Reports Evidence of Engraftment and Long-Term Survival of HuCNS-SC^® Cells

StemCells, Inc. (NASDAQ: STEM) announced today positive results from the first Phase I clinical trial of its proprietary HuCNS-SC^® product candidate (purified human neural stem cells), including demonstration of a favorable safety profile along with evidence of engraftment and long-term survival of the HuCNS-SC cells.

The Phase I trial was designed primarily to assess the safety of HuCNS-SC cells as a potential cell-based therapeutic. Six patients with advanced stages of infantile and late infantile neuronal ceroid lipofuscinosis (NCL), often referred to as Batten disease, were transplanted with HuCNS-SC cells and followed for 12 months. Overall, the Phase I data demonstrated that high doses of HuCNS-SC cells, delivered by a direct transplantation procedure into multiple sites within the brain, followed by twelve months of immunosuppression, were well tolerated by all six patients enrolled in the trial. The patients’ medical, neurological and neuropsychological conditions, following transplantation, appeared consistent with the normal course of the disease. The independent Data Monitoring Committee (DMC), a multi-disciplinary group of experts in neurosurgery, transplant medicine, genetics, and neurology responsible for overseeing the safety of the trial, has also concurred with the Company’s assessment of the safety profile of the test product and procedure. The trial was conducted at Oregon Health & Science University (OHSU) Doernbecher Children's Hospital and was completed in January 2009. StemCells will present the final study report to the FDA and plans to pursue future clinical development of HuCNS-SC as a potential treatment for infantile and late infantile NCL.

“We are very pleased and encouraged by the results of this landmark trial,” said Martin McGlynn, president and chief executive officer of StemCells. “As this was the first-ever FDA-authorized study of human neural stem cells as a potential therapeutic agent in humans, the favorable data we obtained is especially meaningful. Completing this first trial also marked an important milestone in the evolution of our cell-based product candidates from research and development to human clinical studies. We are deeply grateful for the support of the patients’ families who enabled us to make an important advance in our search for a therapy that might one day benefit not only children with Batten disease, but also those suffering from other serious neurodegenerative diseases.”

Commenting on the trial data, Stephen Huhn, MD, FACS, FAAP, vice president and head of the Company’s CNS Program, stated, “The HuCNS-SC cells were well tolerated even at very high dose levels – as many as one billion cells were transplanted into certain patients. Given the considerable number of cells transplanted, together with the very fragile nature of the patients involved, the positive safety data we observed is particularly noteworthy.”

StemCells previously reported the loss of the second patient enrolled in the trial, who died from the natural progression of the disease approximately one year post-transplant. Because the family consented to an autopsy examination of the brain, the Company was able to establish that the donor cells had engrafted and survived, despite severe brain atrophy related to the NCL. By permitting the autopsy, the family allowed the researchers to learn very important details that will potentially benefit future patients.

“Our strategy for these lysosomal storage diseases is to protect the patient’s remaining neurons by transplanting donor cells without the genetic defect that causes NCL into the brain,” continued Dr. Huhn. “These healthy neural stem cells have the potential to produce the enzyme currently lacking for proper function and survival of the patient’s brain cells. In this first trial, however, the patients already had a severe amount of neuronal degeneration and brain atrophy due to the advanced stage of their disease and only a limited number of brain cells remaining to protect, making it difficult to measure any degree of efficacy. Our interpretation of potential efficacy measurements was also limited by the number of subjects enrolled in the trial and the absence of a control group. Consequently, now that we have demonstrated a favorable safety profile and evidence of long term donor cell survival, our objective is to initiate a second trial designed to test the potential for efficacy in patients in a much earlier stage of the disease.”

Robert Steiner, MD, FAAP, FACMG, co-principal investigator, professor of pediatrics and molecular and medical genetics, and vice chairman for pediatric research at OHSU Doernbecher Children's Hospital, stated, “The OHSU research team worked very hard to carry out this highly complex research and is heartened to see that this approach appears to be safe. We are delighted that this first trial of human neural stem cells was successful and offers some hope for effective treatment of NCL and other neurodegenerative disorders.”

“It was a privilege for our team to care for these precious children,” added Nathan Selden, MD, Ph.D., FACS, FAAP, co-principal investigator, Campagna Associate Professor and head, division of pediatric neurological surgery at OHSU Doernbecher Children’s Hospital. “We are indebted to our patients and their families for taking us into this new era of therapy for the central nervous system.