Positive Interim Data From Spinal Cord Injury Trial Reported By StemCells, Inc.

StemCells Inc. reported that interim six-month data from the first patient cohort in a Phase I/II clinical trial of its HuCNS-SC product candidate -- purified human neural stem cells -- for chronic spinal cord injury demonstrates a favorable safety profile and shows gains in sensory function in two of the three patients compared to pre-transplant baselines. The third patient remains stable. The trial is being conducted in Zurich, Switzerland at the University Hospital Balgrist, University of Zurich. The trial is scheduled to end at 12 months.

In general stem cell therapeutic candidates have shown good saftey profiles in the phase one clinical trials both within and outside the United States. As phase II trials begin we will learn more about efficacy in various indications and much more will be known about the potential for actual therapies. Some Sector Companies are already hesitating at the door to Phase II awaiting investor or partner money to procede. In this context StemCells Inc. had net cash resources at June 30 of approximately $5 million. While The California Institute for Regenerative Medicine (CIRM) approved an award to StemCells Inc. for up to $20 million under CIRM's Disease Team Therapy Development Award program (RFA 10-05), the award is to fund preclinical development of StemCells' purified human neural stem cells product candidate as a potential treatment for cervical spinal cord injury.

Patients in the study's first cohort all suffered a complete injury to the thoracic (chest-level) spinal cord. In a complete injury, there is no neurological function below the level of injury. All three patients were transplanted four

to nine months after injury with a dose of 20 million cells at the site of injury. The surgery, immunosuppression and the cell transplants have been well tolerated by all the patients.

There were no abnormal clinical, electrophysiological or radiological responses to the cells, and all the patients were neurologically stable through the first six months following transplantation. Changes in sensitivity to touch, heat and electrical stimuli were observed in well-defined and consistent areas below the level of injury in two of the patients, while no changes were observed in the third patient.

Tests of perception of different sensory stimuli as well as measures of electrical impulse transmission across the site of injury correlate with the clinical examination, providing independent and objective confirmation of the changes in sensory function.

The company will webcast these results at 8:30 Pacific Time on Tuesday, September 4.

Adapted from the StemCells, Inc. announcement.