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Medistem Inc. Annual Letter to Shareholders

SAN DIEGO, CA -- (Marketwire) -- 01/04/13 -- Medistem Inc. (PINKSHEETS: MEDS) today issues the following letter to shareholders.

Dear Fellow Shareholders,

2012 was marked by significant progress in the development of the Endometrial Regenerative Cell (ERC), our new universal donor "stem cell drug." Most significantly, we initiated a double blind, placebo controlled clinical study in patients with end stage heart failure, in which ERC were administered via the Medistem's patent-pending minimally invasive procedure. The clinical trial comprises three escalating doses of ERC with cohorts of 20 patients per dose. To date 14 patients have been treated with no adverse effects, thus demonstrating feasibility of the administration procedure, as well as safety of the cells. Because it is a double blind study, efficacy will not be known until the trial is completed. The clinical trial is being conducted at the Backulev Center for Cardiovascular Surgery in Moscow, Russia, by Academician Leo Bockeria. The company also initiated a 15 patient critical limb ischemia trial in China in collaboration with Shanghai Jia Fu Medical Apparatus Inc. To date two patients have been treated. The trial is based on the Medistem critical limb ischemia study that has been cleared by the FDA.

In addition, we licensed from Yale University the world-wide rights for a patent application using ERC to treat Type 1 diabetes. We also initiated a program in type 1 diabetes, with the goal of filing an Investigational New Drug application before the end of 2013 to allow for clinical trial initiation.

In 2012, researchers at the National Institutes of Health (NIH) independently verified and published a peer reviewed article confirming ERC possess a markedly higher expression of genes associated with new blood vessel formation and stem cell potency compared to bone marrow mesenchymal stem cells. The publication may be found at http://www.translational-medicine.com/content/pdf/1479-5876-10-207.pdf

In addition, our intellectual property was further enhanced with the issuance of patent #8,241,621 covering the use of fat derived stem cells for treatment of autoimmune conditions such as rheumatoid arthritis, type 1 diabetes, and multiple sclerosis. We have also filed 2 patent applications covering the use of ERC for radiation protection and treatment of traumatic brain injury.

Also, in collaboration with several corporate and academic institutions we published a total of 7 peer reviewed papers in 2012 on collaborative breakthroughs we made in the areas of hepatitis, cancer, and prevention of transplant rejection.

Additionally, this year we added two new advisory board members including Gene Ray, Ph.D., and Alexander Gershman, M.D., Ph.D. Dr. Ray was founder of the Titan Corporation, where he served as CEO and a director of the corporation since the company's inception in 1981. In 2011, Titan Corporation was acquired by L-3 Communications for $2.6 billion. Dr. Gershman is one of the first surgeons in the world to apply the method of laparoscopic surgery and robotic-assisted surgery to urology. He currently holds several hospital appointments, including: Director of Institute of Advanced Urology at the Cedars-Sinai Medical Center; Director of Urologic Laparoscopy in the Division of Urology, and Harbor-UCLA Medical Center.

Finally, this year marked a major transition in the leadership of the company. I was appointed to the position of CEO on October 26 and Dr. Thomas Ichim transitioned to the position of President and Chief Scientific Officer. Dr. Ichim has done an outstanding job leading the company for the past four years and I look forward to working closely with him at commercializing the ERC product.

In 2013 our objective will be to meet the following milestones:

  • Return to "fully reporting" status and listing on the OTCBB
  • Appointment of at least one new board member
  • Initiation of the FDA cleared critical limb ischemia trial in the USA
  • Completing enrollment in the RECOVER-ERC double blind cardiac trial
  • Filing an IND for type 1 diabetes.

I want to end by thanking our loyal shareholders for their continued support as Medistem continues on its mission to generate the first practical "stem cell medicine."

Sincerely Yours,

Dr. Alan Lewis
Chief Executive Officer
Medistem Inc.

About Medistem
Medistem Inc. is focused on the development of the Endometrial Regenerative Cell (ERC), a universal donor adult stem cell product. ERCs possess specialized abilities to stimulate new blood vessel growth and can differentiate into lung, liver, heart, brain, bone, cartilage, fat and pancreatic tissue. These unique properties have applications for treatment of critical limb ischemia (CLI), congestive heart failure (CHF), neurodegenerative diseases, liver failure, kidney failure, and diabetes. ERCs have been cleared by the FDA to begin studies in the United States.

ERCs have several distinguishing advantages to other stem cell therapies: a) Non-invasive method of collection; b) Unlimited supply of cells; isolated from menstrual blood of young healthy donors; c) Economical and scalable to manufacture; d) Exert higher therapeutic activity compared to other stem cells; and e) demonstrated safe in animal and pilot human studies.

Cautionary Statement
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of our securities. This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking information. Factors which may cause actual results to differ from our forward-looking statements are discussed in our Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission.

Contact:
Thomas Ichim, Ph.D.
President and Chief Scientific Officer
Medistem Inc.
9255 Towne Centre Drive
Suite 450
San Diego, CA 92122
858 349 3617
www.medisteminc.com

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Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

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