NeoStem Raises $11 Million to Increase China Operations

NeoStem, Inc. (AMEX: NBS) raised $11 million from a private placement with Asian investors. Much of the money will be spent to increase the company’s China operations. In November 2008, NeoStem gained control over a China regenerative medical therapy company, Shandong New Medicine Research Institute of Integrated Traditional and Western Medicine LLC. NeoStem says it will expand its medical tourism business, offering regenerative therapies that are not available in the West. NeoStem also operates adult stem cell collection and storage centers in the US.

The investors in the new NeoStem offering are RimAsia Capital Partners, LP ($5 million), a pan-Asia private equity firm that partners with leading Asian families and companies; Enhance Biomedical Holding Corporation ($5 million), based in Shanghai, and Elancrest Investments Ltd. ($1 million), a Singapore-based firm. In September 2008, RimAsia Capital Partners made its first $1.25 million investment in NeoStem.

The new capital will also support the development of NeoStem's VSEL (very small embryonic-like stem cells) technology, which was licensed from the University of Louisville. NeoStem said it may make other China acquisitions with some of the money, and it will repay a $1.1 million bridge loan from RimAsia that was advanced earlier this year.

The financing consists of units priced at $12.50 each, with each unit consisting of one share of the Company's Series D Convertible Redeemable Preferred Stock and ten warrants. Each warrant allows the holder to purchase one share of common stock at a price of $2.50. The warrants are callable if NeoStem’s common stock trades at a price equal to $3.50.

NeoStem’s stock price dropped 16 cents to $1.02 following the news. At this price, the company has a market capitalization of $8 million. During the past 52 weeks, the company has traded in a range from $.41 to $2.15.

Disclosure: none.

Comments

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Apr 14 07:57 PM