International Stem Cell Corporation Announces 2015 First Quarter Results

CARLSBAD, CA - (Marketwired) – May 13, 2015, International Stem Cell Corporation (OTCQB: ISCO) (www.internationalstemcell.com) (“ISCO” or “the Company”), a California-based biotechnology company developing novel stem cell-based therapies and biomedical products, today provided a business update and announced first quarter financial results for the period ended March 31, 2015.

First quarter 2015 business highlights:

·         Completed the required preclinical studies and submitted a clinical trial exemption application to the Australian Therapeutics Goods Administration (TGA) to begin the phase 1/2a clinical study of the Company's cell therapy for the treatment of Parkinson's disease.  To be administered through ISCO’s wholly-owned Australian subsidiary, Cyto Therapeutics Pty Ltd.

·         Completed the manufacture of the bank of clinical-grade human neural stem cells for use in the Parkinson's disease clinical trial. The cell bank contains over 2.6 billion human cells, sufficient to meet the company’s foreseeable clinical trial requirements.

·         Japan Patent Office granted ISCO's patent covering methods of making a bank of human stem cells from parthenogenetically activated eggs significantly strengthening and expanding the Company’s intellectual property to now include Japan as well as the United States and the European Union.

First quarter 2015 financial highlights:

·         $1.62 million in revenue for the three months ended March 31, 2015; Lifeline Skin Care sales up 5% and Lifeline Cell Technology sales down 8%.  Operating income from cosmeceutical and biomedical markets up 76% compared with the corresponding period of 2014.  Gross margin improved to 74%

·         Net loss reduced to $1.29 million for the first three months of 2015 compared to $1.44 million for the corresponding period of 2014.  The Company ended the first quarter of 2015 with cash of $0.61 million

“In the first quarter of 2015 we completed all the necessary preclinical studies of our Parkinson’s program and formally submitted our application to begin the first clinical study of this novel approach to treating this debilitating disease in humans”, stated Andrey Semechkin, Ph.D., CEO and Co-chairman of ISCO.  “We continue to expect to make significant progress during the rest of 2015 towards our goal of providing a viable treatment options for people with Parkinson’s disease.”

About International Stem Cell Corporation

International Stem Cell Corporation is focused on the therapeutic applications of human parthenogenetic stem cells (hpSCs) and the development and commercialization of cell-based research and cosmetic products.  ISCO's core technology, parthenogenesis, results in the 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 parthenogenetic, homozygous stem cell line that can be a source of therapeutic cells for hundreds of millions of individuals of differing genders, ages and racial background with minimal immune rejection after transplantation. hpSCs offer the potential to create the first true stem cell bank, UniStemCell™. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology (www.lifelinecelltech.com), and stem cell-based skin care products through its subsidiary Lifeline Skin Care (www.lifelineskincare.com). More information is available at www.internationalstemcell.com.

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Safe harbor statement

Statements pertaining to anticipated developments, expected clinical studies (including timing and results), progress of research and development, 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, 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 forward-looking statements.

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data)

		March 31,				December 31,
		2015				2014
Assets		(Unaudited)
Cash and cash equivalents		$	611			$	1,111
Accounts receivable, net of allowance for doubtful accounts of $19 at March 31,    2015 and December 31, 2014			436				453
Inventory, net			1,668				1,517
Prepaid expenses and other current assets			384				485
Restricted cash			50				50
Total current assets			3,149				3,616
Property and equipment, net			630				714
Intangible assets, net			2,863				2,795
Deposits and other assets			51				54
Total assets		$	6,693			$	7,179
Liabilities and Stockholders' Equity (Deficit)
Accounts payable		$	1,765			$	670
Accrued liabilities			1,386				1,711
Related party payable			16				11
Advances			250				250
Fair value of warrant liability			3,355				4,216
Total current liabilities			6,772				6,858
Commitments and contingencies
Stockholders' Equity (Deficit)
Series B Convertible Preferred stock, $0.001 par value, 5,000,000 shares authorized, 300,000    issued and outstanding, with liquidation preferences of $426 and $421 at March 31, 2015    and December 31, 2014, respectively			—				—
Series D Convertible Preferred stock, $0.001 par value, 50 shares authorized, 43 issued and    outstanding, with liquidation preference of $4,320			—				—
Series G Convertible Preferred stock, $0.001 par value, 5,000,000 shares authorized,    issued and outstanding, with liquidation preference of $5,000			5				5
Series H-1 Convertible Preferred stock, $0.001 par value, 2,000 shares authorized, 895    and 1,482 issued and outstanding at March 31, 2015 and  December 31, 2014, respectively			—				—
Series H-2 Convertible Preferred stock, $0.001 par value, 500 shares authorized, issued and    outstanding			—				—
Common stock, $0.001 par value, 720,000,000 shares authorized, 262,117,307 and 239,429,170    shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively			262				239
Additional paid-in capital			95,690				94,826
Accumulated deficit			(96,036	)			(94,749	)
Total stockholders' equity (deficit)			(79	)			321
Total liabilities and stockholders' equity (deficit)		$	6,693			$	7,179

See accompanying notes to the unaudited condensed consolidated financial statements.

International Stem Cell Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

		Three Months Ended
		March 31,
		2015				2014
Revenues
Product sales		$	1,622			$	1,649
Total revenue			1,622				1,649
Expenses
Cost of sales			418				439
Research and development			1,118				958
Selling and marketing			654				669
General and administrative			1,398				1,648
Total expenses			3,588				3,714
Loss from operating activities			(1,966	)			(2,065	)
Other income (expense)
Change in fair value of warrant liability			679				623
Interest expense			(1	)			(1	)
Sublease income			1				8
Total other income, net			679				630
Loss before income taxes			(1,287	)			(1,435	)
Provision for income taxes			—				—
Net loss		$	(1,287	)		$	(1,435	)
Net loss applicable to common stockholders		$	(1,287	)		$	(1,435	)
Net loss per common share-basic and diluted		$	(0.01	)		$	(0.01	)
Weighted average shares-basic			245,556				153,488
Weighted average shares-diluted			274,518				153,488

See accompanying notes to the unaudited condensed consolidated financial statements.

Contacts:

International Stem Cell Corporation

Simon Craw, Ph.D. Executive Vice President of Business Development

Phone: 760-940-6383

Email: ir@intlstemcell.com

Media:

Christopher R. Hippolyte

Phone: +1-646-942-5634

Email: chris.hippolyte@russopartnersllc.com

Tony Russo, Ph.D.

Phone: (212) 845-4251

Email: tony.russo@russopartnersllc.com