StemCells, Inc. (Form: 8-K)  

 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

     
Date of Report (Date of Earliest Event Reported):   November 1, 2006

StemCells, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

     
Delaware 000-19871 94-3078125
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation) File Number) Identification No.)
      
3155 Porter Drive, Palo Alto, California   94304
_________________________________
(Address of principal executive offices)
  ___________
(Zip Code)
     
Registrant’s telephone number, including area code:   650.475.3100

Not Applicable
______________________________________________
Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


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Item 2.02 Results of Operations and Financial Condition.

On November 1, 2006, StemCells, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2006. The full text of the press release is attached hereto as Exhibit 99.1.





Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

Exhibit 99.1 Press release






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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    StemCells, Inc.
          
November 1, 2006   By:   Rodney K.B. Young
       
        Name: Rodney K.B. Young
        Title: Chief Financial Officer


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Exhibit Index


     
Exhibit No.   Description

 
99.1
  Press Release
EX-99.1
     
Company Contact:
  Media Contact:
Rodney Young
Chief Financial Officer
(650) 475-3100 ext.105
irpr@stemcellsinc.com
  Schwartz Communications, Inc.
(781) 684-0770
stemcells@schwartz-pr.com

STEMCELLS ANNOUNCES THIRD QUARTER 2006 FINANCIAL RESULTS

PALO ALTO, Calif., November 1, 2006 – StemCells, Inc. (NASDAQ: STEM) today reported its financial results for the third quarter ended September 30, 2006.

The Company reported a net loss of $4,863,000, or $0.06 per share, for the third quarter ended September 30, 2006, compared to a net loss of $94,000, or $0.00 per share, for the third quarter ended September 30, 2005. The increase in net loss from 2005 to 2006 was primarily attributable to higher income in the third quarter of 2005, when the Company recorded approximately $3,748,000 as income, net of legal and other expenses, upon the receipt of shares in ReNeuron Group plc as part of a license and settlement agreement. In addition, the Company adopted Statement of Financial Accounting Standards 123R effective January 1, 2006 and recognized approximately $696,000 in compensation expense in the third quarter of 2006 related to qualified stock option grants; no such expense was recognized in 2005. The increase in operating expenses was also attributable to the expansion of the Company’s operations in cell processing and clinical development. This increase was partially offset by an increase in interest income attributable to a higher average cash balance and higher yield on investments in 2006.

Cash and cash equivalents were approximately $55,441,000 as of September 30, 2006 as compared to $34,971,000 at September 30, 2005. The Company’s cash balance increased in 2006 due to a $35,840,000 registered direct placement of 11.75 million shares of common stock to a limited number of institutional investors at $3.05 per share in April 2006. Net cash used in operating activities for the nine months ended September 30, 2006 was approximately $12,077,000 compared with approximately $9,188,000 in the same period in 2005.

About StemCells, Inc.
StemCells, Inc. is a clinical-stage biotechnology company focused on the discovery, development and commercialization of cell-based therapeutics to treat diseases of the nervous system, liver and pancreas. The Company’s programs seek to repair or repopulate neural, liver or other tissue that has been damaged or lost as a result of disease or injury. StemCells is the first company to directly identify and isolate human neural stem cells from normal brain tissue. These cells are expandable into cell banks for therapeutic use, which offers the potential of using normal, non-genetically modified cells as cell-based therapies. StemCells has initiated a Phase I clinical trial of its proprietary human neural stem cells (HuCNS-SC™) as a treatment for neuronal ceroid lipofucinosis (NCL) and anticipates dosing the first patient in that trial later this year. NCL, which is often referred to as Batten disease, is a rare and fatal neurodegenerative disease that affects infants and young children. StemCells has approximately 40 U.S. and 100 non-U.S. patents. Further information about the Company is available on its web site at: www.stemcellsinc.com.

Apart from statements of historical facts, the text of this press release constitutes forward-looking statements regarding, among other things, the future business operations of StemCells, Inc. (the “Company”) and its ability to conduct clinical trials as well as its research and product development efforts. The forward-looking statements speak only as of the date of this news release. StemCells 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 the forward-looking statements due to risks and uncertainties to which the Company is subject, including uncertainty whether results obtained in the animal models of infantile NCL, spinal cord injury, or other diseases and conditions will be able to be translated into treatment for humans; uncertainty as to whether the FDA or other applicable regulators or review boards will permit the Company to continue clinical testing in NCL or in future clinical trials of proposed therapies for other diseases or conditions despite the novel and unproven nature of the Company’s technology; uncertainties regarding the timing and duration of any clinical trials; uncertainties regarding the Company’s ability to obtain the increased capital resources needed to continue its current research and development operations and to conduct the research, preclinical development and clinical trials necessary for regulatory approvals; uncertainty regarding the validity and enforceability of the Company’s patents; uncertainty as to whether HuCNS-SC and any products that may be generated in the future in the Company’s stem cell programs will prove safe and clinically effective and not cause tumors or other side effects; uncertainty as to whether the Company will achieve revenues from product sales or become profitable; the Company’s likely increase in the use of cash as compared to the Company’s historical use of cash; and other factors that are described under the heading “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K.

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StemCells, Inc.
Condensed Consolidated Statement of Operations
(in thousands, except share and per share amounts)
    Three months ended
  Nine months ended
     
   
    September 30,
  September 30,
     
   
 
    2006       2005       2006       2005  
 
                               
Revenue from grants and licensing agreements
  $ 18     $ 91     $ 80     $ 163  
Operating Expenses
                               
Research and development
    3,523       2,337       9,403       5,925  
General & administrative
    1,889       1,549       4,979       4,009  
Wind-down expenses related to our former corporate headquarters
    168       297       499       2,015  
Total operating expenses
    5,580       4,183       14,881       11,949  
Loss from operations
    (5,562 )     (4,092 )     (14,801 )     (11,786 )
Other income (expense)
                               
License and settlement agreement, net
          3,747       103       3,747  
Interest Income
    735       301       1,779       790  
Other income (expense)
    (36 )     (50 )     (127 )     (162 )
Total other income (expense)
    699       3,998       1,755       4,375  
 
                               
Net loss per share applicable to common shareholders; basic and diluted
    ($4,863 )     ($94 )     ($13,046 )     ($7,411 )
Net loss per share applicable to common shareholders; basic and diluted
    ($0.06 )     ($0.00 )     ($0.18 )     ($0.12 )
Weighted average shares – basic and diluted
    77,779,257       64,179,563       73,487,670       63,226,214  
                 
StemCells, Inc.
Condensed Consolidated Balance Sheets
    September 30,   December 31,
    2006   2005
(in thousands)
  (unaudited)     (a)  
Assets
               
Current assets:
               
Cash & cash equivalents
  $ 55,441     $ 34,541  
Other current assets
    1,552       589  
 
               
Total current assets
    56,993       35,130  
Marketable securities
    1,042       3,720  
Property, plant & equipment, net
    3,803       3,283  
Other assets, net
    2,615       2,706  
 
               
Total assets
    64,453       44,839  
Liabilities and stockholders’ equity
               
Current liabilities
    2,708       3,548  
Non-current liabilities
    8,835       8,915  
Stockholders’ equity
    52,910       32,376  
 
               
Total liabilities and stockholders’ equity
  $ 64,453     $ 44,839  
 
               
(a) Derived from audited financial statements included in StemCells’ annual
report on form 10-K filed with the SEC.
               

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