883975--3/11/2010--STEMCELLS

related topics

{product, liability, claim}

{product, candidate, development}

{property, intellectual, protect}

{stock, price, share}

{regulation, government, change}

{loan, real, estate}

{operation, natural, condition}

{provision, law, control}

{personnel, key, retain}

{cost, operation, labor}

{acquisition, growth, future}

{cost, contract, operation}

Our product development programs are based on novel technologies and are inherently risky. Our technologies are at early stages of discovery and development, and we may fail to develop any commercially acceptable or profitable products. Our success will depend in large part on our ability to develop and commercialize products that treat diseases other than neuronal ceroid lipofuscinosis (Batten disease) and Pelizeaus-Merzbacher Disease (PMD). Acquisitions of companies, businesses or technologies may substantially dilute our stockholders and increase our operating losses. Costs and disruptions from the management of the acquired SCS business may impair our business. We have payment obligations resulting from real property owned or leased by us in Rhode Island, which diverts funding from our cell-based therapeutics research and development and enabling cell technologies programs. We may be unable to obtain partners to support our product development efforts when needed to commercialize our technologies. If we are unable to protect our patents and proprietary rights, our business, financial condition and results of operations may be materially harmed. If we are unable to obtain necessary licenses to third-party patents and other rights, we may not be able to commercially develop our expected products. We compete with companies that have significant advantages over us. The research market is heavily dependent on government funding, and changes in government funding can adversely affect revenues for our enabling technologies. Development of our technologies is subject to, and restricted by, extensive government regulation, which could impede our business. We are dependent on the services of key personnel. Our activities involve hazardous materials and experimental animal testing; improper handling of these animals and materials by our employees or agents could expose us to significant legal and financial penalties. Natural disasters and violent acts of public protest may cause damage or disruption to us and our employees, facilities, information systems, vendors, and customers. The development, manufacturing and commercialization of cell-based therapeutic products expose us to product liability claims, which could lead to substantial liability. The manufacture of cell-based therapeutic products is novel, highly regulated, critical to our business, and dependent upon specialized key materials. Because health care insurers and other organizations may not pay for our products or may impose limits on reimbursements, our ability to become profitable could be adversely affected. Ethical and other concerns surrounding the use of stem or progenitor-based cell therapy may negatively affect regulatory approval or public perception of our product candidates, which could reduce demand for our products or depress our stock price. Restrictions on the use of human embryonic stem cells, including public and political opposition to the use of these cells, could harm our business. Our corporate documents and Delaware law contain provisions that could make it difficult for us to be acquired in a transaction that might be beneficial to our stockholders. Risks Related to the Securities Market Our stock price has been, and will likely continue to be, highly volatile, which may negatively affect our ability to obtain additional financing in the future.

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883975--3/11/2010--STEMCELLS_INC