Exhibit 10.1

LOGO [g184554g95d14.jpg]

January 10, 2016

Martin McGlynn

Dear Martin:

As we have discussed, your employment with StemCells, Inc. (the “Company”) will
terminate effective as of January 17, 2016 (the “Separation Date”). The purpose
of this letter (the “Agreement”) is to confirm the terms concerning your
separation from employment and to set forth the terms of your engagement to
provide consulting services to the Company following the Separation Date, as
follows:

 

  1. Separation.

(a) Final Salary and Vacation Pay. You acknowledge that, on the Separation Date,
you will receive pay for all work you have performed for the Company through the
Separation Date, to the extent not previously paid, as well as pay, at your
final base rate of pay, for any vacation days you had earned but not used as of
the Separation Date, determined in accordance with Company policy and as
reflected on the books of the Company. For the avoidance of doubt, you will not
receive any bonus payment in respect of the 2015 bonus year. You will receive
the payments described in this Section 1(a) regardless of whether or not you
elect to sign this Agreement.

(b) Severance Benefits. In consideration of your acceptance of this Agreement
and subject to your meeting in full your obligations under it and under the
Employment Agreement (as defined below), the Company will provide you with the
following severance benefits:

(i) The Company will continue to pay you your base salary, at your final base
rate of pay of Five Hundred Seventy Thousand Dollars ($570,000), for a period of
twelve (12) months following the Separation Date. Payments will be made in the
form of salary continuation on a bi-monthly basis, and will begin on the next
regular Company payday following the Separation Date.

(ii) If you are enrolled in the Company’s group medical and/or dental plans on
the Separation Date, you may elect to continue your participation and that of
your eligible dependents in those plans for a period of time under the federal
law known as “COBRA” or applicable state law. Further, if you timely elect to
continue your participation and that of your eligible dependents in the plans,
the Company will contribute to the premium cost of your COBRA or applicable
state law continuation coverage at the same rate that it contributes from time
to time to medical and dental insurance premiums for its active employees until
the earlier of the

 

i

--------------------------------------------------------------------------------

three (3)-year anniversary of the Separation Date or the date that you are no
longer entitled to coverage under COBRA or applicable state law. To be eligible
for the Company’s premium contributions, however, you must pay the remainder of
the premium cost of your COBRA or applicable state law continuation coverage.
Notwithstanding the foregoing, in the event that the Company’s payment of the
COBRA or applicable state law premium contributions, as described under this
Section 1(b)(ii), would subject the Company to any tax or penalty under the
Patient Protection and Affordable Care Act (as amended from time to time, the
“ACA”) or Section 105(h) of the Internal Revenue Code of 1986, as amended
(“Section 105(h)”), or applicable regulations or guidance issued under the ACA
or Section 105(h), you and the Company agree to work together in good faith to
restructure such benefit.

(iii) The Company will pay you a lump-sum amount equal to Five Hundred Seventy
Thousand Dollars ($570,000). This payment will be made to you on the next
regular Company payday which is at least five (5) business days following the
later of the effective date of this Agreement and the date this Agreement,
signed by you, is received by the Company (the “Effective Date”).

(c) Acknowledgement of Full Payment. You acknowledge and agree that the payments
provided under Section 1(a) of this Agreement are in complete satisfaction of
any and all compensation and benefits due to you from the Company, whether for
services provided to the Company under the Offer Letter or otherwise, through
the Separation Date. You further acknowledge that, except as expressly provided
hereunder, no further compensation or benefits are owed or will be provided to
you by the Company.

(d) Status of Employee Benefits, Paid Time Off, Expenses and Equity.

(i) Except as otherwise provided in Section 1(b)(ii) hereof, your participation
in all employee benefit plans of the Company will end as of the Separation Date,
in accordance with the terms of those plans. You will not continue to earn
vacation, paid time off or other similar benefits after the Separation Date. You
will receive information about your COBRA and applicable state law continuation
rights under separate cover.

(ii) You agree that, within two (2) weeks of the effective date of this
Agreement, you will submit your final expense reimbursement statement reflecting
all business expenses you incurred through the Separation Date, if any, for
which you seek reimbursement, and, in accordance with Company policy, reasonable
substantiation and documentation for the same. The Company will reimburse you
for your authorized and documented expenses pursuant to its regular business
practice.

(iii) As of the Effective Date, you will vest in one hundred percent (100%) of
your unvested restricted stock units granted to you by the Company that are
subject only to time-based vesting (the “Time-Based RSUs”). On the date that is
six (6) months following the Effective Date, the Company will issue and deliver
to you the number of shares of Company common stock (“Stock”) equal to the full
number of Time-Based RSUs. You acknowledge and agree that the Company will hold
back shares of Stock otherwise deliverable pursuant to the immediately preceding
sentence having a fair market value sufficient to satisfy the applicable tax
obligation. In the event that the timing of the delivery of such shares could
violate Section 409A of the Code, the

 

ii

--------------------------------------------------------------------------------

Company reserves the right to treat the Time-Based RSUs as taxable to you on the
Effective Date. Your rights and obligations with respect to the Time-Based RSUs
will otherwise be governed by the applicable equity plan(s) and any agreements
or other requirements applicable to the Time-Based RSUs. All restricted stock
units held by you as of the Effective Date that are subject to performance-based
vesting will be governed by the applicable equity plan(s) and any agreements or
other requirements applicable to such restricted stock units.

(e) General Release and Waiver of Claims.

(i) In exchange for the special payments and benefits provided to you under this
Agreement, to which you would not otherwise be entitled, on your own behalf and
that of your heirs, executors, administrators, beneficiaries, personal
representatives and assigns, you agree that this Agreement shall be in complete
and final settlement of any and all causes of action, rights and claims, whether
known or unknown, accrued or unaccrued, contingent or otherwise, that you have
had in the past, now have, or might now have, in any way related to, connected
with or arising out of your employment, its termination, your other associations
with the Company and its Affiliates (as defined below), or the Offer Letter or
the Employment Agreement, or pursuant to Title VII of the Civil Rights Act, the
Americans with Disabilities Act, the Age Discrimination in Employment Act, as
amended by the Older Workers Benefit Protection Act, the Employee Retirement
Income Security Act, the wage and hour, wage payment and fair employment
practices laws and statutes of the state or states in which you have provided
services to the Company or any of its Affiliates (each as amended from time to
time), and/or any other federal, state or local law, regulation or other
requirement (collectively, the “Claims”), and you hereby release and forever
discharge the Company, its Affiliates and all of their respective past, present
and future directors, shareholders, officers, members, managers, general and
limited partners, employees, employee benefit plans, administrators, trustees,
agents, representatives, successors and assigns, and all others connected with
any of them, both individually and in their official capacities (collectively,
the “Released Parties”), from, and you hereby waive, any and all such Claims;
provided, however that the release in this Section 1(e)(i) shall not apply to
(x) your right to enforce the terms of this Agreement or (y) any right to
indemnification that you may have under the certificate of incorporation or
by-laws of the Company or any insurance policies maintained by the Company.

(ii) In signing this Agreement, you expressly waive and relinquish all rights
and benefits afforded by Section 1542 of the Civil Code of the State of
California, and do so understanding and acknowledging the significance of such
specific waiver of Section 1542, which section states as follows:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

Thus, notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release and discharge of the Released Parties,
you expressly acknowledge that the general release and waiver of claims set
forth in Section 1(e)(i) is intended to include in its effect, without
limitation, all Claims which you do not know or suspect to exist in your favor
at the time you sign it, and that this Agreement contemplates the extinguishment
of any and all such Claims.

 

iii

--------------------------------------------------------------------------------

(iii) This Agreement, including the general release and waiver of claims set
forth immediately above, creates legally binding obligations and the Company and
its Affiliates therefore advise you to consult an attorney before signing this
Agreement. In signing this Agreement, you give the Company and its Affiliates
assurance that you have signed it voluntarily and with a full understanding of
its terms; that you have had sufficient opportunity of not less than twenty-one
(21) days, before signing this Agreement, to consider its terms and to consult
with an attorney, if you wished to do so, or to consult with any other of those
persons to whom reference is made in Section 3(c) below; and that you have not
relied on any promises or representations, express or implied, that are not set
forth expressly in this Agreement.

(iv) Nothing contained in this Agreement shall be construed to prohibit you from
filing a charge with or participating in any investigation or proceeding
conducted by the federal Equal Employment Opportunity Commission or a comparable
state or local agency, provided, however, that you hereby agree to waive your
right to recover monetary damages or other individual relief in any charge,
complaint or lawsuit filed by you or by anyone else on your behalf.

(v) You agree that you will timely execute an additional general release and
waiver of claims in the form attached hereto as Exhibit A on or after the
Separation Date (and not before).

 

  2. Consulting Engagement.

(a) Services. Effective as of January 18 (the “Start Date”), you will be engaged
to provide certain consulting services to the Company. Such consulting services
will include services relating to your former employment with the Company as are
from time to time requested by the Company. Your engagement hereunder will
conclude on the first anniversary of the Start Date, unless earlier ended by the
Company or extended in writing by mutual agreement of the parties (such final
date, the “End Date”). The period from the Start Date to the End Date is
referred to in this Agreement as the “Consulting Period.” During the Consulting
Period, you agree to be available for up to fifteen (15) hours per month to
perform such services as are requested by the Company. If the Consulting Period
is terminated by you or the Company prior to the first anniversary of the
Separation Date for any reason other than your breach of this Agreement or the
Employment Agreement, the Company shall continue to pay you the amounts due
under Section 1(b) of this Agreement.

(b) Status of Offer Letter and Employment Agreement. As of the Separation Date,
the Offer Letter has terminated. You and the Company agree that you will
continue to be bound by your obligations under the Employment Agreement between
you and the Company entered into in connection with the Offer Letter (the
“Employment Agreement”) that survive the termination of your employment by the
terms thereof or by necessary implication. Nothing in this Agreement or the
Employment Agreement limits, restricts or in any other way affects your
communicating with any governmental agency or entity, or communicating with any
official or staff person of a governmental agency or entity, concerning matters
relevant to the governmental agency or entity.

 

iv

--------------------------------------------------------------------------------

(c) Relationship of the Parties. You and the Company expressly agree that, in
providing services to the Company under this Agreement following the Separation
Date, you will be an independent contractor and will not be an employee or agent
of the Company. You agree that you will have no right to make any commitments on
behalf of the Company without the express written consent of an authorized
officer of the Company.

(d) Services for Others; Non-Solicitation.

i. During the Consulting Period, you may choose to also provide services for
others, provided that (x) such services do not give rise to a conflict of
interest or otherwise interfere with your obligations to the Company under this
Agreement and (y) you will not provide services in any capacity for any person
or entity that competes with all or any portion of the Business (as defined
below) in any location where the Company or any of its Affiliates engages in, or
is actively planning to engage in, the Business. For purposes of this Agreement,
the “Business” shall mean the business of the Company or any of its Affiliates,
or any portion of such business, as engaged in by the Company or any of its
Affiliates during the Consulting Period.

ii. During the Consulting Period you will not directly or indirectly (i) solicit
or encourage any customer, vendor, supplier or other business partner of the
Company or any of its Affiliates to terminate or diminish its relationship with
them; (ii) seek to persuade any such customer, vendor, supplier or other
business partner or prospective customer, vendor, supplier or other business
partner of the Company or any of its Affiliates to conduct with anyone else any
business or activity which such customer, vendor, supplier or other business
partner or such prospective customer, vendor, supplier or other business partner
conducts or could conduct with the Company or any of its Affiliates; (iii) hire
or engage, or solicit for hiring or engagement, any employee of the Company or
any of its Affiliates or seek to persuade any employee of the Company or any of
its Affiliates to discontinue employment; or (iv) solicit or encourage any
independent contractor providing services to the Company or any of its
Affiliates to terminate or diminish its relationship with them.

iii. You shall promptly and fully disclose all Intellectual Property (defined
below) to the Company. You hereby assign and agree to assign to the Company (or
as otherwise directed by the Company) your full right, title and interest in and
to all Intellectual Property. You agree to execute any and all applications for
domestic and foreign patents, copyrights or other proprietary rights and to do
such other acts (including without limitation the execution and delivery of
instruments of further assurance or confirmation) requested by the Company to
assign the Intellectual Property to the Company (or as otherwise directed by the
Company) and to permit the Company to enforce any patents, copyrights or other
proprietary rights to the Intellectual Property. You will not charge the Company
for time spent in complying with these obligations. For purposes of this
Agreement, “Intellectual Property” shall mean inventions, discoveries,
developments, methods, processes, compositions, works, concepts and ideas
(whether or not patentable or copyrightable or constituting trade secrets)
conceived, made, created, developed or reduced to practice by you (whether alone
or with others, whether or not during normal business hours or on or off Company
premises) during the Consulting Period that relate either to the business of the
Company or any of its Affiliates or to any prospective activity of the Company
or any of its Affiliates or that result from any services performed by you for
the Company or any of its Affiliates or that make use of confidential
information or any of the equipment or facilities of the Company or any of its
Affiliates.

 

v

--------------------------------------------------------------------------------

iv. You agree that, were you to breach any of the covenants contained in this
Section 2(d), the damage to the Company and its Affiliates would be irreparable.
You therefore agree that the Company, in addition and not in the alternative to
any other remedies available to it, shall be entitled to preliminary and
permanent injunctive relief against any breach or threatened breach by you of
any of those covenants, without having to post bond, together with an award of
its reasonable attorney’s fees incurred in enforcing its rights hereunder. So
that the Company may enjoy the full benefit of the covenants contained in this
Section 2(d), you further agree that the period of restriction shall be tolled,
and shall not run, during the period of any breach by you of any of the
covenants contained in this Section 2(d). You and the Company further agree
that, in the event that any provision of this Section 2(d) is determined by any
court of competent jurisdiction to be unenforceable by reason of its being
extended over too great a time, too large a geographic area or too great a range
of activities, that provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by law. It is also agreed that each
of the Company’s Affiliates shall have the right to enforce all of your
obligations to that Affiliate under this Agreement, including without limitation
pursuant to this Section 2(d). Finally, no claimed breach of this Agreement or
other violation of law attributed to the Company, or change in the nature or
scope of your relationship with the Company or any of its Affiliates, shall
operate to excuse you from the performance of your obligations under this
Section 2(d).

(e) Consulting Fees and Expenses. In consideration of the services that you
provide to the Company under this Agreement during the Consulting Period, and in
addition to the payments and benefits described in Section 1(b) of this
Agreement, the Company will pay you a consulting fee at the rate of Seven
Hundred Dollars ($700) per hour (the “Consulting Fee”) for each hour in excess
of fifteen (15) hours in any given month that you provide requested consulting
services to the Company. Any Consulting Fee owed to you will be paid on a
monthly basis.

(f) Taxes, Insurance and Benefits. You acknowledge and agree that, as an
independent contractor, you will be solely responsible for all insurance,
including but not limited to workers’ compensation insurance and unemployment
insurance, and for the withholding and payment of all federal, state and local
income taxes, Social Security and Medicare taxes and other legally-required
payments on any amounts received from the Company. You also acknowledge and
agree that neither you nor any individual claiming through you will be eligible
to participate in or receive benefits under any of the employee benefit plans,
programs and arrangements maintained by the Company (all of the foregoing, the
“Plans”), other than as expressly provided in this Agreement. You hereby waive
any and all rights to participate in, or receive benefits under, any of the
Plans following the Separation Date, and you agree not to make any claim under
any of the Plans, other than in exercising your COBRA (or similar state law)
rights.

 

vi

--------------------------------------------------------------------------------

  3. Miscellaneous.

(a) Taxes. The Company may deduct and withhold from any amounts payable (or
otherwise deliverable) to you under this Agreement such U.S. federal, state,
local, non-U.S. or other taxes as are required to be withheld pursuant to any
law or regulation. You acknowledge and agree that you will be solely responsible
for the withholding and payment of all federal, state and local income taxes,
Social Security and Medicare taxes, and any and all other legally required
payments on any Consulting Fees paid to you hereunder.

(b) Return of Property. In signing this Agreement you represent and warrant that
you will return to the Company, on or before the End Date and as may be
requested by the Company or its designee from time to time, any and all
documents, materials and information (whether in hard copy, on electronic media
or otherwise) related to the business of the Company or its Affiliates (whether
present or otherwise), and all keys, access cards, credit cards and all other
property of the Company or any of its Affiliates in your possession or control;
provided, however, that you will be permitted to retain the laptop, cellular
telephone and cellular telephone number provided to you by the Company so long
as you present the laptop and cellular telephone to the Company within five
(5) days following the Separation Date so that all information of the Company
and its Affiliates can be permanently deleted. Further, you represent and
warrant that you will not retain any copy or derivation of any documents,
materials or information (whether in hardcopy, on electronic media or otherwise)
of the Company or any of its Affiliates following the End Date. You agree that
you will not, after the End Date, for any purpose, attempt to access or use any
computer or computer network or system of the Company or any of its Affiliates,
including without limitation the electronic mail system. Further, you
acknowledge that, on or before the End Date and as may be requested by the
Company or its designee from time to time, you will disclose to the Company all
passwords necessary or desirable to obtain access to, or that would assist in
obtaining access to, all information which you have password-protected on any
computer equipment, network or system of the Company or any of its Affiliates.

(c) Confidentiality. Subject to Section 1(e)(iv) of this Agreement, you agree
that, until such time when this Agreement is publicly filed, you will not
disclose this Agreement or any of its terms or provisions, directly or by
implication, except to members of your immediate family and to your legal and
tax advisors, and then only on condition that they agree not to further disclose
this Agreement or any of its terms or provisions to others.

 

vii

--------------------------------------------------------------------------------

(d) Non-Disparagement.

i. Subject to Section 1(e)(iv) of this Agreement, you agree that you will never
disparage or criticize the Company, its Affiliates, their business, their
management or their products or services, and that you will not otherwise do or
say anything that could disrupt the good morale of employees of the Company or
any of its Affiliates or harm the interests or reputation of the Company or any
of its Affiliates.

ii. The Company agrees that it will instruct its directors and officers, acting
in their official capacity, not to disparage or otherwise criticize you in any
authorized written statements of the Company.

(e) Definition of “Affiliates”. For the purposes of this Agreement, “Affiliates”
means all persons and entities directly or indirectly controlling, controlled by
or under common control with the Company, where control may be by management
authority, equity interest or otherwise.

(f) Compliance with Obligations. The obligation of the Company to make payments
to you or on your behalf under this Agreement, and your right to retain the
same, is expressly conditioned upon your continued full performance of your
obligations under this Agreement and the Employment Agreement.

(g) Choice of Law. This is a California contract and shall be governed and
construed in accordance with the laws of the State of California, without regard
to any conflict of laws principles that would result in the application of the
laws of another jurisdiction.

(h) Entire Agreement. This Agreement constitutes the entire agreement between
you and the Company, and supersedes all prior and contemporaneous
communications, agreements (including the Offer Letter) and understandings,
whether written or oral, with respect to your employment, its termination, your
ownership of equity interests, and all related matters, excluding only your
obligations under the Employment Agreement and your rights and obligations with
respect to the securities of the Company, all of which shall remain in full
force and effect in accordance with their terms.

(i) Amendment; Waiver; Headings. This Agreement may not be modified or amended,
and no breach shall be deemed to be waived, unless agreed to in writing by you
and the Chairman of the Board of the Company or his/her expressly authorized
designee. The captions and headings in this Agreement are for convenience only,
and in no way define or describe the scope or content of any provision of this
Agreement.

(j) Legal Fees. The Company will reimburse you for actual and reasonable legal
fees incurred in connection with the review, negotiation and execution of this
Agreement, in an amount not to exceed Ten Thousand Dollars ($10,000), subject to
receipt of reasonable documentation and substantiation of the same.

(k) Press Release. You and the Company agree that any press release issued by
the Company regarding your departure shall be consistent with the statement
attached to this Agreement as Exhibit B.

 

viii

--------------------------------------------------------------------------------

If the terms of this Agreement are acceptable to you, please sign, date and
return it to John Schwartz within twenty-one (21) days of the date you receive
it. You may revoke this Agreement at any time during the seven (7)-day period
immediately following the date of your signing by notifying John Schwartz in
writing of your revocation within that period, and this Agreement shall not
become effective or enforceable until that seven (7)-day revocation period has
expired. If you do not revoke this Agreement, then, on the eighth (8th) day
following the date that you signed it, this Agreement shall take effect as a
legally binding agreement between you and the Company on the basis set forth
above. The enclosed copy of this letter, which you should also sign and date, is
for your records.

 

Sincerely, STEMCELLS, INC. By:   /s/ John Schwartz

Accepted and agreed:

Signature: /s/ Martin McGlynn

Martin McGlynn

Date: 1-10-2016

 

ix

--------------------------------------------------------------------------------

EXHIBIT A

SUPLEMENTAL RELEASE OF CLAIMS

In exchange for the special payments provided to me under the agreement between
me and StemCells, Inc. (the “Company”), dated as of January 10, 2016 (the
“Agreement”), and for other good and valuable consideration, the receipt and the
sufficiency of which is hereby acknowledged, on my own behalf and that of my
heirs, executors, administrators, beneficiaries, personal representatives and
assigns, I agree that this Release of Claims shall be in complete and final
settlement of any and all causes of action, rights, benefits, entitlements and
claims, whether known or unknown, that I have had in the past, now have, or
might have now or at any time in the future, for, upon or by reason of any
matter, act, omission, event or occurrence, or any other thing whatsoever,
arising at any time on or before the date of this Release of Claims that is in
any way related to, connected with or arising out of my service relationship
with the Company and its affiliates or its termination, the Offer Letter, the
Employment Agreement, or pursuant to the wage and hour, wage payment and fair
employment practices statutes of the state or states in which I have provided
services to the Company, its affiliates or its or their predecessors and/or any
other federal, state or local law, regulation or other requirement, each as
amended from time to time (all of the foregoing causes of action, rights,
benefits, entitlements and claims, collectively, “Claims”) and I hereby release
and forever discharge the Company and all of its past, present and future
subsidiaries, affiliates, officers, directors, trustees, shareholders,
investment funds, employees, employee benefit plans, agents, general and limited
partners, members, managers, investors, joint venturers, representatives,
predecessors, successors and assigns, and all others connected with any of them
(all of the foregoing, the “Released”), both individually and in their official
capacities, from any and all such Claims; provided, however that this Release of
Claims shall not apply to (x) my right to enforce the terms of the Agreement or
(y) any right to indemnification that I may have under the certificate of
incorporation or by-laws of the Company or any insurance policies maintained by
the Company.

In signing this Release of Claims, I expressly waive and relinquish all rights
and benefits afforded by Section 1542 of the Civil Code of the State of
California, and do so understanding and acknowledging the significance of such
specific waiver of Section 1542, which section states as follows:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

Thus, notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release and discharge of the Released Parties,
I expressly acknowledge that the general release and waiver of claims set forth
in this Release of Claims is intended to include in its effect, without
limitation, all Claims which I do not know or suspect to exist in my favor at
the time I sign it, and that this Release of Claims contemplates the
extinguishment of any and all such Claims.

 

A-i

--------------------------------------------------------------------------------

I understand that nothing contained in this Release of Claims shall be construed
to prohibit me from filing a charge with or participating in any investigation
or proceeding conducted by the federal Equal Employment Opportunity Commission
or a comparable state or local agency, provided, however, that I hereby agree to
waive my right to recover monetary damages or other individual relief in any
charge, complaint or lawsuit filed by me or by anyone else on my behalf.

In signing this Release of Claims, I give the Company assurance that I have
signed it voluntarily and with a full understanding of its terms; that I have
had sufficient opportunity to consider its terms and to consult with any of
those persons referenced in Section 3(c) of the Agreement; and that I have not
relied on any promises or representations, express or implied, that are not set
forth expressly in this Release of Claims. I acknowledge I must sign this
Release of Claims, if at all, on the End Date (as defined in the Agreement).
This Release of Claims shall take effect as a legally binding agreement between
me and the Company on the basis set forth above at the time I sign it.

Accepted and agreed:

 

Signature:    

Martin McGlynn

Date:    

 

A-ii

--------------------------------------------------------------------------------

EXHIBIT B

PRESS RELEASE

StemCells, Inc. CEO Martin McGlynn Passes Baton to President and COO Ian Massey

Experienced Biotech Leader to Become Next Chief Executive Officer

NEWARK, Calif., Jan. XX, 2016 (GLOBE NEWSWIRE) — StemCells, Inc. (NASDAQ:STEM),
a world leader in the research and development of cell-based therapeutics for
the treatment of central nervous system disorders, today announced that Dr. Ian
Massey, its President and Chief Operating Officer, has been appointed by the
Board of Directors to succeed Martin McGlynn as the Company’s Chief Executive
Officer, effective January 18, 2016. Massey has additionally been elected to the
Board.

Massey and McGlynn have worked closely together since March of last year, and
over the past few months jointly architected the Company’s recently announced
strategic realignment, which fully focuses StemCell’s resources on its
proprietary HuCNS-SC® platform technology for the treatment of chronic spinal
cord injury (SCI). The two will continue to collaborate, with McGlynn serving as
a consultant over the next year, to facilitate a smooth leadership transition as
the Company expedites its SCI program to demonstrate clinical proof-of-concept.

“When I hired Ian as President and COO almost a year ago, I knew I was bringing
aboard a strong executive with the right background and temperament to
ultimately lead this Company,” said McGlynn. “Ian not only has a stellar track
record of successful clinical development through regulatory approval and on to
commercialization for numerous products, he is also a great fit for the culture
we have built at StemCells: rigorous science is fundamental to him; he is
personally passionate about pursuing treatments for CNS disorders; and he is a
collaborative leader who naturally gains respect from both technical and
business colleagues. I look forward to continuing to support Ian and the rest of
the management team in my ongoing participation with the Company.”

Ian Massey joined StemCells, Inc. in March 2015 as President and Chief Operating
Officer after a successful 30-year career in the pharmaceutical industry, most
recently as COO and President of U.S. Operations of Biotie Therapies
Corporation, a publicly traded Finnish company focused on neurodegenerative and
psychiatric disorders. In 2006, Massey co-founded Synosia Therapeutics and as
President and CEO rapidly created a clinically enabled portfolio by licensing
drug candidates from Novartis AG, Hoffman-La Roche AG, and Syngenta AG for
clinical development as potential therapeutics for the treatment of CNS
disorders. In 2011, with the strategic objective of becoming a public company,
Massey led the completion of a transaction with Biotie in which Synosia was
acquired. Dr. Massey’s prior experience in the pharmaceutical industry included
over 25 years first with Syntex and then with Roche where he held positions of
increasing responsibility culminating in Sr. Vice President and Head of Research
and Preclinical Development of Roche Palo Alto. He received his D. Phil Degree
in Organic Chemistry from Oxford University before undertaking postdoctoral work
first in the Institute of Organic Chemistry at Syntex Research and then with
Professor Carl Djerassi at Stanford University.

 

B-i

--------------------------------------------------------------------------------

“The opportunity to engage with such a talented, experienced and dedicated team
in developing our HuCNS-SC platform technology for the treatment of serious CNS
disorders for which no effective therapies are currently available is extremely
exciting,” stated Massey. “With our strategic realignment to focus on chronic
spinal cord injury we have enhanced our ability to develop a game-changer that
will dramatically improve the quality of life for patients with no current
therapeutic options. I am very pleased that the Board has entrusted me with
fulfilling this mission.”

StemCells Board Chair John Schwartz added, “Timing this transition with the
Company’s strategic realignment makes sense. We are grateful to Martin for his
many accomplishments and strong leadership as CEO over the past 15 years,
guiding the Company through its groundbreaking preclinical work and breakthrough
clinical translation of novel cell-based therapeutics for a wide range of CNS
disorders. And we are now fully confident that Ian will successfully lead
StemCells through the remaining challenges of bringing our first product to
market.”

About StemCells, Inc.

StemCells, Inc. is currently engaged in clinical development of its HuCNS-SC
platform technology (purified human neural stem cells) as a potential treatment
for chronic spinal cord injury (SCI). The Company’s Pathway Study, a Phase II
proof-of-concept trial in cervical SCI is actively enrolling at twelve sites.
Six-month interim data for the first cohort of the Pathway Study showed the
first-ever clinical evidence of a treatment effect improving both muscle
strength and motor function following cellular transplant in spinal cord injury.
Top-line data from the Company’s Phase I/II clinical trial in thoracic SCI
showed measurable gains involving multiple sensory modalities and segments,
including the conversion of two of seven patients enrolled in the study with
complete injuries to incomplete injuries, post-transplant. The Company has also
completed its Phase I/II clinical trial in geographic atrophy dry age related
macular degeneration. Top-line results from this study show a positive safety
profile and favorable preliminary efficacy data. In a Phase I clinical trial in
Pelizaeus-Merzbacher disease (PMD), a fatal myelination disorder in children,
the Company showed preliminary evidence of progressive and durable donor-derived
myelination by MRI.

Further information about StemCells, Inc. is available at
http://www.stemcellsinc.com.

Apart from statements of historical fact, the text of this press release
constitutes forward-looking statements within the meaning of the U.S. securities
laws, and is subject to the safe harbors created therein. These statements
include, but are not limited to, statements regarding the future business
operations of StemCells, Inc. (the “Company”); statements regarding the
Company’s planned leadership transition; statements about Mr. McGlynn’s future
plans; statements about the Company’s plans for its program in spinal cord
injury; and statements about and the prospect for continued clinical development
of the Company’s HuCNS-SC cells in CNS

 

B-ii

--------------------------------------------------------------------------------

disorders. These forward-looking statements speak only as of the date of this
news release. The Company does not undertake to update any of these
forward-looking statements to reflect events or circumstances that occur after
the date hereof. Such statements reflect management’s current views and are
based on certain assumptions that may or may not ultimately prove valid. The
Company’s actual results may vary materially from those contemplated in such
forward-looking statements due to risks and uncertainties to which the Company
is subject, including those described under the heading “Risk Factors” in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and in
its subsequent reports on Forms 10-Q and 8-K.

CONTACT:

Greg Schiffman, Chief Financial Officer

StemCells, Inc.

(510) 456-4128

Lena Evans

Russo Partners

(212) 845-4262

 

B-iii