International Stem Cell Corporation to Raise $6.3 Million

International Stem Cell Corporation to Raise $6.3 Million

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International Stem Cell Corporation (OTCQB: ISCO) is focused on the therapeutic applications of human parthenogenetic stem cells (hpSCs) and the development and commercialization of cell-based research and cosmetic products. ISCO’s core technology, parthenogenesis, results in the creation of pluripotent human stem cells from unfertilized oocytes (eggs). hpSCs avoid ethical issues associated with the use or destruction of viable human embryos. ISCO scientists have created the first parthenogenetic, homozygous stem cell line that can be a source of therapeutic cells for hundreds of millions of individuals of differing genders, ages and racial background with minimal immune rejection after transplantation. The Company announced today it has entered into definitive agreements with two institutional healthcare investors and management for the private placement of $6.3 million of the Company’s convertible preferred stock and common stock purchase warrants to purchase up to an additional $25.7 million of the Company’s common stock. The gross proceeds for the initial purchase of securities consisted of $2.5 million in cash and conversion of $3.8 million debt. Dr. Andrey Semechkin, the Company’s Co-Chairman and Chief Executive Officer, purchased $4.3 million of the preferred stock (on the same terms as the outside investor) through conversion of the $3.8 million of indebtedness owed to him and $500,000 of cash. The closing of the offering is expected to occur on or about March 15, 2016, subject to satisfaction of customary closing conditions set forth in the Purchase Agreement.

“The recurring investment of these healthcare focused institutional investors is in support of and attests to the potential of our technology. The capital raised will help to drive our Phase 1 study of ISC-hpNSC® for the treatment of moderate to severe Parkinson’s disease. With enrollment of patients already underway, we look forward to the end of this year for preliminary safety and efficacy clinical data,” commented Dr. Andrey Semechkin, ISCO’s Co-Chairman and CEO.

Pursuant to the terms of the private placement, the Company will issue (i) 6,310 shares of Series I-1 and Series I-2 convertible preferred at a price of $1,000 per share, (ii) Series A Common Stock purchase warrants to purchase up to approximately 3.6 million shares of common stock at an initial exercise price of $3.65 per share with a term of five years, (iii) Series B Common Stock purchase warrants to purchase up to approximately 3.6 million shares of common stock at an initial exercise price of $1.75 per share with a term of six months and (iv) Series C Common Stock purchase warrants to purchase up to approximately 3.6 million shares of common stock at an initial exercise price of $1.75 per share with a term of twelve months. The Series I-1 and Series I-2 preferred stock are both convertible into shares of common stock of the Company at an initial conversion price of $1.75. $3,810,000 of the gross proceeds of this Offering will be satisfied by the forgiveness of the total principal balance of the Company’s bridge loan payable to Dr. Semechkin in the same amount.

The institutional investors have been granted resale registration rights with respect to the shares underlying the preferred stock and warrants, and all investors have been granted rights of participation in future offerings of the Company’s securities.

Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC is acting as the exclusive placement agent for the offering.

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