P.M. EDT
Moderator Ladies and gentlemen, thank you very much for standing
by. We do appreciate your patience today while the
conference assembled. Good morning, good afternoon to
our audience. Welcome to the NeoStem conference call.
At this point we do have all of your phone lines muted
or in a listen-only mode, however, after our guest
presentation today there will be opportunities for
your questions. As a reminder, today's call is being
recorded for replay purposes. Please stay on line at
the conclusion of our conference to receive that
replay information.
With that being said, let's get right to today's
agenda. Here with our opening remarks is Executive
Vice President of Trilogy Capital Markets, Mr. Michael
Briola. Please go ahead, sir.
M. Briola Thank you. Hello, everybody. Before we get started
today I'd like to read a brief cautionary statement.
This conference may contain forward-looking statements
made by senior management at NeoStem that involve
risks and uncertainties, such as statement about their
plans, objectives, expectations, assumptions, or
future events. These statements involve estimates,
assumptions, known and unknown risks, uncertainties,
and performances or achievements expressed or implied
by the forward-looking statements. Actual future
results and trends may differ materially from those
made in or suggested by this call due to a variety of
factors. Consequently, you should not place undue
reliance on any forward-looking statements made on
this call. We discussed many of these and other risks
and uncertainties in greater detail in recent filings
with the Securities and Exchange Commission.
Dr. Smith Now I'd like to introduce Dr. Robin Smith, Chief
Executive Officer of NeoStem. Robin. Thank you, and
thank you for joining us. I appreciate your continued
interest in NeoStem and also want to welcome all new
interested potential investors and strategic partners.
Over the past few months NeoStem has experienced a
very exciting new development, but before we get into
those let me give you some important background
information. NeoStem is at the forefront of the
regenerative medicine revolution, what many believe to
be one of the biggest and most promising transitions
in medical history. We're the first company to offer
healthy adults the opportunity to have their own stem
cells collected, processed, and banked in such a way
that they're available to them for future use. This is
a bio insurance for the general population. Thanks to
our proprietary process, anyone can store their own
stem cells for long periods of time to ensure
immediate access in times of critical medical needs
for multiple times in the future.
There are tremendous clinical and economic advantages
to using your stem cells for transplantation,
otherwise known as autologous stem cells. You don't
have to worry about your body rejecting the cells, as
they recognize them as being your own. The use of
adult stem cells as a viable treatment option is well
documented, dating back to the '60s, with the advent
of bone marrow transplantation for cancer patients.
Today, scientists, pharmaceutical companies, and
various medical practitioners around the world are
discovering new and innovative therapies for the
treatment of some of today's most debilitating
diseases using stem cells. In fact, new studies
describing the clinical benefits of adult stem cells
in the treatment of diseases are being published quite
frequently. Life saving progress has been made
studying the use of adult stem cells for the treatment
of heart disease, lupus, multiple sclerosis, cancer,
diabetes, and many other critical health problems.
While the use of adult stem cells for the treatment of
disease is not new, the infrastructure necessary to
collect and store these cells for the future has not
existed. NeoStem scientists and clinicians have
developed a safe, non-invasive method to do just that.
It is important to note that our process does not in
any way involve the highly controversial embryonic
stem cells. Rather, we enable our customers to bank
their own adult stem cells as a form of what we call
bio insurance. By this we mean that adults can bank
their stem cells while healthy and access them if
needed in the future to treat disease.
NeoStem believes that bio insurance will some day be a
key term used by the general population to describe
the storage of stem cells. Conceptually, any or all
adults who can afford our service should bank their
stem cells for future use. Based on scientific
literature we believe that the diseases that now are
showing promise for the use of being treated with
adult stem cells have a prevalence of over 50 million
people in the United States. Thanks in part to our
proprietary process, patients no longer need to worry
about whether or not they can find a donor when stem
cell transplantation becomes necessary. Based on
scientific literature, under 20% of people who need a
bone marrow transplant today are able to find a donor
match in time. Respective clients include any adults
or their family members concerned with long-term
health, well-being, or that may be at high risk for
radiation exposure. We believe that early adopters
will most likely be from segments of the population
who are educated regarding the benefits of adult stem
cell and can afford our services. But our research
suggests that insurance companies in the future may be
willing to pay to bank stem cells in order to lower
overall health care costs.
Supporting this progressive view is the powerful
scientific results being published from adult stem
cell research, bone marrow derived stem cells, is that
the unique regenerative capabilities make them
different from stem cells taken from other areas of
the human body. These cells, which are considered very
potent, are early enough in development that they have
the potential to become cells of most adult organs and
tissues, including but not limited to muscle, hair,
liver, and nerve cells, just to name a few. Because of
these special characteristics many scientists believe
that stem cells can become the basis for breakthrough
cures and treatments. We believe stem cell technology
has the potential to create one of the century's most
revolutionary findings in medical care.
The potential of stem cells to help regenerate the
body and tissue and combat disease and injury is well
recognized by the medical community. This has been in
the oncology world, where physicians have used adult
stem cells to repopulate the immune system as part of
the treatment for leukemia, lymphoma, and multiple
myeloma, as well as radiation exposure. While the
media has focused on the controversies over embryonic
stem cells, the fact is that there are a number of
sources of functional stem cells that do not involve
embryo or fetuses.
Adult stem cells are typically harvested from bone
marrow, the blood of adults, known as peripheral
blood, or umbilical blood and placental tissue. Bone
marrow has been the cornerstone of adult stem cell
therapy. This procedure, while yielding large
quantities of stem cells, is highly invasive. Adult
stem cells can also be derived from the baby's
umbilical cord and placental tissue, but of course
that can only be done at a time when a mother gives
birth.
There is a third and what many believe is the most
promising way to harvest adult stem cells, and that's
from an adult person's bloodstream. The problem until
now has been related to accessing the cells that are
needed in high enough quantities. NeoStem's process
typically begins when a patient requests or a doctor
identifies an individual as a good candidate for the
procedure. These patients are generally in good health
and their stem cells have experienced fewer divisions
and have a lower likelihood of damage. Leveraging on
our proprietary technology, NeoStem is able to
substantially increase the number of stem cells in the
peripheral blood by a process called mobilization.
This method of mobilization uses Neupogen, which is
given two days prior to the stem cell collection. The
process then stimulates cells to migrate from the bone
marrow into the peripheral bloodstream for collection.
The actual collecting of stem cells involves a
painless, non-invasive procedure. During the procedure
the patient is relaxed in a chair watching television
or otherwise being entertained, the blood is
circulated and collected, the stem cells are taken
out, and the remaining red cells are returned to the
patient. After the stem cells are collected, they're
sent to NeoStem's facility for processing and
cryopreservation. Should the stem cells be needed by
the patient they are shipped for immediate use. As the
adult stem cell industry grows, we believe NeoStem
holds a first to market competitive advantage. We've
developed a blend of technologies, processes, and
relationships which should enable us to rapidly
execute our business in a cost effective manner.
NeoStem's visionary business model is comprised of a
three-pronged strategy. The first is from the
collection of adult stem cells. We have already begun
to develop multiple mutually beneficial relationships
with practitioners and academic medical centers in
major metropolitan areas across the country. These
centers have the equipment or trained medical staff
needed to perform the collections and are wiling to
use an outsourcing agency if they don't have it in
place. The necessary equipment can be bought or
leased, and the appropriate staff trained through
NeoStem's relationship with HemaCare, a major
therapeutic apheresis provider that's accredited by
the American Association of Blood Banks. The second
prong is generating revenues from the processing of
these cells. The cells are characterized and
cryopreserved in multiple packages that can be
defrosted and used at different times in the future.
The third prong is the storage. NeoStem's innovative
process includes specialized long-term storage
techniques in multiple packages, as well as a secure
patient information system to ensure privacy. Clients
get billed a storage fee annually, and that begins the
second anniversary of their collection.
One of the most compelling aspects of our business
model is that it's not capital intensive, because we
don't depend on risky biopharmaceutical research and
development. It's a service model that's completely
scalable and can be implemented immediately. All fees
load to NeoStem and do not require payment to third
parties.
To conclude this overview, NeoStem's first to market
competitive advantage, our innovative stem cell
collection process, and non-capital intensive business
model are just some of the reasons why we believe that
an investment in NeoStem is truly compelling. The
burgeoning field of regenerative medicine and the
hundreds of adult stem cell therapies and late stage
clinical trials clearly support the role of stem cells
in treating diseases in the 21st century.
Now, I'd like to talk about some of the most recent
milestones that have been achieved. First among them
is NeoStem's recent announcement that we'd entered
into an agreement to expand our nationwide network of
cutting-edge adult stem cell collection centers. Our
newest center will open in Las Vegas, Nevada, allowing
us to continue to leverage our first to market
competitive advantage in what we anticipate will be a
multi-billion dollar field of adult stem cell
therapies. This new center will serve clients
interested in having their stem cells banked, as well
as patients of health care professionals working in
areas such as cancer, diabetes, multiple sclerosis,
lymphoma, and heart disease.
Prospective clients for our new Las Vegas facility
will include anyone with their long-term health,
well-being, or risk of radiation exposure. We chose
Las Vegas because it provides an ideal destination for
international travelers looking for the opportunity to
enhance their bio insurance while vacationing in the
United States. The new center, which is scheduled to
open before summer, will be among the first to offer
the collection of adult stem cells, the process and
storage for adult ... for therapies in the future.
This launch is a continuation of a very exciting
period for the expansion of NeoStem. This new facility
exemplifies the growth which we are hopeful will
continue into the future, with a robust nationwide
network. We believe that the nationwide network will
be fueled by the growing interest expressed by the
health care community with regards to the promising
science of adult stem cells. The Las Vegas facility
will also serve to further compound our first to
market competitive advantage from our proprietary stem
cell collection.
An integral part of NeoStem's business plan is the
five year agreement with HemaCare. This agreement will
provide NeoStem the collection services for the
procurement of adult stem cells for the purpose of
long-term storage. HemaCare is a well-known provider
of blood products, and services the United States
health care industry. We expect this relationship will
foster NeoStem's growth by increasing our adult stem
cell collection capacity and helping to expand our
collection infrastructure through HemaCare's mobile
units and freestanding facilities remain in
California.
This covers everything I wanted to discuss today. I'd
like to open the discussion by the moderator to form
the questions.
Moderator Indeed, I'd be happy to. Thank you very much, Dr.
Smith, for your time and that update today. We do
appreciate that. To ask a question please press star
one on your touchtone phone. In the interest of time,
we do ask each questioner to limit themselves to one
initial question. If time allows, feel free to
re-queue by pressing star one.
The first participant in queue is Greg Hunt, a private
investor. Please go ahead, sir.
G. Hunt Hello. Thank you a lot, Dr. Smith. I wanted to ask you
a little bit more about the nature of the cells being
autologous cells, and I guess that's at the core of
the NeoStem business model. Maybe you can explain for
me a little bit more about what is known about the
advantages or the potential advantages of autologous
cells over I guess what would be called alien cells or
other people's cells.
Dr. Smith Sure, great question. Autologous means that the donor
and the recipient are both the same. In other words,
we collect stem cells for you for your use, so the
person doesn't have to worry about the body rejecting
the cells, you don't have to spend a lifetime of
taking immunosuppressive drug therapy, which is
expensive, and by suppressing your immune system it
puts you at risk for getting infections and other
diseases. You also don't have to worry about Graft
versus Host disease, which means your body sees the
cells that you're taking in and rejects them because
they're not your own. And lastly, the body recognizes
these cells as your own and the engraftment means it
takes it in better and there's much more an
accelerated growth because the body doesn't see these
cells as being foreign. So there are a lot of
advantages for the long-term health of using your own
stem cells, otherwise known as autologous.
G. Hunt Thank you.
Moderator Next we'll go to the line of Derek Findley, a private
investor as well. Please go ahead.
D. Findley Hello, Dr. Smith. Thank you for talking to us today.
My question is regarding your potential target market.
Who do you see as the description of the potential
clients that you would have?
Dr. Smith When you look at who the target market is today, it's
really those individuals who are interested in health
and can afford the service to pay outside their
traditional health care insurance. It's those who are
interested in their long-term viability, vitality, who
may have an individual in their family who has one of
the diseases, such as heart disease or cancer. It's
also individuals who are educated and understand what
stem cells are, such as those who have banked them for
their children when giving birth. Who's going to be
there to take care of their kids if something happens
to them?
Additionally, there are individuals that have family
histories that are very high risk for disease down the
road, some autoimmune diseases, some cancers, who are
really looking for ways to protect ... and even at an
early stage of disease are concerned that if their
disease progresses they want to be prepared and have
the bio insurance for the future.
Moderator Next we'll go to the line of Ashley Black, a private
investor. Please go ahead.
A. Black Thank you for taking my question. I was wondering if
you could share more about NeoStem's go to market
strategy.
Dr. Smith We really feel this is a push-pull strategy. We have
to get out there and educate the consumers of adult
stem cells what the therapeutic uses are being studied
today, what the results are and where we feel the
market will go, and that they can actually have their
stem cells banked. And then the other part of that is
to work with academic institutions working on the
translational research so that as they're collecting
cells and wanting to move further into the cutting
edge research, that they have the ability to work with
us so that the stem cells can be banked for the
future, so that they can be looked upon in the future
and used for their patients as diseases go into
remission and then end up coming back.
Very often what we're finding is that these stem cell
therapies put people into remission, but that doesn't
mean it cures the disease, you still have heart
disease, you still have the autoimmune diseases, so
likely you'll need therapies in the future. So by
being able to bank your stem cells, they'll be there
for you for multiple treatments. That's the other
strategy, is to work with the academic medical centers
who are working on the actual therapeutics.
Lastly, we need physicians to be able to offer the
service to their patients and realize that they can do
this in their offices and in their practice in a safe,
non-invasive way, outside of the traditional use of
having to go into the person's bone marrow in the
hospital setting to get the stem cells. So it's a
push-pull strategy between the consumers and the
academic institutions and physicians.
Moderator Thank you, Dr. Smith. With Emerging Growth Equities,
we have a question now from the line of Raymond Myers.
R. Myers Thank you for taking the question. Robin, I understand
that the market for stem cells and various types of
stem cell therapies is expanding very rapidly. One of
the products that I noticed was launched at the big
Orthopedics conference, the AAOS, and was also
discussed quite a bit at the second annual Stem Cell
Summit, was a product by Osiris Therapeutics--it's
called Prochymal--for bone healing. It utilizes
mesenchymal stem cells, and it created quite a stir in
the Orthopedics community, and at the stem cell
conferences, as being one of the leading new
commercial uses for stem cells. I was hoping that you
could contrast your autologous stem cell banking from
the mesenchymal stem cells that are being used in
these new products.
Dr. Smith In the stem cells that we collect are mesenchymal
cells. Mesenchymal cells are a little bit further down
the line of differentiation, so they couldn't be used
to repopulate your immune system, and they couldn't be
used to build pancreatic islet cells for diabetes. So
they're a very specific cell type that's already
committed to themselves down to the muscle cartilage
area. So although people are looking at, and there is
much hope--and if you look it's really estimated to be
a billion dollar business just in the Orthopedic arena
for using stem cells--people are starting to find that
by taking them from the adults you don't have to worry
about trying to multiply the cells and if you can take
it you don't have to worry about rejection as well. So
although there are companies that are looking for the
therapeutics, we feel that we're very poised to work
with them and avoid the issues of rejecting the cells,
the issues of having to replicate them so that we can
help make these tissue types for wellness in
Orthopedics as well as autoimmune diseases, cardiac
and others.
R. Myers So then the key difference, the biggest one I see is
that mesenchymal cells cannot be used to reconstitute
the immune system, which is the key issue with cancer
and radiation.
Dr. Smith Yes, and it also can't be used to make nerve tissue
and other endocrine type tissues. So they're already
down a lineage path where they can't become many cell
types, but just very specific cells.
R. Myers Thank you.
Moderator Next we go to the line of Dr. Monica Gavin with Azani
Medical Spa. Please go ahead.
Dr. Gavin Hello. Has NeoStem done any marketing research on
actual numbers of calling people with household
incomes of $250,000 and above with a college degree,
and they've actually explained the program or the
focus group explained the program, "What would be your
likelihood of getting this done?" Do you have any such
data?
Dr. Smith NeoStem has spent the last really year or two even
prior to being purchased by Phase Three looking at the
demographics and looking at the typical profile family
or individual who'd be interested in stem cells. And
although we feel that it is related to economics,
because you have to be able to afford to pay it, but
there are many individuals who are high health care
risks who are not of such a high economic bracket who
feel it very important. I think the best way to do
this is to look at the model of cord blood and see
that a lot of the newborn parents, it's actually up to
30% of live births are banking stem cells from the
cord blood, and that's not as high as an economic
household income as you're stating. They're doing it
for their children so that, God forbid, their children
get leukemia in the future, the treatment is available
for them.
Moderator We have a question from a private investor, Dr. Smith,
it's Mitchell Blatt. Please go ahead.
M. Blatt Hello, Dr. Smith. I was wondering, the current
collection and storage facilities--and I understand
that you're opening up a new facility, or attempting
to, in Las Vegas--what do you see as your 12 to 24
rollout plans to other states?
Dr. Smith Our management team is going to be very aggressive in
building out throughout the United States and building
nationwide. However, it's not in the public domain
yet, and so we can't talk about ... at this time.
Moderator And with that, Dr. Smith, I'll turn the call back to
you for any closing remarks.
Dr. Smith We thank you for participating in today's call. I'd
like to tell you how pleased we are at the
groundbreaking work we've laid out to date, and
hopefully it will continue to lead to a very
successful future for us and the health service
industry. We have a great management team in place,
and we're continuing to add to our management group
with ... in the industry. And we hope you'll keep an
eye on NeoStem and follow our progress in the coming
months. Thank you for your time today.
Moderator Ladies and gentlemen, your host is making today's call
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March 14th all the way through 11:59 p.m. April 14th.
To access AT&T's Executive replay service please dial
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conference ID of 866639.
That does conclude our NeoStem call for today. Thank
you very much for your participation, as well as for
using AT&T's Executive TeleConference Service. You
may now disconnect.