StemCells, Inc. Announces First Quarter 2001 Financial Results

PALO ALTO, Calif. -- (BW HealthWire) -- May 10, 2001 -- StemCells, Inc. (Nasdaq: STEM) today reported financial results for the first quarter ended March 31, 2001. Overall, the Company reported net income of $0.27 million, or $0.01 per diluted share, for the first quarter of 2001, compared to a net loss of $1.79 million, or $0.09 per diluted share, for the first quarter of 2000. The Company's total operating expenses for the first quarter of 2001 increased to $2.64 million from $1.79 million for the same period in 2000.

For the three months ended March 31, 2001, research and development expenses were $1.6 million, an increase of $.7 million or 81% from the comparable quarter last year of $.9 million. General and administrative expenses were $1 million, up 52% from the $0.65 million reported for the same quarter in 2000. Cash and cash equivalents were $4.5 million, compared to $4.5 million during the same period 2000. The Company reported grant revenue of $100,000 for the quarter, compared to no revenue for the first quarter of 2000. In addition, the Company held 103,577 shares of stock in Modex Therapeutics (Modex), a Swiss company, at the end of the quarter, reported as a short-term restricted investment at its then market price of $8.4 million. In the first quarter of 2000, the stock was not valued, since it was not then publicly traded. As noted in subsequent events, the stock has since been sold for approximately $5.2 million.

"The change in net income per share is primarily due to a realized gain from the sale of a portion of our investment in Modex Therapeutics, which the Company announced in January," said Martin McGlynn, President and CEO of StemCells, Inc. "This was offset by an increase in expenses attributable to an increase in personnel and the move to a larger facility.

"The sale of Modex shares was part of our strategy to divest ourselves of holdings related to our former Encapsulated Cell Technology."

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About StemCells, Inc.
StemCells Inc. is a biotechnology company focused on the discovery, development and commercialization of stem cell-based therapies to treat diseases of the central nervous system, liver, and pancreas. The Company's stem cell programs seek to repair or repopulate neural or other tissue that has been damaged or lost as a result of disease or injury.

Statements in this press release other than statements of historical facts constitute forward looking statements regarding, among other things, the future business operations of StemCells, Inc., ("the Company"). The Company's actual results may vary materially from those contemplated in the forward looking statements due to risks and uncertainties to which the Company is subject, including uncertainties regarding the Company's ability to obtain the capital resources needed to conduct the research, preclinical development and clinical trials necessary for regulatory approvals; the fact that the Company's stem cell technology is at the pre-clinical stage and has not yet led to the development of any proposed product; the uncertainty whether any products that may be generated in the future in the Company's stem cell programs will prove clinically effective and not cause tumors or other side effects; the uncertainty whether the Company will achieve revenues from product sales or become profitable; and others that are described in Exhibit 99 to the Company's Annual Report on Form 10-K entitled "Cautionary Factors Relevant to Forward Looking Statements."

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CONTACT:	StemCells, Inc., Palo Alto
	Martin McGlynn, 650/475-3100, ext. 108
	President and CEO
	or
	Susan E. Atkins & Associates, San Diego
	Anette Breindl, 858/860-0266