NeoStem, Inc. (AMEX: NBS; Stock Twits: $NBS) is engaged in the development and manufacturing of cell-based therapies in the U.S. Its January 2011 acquisition of Progenitor Cell Therapy, LLC ("PCT") is central to the Company's strategic mission of capturing the paradigm shift to cell therapy.

1. WBB Securities, LLC
Stephen G. Brozak sbrozak@wbbsec.com (908) 518-7610
Neostem, Inc. (NBS) (08/16/2011)
Upgrading from Hold to Speculative Buy and adjusting Price Target to $1.40
Rating Legend:
Strong Buy-Should be aggressively purchased.
Buy-Should be purchased on market weakness.
Hold-Fairly valued.
Sell-Stock should be sold on market strength.
Sell Short-Should be aggressively sold.
Speculative Buy – For aggressive accounts
Current Price $0.74
12-Month Trading Range $0.60-$2.15
Market Capitalization (Mil) $69.56
Shares Outstanding (Mil) 94.00*
12-Month Price and Trading Volume Avg. Daily Volume 464,966
L. T. Debt (Mil) $5.9
You Gotta Have Heart Dividend/Yield N/A
On July 14, 2011, NeoStem, Inc. (NBS) announced an Book Value P/S 0.83
agreement to acquire Amorcyte, Inc., a company focusing
on discovering novel treatments for cardiovascular NASDAQ Composite 2,555.20
disease. Amorcyte’s lead product candidate, AMR-001, S&P 500 1,204.49
has completed a Phase I study of acute myocardial 12 Month Target Price $1.40
infarction (AMI) patients and expects to begin a Phase II Source: QUODD
*146 Million Shares Fully Diluted
study by 1Q 2012 or earlier with a mid 2013 readout of Cash EPS 2010 2011 2012
results. Q1 (0.12)A (0.14)A
Q2 (0.11)A (0.13)A
AMR-001 consists of a patient’s own bone marrow cells
Q3 (0.13)A
(bone-marrow derived mononuclear cells), processed in
Q4 (0.10)A
facilities of Progenitor Cell Therapy, LLC (an NBS-owned Year (0.46)A (0.55)E (0.44)E
subsidiary) to create CD34+CXCR4+-rich pharmaceutical-
grade cells. These cells are reinjected through coronary P/E NM NM NM
arteries into damaged areas of the heart 6 to 11 days after EPS Growth NM NM NM
the patient experiences an (AMI). The CD34+ cells are FY Rev. (Mil) 69.8A 10.0E** 15.0E**
**Exclusive of
then able to have an anti-apoptotic effect in addition to a FY:DEC Suzhou Erye Revs
See Page 4 for Management Biographies
positive angiogenic effect in the area around the infracted
tissue (the peri-infarct zone). The CXCR4 receptors on the cells allow them to home in on areas that
are ischemic, thus allowing the cells to concentrate where needed rather than randomly disperse
throughout the bloodstream. This is essentially a mechanism for damage control, in which the heart
can preserve as much viable tissue as possible, and in doing so, prevent the classic progression to
Congestive Heart Failure and death that is seen in severe heart attack patients. This is a one-time
treatment that holds promise to reduce continuing damage to heart muscle after an AMI, to reduce
patient care cost over time and to improve quality of life for those patients who are significantly
affected by ischemic heart disease.

2. NBS’s product has particular promise given that it is an autologous product, and thus avoids the many
negative consequences that plague allogeneic products. AMR-001’s administration is worth
highlighting. First, it utilizes the homing potential granted by the CXCR4 receptors, allowing for a larger
percentage of cells to remain where they can be effective. Second, AMR-001 is administered via the
IRA (Infarct Related Artery), and thus is performed in an identical manner as the original coronary
cauterization. This allows for ease of use, consistent deployment of cells and avoids the potential risks
arising from intra-cardiac injections of cells.
NBS has conducted favorable phase I clinical trials that make AMR-001 an ideal candidate for further
trials. The company has a well thought out phase II clinical trial planned that is intended to show clear
clinical efficacy in enrolled patients.
Heart disease is the leading cause of death in the United States. Over 1 million Americans suffer AMIs
each year, with a significant proportion of them having significant cardiac dysfunction. This number is
expanded many fold when international markets are considered. Thus we believe AMR-001 has
potential to serve a large worldwide population. Given the grim statistics of AMIs in the U.S. and the
promise of AMR-001 to provide benefit to these patients, we are raising our rating on NBS to
Speculative Buy with a 12-Month Price Target of $1.40
AMR-001 Trials
Phase I Study
The Phase I study was conducted by the Emory University School of Medicine under Principal
Investigator Dr. Arshed Quyummi, M.D., Professor of Medicine and Cardiology. This study
performed autologous intracoronary infusions of bone-marrow derived CD34+ cells in patients with
significant cardiac dysfunction post-STEMI. Treatment was administered in the golden period of 6
to 9 days after infarct-related artery stent placement. Patients were dosed at four dose levels in this
safety and tolerability study. The secondary objective of the study was to assess the effect on
cardiac function and cardiac perfusion in the infarcted area.
Primary outcome measures for the Phase I study were cardiac function at two time points (3 and 6
months follow-up), compared to baseline measures obtained prior to CD34+ cell product infusion.
Secondary outcome measures include perfusion of the infarct region at 6 months follow-up
compared to baseline measures obtained prior to CD34+ cell product infusion. The study also
established a threshold dose of 10 million cells injected per patient.
Inclusion criteria were:
Patients age 18 - 75 years
Acute ST elevation myocardial infarction meeting ACC/AHA criteria, with symptoms of chest
pain within 3 days of admission. Criteria include ST elevation > 1mm in limb leads or 2 mm
in two or more precordial leads and increased levels of troponin, CPK MB or both)
NYHA heart failure class of I, II or III
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3. Phase II Study
The Phase II trial will include 150 patients, 75 of whom will be treated with AMR-001 and 75 will
receive a placebo. To be a candidate for this trial, the patient must have had experienced a STEMI,
have undergone cardiac stent placement (which is standard of care), and after 96 hours have
undergone a cardiac magnetic resonance exam that demonsrates an ejection fraction of less than
or equal to 48 percent in addition to abnormal cardiac wall motion.
Treated patients will receive a dose greater than 10 million cells, two to four-times the threshold
dose established in the Phase I trial. Of note, treatment doses of up to 5 to 10 times that amount
are permitted by FDA in this study.
The study is expected to be completed in one year and will measure clinically-significant end-points.
Six month measurements will include coronary perfusion, preservation of heart muscle function and
quality of life. In years one, two and three, patients will be followed for major cardiac events,
including heart failure, myocardial infarction and death.
AMR-001’s phase II trial will be considered successful if positive end-points of heart function are
observed. These will be quantified by maintenance of ejection fraction, improved wall motion,
increased myocardial contractility, and improved heart volumes in the treated group versus the
control group. This should also be met by improvement in quality of life (QoL) without safety signals.
Should all measures trend positively NeoStem hopes to initiate a pivotal study prior to 2 and 3 year
MACE read-outs upon which point a Phase II/III study may qualify as a supporting trial for approval.
Other NBS Initiatives
In addition to AMR-001, NBS operates within three distinct business segments: the U.S. market for
adult stem cells, the China market for adult stem cells, and the China market for pharmaceuticals.
U.S. Adult Stem Cells
In the U.S., NBS provides stem cell collection, processing and storage services through a network
of centers primarily in the Southern California and Northeastern U.S. NBS allows healthy individuals
to donate their own stem cells to be used therapeutically later in life. The therapeutic applications for
which the stem cells would be used are under each collection center’s discretion. NBS does not
participate in any clinical decision-making in the U.S. Progenitor Cell Therapy; LLC provides the
commercial collection and processing services.
On April 27, 2010, NBS announced the launch of a new adult stem cell collection center and
research and development laboratory in Cambridge, Massachusetts. The company now has a
network of collection centers in the U.S.
NBS licensed Very Small Embryonic-Like (VSEL) technology from the University of Louisville to
research and develop potential diagnostic and therapeutic products based on very small embryonic-
like stem cells, found in bone marrow. The company believes vast therapies could be developed
from VSEL technology including those for cardiovascular, neural and ophthalmic diseases. VSEL
technology holds the promise as a naturally pluripotent cell and has the potential to move the
regenerative adult stem cell space to the next level of therapeutic value.
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4. China Adult Stem Cells
NBS’s Chinese adult stem cell efforts include creating a separate China-based stem cell operation,
constructing a new research and development laboratory and processing facility in Beijing that will
compliment PCT’s CMO operations as well. In addition, NBS is today providing stem cell therapies
to a network of hospitals and obtaining stem cell product licenses in regenerative medicine.
To develop its regenerative medicine pipeline in China, NBS acquired an exclusive license in Asia
from Regenerative Sciences, Inc. for a procedure called Regenexx™. The Regenexx procedure
involves extracting mesenchymal stem cells from the bone marrow to potentially treat various
musculoskeletal diseases. The company has partnered with Shandong Wendeng Orthopedic
Hospital to treat patients with adult stem cell therapies and conduct clinical research in orthopedic
applications.
NBS has also in-licensed certain technologies from Vincent Giampapa, M.D. for skin rejuvenation
therapies based on autologous adult stem cells. The company intends to eventually launch a range
of anti-aging and cosmetic applications in China.
China Pharmaceuticals
In October 2009, NBS completed a merger China Biopharmaceuticals Holdings, Inc., and as a
result, acquired a 51 percent stake in Suzhou Erye Pharmaceuticals Company Ltd. Erye is a
Chinese pharmaceutical company primarily focused on the manufacturing and distribution of
generic antibiotic products throughout China.
Valuation
Our valuation of NBS is based on a sum of the parts analysis. We believe NBS’s greatest asset is
its Amorcyte Phase II clinical technology at $100M. We also believe that the Suzhou Erye
Pharmaceuticals assets have a value of $30M at a minimum. Using a three-times sales model for
Progenitor Cell Therapy, we add an additional $30M. We use a value of $20M for the NBS (VSEL)
technology and finally a $20M price for both cash and remaining assets. Assuming a fully diluted
share count of 146 million shares, we arrive at our adjusted 12-month price target of $1.40 per
share.
Management Biographies
Robin L. Smith – Chairman & CEO, M.D., MBA, joined as Chairman of the Advisory Board in
September 2005 and, effective June 2, 2006, became the Chief Executive Officer and Chairman of
the Board. Dr. Smith received a medical degree from Yale University and a master’s degree in
business administration from the Wharton School. From 2000 to 2003, Dr. Smith served as
President and Chief Executive Officer of IP2M, a multi-platform media company specializing in
healthcare. From 1998 to 2000, she was Executive Vice President and Chief Medical Officer for
HealthHelp, Inc., a National Radiology Management company. She currently serves on the Board
of Trustees of the NYU Medical Center Board, is a member of the Board of Directors for the New
York University Hospital for Joint Diseases, and serves on the Board of Choose Living. Dr. Smith is
the President and serves on the Board of Directors of The Stem for Life Foundation.
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5. Larry A. May, Chief Financial Officer since January 2006. Mr. May, joined Neostem in
September 2003 to assist with licensing activities. He worked for Amgen from 1983 until 1998 in
several positions of increasing responsibility, becoming Vice President/Treasurer in 1997. From
1998 to 2000, Mr. May served as the Senior Vice President, Finance and Chief Financial Officer of
Biosource International, Inc. From 2000 to 2003, Mr. May served as the Chief Financial Officer of
Saronyx, Inc. From August 2003 to January 2005, Mr. May served as the Chief Financial Officer of
NS California. In March 2005, Mr. May was appointed CEO of NS California and in May 2005 he
was elected to the Board of Directors of NS California. He received a Bachelor of Science degree in
Business Administration & Accounting in 1971 from the University of Missouri.
Catherine M. Vaczy, Vice President and General Counsel since April 2005. From 1997 through
2003, Ms. Vaczy held various senior positions at ImClone Systems Incorporated, most recently as
its Vice President, Legal and Associate General Counsel. From 1988 through 1996, Ms. Vaczy
served as a corporate attorney at the New York City law firm of Ross & Hardies. Ms. Vaczy is
Secretary and serves on the Board of Directors of The Stem for Life Foundation. Ms. Vaczy
received a Bachelor of Arts degree in 1983 from Boston College and a Juris Doctor from St. John’s
University School of Law in 1988.
Jason Kolbert, Vice President of Strategic Business Development, MBA was formerly a
managing director of National Securities where he founded the firm's biotechnology research effort.
He spent the past 16 years on Wall Street as an analyst, both managing biotechnology dedicated
investments (buy-side) and covering biotechnology companies (sell-side). Prior to his career on
Wall Street he spent several years in the pharmaceutical industry with Schering-Plough in Japan.
Mr. Kolbert has an undergraduate degree in Chemistry (New Paltz) and an MBA in Finance
(University of New Haven).
Ian Zhang, President of NeoStem China and Managing Director since September 2010. He
held management and scientific positions in healthcare and biotechnology industries for the past
ten years. Since January 2008, he held the position of Head of Corporate Development and Head
of Integration for Asia Pacific at the Life Technology Corporation. In those positions, Mr. Zhang was
responsible for strategic initiatives in the region to build capabilities and capture growth, identifying
key investment markets in China and other regions, and managing acquisition and integration.
Before that, he was President and General Manager of Dynal Biotech (Beijing) Ltd, a wholly owned
subsidiary of Invitrogen serving the clinical transplant diagnostic market as well as medical research
institutions and government agencies. Mr. Zhang holds a Ph. D. in biotechnology from Simon
Fraser University and a MBA from the University of Chicago.
Andrew L. Pecora, Chief Medical Officer, Progenitor Cell Therapy, M.D., F.A.C.P. since March
1999. He is scheduled to join the Board of Directors for NeoStem pending Board approval. Dr.
Pecora currently serves as Vice President of Cancer Services and Chief Innovations Officer of the
John Theurer Cancer Center at Hackensack University Medical Center, and Co-Managing Partner
of the Northern New Jersey Cancer Center (NNJCC), which is a private physicians practice group
affiliated with HUMC.
Dr. Pecora currently serves as Chairman of the Board of Directors of Tetralogics, a private venture
funded Biotechnology Company developing small molecules for cancer therapy and on the Board
of directors of Cancer Genetics, a private venture funded cancer Diagnostics Company. Dr. Pecora
is a Professor of Medicine at the University of Medicine and Dentistry of New Jersey. He serves on
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6. the Board of Directors for the American Society for Blood and Marrow Transplantation. In addition,
he has also served on the Board of Directors for the International Society of Hematotherapy and
Graft Engineering, now the International Society for Cellular Therapy; the Accreditation Committee
of the Affiliated Physicians Network; and as an Inspector for the Foundation for Accreditation of
Hematopoietic Cell Therapy.
Dr. Pecora received his medical degree from the University of Medicine and Dentistry of New
Jersey, graduating with honors. He went on to complete his medical education in internal medicine
at New York Hospital and in hematology and oncology at Memorial Sloan-Kettering Cancer Center,
both in New York City. He is board certified in internal medicine, hematology, and oncology.
Robert A. Preti, President and Chief Scientific Officer, Progenitor Cell Therapy, Ph.D. since
March 1999. Dr. Preti is PCT's Co-Founder, President, and Chief Scientific Officer, and a member
of the Company's Board of Managers. Previous positions held by Dr. Preti include Scientific and
Laboratory Director of Hackensack University Medical Center's stem cell processing and research
laboratory and Scientific Director of the Clinical Services Division at the New York Blood Center.
Dr. Preti is a founding member of the International Society for Cellular Therapies, formerly the
International Society for Hematotherapy and Graft Engineering, served on its Executive Committee
and Board of Directors for 10 years, and serves on the Editorial Board for the society’s
journal, Cytotherapy. He currently serves in his fourth term as Director for the AABB. Dr. Preti
received his Doctor of Philosophy degree from New York University, graduating with distinction.
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7. Distribution of Ratings and Disclosure of Banking Relationships: The following table shows WBB’s
ratings distribution expressed as a percentage of all securities rated as of the end of the most
recent calendar quarter, as well as the percentage of subject companies within each rating category
for whom WBB has provided investment banking services within the previous 12 months.
Percentage of Percentage of
Covered Securities Banking Clients
Buy 68.4% 11.5%
Hold 10.5% 0%
Sell 21.1% 0%
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