Re Agreement

Stem Cell Sciences plc
23 October 2007



Press Release

  STEM CELL SCIENCES TO DEVELOP NOVEL MUSCLE STEM CELLS FOR DRUG DISCOVERY AND
                                   TOXICOLOGY
                         ("Stem Cell Sciences", "SCS")

23 October 2007

Stem Cell Sciences plc (SCS, AIM:STEM, ASX:STC), the global biotechnology
company focused on the commercialisation of stem cells and stem cell
technologies in research and cell-based therapies, today announced the signing
of an exclusive agreement with San Raffaele Scientific Institute (Milan, Italy)
covering assay validation and future commercialisation of novel human muscle
stem cells for drug discovery and toxicology applications. Financial terms were
not disclosed.

These muscle stem cells, a subset of pericytes (cells located around the
circumference of small blood vessels), can be extracted from skeletal or heart
muscle and retain the capacity to turn into muscle cells on demand. The cells
were discovered by Professor Giulio Cossu, Director of the Stem Cells Institute,
and his team at the San Raffaele.

Pericytes can be readily grown in the laboratory and represent a significant
addition to SCS's growing platform of renewable cell types originating from
embryonic, neural and adipose stem cell sources. Pericyte-derived muscle cells
are believed to be capable of providing the functionality and consistent quality
needed for the discovery and testing of new drug candidates on human cells.

SCS will initially conduct in-house technology development of the pericytes at
its Cambridge, UK, automated cell production facility. Once consistent,
automated and cost-effective muscle cell production is confirmed, the technology
will be made available to the pharmaceutical industry via a range of commercial
options, including assay-ready formats or under license for in-house use.

"It's another step for SCS in becoming a leading supplier of stem cells to the
pharmaceutical industry," said Dr Peter Mountford, President and CEO of Stem
Cell Sciences. "The agreement validates our approach of working with the world's
elite stem cell groups. Thanks to our European Union supported "Eurostemcell"
collaboration with Professor Cossu, well known for his pioneering work on
muscular dystrophy, new and improved approaches to drug discovery and toxicology
are now possible."

"This is an important result for the San Raffaele Stem Cell Institute. It shows
the great potential of stem cell research for a varied range of pharmaceutical
applications, including discovery and selection of more effective and safe
drugs," commented Daniela Bellomo, Director of the Biotechnology Transfer Centre
(BTC) at San Raffaele who negotiated the agreement.

Lucia Faccio, Licensing Manager at BTC said: "We are very excited with this
agreement and we are confident the development of these assays will quickly
proceed thanks to SCS' expertise and word-class facilities."

With metabolic diseases such as diabetes, arteriosclerosis and heart failure on
the increase, drug companies are actively looking for improved predictive human
cell-based assays in the discovery process for new drugs. Cell assays utilising
human muscle can more accurately indicate adverse effects of a drug on, for
example, normal and regular heart function.
Dr Tim Allsopp, SCS' Chief Scientist commented: "The pericytes can be obtained
in a very simple manner, grow well in the laboratory and reproducibly make
muscle cells, factors which are crucial in building a robust, scalable platform
technology."

The company intends to provide novel, high quality, functional human skeletal
and heart muscle assays to pharmaceutical industry partners.

                                - Ends -

For further information, please contact:

Stem Cell Sciences plc (United Kingdom)                     [phone]
Tim Allsopp, Chief Scientific Officer

Halsin Partners                                             [phone]
Mike Sinclair

Stem Cell Sciences (Australia) pty ltd                      [phone]
Peter Mountford, President and CEO

Talk Biotech                                                [phone]
Fay Weston

Stem Cell Sciences llc (USA)                                [phone]
George Murphy, Vice President Business Development


Notes to Editors

ABOUT STEM CELL SCIENCES:

Stem Cell Sciences plc (SCS, AIM: STEM, ASX: STC) is a global biotechnology
company providing the biological infrastructure of cells and cell culture media
to the burgeoning stem cell research market.

Stem Cell Sciences' core objective is to develop safe and effective cell-based
therapies for currently incurable diseases. SCS retains all rights to its
technology for therapeutic use and is targeting cell-based therapies for
neurodegenerative disease and injury.

Revenues from Stem Cell Sciences' research business are delivered via an
integrated network of business teams and regional offices in Edinburgh and
Cambridge (UK), Kobe (Japan), Melbourne (Australia) and San Francisco (USA).
This global reach provides the Company with the direct access to markets through
experienced personnel and local business networks needed to drive SCS business
growth in each region.

The key challenge for the successful application of stem cells in both research
and clinical applications is the reproducible supply of pure, fully
characterized stem cells and stem cell-derived specialised cells such as nerves
and muscle. This represents a significant technological challenge that will
require access to multiple technologies and a globally integrated stem cell
initiative.

To access cutting edge technologies on a rapid and on-going basis, Stem Cell
Sciences has built an exceptional network of highly interactive collaborations
with academic centres of excellence in the stem cell field. These collaborations
have been the source of our founding technologies and continue to provide an
expanding pipeline of products and intellectual property that are central to the
Company's strategy and success.

To facilitate research and technology transfer with its major collaborating
academic institutions, Stem Cell Sciences' business and scientific teams are
usually co-located on site or adjacent to the centre of excellence in
independent company facilities. The Company's key collaborating institutes
include the Wellcome Trust Centre for Stem Cell Research (University of
Cambridge), the Institute of Stem Cell Research (University of Edinburgh), RIKEN
Centre for Developmental Biology (Kobe) and the Australian Stem Cell Centre
(Melbourne).

Academic and commercial use of stem cells in basic research and drug discovery
provides the Company with immediate and growing revenue streams and offsets the
cost of technology development for full scale cell production of SCS cell-based
therapeutics.

For further information on the company please visit:
www.stemcellsciences.com

ABOUT SAN RAFFAELE
San Raffaele of Monte Tabor Foundation, founded in 1971 by Luigi Maria Verze, is
a non-profit private Foundation characterised by the integration of education
with basic research and clinical activities. It includes: the San Raffaele
Scientific Institute (550 scientists, 666 publications and an impact factor of
3412 in 2006); the San Raffaele Hospital, one of the biggest hospitals in Italy,
with more than 3.600 employees and 1.392 beds, running over 250 clinical trials
per year; and The Vita-Salute University.
The San Raffaele is active in technology transfer through its Biotechnology
Transfer Centre whose mission is to create value from know-how and intellectual
property, available within the San Raffaele Scientific Institute.

The Biotechnology Transfer Centre acting within Science Park Raf SpA (a company
entirely owned by the San Raffaele Foundation) has produced the following
results:

   • 82 international patents filed
   • 41 patents active
   • 25 license agreements
   • 260 sponsored research contracts
   • 99 industrial clients worldwide (companies that signed research
     contracts and/or license agreements


For further information please visit: www.spr.it and www.sanraffaele.org


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