StemCells, Inc. Announces Issuance of Two Patents; Neural and Pancreas Stem Cell Portfolios Increased.

Business Editors and Health/Medical Writers

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PALO ALTO, Calif.--(BW HealthWire)--June 7, 2001

StemCells, Inc. (Nasdaq: STEM) announced today the issuance of two U.S. patents that further their proprietary position in the neural and pancreatic programs, respectively.

The first, a process patent, covers a novel method to separate neural stem cells for growth in culture. "This method allows us to expand and harvest a significantly greater number of viable cells than was previously possible. It should help us to develop a more efficient manufacturing process for human neural stem cells and to scale up production of cells as we continue our preclinical research and development," said Dr. Nobuko Uchida, inventor and Director of Neural Stem Cell Research. "It strengthens our large and growing patent estate in the neural stem cell area."

StemCells owns or has exclusive licenses to twenty-five issued U.S. patents in the neural stem cell field, as well as fifteen U.S. applications (including two that have been allowed) and pending foreign counterparts.

The second patent, invented by Dr. Nora Sarvetnick and collaborators at the Scripps Research Institute in La Jolla, covers a unique murine model useful for identifying stem/progenitor cells for the pancreas and liver. "This newly patented work is important enabling technology that may provide a stepping stone to the discovery of the stem cell capable of regenerating the pancreas or liver," explains Dr. Ann Tsukamoto, VP Scientific Operations at StemCells Inc. The advantage conferred by these mice is that they provide a source of actively regenerating cells, possibly stem cells, from the pancreas. Regenerating cells within the pancreas of the normal adult mouse are not typically seen, making

the identification of a candidate stem cell difficult. These mice have a subset of cells that grow and mature not only to the expected islet cells but also to albumin-producing liver cells. Isolation of the regenerating cells from this mouse model may provide the key to identifying markers on a pancreatic or liver stem cell. The patent was assigned to the Scripps Research Institute and is licensed exclusively to StemCells, Inc. It is the Company's first issued patent outside the neural area.

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.

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 statements due to risks and uncertainties to which the Company is subject, including the risks 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 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."