International Stem Cell Corporation (ISCO-OTC: BB)

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September 3, 2010 Issue

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Using Its Patented Pluripotent Stem Cells Derived From Unfertilized Embryos, International Stem Cell Corporation Is Removing Ethical Issues And Addressing The Problem Of Immune Rejection In Stem Cell Therapy, While Enhancing The Probability Of Cures For Various Diseases Where Transplants Are Necessary

Company Profile:

International Stem Cell Corporation is a California-based biotechnology company focused on therapeutic and research products. ISCO's core technology, parthenogenesis, results in creation of pluripotent human stem cells from unfertilized oocytes (eggs). These proprietary cells avoid ethical issues associated with use or destruction of viable human embryos and, unlike all other major stem cell types, can be immune matched and be a source of therapeutic cells with minimal rejection after transplantation into hundreds of millions of individuals across racial groups. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology, develops a line of cosmeceutical products via its subsidiary Lifeline Skin Care and advances novel human stem cell-based therapies where cells have been proven to be efficacious but traditional small molecule and protein therapeutics do not. More information is available at ISCO's website,

Kenneth C. Aldrich, Chairman and Co-Founder.
Kenneth C. Aldrich is Chairman and co-founder of International Stem Cell Corporation (ISCO.OB), a publicly traded regenerative medicine company. ISCO has invented and owns the intellectual property for a new class of human pluripotent stem cells. Its “Human Parthenogenetic Stem Cell Lines” (hpSCs) are pluripotent lines with two unique features: (1) they do not involve the use of viable human embryos, thus removing the ethical debate surrounding embryonic cell lines, and (2) they have the potential to solve the dilemma of immune rejection without using autologous cells, thus creating the potential for a Universal Stem Cell Source Bank from which any patient could draw cells to match his or her immune system.

Mr. Aldrich has been active in the investment business since 1975, and in early stage venture capital since 1993. He is an active member of Tech Coast Angels, the largest Angel organization in the United States and has provided early-stage funding and management assistance to a variety of successful start-up companies, including WaveTec Vision Systems, a VC backed ophthalmic device company, and Green Dot Corporation, the world’s largest issuer of prepaid debit cards and other banking services to the Nation’s 70 million “unbanked”.

Mr. Aldrich holds degrees, with honors, from both Harvard University and Harvard Law School and practiced law with the Los Angeles-based firm of O’Melveny & Myers before leaving in 1969 to build a career in finance.


Regenerative Medicine

Stem Cell Technology

International Stem Cell Corporation
2595 Jason Court
Oceanside, CA 92056
Phone: 760-940-6383


Interview conducted by: Lynn Fosse, Senior Editor,, Published – September 3, 2010

Mr. Aldrich, what is your focus and vision for International Stem Cell Corporation?

Mr. Aldrich: The focus and vision of International Stem Cell Corporation is to develop therapeutic applications for a new class of what are called pluripotent human stem cells. The reason they are important to us is that they are the only cells that can be made into any cell in the human body and also do not involve any genetic manipulation or involve the use of fertilized embryos in their creation. There are only three known classes of pluripotent stem cells, we own the IP on one of those three, which we think is the best and will be ultimately the most prolific. So that is the real focus: to find ways to make those cells available for the treatment of a variety of diseases, primarily through partnerships and collaborations.


CEOCFO: What are you currently working on?

Mr. Aldrich: Right now on the therapeutic side, we are working actively to do what they call differentiation, which is to convert the stem cell into a specific cell type. We are working on cells that can ultimately be used by researchers and, eventually therapists, for diseases or conditions where we already know that you can use cells to treat the problem, but there is a limitation of where to get the cells, because they are just not available in sufficient quantity from cadavers. So we are focusing on liver disease, macular degeneration, which is the largest single cause of blindness in adults, and we are focusing on corneal disease, which is the front of the eye and is a major problem outside the US, although less so in the US. Finally, we are focusing on central nervous system diseases, specifically on Parkinson’s. Again the reason has to do with the fact that in all of those cases there are very strong indications that the cells will actually work to treat the disease. If scientists come up with another form of treatment, our cells would potentially be available, but we are focused on creating and differentiating the cells that are needed, and we don’t want to also have to create the cure. So we are trying to stand on the shoulders of others.


CEOCFO: Would you tell us about your patents?

Mr. Aldrich: Our core patent is for our parthenogenesis technology, which is the process of creating pluripotent stem cells without the use of fertilized embryos. We pioneered that research and we were the first people ever to do it in a controlled manner. There was one apparently accidental case of parthenogenetic cell lines, but no one has been able to replicate that that we know of, and we hold the patent on that basic technology. Most of the rest of our patents surround that and relate to specific applications of it, variations on it, and uses of it. So the core technology is all related to parthenogenesis. We also have patents pending related to the growth of human corneas in a Petri dish and we are the only people in the world we know of who have ever managed to grow a human cornea as a self assembling organ in a Petri dish. Cells for corneas have been grown, but we think we have the only one that has ever created the actual organ itself. We are hoping that will be an available source for transplants, particularly in India, for example, where there are about four million people identified as being blind or partially blind from corneal damage; China probably has a comparable number although we can only verify about two million. We are very excited about that. It is not as much of an issue in the US, as we have a very good cornea transplant program here that is able to use cadaver corneas, but that depends on an infrastructure that does not exist in those foreign countries.


CEOCFO: What is it that you have figured out that other stem cell companies have not?

Mr. Aldrich: This is what we have figured out. We take unfertilized eggs, which we get as a byproduct, as they are extras from women who are undergoing in vitro fertilization. However, we do not fertilize the eggs, so that takes the ethical issue off the table. In addition, we use a combination of chemicals and temperature to trick the egg into beginning to produce what would otherwise be an embryo, but because it is not fertilized, it cannot actually complete that process. What it can do, though, is create the bundle of cells from which we can derive a true stem cell line. A stem cell line simply means a cell that will reproduce itself infinitely and can be converted (the technical term is ‘differentiated’) into essentially any cell in the body. Obviously, nobody has done every cell in the body, but we already demonstrated the major cell groups and once you know that you know that, you pretty much know you can go anywhere if you develop the right technique.


CEOCFO: You have a number of partnerships; what is going on and how does that philosophy work for you?

Mr. Aldrich: The philosophy behind our partnerships is to find companies, or in some cases government agencies, particularly outside the US, who are focused on treating a particular disease or group of diseases who will use our cells in their research or license or joint venture with us, so that as they carry forth their research, our cells become embedded in the ultimate product that is available to the consumer, which is in this case is the physician or the patient. Whereas some companies, for example, Geron, which is one of the major companies in our field, have spent what they say is about a half a billion dollars in developing one particular cell type for one particular disease, our model is just the reverse of that. We have the core technology, but we would rather have ten or twenty partners, each of whom is developing a treatment for some particular disease, using our cells. Ultimate revenue from any one of those will be less, but the probability of having one or more successes obviously becomes much greater. So that is where our business model differs, I think, from almost any other or any other stem cell company in the world, and it is derived from the fact that we do control our own intellectual property. Most people have to license their basic core technology from the University of Wisconsin or some other source.


CEOCFO: Is the medical community paying attention?

Mr. Aldrich: Yes, I think they are. The medical community is obviously waiting for the first approved process, which has been a long road and it will be even longer. Geron recently announced that they had gotten approval for human trials for a cell, called an oligodendrocyte, for treating spinal cord injuries, derived from a stem cell--in this case an embryonic stem cell. There are a couple of other companies that we are told are very close to being in human trials for different diseases. We are not that close yet, but we are not all that far behind, and because of our partnering strategy we are trying to go down multiple paths while still not utilizing huge amounts of our own capital.


CEOCFO: What about the investment community; do they understand your technology and strategy?

Mr. Aldrich: I think they are beginning to. To be honest with you, it was a long and difficult task to begin to get on people’s radar. There was a lot of buzz about embryonic stem cells, so initially there was a lot of “ho-hum and why is this different, why do we care?” Now the financial community and the medical community are beginning to realize that the parthenogenetic stem cells not only solve an ethical problem, but are very likely the solution to the problem of immune rejection for many patients, and that is a huge problem. As people begin to realize that, we are getting much more interest from the investment banking community and the investment community as well as the scientific community, and it is just a matter of time and our spending the effort to tell the stories.


CEOCFO: Although you have a different focus, but do you get around the negative connotation of stem cells?

Mr. Aldrich: The vast majority of people that have a negative reaction to stem cells, are reacting to the use of a human embryo that might become a human being if it wasn’t being used to make stem cells. Because we use only unfertilized eggs, we never start with or use anything that could become a human. So that issue really disappears. Now there is another subset of people that worry that any time you use stem cells at all, you are somehow going to be involved in creating humans to harvest body parts or other sort of Frankensteinian worries. That frankly is a very small group of people and if we have a chance to address them, we can usually calm those fears as well. So those are the two ways, but I think the vast majority of people concerned are concerned on the ethical issues of using human embryos, and we simply don’t do that.


CEOCFO: What is the financial picture like for International Stem Cell Corporation today?

Mr. Aldrich: Fortunately, the picture today is better than it has been for a long time for us, as 2008 and most of 2009 were very bleak periods in terms of access to the capital markets. We just completed a $10 million financing a few months ago. So we cleaned up our balance sheet and got rid of about $15 million worth of outstanding preferred stock. I can’t give out specific details because our quarterly report won’t be published for another couple of days, but suffice it to say we have adequate capital to run the company for the next year. This does not include pending projects, which have been announced, that if they come to fruition will give us perhaps two years or more of runway to operate the company without having to go back to the capital market.


CEOCFO: What is going to happen over the next year to eighteen months?
Mr. Aldrich: With our company specifically, I think we will see some significant advances in the area of creating specific cell types that have a potential for therapy. We will also see expanded international collaborations, particularly in the area of the cornea, which will provide capital for us. We hope to include this year the establishment of a European subsidiary, which will initially provide financing for the company, but ultimately will provide a new point of distribution in Europe. Those are all things that we have announced and expect to have happen. We also have two revenue-producing arms of the company that will probably ultimately be generating more news. Those include our Lifeline Cell Technology subsidiary, which produces human cells and growth media for researchers. It is continuing to grow and we will be announcing additional growth. We will launch, probably in October, the first of our cosmeceutical skin cream products. It is a product that was, frankly, an almost accidental by-product of our stem cell work, but we realized that it had potential and so we have created a separate subsidiary to develop it for the market it as a separate product. It is not going to cure any diseases, but it might very well help millions women and men to have a more youthful appearance. So we think that is worthwhile as well, a little bit ancillary to our core business, but a very serious endeavor of ours.


CEOCFO: In closing, why should potential investors choose International Stem Cell Corporation?
Mr. Aldrich: The reason to look very seriously at International Stem Cell is, number one, that we do own and control our own very broad intellectual property and platform. In addition, our technology is one of only three known ways of creating the kinds of cells that can be used for any kind of future therapy. We think it is a stronger one because it eliminates the ethical issue and because it also eliminates genetic manipulation, which is one of the features of what are called induced pluripotent cells, which is the third method. So that is the starting point, and we have a very broad platform.


We are among a very small group of companies that have actually built the basis for generating independent revenue while we are in the development phase. It takes a long time to bring a stem cell product to market. We are in revenue now with our cell products for research and will be in revenue before the year is out with our cosmeceutical product, so that if things go the way we hope within the next year or two, we will no longer be dependent on being able to go back for new financing from Wall Street. This means we will have less dilution in the future and more revenue to support the more aggressive development of therapies to reach the long term goal, which is ultimately to own and control several multi-billion dollar applications of therapeutic stem cells.


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Now the financial community and the medical community are beginning to realize that the parthenogenetic stem cells not only solve an ethical problem, but are very likely the solution to the problem of immune rejection for many patients, and that is a huge problem. As people begin to realize that, we are getting much more interest from the investment banking community and the investment community as well as the scientific community, and it is just a matter of time and our spending the effort to tell the stories. - Kenneth C. Aldrich J.D.

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