A Medical Device Daily

NeoStem (New York) reported completing a private placement of $11 million from three Asia-based investors, including, it said, "a private equity firm operating in partnership with strategic investors drawn from leading Asian families and businesses."

The financing consists of units priced at $12.50 a unit, each unit consisting of one share of the company's Series D convertible redeemable preferred stock and 10 warrants each to purchase one share of common stock (resulting in an equivalent price of $1.25 per common share, plus an attached warrant).

The warrants have a per-share exercise price equal to $2.50, callable by the company if the common stock trades at a price equal to $3.50. Subject to a vote of the company's shareholders and the rules of the NYSE Amex, the warrants will become exercisable for a period of five years, and each share of Series D convertible redeemable preferred stock will automatically convert into 10 shares of common stock.

The investing firms are RimAsia Capital Partners, a pan-Asia private equity firm operating in partnership with various Asian families and companies, investing $5 million; Enhance Biomedical Holding (Shanghai), investing $5 million; and Elancrest Investments (Singapore), investing $1 million. RimAsia Capital Partners previously invested $1.25 million in NeoStem last September.

NeoStem said the new funds will support development of its very small embryonic-like (VSEL) stem cells technology, licensed from the University of Louisville (Louisville, Kentucky), and to advance expansion activities in China, including those relating to its pending acquisitions and medical tourism activities, travel by people whose main purpose is to receive medical treatment in a foreign country not yet available in their own nation.

NeoStem said that through connections with physicians in China and the U.S., it will connect U.S. citizens to "advanced therapies not yet available in the U.S. and attract people from other countries to seek safe and effective regenerative therapies as they become available here."

A portion of the funds also will be used to expand U.S.-based operations, and a portion will be used to repay $1,125,000 in bridge financing from RimAsia Capital Partners in February and March, interest on the bridge financing and other costs advanced by RimAsia for the company's expansion in China.

Dr. Robin Smith, CEO/chairman of NeoStem, said, "Our relationships with our business partners in China continue to deepen as we recognize increasing areas of synergies among our innovative stem-cell technologies, products and services, and business models. When these acquisitions are completed, we anticipate NeoStem will benefit greatly from expanded new markets, distribution channels and production capabilities for a growing pipeline of regenerative drugs and procedures offered in the world's two largest economies."

Eric Wei, managing partner of RimAsia Capital, said, "We are extremely optimistic about the growth opportunities for NeoStem based on its multi-pronged plan to capitalize on a growing PRC-based network. We are glad to be joined by other investors in Asia who recognize the huge market potential for stem cell therapies in the PRC ..."

The securities were sold without registration under the Securities Act of 1933 and may not be resold in the U.S. or to U.S. persons unless in accordance with other guidelines of the law.

NeoStem manages a network of adult stem cell collection centers in U.S. metropolitan areas, enabling people to store their own, autologous stem cells when they are young and healthy for their personal medical need in the future. The company also is pursuing R&D activities through the purchase of an exclusive technology license to identify and isolate VSEL stem cells with several characteristics found in embryonic stem cells.

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