883975--3/14/2008--STEMCELLS

related topics

{product, candidate, development}

{product, liability, claim}

{property, intellectual, protect}

{acquisition, growth, future}

{personnel, key, retain}

{loan, real, estate}

{provision, law, control}

{cost, contract, operation}

We have limited capital resources and we may not obtain the significant additional capital needed to sustain our research and development efforts. Our product development programs are based on novel technologies and are inherently risky. Our technology is at an early stage 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). Acquisitions of companies, businesses or technologies may substantially dilute our stockholders and increase our operating losses. 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. We may be unable to obtain partners to support our cell-based therapeutic 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. 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. 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. 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.

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883975--3/14/2008--STEMCELLS_INC