NeoStem Announces Second Quarter 2014 Financial Results and Provides Business Update

NeoStem Announces Second Quarter 2014 Financial Results and Provides Business Update

NEW YORK, Aug. 7, 2014 (GLOBE NEWSWIRE) -- NeoStem, Inc. (Nasdaq:NBS), a leader in the emerging cellular therapy industry, today provided an update on the progress of its business and reported second quarter 2014 financial results.

Notable achievements in 2014 year to date include:

"NeoStem has had an exciting first half as we make progress towards our goal of delivering transformative cell based therapies. We expect to continue to build on our progress through the rest of 2014 with a number of important programs," said Dr. Robin Smith, Chairman and CEO of NeoStem. These include:

Dr. Smith continued, "A review of the current status of the cell therapy sector reveals NeoStem as a standout enterprise given its multi-dimensional and diversified approach to accelerating its clinical pipeline by acquisition, internal executive hires and pursuing multiple independent platforms so as not to limit our capacity to grow shareholder value. The key drivers of our near and longer term growth will relate to the generation of clinical data and the diversity of our platforms."

Financial Results for the Second Quarter of 2014 (all comparisons are with the Second Quarter of 2013):

Total revenue for the three months ended June 30, 2014 was $4.5 million, up 3 percent from $4.4 million for the prior year period. Clinical services and reimbursable revenue, representing approximately 80% of total revenues, increased slightly compared with the prior year period. Of note, the number of clinical service contracts for process development in the current year nearly doubled, resulting in $2.1 million of deferred revenue as of June 30, 2014. This revenue will be recognized in future periods upon completion of the associated contracts.

For the three months ended June 30, 2014, research and development expenses were $5.8 million compared with $4.0 million for the quarter ended June 30, 2013, an increase of $1.8 million. The increase was primarily comprised of the following:

Selling, general and administrative expenses were $7.4 million, up from $4.3 million a year ago. The increase was related to increased corporate development activities, including those associated with the acquisition of CSC, expenses associated with the additional CSC operating activities since the acquisition date, increased corporate infrastructure needed to support the Company's expanded clinical activities, and higher equity-based compensation paid in exchange for services.

Net loss for the three months ended June 30, 2014 was $12.8 million compared with $8.6 million for the three months ended June 30, 2013. Net loss for the six months ended June 30, 2014 was $26.6 million (or $19.4 million when excluding non-cash charges - see appendix for reconciliation) compared with $17.5 million for the six months ended June 30, 2013 (or $13.1 million when excluding non-cash charges - see appendix for reconciliation).

At June 30, 2014 NeoStem's cash and cash equivalents, and marketable securities totaled $33.8 million. This compares with cash and cash equivalents of $46.1 million at December 31, 2013.

Use of Non-GAAP Financial Measures

The Company uses Net Loss Excluding Non-Cash Charges as a non-GAAP financial measure in evaluating its performance. This measure represents net loss, less equity-based compensation, depreciation and amortization, and other non-cash adjustments included in net loss. The Company believes that providing this measure to investors provides important

supplemental information of its performance and permits investors and management to evaluate the core operating performance and cash utilization of the Company by excluding the use of these non-cash adjustments. Additionally, the Company believes this information is frequently used by securities analysts, investors and other interested parties in the evaluation of performance. Management uses, and believes that investors benefit from, this non-GAAP financial measure in assessing the Company's operating results, as well as in planning, forecasting and analyzing future periods.

Net Loss Excluding Non-Cash Charges has limitations as an analytical tool, and investors should not consider this measure in isolation, or as a substitute for analysis of the Company's results as reported under generally accepted accounting principles in the United States ("U.S. GAAP"). For example, this measure does not reflect the Company's cash expenditures, future requirements for capital expenditures, contractual commitments, or cash requirements for working capital needs. Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced in the future, and Net Loss Excluding Non-Cash Charges does not reflect any cash requirements for such replacements. Given these limitations, the Company relies primarily on its U.S. GAAP results and uses the Net Loss Excluding Non-Cash Charges measure only as a supplemental measure of its financial performance and cash utilization.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current expectations, as of the date of this press release, and involve certain risks and uncertainties. Forward-looking statements include statements herein with respect to the successful execution of the Company's business strategy, including with respect to the Company's ability to develop and grow its business, the successful development of cellular therapies, including with respect to the Company's research and development and clinical evaluation efforts in connection with the Company's Targeted Cancer Immunotherapy Program, Ischemic Repair Program and Immune Modulation Program, the future of the regenerative medicine industry and the role of stem cells and cellular therapy in that industry and the performance and planned expansion of the Company's contract development and manufacturing business. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the "Risk Factors" described in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2014 and Current Report on Form 8-K filed with the Securities and Exchange Commission on May 8, 2014 and in the Company's periodic filings with the SEC. The Company's further development is highly dependent on future medical and research developments and market acceptance, which is outside its control.

CONTACT: Investor Contact:

LifeSci Advisors, LLC

Phone: +1-646-597-6979

Email: mrice@lifesciadvisors.com

Manager of Communications and Marketing

Phone: +1-212-584-4173

Email: epowers@neostem.com