StemCells, Inc. Reports Fourth Quarter and Full Year 2013 Financial Results and Provides Business Update

StemCells, Inc. Reports Fourth Quarter and Full Year 2013 Financial Results
and Provides Business Update

Conference Call to be Hosted March 12, 2014 at 4:30 p.m. EDT

NEWARK, Calif., March 12, 2014 (GLOBE NEWSWIRE) -- StemCells, Inc.
(Nasdaq:STEM), a leading stem cell company developing and commercializing
novel cell-based therapeutics and tools for use in stem cell-based research
and drug discovery, today provided a business update and reported financial
results for the fourth quarter and year ended December 31, 2013.

"2013 was a year of significant clinical and regulatory progress for
StemCells, Inc. moving us closer to our goal of bringing a truly disruptive
therapeutic to the clinic for a broad array of diseases and conditions
affecting the central nervous system (CNS)," said Martin McGlynn, President
and CEO of StemCells, Inc. "We received approval to expand our Phase I/II
thoracic spinal cord injury trial from Switzerland into Canada and the United
States, which should enable us to complete enrollment in our Phase I/II study
this quarter. In addition, the FDA authorized us to increase the number of
clinical sites from two to five, in our Phase I/II study in dry age-related
macular degeneration, which will enable us to complete enrollment later this
year. We look forward to the completion of these studies and the clinical
insights they will give us.

"As pleased as I am about these accomplishments, I am most excited about our
agenda for this year. We plan to initiate two randomized controlled phase II
studies, both of which will assess proof of concept for our technology later
this year: one for spinal cord injury, which will include cervical injury, and
the other for dry age-related macular degeneration. These clinical trials
further solidify our leadership position in the development of neural stem
cell based therapeutics for disorders of the CNS. We are excited to be
transitioning from single center open label Phase I studies to multicenter
Phase II controlled studies designed to give us definitive efficacy data. "

2013 and Recent Highlights

Clinical Activities

  *Published a comprehensive overview of the therapeutic potential and
    results from early clinical trials of our HuCNS-SC® cells in Stem Cell
    Research & Therapy, a peer-reviewed journal considered the major forum for
    translational research into stem cell therapies.

Spinal Cord Injury (SCI)

  *Received authorization from Health Canada to expand our Phase I/II
    clinical trial for SCI into Canada.
  *A team at the University of Calgary successfully transplanted the first
    subject under the Phase I/II study in North America. The University of
    Toronto conducted the second transplant in North America shortly
  *Received FDA authorization of an IND application for clinical testing of
    our HuCNS-SC cells as a potential treatment for SCI.
  *The first cohort, consisting of three patients with complete spinal cord
    injury, completed the Phase I/II clinical trial in 2013.The data from
    this cohort continued to demonstrate a favorable safety profile, and
    showed that the considerable gains in sensory function first observed at
    the six month assessment in two of the three patients had persisted to the
    12 month assessment.

Dry Age Related Macular Degeneration (AMD)

  *Published preclinical data in the peer-reviewed journal Investigative
    Ophthalmology and Visual Science (IOVS) confirming that our HuCNS-SC cells
    preserve photoreceptor cells and visual function.
  *Completed enrollment of the first of two planned patient cohorts in our
    clinical trial of our proprietary HuCNS-SC cells for AMD. This cohort
    consisted of eight subjects, four of whom each received 200,000 cells and
    four of whom each received1,000,000 cells.

Alzheimer's Disease

  *Entered into an agreement with the California Institute for Regenerative
    Medicine (CIRM) under which CIRM will provide up to approximately $19.3
    million, in the form of a forgivable loan, to help fund preclinical
    development and IND-enabling activities of our HuCNS-SC cells for
    Alzheimer's disease.
  *Formally launched our Alzheimer's disease program with a goal of filing an
    Investigational New Drug (IND) application with the FDA in 2016.

Pelizaeus-Merzbacher Disease (PMD)

  *Presented data showing that, two years after transplantation, the evidence
    of myelination is more pronounced compared to one year
    post-transplantation and the gains in neurological function reported after
    one year were maintained.

NCL (Batten Disease)

  *Presented results of a four-year observation study of patients with NCL,
    who had been transplanted with our HuCNS-SC cells in our initial Phase I
    study, at the Congress of Neurological Surgeons Annual Meeting in San
    Francisco, California. The study showed long-term evidence of safety at
    doses of up to one billion cells. The study is the longest follow-up study
    of patients transplanted with human neural stem cells.

Other Business Activities

  *Acquired certain patents and patent applications from NsGene A/S. These
    patents and patent applications claim a purified population of GFAP+
    Nestin+ precursor cells in which one or more of the cells are capable of
    differentiating into neurons.
  *Acquired from NeuroSpheres the patents we had licensed on an exclusive
    worldwide basis.This patent portfolio, associated with research done by
    Samuel Weiss and Brent Reynolds at the University of Calgary, has
    repeatedly been recognized as the seminal intellectual property claiming
    purified populations of human neural stem cells.

Fourth Quarter and Full-Year Financial Results

For the fourth quarter of 2013, the Company reported a net loss of 6,962,000,
or $(0.13) per share, compared with a net loss of $2,759,000, or $(0.07) per
share, for the fourth quarter of 2012.

Total revenue during the fourth quarter of 2013 was $312,000, compared to
$211,000 in the same period of 2012.The increase of 48% from 2012 to 2013 was
primarily due to higher revenue from our SC Proven product sales in 2013.

Total operating expenses in the fourth quarter of 2013 were $9,697,000,
compared to $6,949,000 in the fourth quarter of 2012.The increased operating
expenses reflects our on-going preparation to initiate two Phase II controlled
efficacy studies in 2014, one in SCI and one in AMD.

Other income, net in the fourth quarter of 2013 was $2,509,000, compared to
other income, net of $4,034,000 in the fourth quarter of 2012.The change from
2012 to 2013 was primarily due to changes in the estimated fair value of
warrant liability.

For the full year 2013, the Company reported a net loss of $26,439,000, or
$(0.61) per share, compared with a net loss of $28,491,000, or $(0.99) per
share, for 2012.

Total revenue in 2013 was $1,203,000, a 12% decrease from 2012 to 2013.The
2012 licensing revenue includes a one-time fee from a license agreement with
genOway. Revenue from our SC Proven line of media and reagents increased from
2012 by 17% to $998,000 in 2013.

Total operating expenses in 2013 were $29,492,000, a 25% increase compared to
$23,650,000 in 2012. The increased operating expenses in 2013 reflects our
on-going preparation to initiate two Phase II controlled efficacy studies in
2014, one in SCI and one in dry AMD.

Net other income / expense in 2013 was a net other income of $2,166,000, while
in 2012, it was net other expense of $5,946,000.This change was primarily
driven by changes in the estimated fair value of warrant liability.This is a
non-cash expense where increases in the warrant liability are shown as an
expense and decreases are shown as income.

For the full year 2013, cash used in operations, which excludes capital
purchases of approximately $4.7 million, totaled $23,322,000, compared to
$19,869,000 in 2012, which excludes capital purchases of approximately $73

At December 31, 2013, cash and cash equivalents totaled $30,585,000, which is
37% higher than the aggregate of cash, cash equivalents and marketable
securities at December 31, 2012.

Conference Call

StemCells will host a live conference call and webcast on Wednesday, March 12,
2014 at 4:30 PM Eastern Time (1:30 PM Pacific Time) to discuss our financial
results and recent business activities.Interested parties are invited to
listen to the call over the Internet via the Investors section of our website

An archived version of the webcast will be available for replay on our website
beginning approximately two hours following the conclusion of the live call
and continuing for a period of 30 days.

About StemCells, Inc.

StemCells, engaged in the research, development, and commercialization
of cell-based therapeutics and tools for use in stem cell-based research and
drug discovery. The Company's platform technology, HuCNS-SC® cells (purified
human neural stem cells), are currently in development as a potential
treatment for a broad range of central nervous system disorders. In a Phase I
clinical trial in Pelizaeus-Merzbacher disease (PMD), a fatal myelination
disorder in children, the Company has shown preliminary evidence of
progressive and durable donor-derived myelination in all four patients
transplanted with HuCNS-SC cells. The Company is conducting a Phase I/II
clinical trial in chronic spinal cord injury in Switzerland,Canadaandthe
United States, and has reported positive interim data for the first three
patients.The Company is also conducting a Phase I/II clinical trial in dry
age-related macular degeneration (AMD) inthe United States. In addition, the
Company is pursuing preclinical studies in Alzheimer's disease, with support
from theCalifornia Institute for Regenerative Medicine(CIRM).StemCells
also markets stem cell research products, including media and reagents, under
the SC Proven® brand.Further information aboutStemCellsis available at

Apart from statements of historical fact, the text of this press release
constitutes forward-looking statements within the meaning of the U.S.
securities laws, and is subject to the safe harbors created therein. These
statements include, but are not limited to, statements regarding the future
business operations of StemCells, Inc. (the "Company"); the timing and
prospects associated with detecting potential clinical benefit from the use of
the Company's HuCNS-SC cells; the prospect for continued clinical development
of the Company's HuCNS-SC cells in CNS disorders; the prospect for growth in
the Company's product sales; and the adequacy of our existing supply of
HuCNS-SC cells to complete our ongoing and planned clinical trials. These
forward-looking statements speak only as of the date of this news release. The
Company 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 such forward-looking
statements due to risks and uncertainties to which the Company is subject,
including uncertainties with respect to the fact that additional trials will
be required to confirm the safety and demonstrate the efficacy of the
Company's HuCNS-SC cells for the treatment of spinal cord injury, AMD, PMD, or
any other condition; uncertainties about whether myelination formed by donor
cells, if any, will have any biologic effect; uncertainties about whether
preliminary data in any Phase I clinical study will prove to be reproducible
or biologically meaningful in any future clinical study; risks whether the FDA
or other applicable regulatory agencies will permit the Company to continue
clinical testing or conduct future clinical trials; uncertainties about the
design of future clinical trials and whether the Company will receive the
necessary support of a clinical trial site and its institutional review board
to pursue future clinical trials; uncertainties regarding the potential for
the Company to grow its SC Proven business; uncertainties regarding the
Company's ability to obtain the increased capital resources needed to continue
its current and planned research and development operations; uncertainties
about the Company's ability to secure funding from any governmental agency,
such as the California Institute of Regenerative Medicine; uncertainty as to
whether HuCNS-SC cells and any products that may be generated in the future in
the Company's cell-based programs will prove safe and clinically effective and
not cause tumors or other adverse side effects; uncertainties regarding
whether results in preclinical research in animals will be indicative of
future clinical results in humans; uncertainties regarding the Company's
manufacturing capabilities given its increasing preclinical and clinical
commitments; uncertainties regarding the validity and enforceability of the
Company's patents; uncertainties as to whether the Company will become
profitable; and other factors that are described under the heading "Risk
Factors" disclosed in Part I, Item 1A in the Company's Annual Report on Form
10-K for the year ended December 31, 2012 and in its subsequent reports on
Form 10-Q and Form 8-K.

StemCells, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)
                              Three months ended      Twelve months ended
                              December 31             December 31
                              2013        2012        2013        2012
Revenue from licensing         $45       $40       $205      $512
agreements and grants
Revenue from product sales     267        171        998        856
Total revenue                  312        211        1,203      1,368
Cost of product sales          86         55         316        263
Gross profit                   226        156        887        1,105
Operating expenses:                                             
Research and development       5,981      4,681      20,534     15,847
Selling, general and           3,716      2,111      8,896      7,447
Wind-down expenses             --         157        62         356
Total operating expenses       9,697      6,949      29,492     23,650
Loss from operations           (9,471)    (6,793)    (28,605)   (22,545)
Other income (expense):                                         
Change in fair value of        2,828      4,030      3,253      (5,945)
warrant liability
Interest expense, net          (379)      (4)        (1,155)    (35)
Other income, net              60         8          68         34
Total other income (expense),  2,509      4,034      2,166      (5,946)
Net loss                       $(6,962)  $(2,759)  $(26,439) $(28,491)
Basic and diluted net loss per $(0.13)   $(0.07)   $(0.61)   $(0.99)
Shares used to compute basic   54,206,907 37,256,496 43,422,001 28,824,417
and diluted loss per share

StemCells, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

                                          December 31, 2013 December 31, 2012
                                          (unaudited)       (unaudited)
Current Assets:                                             
Cash & cash equivalents                    $30,585         $8,471
Marketable securities                      --               13,901
Other current assets                       1,255            1,669
Total current assets                       31,840           24,041
Property, plant and equipment, net         5,305            1,375
Goodwill and other intangible assets, net  3,975            3,807
Other assets, non-current                  437              947
Total assets                               $41,557         $30,170
Loan payable net of discount, current      $3,664          $--
Other current liabilities                  5,468            5,097
Fair value of warrant liability            5,542            9,265
Loan payable net of discount, non-current  9,245            
Other non-current liabilities              2,684            1,823
Stockholders' equity                       14,954           13,985
Total liabilities and stockholders' equity $41,557         $30,170

CONTACT: Greg Schiffman
         StemCells, Inc.
         Chief Financial Officer
         (510) 456-4128
         Andrea Flynn
         Russo Partners
         (646) 942-5631

company logo
Press spacebar to pause and continue. Press esc to stop.