StemCells, Inc. Announces Receipt of NIH Funding.

Business Editors & Health/Medical Writers

BIOWIRE2K

SUNNYVALE, Calif.--(BW HealthWire)--March 1, 2001

StemCells, Inc. (Nasdaq: STEM) announced that it has been awarded a two year, $300,000 per year grant from the NIH's Small Business Innovation Research (SBIR) office.

"We are delighted to receive this funding, which will fund further work in our liver stem cell program," commented Martin McGlynn, President and CEO of StemCells, Inc. StemCells Inc. has been focused on identifying human liver stem and progenitor cells as a potential cell based therapeutic in the area of liver disease. As part of this work, scientists at the Company have identified conditions that allow an early liver cell to grow in culture. In collaboration with virologist Dr. Jeffrey Glenn, at Stanford University, they have also shown that these cells can be infected by a human hepatitis virus.

The aim of the SBIR grant is to further characterize the human cells that can be infected by the virus. In addition, they hope to develop a small animal model using these cells that can be infected by human hepatitis viruses to develop assays for the disease, which is a growing public health problem in the United States. "Such an animal model could lead to the discovery and testing of better therapeutics for the detection, treatment, or prevention of this prevalent infectious agent," commented Eric Lagasse, Director of Liver Cell Research at StemCells, Inc. Hepatitis C is the most common blood-borne infection in the US, affecting over 4 million people. Currently there are no vaccines or drugs that specifically target the hepatitis C virus.

StemCells Inc. is a biotechnology company focused on the discovery, development and commercialization of stem cell-based therapies to treat diseases of the central 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 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."