NeoStem Receives Notification Of $1.2 million NIH Grant Award For First Clinical Study Of VSELTM Technology In Humans

NeoStem, Inc. (NYSE:NBS ("NeoStem" or the "Company"), an emerging leader in the fast growing cell therapy industry, today announced that it has been awarded a two year grant totaling $1,221,854 for "Repair of Bone Defects with Human Autologous Pluripotent Very Small Embryonic-Like Stem Cells (VSEL)", grant number 2R44DE022493-02A1, from the National Institute of Dental and Craniofacial Research (NIDCR), a division of the National Institutes of Health (NIH). This peer reviewed grant is to support a Phase 2 investigation and first approved NIH clinical study of VSELs^TM in humans. The study will be headed by Denis O. Rodgerson, Ph.D., Director of Grants and Academic Liaison for NeoStem, in collaboration with co-investigators Drs. Russell Taichman and Laurie McCauley of the University of Michigan. Enrollment for this study is expected to begin in 2013.

This award will fund the evaluation of VSEL^TM stem cells as a potential treatment for periodontitis. The product candidate, an autologous therapy derived from a patient's own stem cells, is to be developed for use in the regeneration of bone tissue damaged by this disease. The award includes $706,682 for the first year and $515,172 for the second year of the project, and will cover the cost of the Investigational New Drug (IND) submission to the FDA for the product candidate.

Dr. Denis O. Rodgerson, Director of Grants and Academic Liaison for NeoStem, said, "We are pleased and honored that NIH has agreed to support further studies on bone regeneration by using VSEL^TM stem cells. This is an extension of our successful NIH funded collaboration with Dr. Taichman showing the production of human bone from human VSELs^TM in a mouse model."

Periodontal disease is prevalent in the U.S. and affects up to 90% of the world population. The most severe cases of periodontal disease affect between 5% and 15% of the U.S. population, or between 15 and 47 million Americans. The incidence of periodontal disease is estimated to be between 1 and 3 million Americans annually, and growing at a 7% rate each year. Studies have shown that periodontal inflammation could have a role in the initiation or progression of coronary heart disease and stroke. Market research experts have estimated that severe periodontal disease represents a market between $1.25 and $1.5 billion annually.

Dr. Russell Taichman, Major Ash Collegiate Professor and Co-Director of the Scholars Program in Dental Leadership, Department of Periodontics & Oral Medicine, University of Michigan stated, "I am thrilled for the possibilities that this award opens. The chance to continue to partner with NeoStem to further develop regenerative therapies is significant. The validation that this award brings and the opportunity to establish a proof of concept, which may impact human health, is truly rewarding." Dr. Laurie McCauley, The William K. and Mary Anne Najjar Professor, Division of Periodontics Department of Periodontics and Oral Medicine, University of Michigan added, "This novel cell based therapeutic approach looks to validate scientifically sound pre-clinical studies and provide a vital translation to improved human patient care."

NeoStem has a worldwide exclusive license to VSEL™ technology which uses very small embryonic-like stem cells, a heterogeneous population of stem cells found in adult bone marrow that have properties similar to those of embryonic stem cells. NeoStem has shown that very small embryonic-like stem cells can be mobilized into the peripheral blood, enabling a minimally invasive means for collecting what it believes to be an important population of stem cells that may have the potential to achieve the positive benefits associated with embryonic stem cells without the ethical or moral dilemmas or the potential negative biological effects associated with embryonic stem cells.

Dr. Robin L. Smith, Chairman and CEO of NeoStem, added, "We are very excited about this important step of funding for what will be the first human clinical study for our VSEL^TM technology. Not only will this study expand our knowledge of how autologous cell therapy can treat periodontitis and other bone defects, but it represents a milestone for NeoStem as we move our development of VSEL^TM technology beyond animal models and into the clinic, paving the way for other potential VSEL^TM trials."

About NeoStem, Inc.

NeoStem, Inc. continues to develop and build on its core capabilities in cell therapy, capitalizing on the paradigm shift that we see occurring in medicine. In particular, we anticipate that cell therapy will have a significant role in the fight against chronic disease and in lessening the economic burden that these diseases pose to modern society. We are emerging as a technology and market leading company in this fast developing cell therapy market. Our multi-faceted business strategy combines a state-of-the-art contract development and manufacturing subsidiary, Progenitor Cell Therapy, LLC ("PCT"), with a medically important cell therapy product development program, enabling near and long-term revenue growth opportunities. We believe this expertise and existing research capabilities and collaborations will enable us to achieve our mission of becoming a premier cell therapy company.

Our contract development and manufacturing service business supports the development of proprietary cell therapy products. NeoStem's most clinically advanced therapeutic, AMR-001, is being developed at Amorcyte, LLC ("Amorcyte"), which we acquired in October 2011. Amorcyte is developing a cell therapy for the treatment of cardiovascular disease and is enrolling patients in a Phase 2 trial to investigate AMR-001's efficacy in preserving heart function after a heart attack. Athelos Corporation ("Athelos"), which is approximately 80%-owned by our subsidiary, PCT, is collaborating with Becton-Dickinson in the early clinical exploration of a T-cell therapy for autoimmune conditions. In addition, pre-clinical assets include our VSEL^TM Technology platform as well as our mesenchymal stem cell product candidate for regenerative medicine. Our service business and pipeline of proprietary cell therapy products work in concert, giving us a competitive advantage that we believe is unique to the biotechnology and pharmaceutical industries. Supported by an experienced scientific and business management team and a substantial intellectual property estate, we believe we are well positioned to succeed.