“We have incurred significant operating losses since inception. We expect to incur additional operating losses over the foreseeable future. We have very limited liquidity and capital resources and must obtain significant additional capital and other resources in order to provide funding for our product development efforts....”
StemCells, Inc., Photo
“To be clear, we do not interpret the diligence requirement as an obligation to raise a specific amount of money in a particular period of time, and we wish to correct the misstatements made by some uninformed third parties that the ICOC is requiring us to raise $20 million in matching funds. In point of fact, we expect that a substantial amount of our contribution towards these projects will come from existing infrastructure and overhead, salaries for our existing personnel, and other contributions in kind. Furthermore, we will soon be reviewing the budgets for both projects in detail with CIRM staff. Because each disease team budget was prepared on a stand-alone basis, we expect to see significant economies and efficiencies now that the company has in fact been awarded funding for both.”
"Under this particular CIRM program (RFA 10-05), funding for companies will be in the form of unsecured, non-recourse, interest-bearing, term loans, which will be forgivable in the event the funded research fails to result in a commercialized product. On the other hand, should the product be successfully commercialized, CIRM would earn milestone payments depending on how successful the product becomes. Because CIRM shares the downside risk, and could participate handsomely on the upside, the structure makes the loan about as close to 'equity' as one could, without having to dilute existing shareholders in order to gain access to significant amounts of capital. The company will not issue stock, warrants or other equity to CIRM in connection with these awards.
"Of course, we realize that CIRM prefers that applicants from industry provide evidence of their ability to secure whatever additional funds may be needed to complete any CIRM-funded project, in this case the filing of an IND for each indication. This is stated in the text of RFA 10-05 itself and was repeated in various comments by CIRM staff during the application process. When making the second award on September 5, the ICOC naturally recognized the sizeable commitment it was making to StemCells, so it instructed CIRM staff to satisfy themselves of the company's ability to access the capital needed to fund the project, namely the Alzheimer's program through to the filing of the IND.”
"Finally, I can confirm that in June of this year the Company applied for up to $10 million under CIRM's Strategic Partnership I program (RFA 12-05). Unlike the disease team awards under RFA 10-05, if companies are approved for funding under RFA 12-05, they may elect to take such funding in the form of a grant, not a loan. Our application under RFA 12-05 is for a controlled Phase II clinical trial of HuCNS-SC cells in Pelizaeus-Merzbacher disease (PMD), a rare myelination disorder. StemCells completed a Phase I study in PMD in February 2012 and in April announced that all of the patients from that study showed evidence of cell-derived myelination and three of the four patients in the study showed measurable gains in motor and/or cognitive function.”