EXHIBIT 99.1
[STEMCELLS LOGO]
StemCells, Inc. (Ticker: STEM, Exchange: NASDAQ)
News Release -- July 30, 2004
STEMCELLS ANNOUNCES SECOND QUARTER 2004 FINANCIAL RESULTS
PALO ALTO, Calif., July 30, 2004 - StemCells, Inc. (NASDAQ: STEM) today reported
its financial results for the second quarter ended June 30, 2004.
The Company reported a loss of $3,303,000, or $0.08 per share, for the second
quarter ended June 30, 2004, compared to a loss before dividends and deemed
dividends of $2,713,000, or $0.09 per share, for the second quarter ended June
30, 2003. For the second quarter in 2003, net loss applicable to common
shareholders after dividends and deemed dividends to preferred shareholders was
$3,928,000 or $0.13 per share. There were no dividends or 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 second quarter of 2004 and
2003 was $6,000 and $60,000 respectively. Revenue for 2004 and 2003 was
primarily from grants and licensing agreements. Cash and cash equivalents were
$26,022,000 at the end of June 30, 2004, compared with $6,534,000 at the end of
June 30, 2003.
The increase in net loss from 2003 to 2004 for the quarter reported was
primarily attributable to the increase in expenditures required for various
activities undertaken toward our planned IND (Investigational New Drug) filing
and a revision to our accrued wind-down expenses associated with our former
corporate headquarters in Rhode Island. As previously reported, the Company is
targeting the filing of its first IND early next year, to evaluate the safety
and efficacy of its proprietary human neural stem cells as a treatment for
Batten disease, an always fatal neurodegenerative lysosomal storage disorder.
Martin McGlynn, President and CEO commented, "The Company remains on track to
file the IND in the first quarter of next year and equally important, as a
result of our recent financing on June 17, 2004, we now have the necessary
capital to initiate the trial once it is approved by the FDA."
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:
StemCells, Inc.
Martin McGlynn, President & CEO
650-475-3100, ext 108
-more-
STEMCELLS INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Three months ended Six months ended
-------------------------- --------------------------
June 30, June 30,
-------------------------- --------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenue from grants and licensing agreements $6 $60 $99 $119
Operating Expenses
Research and development 1,939 1,740 3,807 3,080
General & administrative 877 782 1,741 1,598
Wind-down expenses related to our
former corporate headquarters 468 220 598 473
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Total operating expenses 3,284 2,742 6,146 5,151
Loss from operations (3,278) (2,682) (6,047) (5,032)
Other income (expense) (25) (30) (26) (90)
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Net loss (3,303) (2,712) (6,073) (5,122)
Dividend to preferred shareholders 47 47
Deemed dividend 1,168 1,488
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Net loss applicable to common shareholders ($3,303) ($3,927) ($6,073) ($6,657)
Net loss per share applicable to common
shareholders; basic and diluted ($0.08) ($0.13) ($0.14) ($0.23)
Weighted average shares - basic and diluted 43,066,807 31,157,909 42,038,437 29,062,107
STEMCELLS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2004 2003
----------- ------------
(IN THOUSANDS) (UNAUDITED) (a)
Assets
Current assets:
Cash & cash equivalents 26,022 $13,082
Other current assets 215 325
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Total current assets 26,237 13,407
Property, plant & equipment, net 3,215 3,611
Other assets, net 2,719 2,768
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Total assets $32,171 $19,786
Liabilities and stockholders' equity
Current liabilities $ 2,618 $ 2,522
Non-current liabilities 5,810 6,300
Stockholders' equity 23,743 10,964
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Total liabilities and stockholders' equity $32,171 $19,786
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(a) Derived from audited financial statements included in StemCells' annual
report on form 10-K filed with the SEC.