U.S. Patent Office grants StemCells, Inc. 3 neural stem cell patents, including first patent for transplantation of human neural stem cells.

PALO ALTO, California, January 8, 2003/PR Newswire/ – StemCells, Inc. (NASDAQ: STEM) announced today that the U.S. Patent office has granted U.S. Patent Number 6,497,872 with broad claims covering the transplantation of mammalian tissue–derived neural stem cells and their progeny into the central nervous system (CNS) and the peripheral nervous system including the spinal cord. The patent, of which StemCells is the exclusive licensee, also covers transplantation of cells derived from neural stem cells and genetically altered cells. In addition, U.S. Patent Number 6,498,018 for drug screening using human neural stem cell cultures and Number 6,468,794 covering methods for producing a cell population enriched for neural stem cells that can initiate neurospheres, have recently been issued to the Company.

"The issuance of U.S. Patent 6,497,872 is an extremely important event for StemCells, Inc. It is the first patent to be issued anywhere in the world with claims covering transplantation uses of human neural stem cells," said Martin McGlynn, President and CEO of StemCells Inc. "The claims cover the transplantation of neural stem cells themselves as well as neurons or glial cells derived from the stem cells; thus, for example, transplantation of stem cells or neurons derived from neural stem cells for the treatment of diseases such as Parkinson's, Alzheimer's, stroke or spinal cord injury would be subject to the claims of this patent irrespective of the culture method used to grow the cells. Moreover, the claims cover both normal and genetically modified neural cells, so the patent also covers gene therapy applications using neural stem cells. We view the grant of patent number 6,498,018 as having the potential to broaden the Company's future product range to include drug screening as well as disease treatment, and patent number 6,468,794 as protecting the Company's position in respect to commercially feasible methods for producing therapeutic numbers of vigorous neural stem cells."

The issuance of these patents adds to StemCells, Inc.'s portfolio of more than 30 issued patents in the neural stem cell field, enhancing the Company's position in the therapeutic, diagnostic, genomics and drug discovery uses of neural stem cells.

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StemCells, Inc is a biotechnology company focused on the discovery, development and commercialization of stem cell-based therapies to treat diseases of the 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. Further information about the Company is available on its web site, at www.stemcellsinc.com.

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 statement due to risks and uncertainties to which the Company is subject, including the risk that Company will not be successful in using the patented technologies to develop effective treatments for human diseases; 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 state 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."

CONTACT:

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

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