NeoStem (AMEX:NBS) is a pioneer and leader in the pre-disease collection, processing and long-term storage of adult stem cells for the general population to use in future medical applications. The Company's business model includes generating revenue through ongoing fees associated with a minimally invasive, proprietary stem cell collection process, in addition to fees charged to the centers for marketing and long-term storage. NeoStem targets its marketing efforts toward health conscious consumers to encourage them to donate and store their stem cells as a form of bio-insurance for possible use in later years or to address an emerging medical need.
The Company makes its stem cell banking services affordable through a financing program using CareCredit, a GE Money company, which allows clients to participate in a monthly payment plan with no interest over 18 months. The monthly fee includes the collection, processing, cryopreservation (freezing), and two years of storage at prices as low as $495 per month. Other plans are also available to extend the months of payment and lower the monthly fees.
NeoStem has also expanded into R&D with it exclusive licensing agreement with the University of Louisville for the identification and isolation of rare stem cells found in adult bone marrow called VSEL for short (very small embryonic-like). As the name suggests, VSELs share traits with embryonic stem cells (ESCs), including the ability to differentiate into a wide variety of cells found throughout the body.
The Company is working on a method to expand VSELs collected from individual patients while preserving their ability to differentiate in an embryonic-like manner for a wide variety of regenerative medicine applications. The use of VSELs would avoid the ethical controversies associated with ESCs, in addition to eliminating the risk of immune system reactions since VSELs originate from the patient and would not be rejected as foreign by the body.
NeoStem's initial collection center network includes single physician practices in California, Pennsylvania, and Nevada. The revenues generated by these early efforts have not been significant and NeoStem does not expect this core business to become significant. The importance of developing the stem cell collection centers is twofold: (1) to leverage the network for research (VSELs), anti-aging, cosmetic, and regenerative medicine applications and (2) to grow the network through multi-physician practices in major metro areas.
Last month, NeoStem announced an $11M private placement (led by RimAsia Capital Partners and Enhance Biomedical at $5M each) aimed at expanding its operations in China. In late 2008, NeoStem acquired control of a China regenerative medical therapy company (Shandong New Medicine Research Institute of Integrated Traditional and Western Medicine LLC) as part of the Company's efforts at expanding its medical tourism business. Through this deal, NeoStem can offer regenerative medicine therapies which are not currently available in the U.S. market.
In early May, the Company filed a patent application which covers cosmetic stem cell face lift technology while simultaneously announcing an expansion to its stem cell collection network, which is located at the Giampapa Institute for Anti-Aging Medical Therapy in Montclair, NJ. NeoStem also signed a deal for the exclusive worldwide rights to an innovative technology and pending patents that involve using a patient's own stem cells derived from their bone marrow to promote healing of chronic wounds.
Other recent developments for NeoStem include licensing the worldwide rights to Primcel, which is a stem cell product derived from a patient's own bone marrow that has demonstrated promising early-stage results for speeding up the healing of chronic wounds. The CEO of NeoStem, Dr. Robin Smith, announced in a statement that the U.S. Department of Defense appropriated $800,000 last year for NeoStem to evaluate the use of adult stem cells to treat wounds. The net amount of the grant must be distributed to the Company by October 2010 and will be $681,000.
Last week, NeoStem signed an exclusive licensing agreement for Asia with Regenerative Sciences, LLC for a medical procedure known as Regenexx. This process involves extracting stem cells from a patient's own bone marrow, isolating the mesenchymal stem cells (which can develop into bone, tendon, ligament, cartilage, and muscle), culturing the cells in a proprietary solution with elements from the patient's blood, and generating millions of stem cells over a period of 2-3 weeks. The cells are re-injected into the patient's affected joints or bones to promote tissue healing and bone/cartilage restoration as an alternative to surgery.
Another deal announced last week includes an agreement with Ceres Living (a developer and direct marketer of health and wellness products) to promote the sale of an innovative liquid nutritional supplement called AIO Premium Cellular Health, which includes fruit and green tea nutraceutical extracts. NeoStem and the Stem for Life Foundation will receive a portion of the proceeds from each sale in exchange for the Company providing Ceres Living with certain scientific literature and access to its scientific personnel.
NeoStem is expanding upon its core adult stem cell collection and banking business model into related areas such as research on VSELs along with cell-based anti-aging and regenerative medicine applications in the U.S and China. While NeoStem continues to pursue its platform business of operating a commercial autologous adult stem cell bank, its core platform business will be enhanced as the Company expands its regenerative medicine offerings and makes these available through its medical tourism initiatives.
Disclosure: No positions.
$1.88 (05/18/09)
