StemCells to Raise $6.5 Million in a Private Placement.

PALO ALTO, Calif., May 13, 2003 – StemCells, Inc. (NASDAQ: STEM) has entered into an agreement, subject to regulatory approval, providing for the sale of four million shares of its common stock at $1.625 per share to The Riverview Group, LLC, a New York based private equity investment firm, for total proceeds of $6.5 million. The agreement also provides for issuance of a warrant for an additional 1.898 million shares exercisable at $1.50 per share. The agreement is subject to normal closing conditions. Proceeds of the sale of the units will be used by StemCells for general corporate purposes.

Riverview had previously purchased $5 million face value of StemCells' 3% Convertible Preferred redeemable stock. To date, Riverview has converted $3 million of its initial purchase, and as a result, still holds $2 million in the 3% Convertible Preferred redeemable stock.

"Current market conditions remain difficult for small cap, early stage biotechnology companies, so we are particularly gratified by Riverview's continued support for the Company. The market for our stock has responded favorably to our recently published study results. This investment provides us with the ability to follow up on those results without loss of momentum," said Martin McGlynn, President and CEO of StemCells.

StemCells recently reported on preclinical studies in spinal cord injury and Batten Disease, the results in both cases establishing proof of principle of the potential for use of its patented human central nervous system stem cells in treating the conditions. Press releases describing the studies can be found on the Company's web site, at www.stemcellsinc.com.

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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 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 www.stemcellsinc.com.

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 forward-looking statements speak only as of the date of this news release. StemCells does not undertake to update any of these forward-looking statements to reflect events or circumstances that occur after the date hereof. Such statements reflect management's current views and are based on certain assumptions that may or may not ultimately prove valid. 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 continue its current research and development operations and 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; uncertainties regarding the Company's obligations in regard to its former encapsulated cell therapy facilities in Rhode Island; 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."

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