CHOC Children's receives royalty-free research license to certain StemCells' patents

StemCells, Inc. (Nasdaq:STEM) (the "Company") and the Children's Hospital of Orange County ("CHOC Children's") announced today that they have entered into an agreement that provides CHOC Children's with a royalty-free research license to certain of StemCells' patents. This license authorizes CHOC Children's to proliferate, maintain and use human neural stem cells for non-commercial purposes.

"We are very pleased to enter into this license agreement," said Brent Dethlefs, Director of the CHOC Children's Research Institute. "Ultimately, we are all working to find ways to advance the diagnosis and treatment of childhood disease.   This research license allows CHOC Children's to continue these efforts in the neural stem cell field.

"Now that we have entered into this agreement, we at CHOC Children's would like to correct some misperceptions about our negotiations with StemCells," continued Mr. Dethlefs. "Any innuendo or suggestion that StemCells was trying to use its patent position to extract money from CHOC Children's is false. I can confirm that StemCells has never demanded from CHOC Children's any financial compensation for this academic research license.   Moreover, I would like to state that throughout these complicated negotiations, StemCells was responsive and conducted itself in a professional and courteous manner. We had hoped to jointly announce this license last month, because the material terms of the agreement have been agreed-to for some time. But for a number of unanticipated reasons final execution took longer than expected. Notwithstanding this, during the course of these protracted negotiations, both parties developed a great deal of understanding and respect for each other's position. We are appreciative of StemCells' persistence and determination to enable such a satisfactory outcome."

"I am very pleased with this agreement, as I can now continue with my research on human neural stem cells," commented Dr. Philip Schwartz, Ph.D., Managing Director of CHOC Children's National Human Neural Stem Cell Resource. "The most important objective is to try to find new ways to diagnose and treat childhood neuro-developmental diseases, and that is what I am committed to doing. At the same time, I can affirm the commitment of StemCells and its founders to academic research and to the development of stem cell therapeutics. StemCells has spent many years advancing neural stem cells into the clinic as a potential treatment for two different deadly childhood diseases. Today's announcement reconfirms the common purpose and hope we share of improving human health by unlocking the power of stem cells."

Ken Stratton, General Counsel for StemCells, Inc., added, "This is a 'win-win' solution with CHOC Children's. We first approached CHOC Children's to make it aware of our intellectual property because we had concerns that CHOC Children's might wish to sell human neural stem cells through its 'National Human Neural Stem Cell Resource' website, which we considered no different than the commercial pursuits of our existing licensees, such as Cambrex/BioWhittaker. We have made considerable investments in our patent portfolio as a way to safeguard the Company's interests. Thankfully, through a lot of hard work by both parties, we have been able to agree with CHOC Children's upon a scope of activities and license terms which will allow Dr. Schwartz and CHOC Children's to pursue their research agenda and distribute cells to the academic community, while protecting the Company's assets against misuse. The license announced today covers almost two dozen patents from many inventors at several institutions, including researchers at StemCells."

"I would like to correct any impression or inference in the press that StemCells has been forcing CHOC Children's to take a license to any of Dr. Schwartz's own inventions," explained Jay Gabriel, General Counsel for CHOC Children's. "Any insinuations that StemCells somehow patented an invention of his are baseless."

StemCells owns or has exclusive rights to approximately 55 issued or allowed U.S. patents and approximately 200 granted or allowed non-U.S. patents. Many of the Company's patents include claims covering composition of matter and methods for the isolation, expansion, genetic manipulation, and use of neural stem and progenitor cells for both therapeutic use and non-therapeutic applications such as drug discovery and screening. The Company maintains an active licensing program for its technologies, and has several non-exclusive license agreements in place with leading pharmaceutical and research-based companies; as well as various on-going collaborations with stem cell researchers.