ISCO fourth quarter revenue increases 110% to $1.1 million

International Stem Cell Corporation (OTCBB: ISCO) (www.internationalstemcell.com) today announced year-end financial results for the year ended December 31, 2011. ISCO is a California-based development-stage biotechnology company that is focused on therapeutic, biomedical and cosmeceutical product development and commercialization with multiple long-term therapeutic opportunities and two revenue-generating businesses offering potential for increased future revenue.

ISCO reported revenue of $1.1 million for the fourth quarter ended December 31, 2011, reflecting a 110% increase from the same period of the prior year. For the twelve months ended December 31, 2011, the Company reported revenue of $4.5 million, reflecting a year-over-year increase of 189%. The increases in revenues in both periods were primarily driven by strong sales at ISCO's wholly-owned subsidiary Lifeline Skin Care (LSC). In addition, steady growth in sales from ISCO's other wholly-owned subsidiary, Lifeline Cell Technology (LCT), contributed to the increases in revenues for both periods.

While the Company continued to invest in therapeutic projects, development of new technologies, and expansion of products and channels of distribution, to date we have generated limited revenue to support our core therapeutic research and development efforts. For the three months ended December 31, 2011, development expenses, excluding cost of sales, increased $507,000 or 17% compared with the same period of 2010, a reflection of increased G&A expenses resulting from higher stock-based compensation expenses.

For the twelve months ended December 31, 2011, development expenses, excluding costs of sales, increased approximately $3.0 million or 26% when compared with the prior year period. The majority of the increase was primarily due to increases in general and administrative and research and development activities. General and administrative expenses increased largely due to increased non-cash stock-based compensation, higher headcount, and increased expenses related business development activity and general corporate expenses. Research & Development expenses increased mainly due to increased number and complexity of experiments associated with our scientific projects. The increase in development expenses was also related to increased research activities on therapeutic products and product research activities for LSC and LCT coupled with increased sales and marketing expenses related to our skin care products.

Some of the 2011 Highlights:

-- A number of donors willing to provide oocytes for research purposed were enrolled in ISCO's program to establish a bank of clinical grade hpSC capable of being immune-matched to millions of patients.

-- The Research and Development team successfully completed the first series of preclinical studies that supports the therapeutic use of hepatocytes (liver cells) and neuronal cells derived from human parthenogenetic stem cells (hpSC). These in vivo experiments demonstrated that the derived cells are able to survive in targeted locations in mice without causing tumors.

-- We became Sarbanes-Oxley compliant and maintained, in all material respects, effective internal controls over financial reporting as of December 31, 2011.

-- We strengthened our Management Team through the appointments of well-known industry executives: Kurt May as President & Chief Operating Officer, Linh Nguyen as Chief Financial Officer, Donna Queen as Vice President of Marketing and Business Development for LSC.

-- Lifeline Skin Care launched a number of new sales and marketing initiatives including positioning the brand as the first bio-tech skin care company vested in technology-driven proprietary ingredients, opening new destination and resort spa sales and marketing channels and developing close working relationships and strategic partnerships with peer-group influencers in dermatology and plastic surgery clinics. LSC was also featured in the national media promoting its products and ISCO's technology, began distributing products in Australia and New Zealand, and initiated marketing agreements in other selected international markets.

-- Lifeline Cell Technology opened new international distribution channels in Singapore, Malaysia, Indonesia, Korea and India, providing a well-balanced distribution system consisting of direct domestic sales, private label manufacturing contracts and added international distribution partners.