EXHIBIT 99.1
StemCells, Inc. (Ticker: STEM, Exchange: NASDAQ)
News Release -- May 4, 2004
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STEMCELLS ANNOUNCES FIRST QUARTER 2004 FINANCIAL RESULTS
PALO ALTO, Calif., May 4, 2004 - StemCells, Inc. (NASDAQ: STEM) today reported
its financial results for the first quarter ended March 31, 2004.
The Company reported a loss of $2,770,000, or $0.07 per share, for the quarter
ended March 31, 2004, compared to a loss before deemed dividends of $2,409,000,
or $0.09 per share, for the quarter ended March 31, 2003. For the first quarter
in 2003, net loss applicable to common shareholders after deemed dividends to
preferred shareholders was $2,729,000 or $0.10 per share. There were no deemed
dividends for the same period in 2004, as all of the Company's previously
outstanding cumulative convertible preferred stock was converted to the
Company's common stock prior to the end of 2003. Total revenue for the first
quarter of 2004 and 2003 was $93,000 and $59,000 respectively. Revenue for 2004
and 2003 was primarily from grants and licensing agreements. Cash and cash
equivalents were $10,346,000 at the end of March 31, 2004, compared with
$1,549,000 at the end of March 31, 2003.
The increase in net loss from 2003 to 2004 for the quarter reported was
primarily attributable to the expenditures required for toxicology studies,
supplies, personnel and other external services in preparation for submitting
our first IND (Investigational New Drug filing) to the FDA, to evaluate the
safety and efficacy of our human neural stem cells as a treatment for Batten
disease.
Martin McGlynn, President and CEO commented, "In our press release on 2003
results issued in early April, I discussed our projected goal of filing the
Company's first IND in the first quarter of 2005 for the treatment of Batten
disease, a rare but fatal neurodegenerative disease. I am pleased to report that
we remain on track to achieve that goal. As our financial results for the first
quarter of this year indicate, we are increasing expenditures on IND-enabling
activities so that we may begin clinical testing of our human neural stem cells
next year."
ABOUT STEMCELLS INC.
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. Further information about the Company is available
on its web site at www.stemcellsinc.com.
APART FROM STATEMENTS OF HISTORICAL FACTS, THE TEXT OF THIS PRESS RELEASE
CONSTITUTES FORWARD-LOOKING STATEMENTS REGARDING, AMONG OTHER THINGS, THE FUTURE
BUSINESS OPERATIONS OF STEMCELLS, INC. ("THE COMPANY"). THE FORWARD-LOOKING
STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS NEWS RELEASE. STEMCELLS 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 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 CONTINUE ITS
CURRENT RESEARCH AND
DEVELOPMENT OPERATIONS AND 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 THE COMPANY WILL BE
ABLE TO FILE AN IND IN THE TIME IT PROJECTS AND WHETHER THE FDA WILL PERMIT IT
TO PROCEED TO CLINICAL TESTING; THE UNCERTAINTY WHETHER THE COMPANY WILL ACHIEVE
REVENUES FROM PRODUCT SALES OR BECOME PROFITABLE; UNCERTAINTIES REGARDING THE
COMPANY'S OBLIGATIONS IN REGARD TO ITS FORMER ENCAPSULATED CELL THERAPY
FACILITIES IN RHODE ISLAND; AND OTHER FACTORS THAT ARE DESCRIBED IN EXHIBIT 99
TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K ENTITLED "CAUTIONARY FACTORS
RELEVANT TO FORWARD-LOOKING STATEMENTS."
Corporate Contact: Media / Investor Relations Contact:
StemCells, Inc. The Investor Relations Group
Martin McGlynn, President & CEO Janet Vasquez / Jane Lin
650-475-3100, ext 108 212-825-3210
-more-
StemCells, Inc.
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Condensed Consolidated Statement of Operations
(unaudited)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<Table>
<Caption>
Three months ended
March 31,
2004 2003
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Revenue from grants and Licensing
agreements $ 93 $ 59
Operating Expenses
Research and development 1,868 1,340
General & administrative 864 816
Wind-down related to former
corporate headquarters 130 253
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Total operating expenses 2,862 2,409
Loss from operations (2,769) (2,350)
Other income (expense) (1) (59)
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Net loss (2,770) (2,409)
Deemed dividend 320
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Net loss applicable to common
shareholders $ (2,770) $ (2,729)
Net loss per share applicable to
common shareholders; basic and
diluted $ (0.07) $ (0.10)
Weighted average shares - basic and
diluted 41,010,068 26,943,019
</Table>
<Table>
<Caption>
STEMCELLS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December 31,
2004 2003
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(IN THOUSANDS) (unaudited) (a)
Assets
Current assets:
Cash & cash equivalents 10,346 $13,082
Other current assets 265 325
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Total current assets 10,611 13,407
Property, plant & equipment, net 3,408 3,611
Other assets, net 2,743 2,768
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Total assets $16,762 $19,786
Liabilities and stockholders equity
Current liabilities $2,406 $2,522
Non-current liabilities 6,050 6,300
Stockholders' equity 8,306 10,964
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Total liabilities, redeemable preferred stock
and stockholders' equity $16,762 $19,786
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</Table>
(a) Derived from audited financial statements included in StemCells' annual
report on form 10-K/A filed with the SEC.