StemCells Inc. Announces Study Results Using Human Neural Stem Cells as a Treatment for Spinal Cord Injuries.

PALO ALTO, Calif., Friday, May 2, 2003 – StemCells, Inc. (NASDAQ: STEM) reported today that Dr. Aileen J. Anderson and Dr. Brian J. Cummings, of the Reeve-Irvine Center at the University of California, Irvine, will present promising results of a pre-clinical study that examined the Company's human neural stem cell (hCNS-SC) technology as a potential means of regenerating damaged nerve and nerve fibers in patients with spinal cord injuries at the Tenth Annual Conference of the American Society for Neural Transplantation and Repair on May 2, 2003 in Florida.

Injured mice transplanted with hCNS-SC showed improved motor function in quantitative tests designed to measure functional recovery from complete hind limb paralysis to normal walking, in comparison with controls. A direct link has also been made between the amount of functional recovery and the level of human cell engraftment. Additionally, the hCNS-SC does not contribute to scarring due to glial cell proliferation, which normally inhibits neuronal cell growth and recovery.

"Loss of myelin, the insulator for nerve cells, is a significant problem after spinal cord injury. This data suggests that human neural stem cells could contribute to repairing the nervous system after injury, including the replacement of myelinating cells. We are very excited about the potential for this type of intervention for spinal cord injury," commented Dr. Anderson.

"The sample size in these pilot studies is small. However, we are particularly encouraged by the consistent trend for the transplanted animals to perform better than their controls. Our task now is to replicate these studies and to evaluate the potential of these hCNS-SC at different dose levels" added Dr. Cummings.

Dr. Aileen Anderson is an Assistant Professor, Departments of Physical Medicine and Rehabilitation at the University of California-Irvine. She is also a core professor for The Reeve–Irvine Research Center, part of the College of Medicine of the University of California, Irvine. Dr. Anderson and Cummings are co-investigators on this study. The Reeve-Irvine Center is named for actor Christopher Reeve (http://www.reeve.uci.edu). Its mission is to study injury and disease of the spinal cord and to promote the coordination and cooperation of scientists around the world seeking a cure for paralysis and amelioration of diseases impacting neurological function.

"The potential significance of this study is that we may be able to help those with spinal cord injuries regain their mobility," said Martin McGlynn, President and CEO of StemCells, Inc. "This study elegantly demonstrates recovery of motor ability in a spinal cord injury model, resulting from the presence of human cells rather than spontaneous recovery of endogenous cells. While more testing is needed, we consider these recent findings very encouraging."

McGlynn added, "These results are especially pleasing considering they are a recent follow-on to our presentation of positive pre-clinical data from a transplant study using hCNS-SC for the treatment of Batten Disease. This study provides us with additional hope that hCNS-SC may eventually improve patients' lives by effectively treating a variety of central nervous system diseases and injuries."

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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."

Corporate Contact: Media / Investor Relations Contact:

StemCells, Inc. The Investor Relations Group

Martin McGlynn, President & CEO Janet Vasquez / Jane Lin

650-475-3100, ext 108 212-825-3210