NeoStem Chair, CEO Smith Sends Letter to Holders: Says Co. On Track for Preserve Phase 2 Enrollment This Year

NeoStem (Nasdaq: NBS), a leader in the emerging cellular therapy market,continues to position itself for success through scientific discovery, adiversified product development pipeline that addresses cardiovascular andautoimmune diseases as well as regenerative medicine, an expanding contractdevelopment and manufacturing business that serves as its revenue generatingarm, and a professional and experienced management team.We are proud to be at the forefront of a paradigm shift in medicine towardcell therapy – a shift away from treating disease with drugs and towardtreating disease with our own cells; a shift away from treating symptoms andtoward cures for illnesses that cause the most suffering; a shift away fromchemical drug development and toward looking inside ourselves to understandand then amplify our bodies' natural repair mechanism. We firmly believe thatthe future of medicine emanates from within each of us and NeoStem isdedicated to unlocking the potential of cellular therapy for humankind.NeoStem prides itself on not being "just another biotech company." In theever-changing global economy, ingenuity is rewarded. We are building theCompany based on the foundation and sector expertise provided by our contractdevelopment and manufacturing subsidiary, Progenitor Cell Therapy ("PCT"). Asa leader in the cell therapy industry in-process development innovation andcost effective scale-up, PCT supports NeoStem's internal development of itstherapeutic programs. Our investments in our therapeutic pipeline, which wehave approached with scientific discipline and business and market analysis,include significant opportunities which are protected by an expandingintellectual property portfolio, positioning the Company for dynamic partnercollaborations.As more cellular therapies enter clinical trials and therapies start to becomecommercially available, scores of scientists, doctors and patients areawakening to a simple reality – cell therapies hold the potential to vanquisha plethora of diseases and dangerous medical conditions. NeoStem is dedicatedto its leadership role in cellular therapy and we look forward to an amazingfuture built on the accomplishments of today.We have been extremely busy and productive at NeoStem as we continue toimplement our Company's strategic growth and development plans, all the whilenever losing sight of our responsibility to the health and wellness of thepublic. Our pipeline of proprietary cell therapy products continues to developand, most notably, we are on track to complete enrollment of our PreSERVEPhase 2 clinical trial this year, investigating the Company's most advancedproduct candidate, AMR-001, in preserving heart function after a severe heartattack, with data read out 6-8 months after the last patient is infused. PCTcontinues to strengthen its presence in the contract development andmanufacturing arena. And lastly, our Company has undergone a positivecorporate change by moving our stock listing to NASDAQ intended to make usmore competitive in the marketplace and enhance exposure to institutionalshareholders, while at the same time providing investors with the best prices,the fastest execution and lowest cost per trade.Finally, our search for the brightest talent to make our Company the "best inclass" has brought us experienced industry executives that we believe willassist in maximizing shareholder value. We have recently added four new keymembers to our management team – each a seasoned executive in the field –raising the Company's profile in the industry, increasing our core knowledgeand skill base, and increasing our competitiveness amongst our peers. The teammembers include Dr. Douglas Losordo, Chief Medical Officer; Robert Dickey IV,Chief Financial Officer; Stephen W. Potter, Executive Vice President; andRobert Shaw, Vice President of Commercial Sales, PCT.I'd like to share details on some of our recent highlights and developments.CLINICAL AND DEVELOPMENT UPDATESNeoStem continues to advance its research and development efforts. Ourproprietary product development pipeline targets unmet medical needs inconditions such as cardiovascular disease (acute myocardial infarction,congestive heart failure, and traumatic brain injury), immune disorders (type1 diabetes, steroid resistant asthma, and organ rejection) and tissue repair(periodontitis, wound healing, osteoporosis, macular degeneration, acuteradiation syndrome, and other indications).The following are some of the important collaborations and updates in theCompany's research and development:AmorcyteWe are very excited and encouraged by the enrollment progress of the PreSERVEPhase 2 clinical trial, investigating the Company's most advanced productcandidate, AMR-001, in preserving heart function after a severe heart attack.We are on track to complete patient enrollment for this trial in 2013 withdata read out 6-8 months after the last patient is infused.The Amorcyte intellectual property portfolio continues to grow and AMR-001 nowhas the benefit of 4 granted U.S patents, 8 patent grants outside of the U.S.and 24 additional patents pending around the world. We are beginning theprocess of expanding applications for AMR-001 into other ischemic conditionssuch as congestive heart failure and traumatic brain injury.AthelosHuman Regulatory T cells ("Treg") therapy represents a novel approach forrestoring immune balance by enhancing T-regulatory cell number and function.NeoStem continues to advance its T cell program with the goal of developingtreatments for immune-mediated diseases such as type 1 diabetes, andinflammatory conditions such as steroid resistant asthma.In July, the Company executed agreements with the University of California,San Francisco ("UCSF") and the laboratories of Jeffrey Bluestone, PhD, andQizhi Tang, PhD, to collaborate on the development of a therapy for thetreatment of type 1 diabetes. This collaboration will advance the Company'sTreg program towards a Phase 2 trial to evaluate the efficacy of autologousTregs in type 1 diabetes, effectively advancing the Company's pipeline morequickly than if it had developed a program for this clinical indicationindependently. Under the agreements, NeoStem will manufacture a Treg productconsisting of polyclonally expanded Tregs for the planned Phase 2 trial totreat patients newly diagnosed with type 1 diabetes and will also collaboratewith Dr. Bluestone on allo-specific Tregs for organ transplant tolerance inanother anticipated clinical study. The collaboration also includes theresearch effort to develop the next generation of Treg products fortherapeutic use.In August, we engaged the services of three experts at the forefront of asthmaresearch, 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 theconsultants brings a breadth of experience in research to assist the Companyin determining the appropriate clinical endpoints for a clinical trial insteroid resistant asthma.In September, the Company announced the licensing of three families of patentsfrom UCSF. NeoStem's worldwide exclusive license to these patents providesincremental protection for the Company's Treg platform. The three patentfamilies cover methods to isolate, expand and use Tregs with therapeuticpotential for autoimmune disorders, including U.S. patent 7,722,862, whichclaims a cellular immunotherapy for the treatment of type 1 diabetes.NeoStem's patent estate for its Treg program now includes exclusive rights to22 issued patents in U.S. and major international commercial geographies andcovers isolation, activation, expansion and methods of treating or preventingcertain conditions and/or diseases using Tregs.VSEL™ TechnologyWe continue to develop our very small embryonic like stem cell (VSEL^TMTechnology) platform in pre-clinical models and expect soon to advance intoearly clinical studies that assess the therapeutic potential of VSEL^TMTechnology in wound care, bone regeneration and/or macular restoration.NeoStem also continues to receive grant awards to develop this importanttechnology, including a recent award of funds from the National Institute ofAllergy and Infectious Diseases (NIAID) supporting the development of VSEL^TMTechnology for radiation exposure.Recent pre-clinical data in animal models suggest that VSELs™ may be capableof developing into cells of all three germ layers which, if substantiated byfurther research, could imply significant potential for restorative healing.Unlike classically defined "pluripotent" stem cells, it is believed thatVSELs™ do not contribute to teratoma formation.  Independent investigators inpreclinical models have demonstrated the regenerative potential of VSELs™ andwe will continue to support preclinical and early clinical studies to furtherassess the regenerative potential of VSEL™ Technology.PROGENITOR CELL THERAPYNeoStem is capitalizing on the dramatic growth in the cell therapy industryboth for its clients and for its internal pipeline by vertically integratingthe 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 entireindustry and offers NeoStem and PCT clients cell processing and developmentcapabilities on both the East and West Coasts of the U.S. PCT is also pursuingplans to expand internationally. PCT currently provides services to over 30clients and is the only contract development and manufacturing organization("CDMO") to have worked with a client's product (Provenge®) through all of thephases of clinical trials and ultimately to FDA approval.PCT completed three process development contracts in Q2 2013, triggeringhigher revenue recognition. PCT also recently signed two new clients,including a large pharmaceutical company that is entering the cell therapysector. PCT's management team is focused on growing the CDMO business throughincreased services and product offerings, including automation technologiesgeared toward improving efficiencies and lowering cost of goods.PCT's business model uniquely positions NeoStem to take advantage of revenuesgenerated in a growing industry, while reducing its reliance on the success ofNeoStem's internal development platforms. This unique revenue-generating CDMObusiness allows NeoStem to remain current on the most innovative developmentsin the sector, informing our decisions as we seek to co-develop and/or acquirenew technologies. As the regenerative medicine market continues to grow, NeoStem is uniquelypositioned to capture the value of this market and lead the industry. Weappreciate your continued confidence in the Company's agenda and will continueto provide updates on our progress as we work to save lives and end sufferingfor the millions of people afflicted with chronic disease.Regards,Robin L Smith, M.D., MBAChairman and Chief Executive Officer