International Stem Cell Corporation: Note From The CEO Andrey Semechkin

"Since releasing our press release this morning announcing that ISCO.OB had successfully created enriched cell cultures that might be used to treat diabetes or liver disease, people have asked, 'What does that really mean?’

The simple answer is that it further proves ISCO’s Parthenogenetic stem cells can do the same things that can be done with embryonic stem cells, but without raising the ethical issues of using cells from fertilized embryos and with a real chance to solve one of the toughest problems in cell therapy—how do you keep the human body from rejecting a cell transplant before the transplant can treat the disease.

Scientists already know that they can treat liver disease and diabetes with human cells. The problems have been to find an ethical supply of cells in sufficient quantity and prevent the body from rejecting those cells. We think this is a major step toward the pathway and it enables ISCO to stand on the shoulders of 10 years of prior research to reach the next rung of the ladder to a cure for both of these life threatening diseases.

ISCO’s latest press release reflects a major step in the direction of treating diabetes and liver disease with its cells."

International Stem Cell Corporation Demonstrates Progress in the Use of Immune Matched Human Parthenogenetic Stem Cells to Promote the Development...

International Stem Cell Corporation Demonstrates Progress in the Use of Immune Matched Human Parthenogenetic Stem Cells to Promote the Development of Therapies for Diabetes and Liver Diseases

International Stem Cell Corporation (OTCBB:ISCO), www.internationalstemcell.com, together with colleagues from ViaCyte (formerly Novocell), announced the successful derivation from its human parthenogenetic stem cells (hpSCs) of enriched cultures of definitive endoderm (DE). DE can be further developed into pancreas or liver cells. These new results create a platform for the development by ISCO of therapeutic products that have great potential to overcome the problem of rejection of transplanted cells by the patient's own immune system.

The results are described in a new article that will appear in Differentiation, the official journal of the International Society of Differentiation, published by Elsevier. The article concludes that, "Creation of the definitive endoderm lineages from hpSC represents the critical first step toward the development of hpSC-based cellular therapies for diseases of the liver or pancreas."

The article also describes improvement in an earlier published differentiation protocol. This new method extends ISCO's portfolio of intellectual property, demonstrating for the first time that the pre-treatment of undifferentiated cells by trichostatin A (TSA) significantly improves the efficacy of the differentiation procedure.

"This work represents a step forward in our ability to direct the differentiation of hpSCs to cell populations of sufficient purity for their eventual use to produce commercially viable populations of endoderm lineage cells such as liver and pancreas," said Nikolay Turovets, PhD, ISCO's Director of Research and Therapeutic Development, and the paper's co-author.

The published work was carried out in collaboration with scientists from ViaCyte, a leader in the direct differentiation of pluripotent stem cells toward definitive endoderm and pancreatic cells. The ViaCyte team was led by Dr. Baetge, currently Director of the Nestlé Institute of Health Sciences S.A., Lausanne, Switzerland, and Dr. D'Amour, ViaCyte's Director of Stem Cell Biology, both pioneers in the development of endoderm from human embryonic stem cells.

Andrey Semechkin, PhD, ISCO's CEO and the paper's co-author, said: "The fact that hpSC could be differentiated into progenitors of pancreatic and liver cells have now become a proven scientific fact. This data establishes hpSCs as a useful source of starting material in stem-cell based technologies and demonstrates excellent progress in therapeutic research."

According to earlier published scientific data, the most efficient method for deriving pancreatic and liver cells from human pluripotent stem cells is a method of direct differentiation that utilizes treatment of the stem cell cultures by specific signals directing differentiation toward particular lineages. Therefore it is extremely important that stem cells used for the differentiation process are able to respond to such signaling. Dr. Semechkin commented, "In this published paper we report for the first time that hpSCs can respond to well characterized differentiation signals. Moreover, we demonstrate that these unique cells respond to similar signaling factors and demonstrate gene expression dynamics and transitions that simulate properties of DE differentiation during vertebrate development and closely follow differentiation of human embryonic stem cells to DE. These data are extremely important as they demonstrate that hpSCs have therapeutic potential; however, parthenogenetic stem cells have an additional benefit of superior immune-matching capabilities and don't pose the same ethical questions associated with embryonic stem cells."

The Abstract of the paper is available on the Elsevier web site. The title of the paper is: "Human parthenogenetic stem cells produce enriched populations of definitive endoderm cells after trichostatin A pretreatment."

Full text article can be obtained upon request to corresponding author, Nikolay Turovets, PhD: nturovets@intlstemcell.com.

Additional information regarding ISCO's therapeutic projects is available on the ISCO website:http://www.internationalstemcell.com/therapeutics.htm.

ABOUT INTERNATIONAL STEM CELL CORPORATION (ISCO.OB):

International Stem Cell Corporation is a California-based biotechnology company focused on the therapeutic applications of human parthenogenetic stem cells and the development and commercialization of cell-based research and cosmetic products. ISCO's core technology, parthenogenesis, results in creation of pluripotent human stem cells from unfertilized oocytes (eggs). hpSCs avoid ethical issues associated with the use or destruction of viable human embryos. ISCO scientists have created the first parthenogenic, homozygous stem cell line that can be a source of therapeutic cells with minimal immune rejection after transplantation into hundreds of millions of individuals of differing sexes, ages and racial groups. This offers the potential to create the first true stem cell bank, UniStemCell™, while avoiding the ethical issue of using fertilized eggs. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology and cell-based skin care products through its subsidiary Lifeline Skin Care. More information is available at ISCO's website, www.internationalstemcell.com.

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FORWARD-LOOKING STATEMENTS

Statements pertaining to anticipated technological developments and potential therapeutic applications, and other opportunities for the company and its subsidiaries, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact (including, but not limited to statements that contain words such as "will," "believes," "plans," "anticipates," "expects," "estimates,") should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products, uncertainty in the results of clinical trials or regulatory approvals, need and ability to obtain future capital, application of capital resources among competing uses, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the company's business, particularly those mentioned in the cautionary statements found in the company's Securities and Exchange Commission filings. The company disclaims any intent or obligation to update these forward-looking statements.

Key Words: Stem Cells, Biotechnology, Parthenogenesis

International Stem Cell Corporation
Kenneth C. Aldrich, Chairman
760-940-6383
kaldrich@intlstemcell.com
or
Nikolay Turovets, PhD
nturovets@intlstemcell.com

International Stem Cell Corporation: A Multitude Of Potential Products From Its Parthenogenesis Technology by Jason Chew

International Stem Cell Corporation (ISCO) is at the forefront in the field of stem cell research. Its key technology is a technique to create an immortal stem cell line by activating a human egg to create stem cells without the need for fertilization by a sperm. This method is called parthenogenesis and is one of only two known ways to create human stem cell lines without genetic manipulation that have the potential to become any cell in the body that might be needed for therapy.

Most commonly, these cell lines are created from unwanted embryos stored at IVF clinics. To distinguish the two methods, stem cell lines created through parthenogenesis are called hpSC; those created from fertilized eggs are called “embryonic” or hESC. Both have the potential to create any cell in the human body, but only hpSC lines do not involve the use or destruction of a fertilized human egg.

ISCO has formed several business units to advance its hpSC technology. The Lifeline Skin Care unit has created a stem cell based anti-aging cream. The Lifeline Cell Technologies division encompasses both the sale of growth media and human cells used in stem cell and other research. UniStemCell® was established to create a stem cell bank. And most recently, a business unit call Cytovis® was formed to further the company’s stem cell derived corneal and retinal tissue programs.

The Company launched its skin care products, consisting of a Day and a Night conditioning crème, in December through a joint marketing venture with noted Internet financial and economic advisor, John Mauldin. The initial launch involved only a limited number of targeted customers and was intended to analyze acceptance rates and refine the company’s customer service and delivery systems. The Company has stated that, although the data base needs to be expanded by an additional offering scheduled in January before meaningful statistics can be generated, early customer responses indicate that users of the crèmes are getting favorable results from the product, which confirms the Company’s own pre-market test results.

The market for skin care products is large; according to Mintel market research, total US sales in 2009 was $4.35 billion. By individual brand, the best selling anti-aging creams in 2008 range in market share from 3% for Olay Regenerist, to 1.3% for L’Oreal RevitaLift. Applied to the 2009 sales total, this translates to roughly $130 million and $57 million, respectively. These are likely upper bounds for sales of any new product.

Without the ability to run a large marketing campaign, ISCO is smart to offer its product first to its shareholders and followers. On the surface, its partnership with entrepreneur and newsletter writer John Mauldin seems a bit odd, it will be interesting to see how his marketing skills will be used to convert his 1.5 million readers into Lifeline Skin Care buyers.

ISCO sells reagents and human cells for research through its Lifeline Cell Technology unit. Stem cell research is a fast-growing field requiring specialized, high quality products. Lifeline Cell Technology has signed distribution agreements with such powerhouses as American Type Culture Collection (ATCC) and Millipore for its products, as well as regional distributorships in Europe, Japan and elsewhere. These products generate revenue for the company while providing a source of quality reagents for in-house research.

Other business units under the ISCO umbrella are still in the early stages of development. The unit that may best leverage the hpSC technology may be the UniStemCell cell bank.

One of the major promises in stem cell research is in the field of regenerative medicine. Embryonic and parthenogenetic stem cells can be turned into any human cell type; in theory, these cells can then be used to treat diseases such as diabetes, degenerative brain diseases, cardiac arrest, spinal cord injury, all by aiding in the re-growth of damaged tissue.

A major problem in the use of hESC in regenerative medicine is the ability to find proper matches for the recipient. As with any transplant, strategies must be used to prevent rejection of the donor tissue. By their nature, hESC cell lines express a highly variable set of antigens involved in graft rejection. These antigens are part of the major histocompatibility complex (MHC).

The high variability causes difficulty in finding matches between hESC lines and recipients. On the other hand, hpSC technology produces cell lines with a much more uniform set of MHC molecules. Through proper selection, a single hpSC cell line can provide fairly good histocompatibility match for a large segment of the US population. Additional cell lines can provide matches for additional subgroups so that, in time, a match may be possible for almost all potential transplant candidates.

Through the cell bank, ISCO is providing material for outside groups to conduct cutting edge research and develop therapies based on hpSC technology. The potential is great, but revenue in the form of royalties is far off and uncertain.

Further along in development is the company’s stem cell derived corneal and retinal tissue therapy program. ISCO has partnered with Absorption Systems in the US, Sankara Nethralaya in India, and Automation Partnership in the UK to develop the technology, now under the Cytovis® brand- CytoCor ®for corneal tissue and CytoRet® for retinal tissue.

The Cytovis® technology is in pre-clinical testing and has many potential therapeutic applications including: age-related macular degeneration, retinitis pigmentosa, and the repair of traumatic eye injuries.

The company is also actively testing its CytoCor® tissue for use as an alternative to live animals and animal eyes in drug and consumer products testing. ISCO estimates this to be a $500 million dollar market. Recent laboratory results have shown the CytoCor® corneal tissue to have optical properties. It was also observed to have drug absorption properties similar to real cornea.

The large number of business units is unusual for a company this size. A lack of focus is always a concern, but at the same time, it speaks to the considerable potential of the company’s stem cell technology.