StemCells Announces Fourth Quarter and Year End 2002 Financial Results

2003-04-01 08:01 ET - News Release

PALO ALTO, Calif., April 1 /PRNewswire-FirstCall/ -- StemCells, Inc. today reported financial results for the fourth quarter and fiscal year ended December 31, 2002.

The Company reported a loss of $1,772,000, or $0.07 per share, for the fourth quarter ended December 31, 2002, compared to a loss of $3,524,000, or $0.19 per share, for the fourth quarter of 2001, all before deemed dividends. For the fiscal year ended December 31, 2002, the Company reported a loss of $10,365,000, or $0.41 per share, as compared to a loss of $3,446,000, or $0.15 per share, for the 2001 fiscal year, also before deemed dividends. The net loss after deemed dividends for the fiscal year 2002 is $11,645,000, or $0.46 per share, applicable to common shareholders as compared to a net loss of $4,992,000, or $0.22 per share, for the fiscal year 2001. Total revenue for 2002 was $415,000, compared with $805,000 in 2001. Revenue for 2002 was primarily from grants, while revenue for 2001 was from grants and from assignment of rights to technology. Cash and cash equivalents were $4,236,000 at the end of 2002, compared with $13,697,000 at the end of 2001.

The increase in net loss from 2001 to 2002 was primarily attributable to a realized gain on sale of our remaining holdings in Modex Therapeutics in 2001, offset by the effect of a higher valuation of non-qualified stock options on expenses in 2001 as compared to 2002, and a reduction in rent expense in 2002 as a result of an amendment to the contract on our leased facilities in California.

"Despite the major cost reduction program announced on September 23, 2002, arising from the continuing uncertainties in the capital markets, the Company made good progress in 2002 in the development of its stem cell technology targeted at diseases of the Central Nervous System (CNS), Liver and Pancreas," said Martin McGlynn, President and CEO of StemCells. "To be specific," he added, "we have initiated pre-clinical testing of our human neural stem cells in animal models of Parkinson's, Alzheimer's, lysosomal storage disorders (LSD) of the central nervous system, spinal cord injury and stroke. In November 2002, our collaborators at the Stanford Stroke Center presented what we regard as very encouraging results of a pilot study in a rat cortical stroke model at the annual meeting of the Society for Neuroscience. We are continuing to evaluate data from experiments in animal models of Parkinson's, Alzheimer's and spinal cord injury, and plan to engage in additional studies in all three of these areas to gather more information pertaining to the behavior of our neural stem cells in these animal models. We intend to present the results of our studies in LSD at a major scientific meeting to be held later this quarter.

"In our liver program, we are using a number of animal models to evaluate the in-vivo characteristics of our candidate liver engrafting cell and have observed sustained human serum albumin production in the mouse blood in two of these models. Our U.S. Patent Application number 20030032184, pertaining to this technology, was published on February 13th of this year.

"We have also identified a number of candidate cells with the potential to treat diseases of the pancreas, such as diabetes. We have an exclusive license to a Patent Application for a novel gene, with utility for the identification of an insulin producing cell. A U.S. Patent for this enabling technology will issue today, April 1, 2003.

"Our portfolio of patents, owned by or exclusively licensed to us, continued to grow. In 2002, the U.S. Patent Office awarded us five patents, the most significant of which is a patent governing the transplantation of mammalian tissue-derived neural stem cells and their progeny into the CNS and the Peripheral Nervous System, including the spinal cord. In addition, new foreign patents issued on four inventions, in one case including a European Patent validated in 16 countries.

"In conjunction with the announcement of our 3rd Quarter results on November 14, 2002, we announced that our capital reserves were sufficient only to fund operations into the second quarter of 2003. This remains true, and the capital markets remain difficult. We are, however, engaged in discussions with a number of financial institutions who have expressed an interest in investing in our Company. We are also engaged in discussions with companies who have strategic interests in the diabetes field, pertaining to the funding of an endeavor to discover and develop a human insulin producing cell. Finally, we are in discussions with other companies regarding a strategic partnership in the stem cell field of endeavor. While there are no assurances that all or any of these initiatives will succeed, we are working diligently to attract sufficient capital to fund the Company's operations for the near term, pending an improvement in the markets and the creation of additional value for our shareholders."

Statements in this press release other than statements of historical facts constitute forward-looking statements regarding, among other things, the future business operations of StemCells, Inc. ("the Company"). The Company's actual results may vary materially from those contemplated in the forward looking statement due to risks and uncertainties to which the Company is subject, including the risk that Company will not be successful in using the patented technologies to develop effective treatments for human diseases; uncertainties regarding the Company's ability to obtain the capital resources needed 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 state and has not yet led to the development of any proposed product; the uncertainty whether any products that may be generated in the future in the Company's stem cell programs will prove clinically effective and not cause tumors or other side effects; the uncertainty whether the Company will achieve revenues from product sales or become profitable; and others that are described in Exhibit 99 to the Company's Annual Report on Form 10-K entitled "Cautionary Factors Relevant to Forward Looking Statements."

CONTACT: Martin McGlynn, President & CEO of StemCells, Inc., +1-650-475-3100, ext 108.

StemCells, Inc.

CONTACT: Martin McGlynn, President & CEO of StemCells, Inc.,
+1-650-475-3100, ext. 108

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