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StemCells, Inc. Plans to Advance to Second Clinical Trial in Batten Disease

PALO ALTO, Calif., April 21, 2010 – StemCells, Inc. (NASDAQ: STEM) announced today that it has submitted a protocol to the FDA for initiation of a second clinical trial of its proprietary HuCNS-SC® human neural stem cells in neuronal ceroid lipofuscinosis (NCL), which is also often referred to as Batten disease.

NCL is a genetic disorder characterized by the absence of a critical enzyme, which leads to the loss of neurons and the eventual death of the patient. The Company completed a Phase I clinical trial in NCL in January 2009 and reported the results to the FDA in September 2009.

“Our first NCL trial was focused primarily on safety, and our data showed that the cells, the immunosuppression regimen and the procedure were all well tolerated,” stated Stephen Huhn, MD, FACS, FAAP, Vice President and Head of the CNS program at StemCells, Inc. “This positive safety profile encourages us to advance our clinical program in NCL, and this second trial will place an increased emphasis on the measurement of clinical benefit. We have shown that our HuCNS-SC cells produce the enzyme missing in NCL, so our strategy is to transplant our cells and have them provide enough enzyme to keep the patient’s own neurons intact and functioning. We believe that demonstrating benefit will depend on how many neurons are alive at the time of the transplant, so unlike our first trial, which enrolled patients with few neurons left to protect, this second trial is designed to enroll patients who have less neuronal degeneration and cognitive impairment.”

The proposed new trial is designed to further assess the safety of HuCNS-SC cells in NCL, while also examining the ability of the cells to affect the progression of the disease. The Company plans to enroll six patients with infantile and late infantile NCL. Because intervention prior to the final stages of the disease will likely be key to providing a therapeutic benefit, the Company plans to enroll patients with less brain atrophy than those enrolled in its first trial. Under the proposed protocol, all patients would be transplanted with HuCNS-SC cells and immunosuppressed for nine months. The patients would also be evaluated and assessed at regular intervals over the course of 12 months following transplantation. As the Company intends to follow the effects of this therapy long-term, a separate four-year observational study would be initiated at the conclusion of this trial. Upon FDA authorization of the trial protocol, the Company will proceed with site selection and seek the necessary Institutional Review Board approval to initiate the trial.

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