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.
