Stem Cell Therapeutics Corp.

Stem Cell Therapeutics Corp.

November 29, 2006 19:49 ET

Stem Cell Therapeutics Corp. Announces Third Quarter 2006 Financial Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 29, 2006) -


Stem Cell Therapeutics Corp. (TSX VENTURE:SSS) ("SCT") today announced its financial results for the period ended September 30th, 2006.

Selected Highlights

During the fiscal period ended September 30th, 2006, and subsequent to the end of the third quarter, SCT achieved several significant milestones, including the following:

- Enrolment began in the Phase IIa clinical safety study examining the effects of NTx™-265 in stroke patients, with initiation of dosing of the first patient reported on September 11, 2006.

- Entered into a cross-license agreement with StemCells, Inc. (NASDAQ: STEM) on August 29, 2006. Under the terms of the agreement, rights were licensed from StemCells to further solidify and strengthen SCT's intellectual property position, with reciprocal patent rights being extended to StemCells from SCT's intellectual property portfolio.

- Presented preclinical data at the "Back to the Science of Stem Cell Research" conference held in Boston, MA on August 15, 2006, describing the positive results from a controlled study testing NTx™-265 therapy in a rodent model of stroke. The data confirmed that, in test animals, treatment with the NTx™-265 regimen of drugs produces substantial and significant recovery of lost neurological function.

- SCT was named by The Ottawa Life Sciences Council, as a finalist of Canada's Top 10 Life Science Companies Competition for 2006/2007.

- Entered into an Option to Acquire agreement on September 13, 2006 with researchers from the Max Planck Institute of Experimental Medicine for up to two additional Phase II clinical stage programs, one in schizophrenia and the other in multiple sclerosis. If both programs are acquired, SCT would expand its drug development pipeline from one Phase II clinical program to three. On October 17, 2006 SCT announced the online publication of the results of the Phase II schizophrenia study in the journal, Molecular Psychiatry, a member of the Nature Publishing Group. The double-blind, placebo-controlled, proof-of-principle Phase II trial demonstrated a statistically significant improvement in patients receiving infusions of EPO over placebo in schizophrenia-related cognitive performance.

- Appointment of Dr. Jean-Paul Castaigne on September 19, 2006 as a member of its Board of Directors. Dr. Castaigne is a senior pharmaceutical executive with extensive international experience in top pharmaceutical companies.

"Over the course of the third quarter and beyond, we have continued to make progress towards our stated goals and are very excited about our advancement into the clinic with our lead therapeutic program NTx™-265 which has entered a Phase IIa clinical safety trial. To date, three patients have been enrolled in the study. We are encouraged by the initial results and look forward to additional enrollments in the coming months" said Dr. Joseph Tucker, President and CEO of SCT.

Liquidity and Capital Resources

The Corporation's primary capital needs are for funds to support our scientific research and development activities including pre-clinical and clinical trials and for working capital.

As of September 30, 2006 the working capital (current assets minus current liabilities) for the Corporation was $1,337,009 ($4,868,735 as of December 31, 2005). This working capital position reflects full payment of the Phase IIa clinical safety trial, as recognized in the prepaid balance of the financial statements. The continuation of the Corporation is dependent upon the Corporation's ability to finance its cash requirements, which will allow it to continue its research and development activity and the commercialization of its stem cell related technologies.

The Corporation currently believes that it has adequate financial resources for anticipated expenditures until the end of 1Q07. This has been reduced from previous estimates due to cash payments made to Transition Therapeutics Inc., as well as Stem Cells Inc. Management is undertaking a cash preservation strategy in order to extend the cash resources of the Corporation beyond 1Q07. However, there is doubt as to the Corporation's ability to continue operations on a long term basis. Additionally, the Corporation is actively seeking additional financing but there is no certainty that management will be successful in this regard.

Outstanding shares as of September 30, 2006 totaled 53,801,364 Common shares and 6,360,000 Class B shares. Outstanding shares as of November 29, 2006 are 53,801,364 Common and 6,360,000 Class B shares. Outstanding and exercisable options as at September 30, 2006 total 4,800,000 and 2,627,778 respectively.

Financial Review

SCT recorded a net loss of $3,644,393 ($0.07 per common share) for the 9 month period ended September 30th, 2006. Research and development costs were $1,778,190, general and administrative expenses were $743,557, professional fees were $269,928 and interest income was $75,900.

About NTx™-265: NTx™-265 is a therapeutic regimen of two drugs being developed by SCT for the treatment of stroke. Human chorionic gonadotropin (hCG) is the first drug administered in the regimen, and aims to increase the number of neural stem cells (NSCs) located in the brain of a patient suffering from a recent stroke. Erythropoietin (EPO) is the second drug administered in the regimen, and aims to promote the differentiation of these newly formed NSCs into new neurons. New neurons thus formed are anticipated to provide benefit to the patient through the replacement of the brain cells that were lost or damaged by the stroke.

About Stem Cell Therapeutics Corp.: Stem Cell Therapeutics Corp. (SCT) is a biotechnology company focused on the development and commercialization of drug-based therapies to treat central nervous system diseases. SCT is a leader in the development of therapies that utilize drugs to stimulate a patient's own resident stem cells. The company's programs aim to repair neurological function lost due to disease or injury. Our currently enrolling Phase IIa clinical program for NTxTM-265 targets the treatment of stroke by repurposing approved and clinically well defined drugs. The company's extensive patent portfolio of owned and licensed intellectual property supports the potential expansion into future clinical programs in numerous neurological diseases.

These securities have not been registered under the United States Securities Act of 1933, as amended, or the securities laws of any state, and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons unless an applicable exemption from U.S. registration requirements is available.

Except for historical information, this press release may contain forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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