Human neural stem cells to treat Pelizaeus-Merzbacher Disease

StemCells, Inc. (NASDAQ:STEM) announced today that it will soon initiate with the University of California, San Francisco (UCSF) Children’s Hospital a Phase I clinical trial to evaluate the therapeutic potential of StemCells’ proprietary HuCNS-SC® product candidate (purified human neural stem cells) to treat Pelizaeus-Merzbacher Disease (PMD), a myelination disorder that primarily affects infants and young children. Myelin is the substance which surrounds and insulates nerve fibers (axons), and enables nerve cells to communicate with one another. Patients suffering from PMD have insufficient myelination of nerve cells in the brain, which leads to loss of neurological function and eventually death in the most severe forms of the disease. In this trial, patients with a fatal form of PMD will be transplanted with the Company’s HuCNS-SC cells to evaluate safety and to explore the ability of the cells to myelinate the patients’ nerve axons.

This trial will be the first ever clinical trial of neural stem cells in a myelination disorder, and will be the Company’s second clinical trial of its HuCNS-SC cells. The Company’s first clinical trial, a Phase I trial in neuronal ceroid lipofuscinosis (NCL, also often referred to as Batten disease) which was completed in January 2009, demonstrated a favorable safety profile along with evidence of engraftment and long-term survival of the HuCNS-SC cells.

“There is a compelling rationale for this trial, and it is a critical first step towards potentially helping seriously ill children who today have no treatment options, as this trial may provide proof-of-concept regarding the extent of myelination in these patients following transplantation of HuCNS-SC cells,” said Martin McGlynn, President and CEO of StemCells, Inc.

Stephen Huhn MD, FACS, FAAP, Vice President and Head of the CNS Program at StemCells, Inc., added, “Our clinical development strategy has been to use our HuCNS-SC cells to provide what the patient’s own cells cannot, whether that is a missing enzyme, as in NCL, or myelin, as in PMD. The goal is to have our cells protect the patients’ existing neurons and maintain their function. I believe that if we can show that these cells preserve neurological function in patients with PMD, then it is conceivable that patients suffering from other, more common, myelination disorders, such as multiple sclerosis, transverse myelitis and certain types of cerebral palsy, may also benefit from this approach.”

The trial will be conducted at UCSF Children’s Hospital, which is one of the top centers for pediatric neurology and neurosurgery in the United States. The principal investigator will be David H. Rowitch, M.D., Ph.D., a pediatric specialist and Chief of Neonatology at UCSF Children’s Hospital, and Professor of Pediatrics and Neurological Surgery, a Howard Hughes Medical Institute investigator, and a member of the Eli and Edythe Broad Center of Regeneration Medicine and Stem Cell Research, all at UCSF. Nalin Gupta, M.D., Ph.D., Chief of Pediatric Neurological Surgery at UCSF Children's Hospital, and Jonathan B. Strober, M.D., Director of Clinical Services for Child Neurology and Director of the Muscular Dystrophy Clinic at UCSF Children's Hospital will be co-investigators.

“Severe PMD is a devastating disease for which we have no treatment,” said Dr. Rowitch. “This trial will help us determine whether cell replacement therapy is safe for the young patients suffering from this condition, and may offer insights into whether the strategy offers prospects for treating the disease.”

Jeff Leonard, Trustee for the PMD Foundation, a patient advocacy and research support group, commented, "We have been waiting years for a clinical trial to emerge for PMD. The potential of a cell-based therapy to treat PMD represents hope for the patients and families impacted by this terrible disease. We are very excited that StemCells, Inc. has focused on PMD as an area of unmet medical need, and our foundation is committed to raising awareness for this groundbreaking trial."

About the PMD Clinical Trial

The Phase I trial is designed to assess the safety and preliminary efficacy of HuCNS-SC cells as a treatment for PMD. The trial is expected to enroll four patients with connatal PMD, which is the most severe form of the disease. All patients will be transplanted with HuCNS-SC cells, and will be immunosuppressed for nine months. Following transplantation, the patients will be evaluated regularly over a 12-month period in order to monitor and evaluate the safety and tolerability of the HuCNS-SC cells, the surgery, and the immunosuppression. In addition, magnetic resonance imaging (MRI) of the brain post-transplant may enable the measurement of new myelin formation. The Company is planning to follow the effects of this therapy long-term, so, as with the Phase I NCL trial, this trial will also be followed by a separate four-year observational study. Interested parties may find more information on patient enrollment at http://neonatology.ucsf.edu/research/ or by visiting www.stemcellsinc.com.

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