Good day ladies and gentlemen and welcome to the Q3 2012 StemCells, Inc. Earnings Conference Call. My name is Coby and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). I would now like to turn the call over to Mr. Martin McGlynn, President and Chief Executive Officer. Please proceed sir.

Thank you, Coby. Welcome everybody and thank you for joining us today. So on our call today, Rodney Young, our Chief Financial Officer and I will deliver some prepared remarks. Rodney’s remarks will include a discussion on the financial results for the third quarter of this year; I will follow up with a discussion of some of the exciting activities going on at company. And then, we’ll open the lines for question-and-answer period. So to begin, I’d like to hand over to Rodney Young, our Chief Financial Officer.

Thank you, Martin. Before we proceed, I would like to remind everyone that again, during today's call, we will be making some forward-looking statements, which reflect our current views and are based upon certain assumptions that may or may not ultimately prove valid. We assume no obligation to update these statements anytime in the future and the company's actual results may differ materially from anything projected during today’s call due to risks and uncertainties to which we are subject. These risks and uncertainties are described in our public filings with the SEC and at the end of today’s press release which you are encouraged to consult. So to the numbers. In the third quarter, we continue to make good progress in our clinical development efforts, while keeping tight control of our expenses and cash burn. Importantly, we strengthened our balance sheet giving us additional capital to pursue our clinical development objectives. Our highlights for the quarter include revenue from our SC Proven product business up 11% year-over-year, operating expenses continue to trend down. They were down 17% year-over-year. Cash used in operations was $4.2 million for the quarter on just under 15 million for the nine months. So that puts us on track to hit our anticipated 2012 cash burn rate which is in the range of $18 to $20 million. Pro forma, our cash balance at the end of the quarter was $27.4 million. This includes 5.6 million from warrant exercises and sale of shares subsequent to the end of the quarter. As you know, during the quarter, the California institute for regenerative medicine or CIRM approved two disease team awards for up to $20 million. So give you a little bit of color about the numbers starting with the top line. Our revenue from product sales increased 11%…

Well thanks Rodney. Obviously another very successful quarter for the company. I’d like to direct my remarks to our translational efforts and progress to date. Last month we finally published two papers demonstrating the therapeutic potential of our human CNS stem cells for the range of myelination disorders. The papers were published simultaneously in the October 10th issue of Science Translational Medicine which is a peer review journal of the American Academy of Science. I am told that this is indeed a very rare occurrence to be able to see simultaneously the preclinical data that provided rationale for a clinical trial alongside the actual results of that trial. But also a wonderful example of what can be done when scientists, clinicians and companies work together as a cohesive team. The first paper summarized the preclinical data showing that transplanting our human neural stem cells in to the (inaudible) mouse which is a widely use model of myelin deficiency results in new functional human myelin. Sophisticated techniques were used to confirm the changes measured by magnetic resonance images or MRIs were in fact derived from new human myelin generated by the transplanted human neural stem cells. The demonstration that myelin was functioning as it was supposed to was in itself encouraging and helped provide the rationale for a clinical study in PMD but equally important was that the results gave cadence to the use of such analytical techniques to detect and evaluate the degree of myelin and our PMD trial. The results of our Phase I trial and PMD completed earlier this year were summarized in the second paper. But before I summarize the key findings of the trial, I would like to borrow a quote from Dr. Nalin Gupta, who is the lead author of the article and a neurosurgeon…

(Operator Instructions). Your first question comes from the line of Stephen Dunn with LifeTech Capital. Please proceed. Stephen Dunn – LifeTech Capital: I guess you did a very good background on the PMD publications last month by inviting the investors to watch that again up on YouTube through your website. So it was very, very good and it was extremely unusual to have both the animal data and the human data at the same time. A couple of some housekeeping questions here. On the proposed Phase II design, if you’re going to go with the control arm in there is it possible to use the results of that Phase II for registration? PMD is such an ultra-orphan indication?

Steve to be quite honest with you, I don't have an answer to that question. The orphan disease are in the ultra-orphan disease area are very, very hot topics right now. And both Congress and the agency have indicated a very definite willingness to do anything that they can to accelerate potentially excitement treatments into the client. But when we do engage in our discussions with the FDA, this of course will be an important point of discussion for us and the pathway to registration. Stephen Dunn – LifeTech Capital: And I’d like to follow-up on the ultra-orphan indication, my next question. We saw in Europe Glybera, which is a gene therapy enzyme replacement drug for another ultra-orphan indication familial hypercholesterolemia, is going to propose to sell for $1.6 million per patient because it’s once in a lifetime treatment. I in the past have continued to model that as a pricing strategy forced StemCells Inc. in ultra-orphan indication of PMD and if you have a once-in-a-lifetime injection for dry AMD, the value could rack up pretty quickly as well. Do you think there is parallel in such a high pricing per patient if it cures gene therapy versus your stem cell therapy?

Thanks for bringing that up. I mean obviously we took careful note of that development. Obviously genetherapy has been knocking on the door for quite a while and this is a very significant development in Europe and it does provide all kinds of folks an interest in this field with ways and means to start thinking about how payers and sponsors might approach the whole question of payment and reimbursement and value capturing. The notion of a one-time intervention with an endurable clinical benefit for the life of the patient is one of the intriguing prospects for our human neural stem cell technologies. So the question of course does arise, how are you going to price something like that assuming you come out of the clinic with good clinical data supporting that claim. And the idea of a single payment of those orders of magnitude certainly gets everybody’s attention. There are discussions and there are different models to approach this including mechanisms whereby there is a specific reimbursement amount that is agreed upon which is set aside by the payer and which can have a revenue stream over multiple years as long as the patient is being treated by the medication. And so, this particular development and the particular details of the reimbursement mechanism certainly would have some parallels for how one would have to start thinking about dosing and transferring a therapeutic that was stem cell in nature with it an enduring benefit and a one-time intervention. So it very definitely would have some parallels. Stephen Dunn – LifeTech Capital: Yes, I think they are currently talking about payment over five years. Just two more quick questions, any color on your strategy to exploit the CIRM awards and a little color on biomedical, your recent partnership with them in the IPS, a Proven tool space?

Could you be more specific with regard to your question on the CIRM funding? Stephen Dunn – LifeTech Capital: Certainly, both are structured as forgivable loans. I guess the mechanism to use them requires some commitment on StemCell’s part financially. What are your thoughts on using that CIRM award both in cervical spinal cord and Alzheimer's?

Well the funding that would come from CIRM once all of their terms and conditions have been ironed and agreed to by both parties, would come in the form of the product backed loan and so these funds would be made available to StemCells Inc. to further the objectives of the awards and in both cases, these would be to fund the company’s activities designed to successfully deliver the endpoint which would be an IND filing within four years of the commencement of funding. So you might consider it as a funding provision that could be accessed by the company at certain intervals of time. Stephen Dunn – LifeTech Capital: I guess that's kind of my question, since the matching loan, or maybe this is more of a Rodney question, what kind of outlays do we look for, going into 2013, for each of those two indications?

So quite honestly I think it’s premature for us to start talking about that kind of subject matter. At this stage we’re focused on completing our discussions with the California Institute of Regenerative Medicine with regards to the terms and conditions of the loans, how the money would be accessed, what the final budgets might look like. So it’s premature to start talking about impact on burn and so on and so forth. Stephen Dunn – LifeTech Capital: But you intend to pursue both those projects?

We’re currently in negotiations with CIRM to iron out the terms and conditions that would apply to the provision of those monies to the company. Stephen Dunn – LifeTech Capital: And the final was the Biomedical IP, I guess it looks like they are going to be doing more work for you in the SC Proven line?

Right, right. So R Biomedical which is located in Edinburgh, Scotland are focusing on the development of enabling cells and cell culture media for the hold IPS sale. We have entered into a collaborative endeavor with R Biomedical to develop cells and reagents that could be used to enable researchers who are developing cells and assays for the IPS sale.

Your next question comes from the line of (inaudible) Capital. Please proceed.

Marty, you mentioned perhaps bringing up a second site for the AMD study. How long do you think that might take to have them in a position to begin screening enrolling patients?

Well we’re currently engaged in discussions with a couple of sites specifically. We’re at the stage where we’re engaged with the internal IRBs. So our discussions are quite advanced.

With respect to that study, is there any specific inclusion criteria that is making it more difficult to find the appropriate patients/

Well the paradigm with stem cell trials, currently at least is that you have to start off pretty much in the worst of the worst and then move your way, move along into the less severely impact. The patients that we’re seeking to enroll for all intents and purposes are legally blind. So they are very severely impacted and once we get up and running and through that first cohort, we anticipate that the enrollment will accelerate, not just because of potential addition of an additional site, just because of the prevalence of the patients and the particular state of their condition.

Okay, great. And then when we think about your initiatives in Alzheimer’s what other preclinical study do you need to do and how should we think about timing of when you might be in a position to go to humans with that?

The objective of the funding, the CIRM funding is that we would file an IND within four years of commencement after funding. So in terms of preclinical data, for the most part the work that we will do will be confirmatory and we will be doing studies that meet GLP requirements that are laid down under the rags in order to file an IND. The proof of principal has been established in the two animal models that have been described as triple transgenic and the (inaudible) so it will be mostly confirmatory and under GLP rules if you will.

Okay, and then finally with the spinal cord study. You had the publication of the interim results of the first cohort. How is that helping you in any way recruiting the Asia B patients? I realize that there are fewer of them, but in terms of interests and screening potential candidates, how is that looking now as opposed to before those results were presented?

I think we prefer to say that we have seen an uptick in the number and the level of interest in patients who want to present themselves as possible candidates for the trial. But you rightly stated Kay that the Bs are not as prevalent as the As, there are less of them. and the challenge of course is to find patients in that cohort who meet all of the enrollment criteria. So while they might have the clinical fingerprint if you will of an Asia B patient there may be other limiting factors that might disqualify them from enrollment in our particular trial including that they may have participated in another trials, in another experiment treatments etcetera, just to name one.

Your next question comes from the line of Joe Pantginis with Roth Capital Partners.

This is (inaudible) for Joe. Thank you for taking the question. Actually most of my questions have been answered but I do have a question. Can you please summarize in terms of the upcoming data stream from the spinal cord injury trial, what should we expect and also with regards to follow up from the first Asia cohort. Thank you.

So the patients who were enrolled in the Asia cohort will complete the study by December next month and we will be reporting out that data as soon as it becomes available. So we will be looking for that early next year. with regards to the Asia B cohort, that's going to be a function of how quickly we enroll the patients but the first patient was only enrolled last month and in the past what we have done, we have reported that on the six month data. So you’re looking at four months into next year before we be in a position to start looking at that data in the Asia B program. That would be earliest.

At this time, there are no further questions in the Q&A session.

Well thank you very much everybody for taking the time to join us today. Appreciate your continued interest and the exciting activities going on here at the company and we look forward to talking to you again early next year when we we’ll be reporting on our fourth quarter results and on the results for fiscal year 2012. Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.