Business Strategy

Initially, we are focusing our research & development efforts in adult, as opposed to embryonic, stem cell technology. We believe that currently, this strategy has a number of advantages:

1) Adult stem cells are preprogrammed to become specialized cells of tissue of origin, posing fewer development challenges than embryonic stem cells.

2) Adult stem cell product candidates face a less challenging regulatory pathway.

3) Use of adult stem cells is not encumbered by restrictive Federal or State legislation or policies.

4) Use of adult stem cells offers the prospect of a shorter commercialization runway.

The Company plans to discover, develop and administer stem and progenitor cell therapeutics in ways that will enhance their natural function and thereby form the basis of therapies that will support or replace specific subsets of cells that have been damaged or lost through disease, injury or genetic defect.

The Company plans to fund the development of candidate cell therapies through to the clinical proof of principle stage. Therefore, we plan to enter into collaborative agreements with third parties who possess the capabilities and financial resources to carry out the remaining clinical development and testing of the therapies, and to commercialize them.

An important element of the Company's stem cell discovery program is the further development of intellectual property positions with respect to stem and progenitor cells. The Company has obtained rights to certain inventions relating to stem cells from, and is conducting cell-related research at, several academic institutions. Management expects to expand the Company's search for new stem and progenitor cells and to seek to acquire rights to additional inventions relating to stem and progenitor cells from third parties.

The Company also intends to pursue a series of non-exclusive agreements whereby third parties would have access to the Company's cells for use in gene discovery and use, drug discovery and screening, and diagnostics. StemCells has outlicensed some of its technology to BioWhittaker, Inc. and Stem Cell Technologies, Inc. for research purposes.