StemCells' Human Neural Stem Cells Show Promise in Pilot Pre-Clinical Stroke Study

PALO ALTO, Calif., November 6, 2002 – StemCells, Inc. (NASDAQ: STEM) announced today that results of a pilot study evaluating the use of its human neural stem cells in a preclinical stroke model will be presented today at the Society for Neuroscience 32nd Annual Meeting in Orlando, Florida. The study was performed at the Departments of Neurosurgery and Neurology at Stanford University under the direction of Gary Steinberg, M.D., Ph.D., Chairman Department of Neurosurgery; Co-Director, Stanford Stroke Center. The objective of this pilot study was to examine the fate of human neural stem cells in a rat preclinical model for stroke and to map survival, migration and maturation of the transplanted cells following distal middle cerebral artery occlusion (dMCAO). Dr. Steinberg's group also developed a battery of behavioral tests used to assess functional outcomes.

Results of this small pilot study have shown that the transplanted cells are capable of surviving in the immunosuppressed rat, migrating towards the stroke site and initiating the process of differentiating into neurons. Behavioral tests were performed out to four weeks post transplant. No improvement in function was observed at these early time points.

"We are encouraged by the results of this study in immunosuppressed lesioned rats," said Martin McGlynn, CEO StemCells Inc. "All of our own transplant experiments to date have been conducted in a special mouse strain with no immune system. Our data shows that it takes up to six months post transplant for our neural stem cells to engraft, migrate and fully differentiate into neurons. It is therefore not surprising that we don't see functional improvement at such early time points in this rat stroke model. Clearly there is a need for a second, larger study in this model to evaluate functional improvement at later time points and to correlate the behavioral outcomes with graft survival."

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About StemCells Inc.
StemCells, Inc. uses proprietary technology to isolate, purify and expand stem or progenitor cells that are found in human tissue and which are at least committed to become the mature cells of the organ from which they were derived. StemCells' goal is to use these cells to repair or repopulate neural or other tissue that has been damaged or lost due to disease or injury. For more information about StemCells, Inc., please visit www.stemcellsinc.com.

Forward-Looking Statements
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 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 the Company will achieve revenues from product sales or become profitable; and other factors that are described in Exhibit 99 to the Company's Annual Report on Form 10-K entitled "Cautionary Factors Relevant to Forward-Looking Statements."

StemCells, Inc.
Martin McGlynn, President & CEO
650-475-3100, ext 108

BMC Communications Group (media)
Brad Miles
212-477-9007, ext. 17