StemCells, Inc Announces Financing Transaction

PALO ALTO, Calif. -- (BW HealthWire) -- June 22, 2001 -- StemCells, Inc. (Nasdaq: STEM) announced today that Millennium Partners, L.P., has exercised an option allowing it to purchase 457,750 shares of StemCells' common stock for $2 million, or approximately $4.37 per share. The Company has received $1.5 million in cash, and will receive the remaining $500,000 upon effectiveness of a registration statement. Millennium, which invested $5 million in the Company in August, 2000, obtained the option as part of the original investment. The option has now been exercised in full.

Millennium will also receive a warrant to purchase up to 50,352 shares of common stock at an exercise price of approximately $4.77 per share, callable by the Company at $7.94 per share. The remaining terms of the purchase are essentially the same as those of the August 2000 transaction, including the possibility that the Fund will receive additional shares at certain dates in the future, depending on the market price of the stock prevailing at those dates.

"We are pleased with the additional liquidity this generates for StemCells, Inc., and we are also pleased because we view the purchase as a vote of confidence in the company and its technology by a prominent and experienced investment fund," said Martin McGlynn, President and CEO of StemCells, Inc. "This investment, along with the proceeds from the sale of our Founder's stock in Modex Therapeutics and the recently announced $30 million Equity Line, enhances the Company's ability to expand its internal discovery research efforts as well as enabling it to accelerate the transition to early stage development in its neuronal stem cell program." Millennium is an investment fund dedicated, in part, to providing public companies with growth capital.

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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.

Apart from statements of historical facts, the text of this press release constitutes 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 amount of financing that will be needed by the Company to conduct the research, preclinical development and clinical trials necessary for regulatory approvals; its ability to obtain the capital resources needed, 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:	Company Contact:
	StemCells, Inc.
	Martin McGlynn, 650/475-3100 ext. 108
	President and CEO
	or
	Media Contact:
	Susan E. Atkins & Associates
	Anette Breindl, 858/860-0266