StemCells, Inc. Demonstrates Protection of Neurological Function in Batten Mouse

Preclinical Proof-of-Concept Data for the Company`s Neural Stem Cells Published
in Cell Stem Cell

PALO ALTO, Calif.--(Business Wire)--
StemCells, Inc. (NASDAQ:STEM) today announced the publication of preclinical
data demonstrating for the first time that transplantation of its proprietary,
purified human neural stem cells delays the loss of motor function in a mouse
model of infantile neuronal ceroid lipofuscinosis (NCL). NCL, commonly referred
to as Batten disease, is a fatal neurodegenerative disorder in children. This
paper, "Neuroprotection of Host Cells by Human Central Nervous System Stem Cells
in a Mouse Model of Infantile Neuronal Ceroid Lipofuscinosis," was published
online today in the peer-reviewed journal Cell Stem Cell, and will be featured
in the September 2009 print edition.

The study highlights StemCells` novel neuroprotective approach to treating
neurodegenerative diseases and the therapeutic potential of its neural stem
cells. In this research, these cells were transplanted in a mouse model of
infantile NCL and compared to a control (non-transplanted) group. The results
demonstrate that the transplanted cells engraft, migrate throughout the brain
and continuously secrete the missing lysosomal enzyme characteristic of NCL,
which is needed to process cellular waste and keep neurons functioning and
healthy. Compared with the control group, the mice that received the
transplanted neural stem cells showed statistically significant reduction in
cellular waste build-up, protection of critical host neurons and delayed loss of
motor function.

"These exciting results suggest the prospect for improving the quality of life
in patients suffering from NCL, and provide additional preclinical support for
the development of our neural stem cells in this disease," stated Stephen Huhn
MD, FACS, FAAP, Vice President and Head of the CNS Program at StemCells, Inc.
"We are encouraged to continue our clinical development efforts with the hope of
one day achieving a breakthrough in treating neurodegenerative diseases like
NCL, which today have no cure."

The study was conducted by researchers at StemCells, Inc., led by Nobuko Uchida,
Ph.D., Vice President of the Company`s Stem Cell Biology Program, in
collaboration with leading researchers in genetics, neurology and stem cell
biology at King`s College London, the Stanford University School of Medicine and
The Salk Institute for Biological Studies. The neural stem cells used in the
study were supplied by StemCells, Inc.

StemCells is currently testing its neural stem cell product candidate, HuCNS-SC®
cells, in clinical trials. The Company completed a Phase I trial in NCL in
January 2009, the results of which demonstrated a favorable safety profile along
with evidence of engraftment and long-term survival of the HuCNS-SC cells.
StemCells has also received approval from the U.S. Food and Drug Administration
(FDA) to initiate a Phase I trial of its HuCNS-SC cells to treat
Pelizaeus-Merzbacher Disease (PMD), a fatal myelination disorder in the brain
that primarily affects young children.

About Neuronal Ceroid Lipofuscinosis (Batten Disease)

Neuronal ceroid lipofuscinosis (NCL) is a fatal neurodegenerative disorder that
afflicts infants and young children. The disorder, often referred to as Batten
disease, is caused by genetic mutations, and children who inherit the defective
gene are unable to produce enough of an enzyme that processes cellular waste
substances that accumulate in a part of cells known as the lysosome. Without the
enzyme, the cellular waste builds up, and eventually the cells cannot function
and die. Children with NCL appear healthy when born, but as their brain cells
die, they begin to suffer seizures and progressively lose motor skills, sight
and mental capacity. Eventually, they become blind, bedridden and unable to
communicate or function independently. There currently is no cure for the
disease. The infantile and late infantile forms of NCL are caused by different
genetic mutations. As the names imply, the two forms begin to afflict patients
at different stages of infancy, but both have similar disease progression and
outcomes.

About HuCNS-SC® Cells

StemCells` lead product candidate, HuCNS-SC cells, is a highly purified
composition of tissue-derived human neural stem cells that are expanded and
stored as banks of cells. The Company`s preclinical research has shown that
HuCNS-SC cells can be directly transplanted; are able to engraft, migrate, and
differentiate into neurons and glial cells; and possess the ability to survive
for as long as one year with no sign of tumor formation or adverse effects.
These findings show that HuCNS-SC cells, when transplanted, act like normal stem
cells, suggesting the possibility of a continual replenishment of normal human
neural cells.

About StemCells, Inc.

StemCells, Inc. is focused on the development and commercialization of
cell-based technologies. In its therapeutic product development programs,
StemCells is targeting diseases of the central nervous system and liver.
StemCells` lead product candidate, HuCNS-SC® cells (purified human neural stem
cells), is in clinical development for the treatment of two fatal
neurodegenerative disorders that primarily affect young children. StemCells also
markets specialty cell culture media products under the brand SC Proven®, and is
developing its cell-based technologies for use in drug discovery and
development. The Company has exclusive rights to approximately 55 issued or
allowed U.S. patents and approximately 200 granted or allowed non-U.S. patents.
Further information about StemCells is available on its web site at
www.stemcellsinc.com.

Apart from statements of historical fact, the text of this press release
constitutes forward-looking statements regarding, among other things, the
therapeutic potential of the Company`s human neural stem cells and the prospects
for future commercialization of a product to treat neurodegenerative diseases.
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 NCL or any other disease; risks whether the
FDA or other applicable regulatory agencies will permit the Company to continue
clinical testing in NCL, PMD or in future clinical trials of proposed therapies
for other diseases or conditions despite the novel and unproven nature of the
Company`s technologies; 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 in NCL,
PMD or in proposed therapies for other diseases or conditions; uncertainties
regarding the Company`s ability to obtain the increased capital resources needed
to continue its current and planned research and development operations,
including such operations of the Company for non-therapeutic applications, and
to conduct the research, preclinical development and clinical trials necessary
for regulatory approvals; 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; and other factors that are
described under the heading "Risk Factors" in the Company`s Annual Report on
Form 10-K for the year ended December 31, 2008 and in its subsequent reports on
Form 10-Q and Form 8-K.

StemCells, Inc.
Megan Meloni, 650-475-3100, ext. 105 (Investor Relations)
or
Vida Communication, Inc.
Tim Brons, 415-675-7402 (Media)

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