StemCells, Inc. Agrees to Stay Litigation against Neuralstem Pending Reexamination of Patents Involved in Lawsuit

StemCells, Inc. (NASDAQ: STEM) today announced it has consented to a stay, on mutually acceptable terms, of its patent infringement lawsuit against Neuralstem, Inc., pending reexamination by the U.S. Patent and Trademark Office (PTO) of the four patents that are the subject of the litigation. In its lawsuit, StemCells alleges Neuralstem’s contemplated stem cell products and drug screening and discovery services infringe the four patents. StemCells stated that Neuralstem’s petition to the PTO to reexamine these patents was expected given the scope of the issued claims in these patents, which cover Neuralstem’s current business, including the human spinal stem cells it uses. StemCells noted that petitioning for patent reexamination and a stay is a procedural tactic often used by defendants to delay a trial. StemCells further noted that the PTO regularly grants such reexamination requests and often preliminarily rejects the reexamined patents, but then subsequently upholds patent claims in later stages of the review and appeals process. Regardless of the outcome of the reexamination of these four patents, StemCells believes there will be no material effect on its patent portfolio. StemCells owns or has exclusive licenses to 53 issued or allowed U.S. patents and more than 150 granted or allowed patents worldwide. StemCells' patent portfolio includes claims covering cultures containing either human or other mammalian neurospheres or neural stem cells, derived from any tissue source, whether cultured in suspension or adherent conditions. "We have examined the prior art relied upon by Neuralstem in its petitions and cited by the PTO. We are confident that all of these patents will emerge from this process substantively unchanged,” said Martin McGlynn, president and chief executive officer of StemCells. "We firmly believe that in time Neuralstem will be found by the courts to be infringing our patents.” About StemCells, Inc. StemCells, Inc. is a clinical-stage biotechnology company focused on the discovery, development and commercialization of cell-based therapeutics to treat diseases of the nervous system, liver and pancreas. The Company’s programs seek to repair or repopulate neural, liver or other tissue that has been damaged or lost as a result of disease or injury. StemCells has pioneered the discovery and development of HuCNS-SC™ cells, its highly purified population of human neural stem cells. These cells are expandable into cell banks for therapeutic use, which offers the potential of using normal, non-genetically modified cells as cell-based therapies. StemCells owns or has exclusive rights to more than 53 issued or allowed U.S. patents and more than 150 granted or allowed non-U.S. patents. StemCells currently has five corporate licensees to certain patents in its portfolio. 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 Company's belief regarding the strength of its patent portfolio generally and of the four patents at issue in the Neuralstem litigation in particular and the likely outcome of the PTO review and the Neuralstem litigation. These 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 patents could be held to be invalid on the basis of prior art or for other reasons. If any claims in the Company's patents are held to be improper, invalid or otherwise unenforceable, the Company could be prevented from enforcing its patents against Neuralstem or others the Company believes may be infringing its patents. Even if the Company's claims are held to be valid, Neuralstem or others might not be found to have infringed these claims. Actual results may vary materially from those contemplated in the forward-looking statements due to these risks and uncertainties and to other risks to which the Company is subject, including factors that are described under the heading "Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K.