Exhibit 99.3


(STEMCELLS LOGO)


StemCells, Inc. (Ticker: STEM, Exchange: NASDAQ)
News Release -- June 17, 2004
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              STEMCELLS RAISES $20 MILLION IN NEW EQUITY FINANCING

Palo Alto, Calif., June 17, 2004 -- StemCells, Inc. (NASDAQ: STEM) announced
today that it has entered into a definitive agreement with institutional and
other accredited investors with respect to the private placement of
approximately 13,158,000 shares of its common stock at a purchase price of $1.52
per share, for gross proceeds of approximately $20,000,000. Investors will also
receive warrants to purchase approximately 3,289,500 shares of common stock at
an exercise price of $1.90 per share. C.E. Unterberg, Towbin LLC served as
placement agent for the transaction.

The transaction is expected to be consummated within the next few days following
satisfaction of certain customary closing conditions contained in the definitive
transaction agreements.

"We are pleased by this private placement, and welcome a new and broad-based
group of institutional investors who we believe will help us increase the
Company's visibility in the investment community," said Martin McGlynn,
StemCells Inc.'s President and Chief Executive Officer. "As we have previously
announced, we intend to file our first IND with the FDA to begin clinical trials
in Batten Disease, a rare but fatal neurodegenerative disorder, by the end of
the first quarter of 2005. This infusion of new capital is one critical factor
toward enabling us to initiate our first clinical trial in Batten disease in
2005. We estimate that this financing will provide sufficient capital to fund
operations into 2006."

The securities offered in this placement have not been registered under the
Securities Act of 1933, as amended, or state securities laws, and cannot be
offered or sold in the United States absent registration with the Securities and
Exchange Commission (SEC) or an applicable exemption from the registration
requirements. As part of the transaction, the company has agreed to file a
registration statement with the SEC covering the resale of the shares of common
stock issued in the offering, including the shares of common stock issuable upon
exercise of the warrants. This news release is neither an offer to sell nor a
solicitation of an offer to buy any of the securities discussed herein and is
being issued under Rule 135c of the Securities Act of 1933.

ABOUT STEMCELLS INC.

StemCells, Inc. is a biotechnology company focused on the discovery, development
and commercialization of stem cell-based therapies to treat diseases of the
nervous system, liver, and pancreas. The Company's stem cell programs seek to
repair or repopulate neural or other tissue that has been damaged or lost as a
result of disease or injury. Further information about the Company is available
on its web site at www.stemcellsinc.com.

Apart from statements of historical facts, the text of this press release
constitutes forward-looking statements regarding, among other things, the future
business operations of StemCells, Inc. ("the Company"). The forward-looking
statements speak only as of the date of this news release. StemCells does not
undertake to update any of these forward-looking statements to reflect events or
circumstances that occur after the date hereof. Such statements reflect
management's current views and are based on certain assumptions that may or may
not ultimately prove valid. The Company's actual results may vary materially
from those contemplated in the forward-looking statements due to risks and
uncertainties to which the Company is subject, including uncertainties regarding
the

Company's ability to obtain the capital resources needed to continue its current
research and development operations and to conduct the research, preclinical
development and clinical trials necessary for regulatory approvals; the fact
that the Company's stem cell technology is at the pre-clinical stage and has not
yet led to the development of any proposed product; the uncertainty whether the
Company will be able to file an IND in the time it projects and whether the FDA
will permit it to proceed to clinical testing; the uncertainty whether the
Company will achieve revenues from product sales or become profitable;
uncertainties regarding the Company's obligations in regard to its former
encapsulated cell therapy facilities in Rhode Island; and other factors that are
described in Exhibit 99 to the Company's Annual Report on Form 10-K entitled
"Cautionary Factors Relevant to Forward-Looking Statements."

Corporate Contact:                        Media/Investor Relations Contact:
StemCells, Inc.                           The Investor Relations Group
Martin McGlynn, President & CEO           Janet Vasquez/Jane Lin
650-475-3100, ext 108                     212-825-3210