By Randall Osborne

West Coast Editor

With research programs in the neural, liver and pancreatic areas, StemCells Inc. entered an agreement with an institutional researcher for up to $30 million in equity financing.

Under the terms of the 30-month deal, the company can issue stock to the investor in a series of drawdowns, at a discount to the market price at the time of sale, with proceeds to be used for general corporate purposes.

For the first quarter of this year, StemCells reported a net income of $270,000, compared to a net loss of $1.79 million for the same period last year, with $4.5 million in cash on hand, the same amount as during the first quarter of 2000.

StemCells may be better known as the company that began as a wholly owned subsidiary of CytoTherapeutics Inc., of Lincoln, R.I., which cut back and directed its research toward stem cells after its lead product, an encapsulated cell implant for pain control, failed. London-based AstraZeneca Group plc ended its potential $41 million collaboration with CytoTherapeutics because of disappointing Phase IIb results. (See BioWorld Today, July 12, 1999.)

In January, StemCells said it was selling its investment in Modex Therapeutics Ltd., of Lausanne, Switzerland, and adding personnel in a larger facility in Palo Alto, Calif. Modex was formed as a spinoff from CytoTherapeutics, focused on the encapsulated cell technology. The sale was completed earlier this month. Modex entered a research collaboration last year with Novartis Pharma AG, of Basel, Switzerland. (See BioWorld Today, June 15, 2000.)

In its neural program, StemCells is looking for partners, aiming to use strategic alliances to push preclinical work in neurodegenerative disease and research into genetic disorders. In its liver program, the company is focused on injury, cancer and hepatitis, and wants to isolate and patent the stem cells. The pancreas program, in which patents also will be sought, targets Type I diabetes.

The company¿s stock (NASDAQ:STEM) closed Friday at $2.53, down 16 cents.

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