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International Stem Cell Corporation Announces Strong Financial Results for the Three and Nine-Months ended September 30, 2018

November 15, 2018

-- Increases in Revenues and Profit Margins -- Net Income Realized for the Quarter

CARLSBAD, Calif., Nov. 15, 2018 (GLOBE NEWSWIRE) -- International Stem Cell Corporation (OTCQB:ISCO) ( www.internationalstemcell.com ) (“ISCO” or “the Company”), a California-based clinical stage biotechnology company developing novel stem cell-based therapies and biomedical products, today provided a business update and announced operating results for the three and nine months ended September 30, 2018.

“ISCO’s progress in 2018 has been transformative, to say the least. We have not only shown encouraging initial clinical data in Parkinson’s Disease clinical study, our financials, particularly from our revenue-generating subsidiaries are some of the brightest they’ve ever been. We generated a net income for the quarter compared to a net loss during this same quarter last year. Returning to the clinical side, we recently announced positive interim results in our phase 1 clinical study. We plan to announce further data in 2019 and present a clinical development plan for the subsequent trials,” commented Andrey Semechkin, PhD., CEO and Co-Chairman of ISCO.

Year-to-Date Financial Highlights

-- Consolidated revenue for the nine months ended September 30, 2018 was $8.9 million, an increase of 50% compared to the consolidated revenue of $5.6 million for the nine months ended September 30, 2017. -- Gross profit margin for the Company’s revenue-generating subsidiaries for the nine months ended September 30, 2018 was $5.6 million, compared to gross profit margin of $4.1 million for the nine months ended September 30, 2017. -- Combined operating income for the nine months ended September 30, 2018 from our two wholly owned revenue generating subsidiaries was $2.3 million, an increase of 77% compared to $1.3 million in the same period in 2017. -- Consolidated net income for the quarter ended September 30 was $121,000, compared to consolidated loss before income taxes of $2.2 million for the same period in 2017. -- Average net cash used in operating activities, excluding capital expenditures and patent costs, was approximately $124,000 per month during the nine months ended September 30, 2018, a decrease of 32%, compared to $183,000 per month for the same period in 2017. -- Consolidated loss before income taxes, including from Parkinson’s disease clinical trial expenses, for the nine months ended September 30, 2018 was $1.1 million, compared to consolidated loss before income taxes of $4.7 million for the same period in 2017

Recent Corporate and Clinical Trial Highlights

-- Successfully transplanted two patients in the third cohort of patients in the clinical trial for Parkinson’s disease. Each patient received 70,000,000 ISC-hpNSC® cells. -- Presented positive 12-month results of the first cohort and six-month interim results of the second cohort of its phase 1 clinical trial at the Society for Neuroscience annual meeting in San Diego, CA. -- The United States Patent and Trademark Office (USPTO) has granted the Company a key patent (US10039794) on the use of neural cells for the treatment of various neurodegenerative diseases. The patent covers the use of ISC-hpNSC® for the treatment of neurodegenerative diseases such as Parkinson’s disease, Alzheimer’s disease and amyotrophic lateral sclerosis.

About International Stem Cell Corporation

International Stem Cell Corporation 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. hpSCs offer the potential to create the first true stem cell bank, UniStemCell™. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology (www.lifelinecelltech.com), and stem cell-based skin care products through its subsidiary Lifeline Skin Care (www.lifelineskincare.com). More information is available at www.internationalstemcell.com.

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Safe harbor statement

Statements pertaining to anticipated developments, expected results of clinical studies, progress of research and development, and other opportunities for the company and its subsidiaries, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact (including, but not limited to statements that contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,” “estimates,”) should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products, regulatory approvals, need and ability to obtain future capital, application of capital resources among competing uses, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the company’s business, particularly those mentioned in the cautionary statements found in the company’s Securities and Exchange Commission filings. The company disclaims any intent or obligation to update forward-looking statements.

International Stem Cell Corporation and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except share data) September December 30, 31, 2018 2017 ---------- ---------- Assets (Unaudited) Cash $ 1,161 $ 304 Accounts receivable, net of allowance for doubtful accounts of $12 1,545 465 Inventory, net 1,474 1,307 Prepaid expenses and other current assets 512 779 - -------- - -------- Total current assets 4,692 2,855 Non-current inventory 774 692 Property and equipment, net 347 321 Intangible assets, net 2,848 2,922 Deposits and other assets 64 74 - -------- - -------- Total assets $ 8,725 $ 6,864 - -------- - -------- Liabilities and Stockholders’ Equity Accounts payable $ 799 $ 830 Accrued liabilities 844 607 Related party payable 2,025 — Advances 250 250 Fair value of warrant liability 2,021 3,113 - -------- - -------- Total current liabilities 5,939 4,800 - -------- - -------- Commitments and contingencies Stockholders’ Equity Series B Convertible Preferred stock, $0.001 par value, 5,000,000 shares authorized, 250,000 issued and outstanding, with liquidation preferences of $405 — — and $396 at September 30, 2018 and December 31, 2017, respectively Series D Convertible Preferred stock, $0.001 par value, 50 shares authorized, 43 — — issued and outstanding, with liquidation preference of $4,320 Series G Convertible Preferred stock, $0.001 par value, 5,000,000 shares 5 5 authorized, issued and outstanding, with liquidation preference of $5,000 Series I-1 Convertible Preferred stock, $0.001 par value, 2,000 shares authorized, 1,094 and 1,304 issued and outstanding, with liquidation preferences of $1,094 and — — $1,304 at September 30, 2018 and December 31, 2017, respectively Series I-2 Convertible Preferred stock, $0.001 par value, 4,310 shares authorized, — — issued and outstanding with liquidation preference of $4,310 Common stock, $0.001 par value, 120,000,000 shares authorized, 6,599,739 and 6,057,132 shares issued and outstanding at September 30, 2018 and December 31, 7 6 2017, respectively Additional paid-in capital 108,409 106,585 Accumulated deficit (105,635 ) (104,532 ) - -------- - -------- Total stockholders’ equity 2,786 2,064 - -------- - -------- Total liabilities and stockholders’ equity $ 8,725 $ 6,864 - -------- - --------

International Stem Cell Corporation and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2018 2017 2018 2017 ------- -------- -------- -------- Revenues Product sales $ 3,195 $ 1,847 $ 8,866 $ 5,614 - ----- - ------ - ------ - ------ Total revenues 3,195 1,847 8,866 5,614 - ----- - ------ - ------ - ------ Expenses Cost of sales 1,315 474 3,235 1,498 Research and development 616 670 1,879 2,054 Selling and marketing 608 657 1,940 1,790 General and administrative 1,319 1,016 4,026 3,290 - ----- - ------ - ------ - ------ Total expenses 3,858 2,817 11,080 8,632 - ----- - ------ - ------ - ------ Loss from operations (663 ) (970 ) (2,214 ) (3,018 ) - ----- - ------ - ------ - ------ Other income (expense) Change in fair value of warrant liability 758 (1,174 ) 1,092 (1,622 ) Interest expense (17 ) (20 ) (26 ) (40 ) Miscellaneous income 43 — 45 — - ----- - ------ - ------ - ------ Total other income (expense) 784 (1,194 ) 1,111 (1,662 ) - ----- - ------ - ------ - ------ Income (loss) before income taxes 121 (2,164 ) (1,103 ) (4,680 ) Provision for income taxes — — — — - ----- -------- - ------ -------- Net income (loss) $ 121 $ (2,164 ) $ (1,103 ) $ (4,680 ) - ----- - ------ - ------ - ------ Net income (loss) applicable to common stockholders $ 121 $ (2,164 ) $ (1,103 ) $ (4,680 ) - ----- - ------ - ------ - ------ Net income (loss) per common share-basic $ 0.02 $ (0.54 ) $ (0.18 ) $ (1.17 ) - ----- - ------ - ------ - ------ Net loss per common share-diluted $ (0.10 ) $ (0.54 ) $ (0.18 ) $ (1.17 ) - ----- - ------ - ------ - ------ Weighted average shares-basic 6,337 4,020 6,233 3,989 - ----- - ------ - ------ - ------ Weighted average shares-diluted 6,404 4,020 6,233 3,989 --------------------------------------------------- - ----- - ------ - ------ - ------

Contacts:

International Stem Cell CorporationRussell Kern, PhDExecutive Vice President, CSOPhone: 760-940-6383Email: ir@intlstemcell.com

or

Edison AdvisorsTirth PatelVice President, Investor Relations(646) 653-7035tpatel@edisongroup.com

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