NeoStem Letter to Shareholders

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| Source: NeoStem Inc.

NEW YORK, Sept. 25, 2013 (GLOBE NEWSWIRE) --

Dear NeoStem Shareholders,

NeoStem (Nasdaq:NBS), a leader in the emerging cellular therapy market, continues to position itself for success through scientific discovery, a diversified product development pipeline that addresses cardiovascular and autoimmune diseases as well as regenerative medicine, an expanding contract development and manufacturing business that serves as its revenue generating arm, and a professional and experienced management team.

We are proud to be at the forefront of a paradigm shift in medicine toward cell therapy – a shift away from treating disease with drugs and toward treating disease with our own cells; a shift away from treating symptoms and toward cures for illnesses that cause the most suffering; a shift away from chemical drug development and toward looking inside ourselves to understand and then amplify our bodies' natural repair mechanism. We firmly believe that the future of medicine emanates from within each of us and NeoStem is dedicated to unlocking the potential of cellular therapy for humankind.

NeoStem prides itself on not being "just another biotech company." In the ever-changing global economy, ingenuity is rewarded. We are building the Company based on the foundation and sector expertise provided by our contract development and manufacturing subsidiary, Progenitor Cell Therapy ("PCT"). As a leader in the cell therapy industry in-process development innovation and cost effective scale-up, PCT supports NeoStem's internal development of its therapeutic programs. Our investments in our therapeutic pipeline, which we have approached with scientific discipline and business and market analysis, include significant opportunities which are protected by an expanding intellectual property portfolio, positioning the Company for dynamic partner collaborations.

As more cellular therapies enter clinical trials and therapies start to become commercially available, scores of scientists, doctors and patients are awakening to a simple reality – cell therapies hold the potential to vanquish a plethora of diseases and dangerous medical conditions. NeoStem is dedicated to its leadership role in cellular therapy and we look forward to an amazing future built on the accomplishments of today.

We have been extremely busy and productive at NeoStem as we continue to implement our Company's strategic growth and development plans, all the while never losing sight of our responsibility to the health and wellness of the public. Our pipeline of proprietary cell therapy products continues to develop and, most notably, we are on track to complete enrollment of our PreSERVE Phase 2 clinical trial this year, investigating the Company's most advanced product candidate, AMR-001, in preserving heart function after a severe heart attack, with data read out 6-8 months after the last patient is infused. PCT continues to strengthen its presence in the contract development and manufacturing arena. And lastly, our Company has undergone a positive corporate change by moving our stock listing to NASDAQ intended to make us more competitive in the marketplace and enhance exposure to institutional shareholders, 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 in class" has brought us experienced industry executives that we believe will assist in maximizing shareholder value. We have recently added four new key members to our management team – each a seasoned executive in the field – raising the Company's profile in the industry, increasing our core knowledge and skill base, and increasing our competitiveness amongst our peers. The team members include Dr. Douglas Losordo, Chief Medical Officer; Robert Dickey IV, Chief Financial Officer; Stephen W. Potter, Executive Vice President; and Robert Shaw, Vice President of Commercial Sales, PCT.

I'd like to share details on some of our recent highlights and developments.

CLINICAL AND DEVELOPMENT UPDATES

NeoStem continues to advance its research and development efforts. Our proprietary product development pipeline targets unmet medical needs in conditions such as cardiovascular disease (acute myocardial infarction, congestive heart failure, and traumatic brain injury), immune disorders (type 1 diabetes, steroid resistant asthma, and organ rejection) and tissue repair (periodontitis, wound healing, osteoporosis, macular degeneration, acute radiation syndrome, and other indications).

The following are some of the important collaborations and updates in the Company's research and development:

Amorcyte

We are very excited and encouraged by the enrollment progress of the PreSERVE Phase 2 clinical trial, investigating the Company's most advanced product candidate, AMR-001, in preserving heart function after a severe heart attack. We are on track to complete patient enrollment for this trial in 2013 with data read out 6-8 months after the last patient is infused.

The Amorcyte intellectual property portfolio continues to grow and AMR-001 now has 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 the process of expanding applications for AMR-001 into other ischemic conditions such as congestive heart failure and traumatic brain injury.

Athelos

Human Regulatory T cells ("Treg") therapy represents a novel approach for restoring immune balance by enhancing T-regulatory cell number and function. NeoStem continues to advance its T cell program with the goal of developing treatments for immune-mediated diseases such as type 1 diabetes, and inflammatory 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, and Qizhi Tang, PhD, to collaborate on the development of a therapy for the treatment of type 1 diabetes. This collaboration will advance the Company's Treg program towards a Phase 2 trial to evaluate the efficacy of autologous Tregs in type 1 diabetes, effectively advancing the Company's pipeline more quickly than if it had developed a program for this clinical indication independently. Under the agreements, NeoStem will manufacture a Treg product consisting of polyclonally expanded Tregs for the planned Phase 2 trial to treat patients newly diagnosed with type 1 diabetes and will also collaborate with Dr. Bluestone on allo-specific Tregs for organ transplant tolerance in another anticipated clinical study. The collaboration also includes the research effort to develop the next generation of Treg products for therapeutic use.

In August, we engaged the services of three experts at the forefront of asthma research, 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 the consultants brings a breadth of experience in research to assist the Company in determining the appropriate clinical endpoints for a clinical trial in steroid resistant asthma.

In September, the Company announced the licensing of three families of patents from UCSF. NeoStem's worldwide exclusive license to these patents provides incremental protection for the Company's Treg platform. The three patent families cover methods to isolate, expand and use Tregs with therapeutic potential for autoimmune disorders, including U.S. patent 7,722,862, which claims a cellular immunotherapy for the treatment of type 1 diabetes. NeoStem's patent estate for its Treg program now includes exclusive rights to 22 issued patents in U.S. and major international commercial geographies and covers isolation, activation, expansion and methods of treating or preventing certain conditions and/or diseases using Tregs.

VSEL™ Technology

We continue to develop our very small embryonic like stem cell (VSELTM Technology) platform in pre-clinical models and expect soon to advance into early clinical studies that assess the therapeutic potential of VSELTM Technology in wound care, bone regeneration and/or macular restoration. NeoStem also continues to receive grant awards to develop this important technology, including a recent award of funds from the National Institute of Allergy and Infectious Diseases (NIAID) supporting the development of VSELTM Technology for radiation exposure.

Recent pre-clinical data in animal models suggest that VSELs™ may be capable of developing into cells of all three germ layers which, if substantiated by further research, could imply significant potential for restorative healing. Unlike classically defined "pluripotent" stem cells, it is believed that VSELs™ do not contribute to teratoma formation.  Independent investigators in preclinical models have demonstrated the regenerative potential of VSELs™ and we will continue to support preclinical and early clinical studies to further assess the regenerative potential of VSEL™ Technology.

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.

Regards,

Robin L Smith, M.D., MBA
Chairman and Chief Executive Officer

About NeoStem, Inc.

NeoStem, Inc. ("NeoStem" or the "Company") is a leader in the emerging cellular therapy industry. Our business model includes the development of novel proprietary cell therapy products as well as operating a contract development and manufacturing organization providing services to others in the regenerative medicine industry. The combination of a therapeutic development business and revenue-generating service provider business provides the Company with capabilities for cost effective in-house product development and immediate revenue and cash flow generation.

For more information on NeoStem, please visit www.neostem.com.

Forward-Looking Statements for NeoStem, Inc.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current expectations, as of the date of this press release, and involve certain risks and uncertainties. Forward-looking statements include statements herein with respect to the successful execution of the Company's business strategy, including with respect to the Company's research and development and clinical evaluation efforts as well as efforts towards development of cellular therapies, including with respect to AMR-001, the future of the regenerative medicine industry and the role of stem cells and cellular therapy in that industry and the Company's ability to successfully grow its contract development and manufacturing business. The Company's actual results could differ materially from those anticipated in these forward- looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the "Risk Factors" described in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 11, 2013 and in the Company's periodic filings with the SEC. The Company's further development is highly dependent on future medical and research developments and market acceptance, which is outside its control.

NeoStem
Eric Powers
Manager of Communications and Marketing
Phone: +1-212-584-4173
Email: