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Neostem (NBS) Closes Divestiture Of Its Ownership Interest In China's Suzhou Erye

 November 13, 2012 12:07 PM


(By Balaseshan) Neostem Inc. (NYSEAMEX: NBS) said it has closed the divestiture of its 51% ownership interest in China's generic pharmaceutical company Suzhou Erye Pharmaceutical Co. Ltd.

The divestiture provides NeoStem with $12.28 million in cash and removes from the company's balance sheet over $30 million in short and long-term debt obligations.

Suzhou Erye also returns 1.04 million shares representing about 0.7% of the company's outstanding common stock, 1.17 million stock options representing about 5.1% of Neostem's outstanding options and 640,000 warrants to purchase common stock held by Suzhou Erye representing about 1.1% of the company's outstanding warrants.

[Related -Markets Up On Easing Of U.S. Debt Fears, KO, IBM Strong Earnings]

Suzhou Erye divestiture brings non-dilutive capital that bolsters Neostem's cash position in the United States, lowers legal and financial reporting expenditures, simplifies its financial statements and focuses efforts exclusively on the rapidly growing cell therapy industry.

"The divestiture also paves the way for the Company to qualify for new funding through the National Institutes of Health (NIH) Small Business Innovation Research (SBIR) program which would support our pre-clinical development of VSEL Technology," said Robin Smith, Chairman and CEO of NeoStem.

NeoStem said it will also be able to invest more resources into its cell therapy development and contract manufacturing activities.

NeoStem is a provider of adult stem cell collection, processing and storage services in the United States, enabling healthy individuals to donate and store their stem cells for personal therapeutic use.

[Related -Earning Scan: KID, DSTI, CREG, GOK, NBS]

In addition, the company collects and stores cord blood cells of newborns which help to ensure a supply of autologous stem cells for the child should they be needed for future medical treatment.

NBS is trading up 4.03% at $0.645 on Tuesday. The stock has been trading between $0.30 and $0.90 for the past 52 weeks.

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