SecProbe.io

September 15, 2010
  Mr. Martin McGlynn President and Chief Executive Officer  StemCells, Inc.  3155 Porter Drive Palo Alto, CA 94304
Re: StemCells, Inc.
 Form 10-K for the Fiscal Year Ended December 31, 2009
Definitive Proxy Statement filed April 13, 2010 File No. 000-19871

Dear Mr. McGlynn:

We have reviewed your July 6, 2010 response to our June 7, 2010 letter and have the
following comments.  In our comments, we ask y ou to provide us with information to better
understand your disclosure.
 Please respond to this letter within ten business days by providing us the requested
information or by advising us when you will provide the requested response.  Where a comment requests you to revise disclosu re, the information you provide s hould show us what the revised
disclosure will look like and identify the annual or quarterly filing, in which you intend to first
include it.  If you do not believe a comment  applies to your facts and circumstances
, please tell us
why in your response.  Please furnish us a letter on EDGAR under the form type label CORRESP
that keys your responses to our comments.
 After reviewing the information provided, we may raise additional comments and/or
request that you amend your filing.   Item 1. Business

 Licenses with Research Institutions, page 14

1. We note your responses to prior comments five  and seven directing us to your requests
for confidential treatment w ith respect to certain terms of the Edinburgh License
Agreement and the License Agreement with NeuroSpheres Holdings Ltd. each granted by
the Commission.  The confidential treatment re quest was granted without the benefit of a
review.  In the letter informing you of the gr ant of your confidential treatment request, we
informed you that we maintain the authority to reconsider the grant of confidential treatment.  While we generally believe the royalty rate is a material term of a license agreement, we are willing to grant confiden tial treatment for the royalty rate when the

Mr. Martin McGlynn StemCells, Inc.   September 15, 2010 Page 2

royalty range is disclosed.  Accordingly, plea se revise your disclosure regarding these
agreements to include a reasona ble range within which the roya lty rate falls, for example
“single digits,” teens,” “twenties,” etc.  Additionally, in lieu of any minimum annual
payments owed, please provide the aggregate potential milestone payments due under the
Edinburgh License Agreement.
 Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

 Liquidity and Capital Resources, page 49

Indemnification Agreement
2. Please refer to prior comment ten. You have  concluded that as of December 31, 2009,
prepaid royalties of $750,000 ar e realizable against future milestone and royalty
payments to NeuroSpheres.  Please tell us w hy this assumed realization against future
milestone payments does not represent rec ognition of a continge nt gain, which is
prohibited by ASC 450-30-25.

Notes to Consolidated Financial Statements

Note 5. Acquisition of SCS, page 70

3. Please refer to prior comment 13. Confirm to us that you will disclose the information
provided in your response in future filings.
Note 12. Commitments and Contingencies, page 77

4. Please refer to prior comment 16. You assert th at these arrangements are not material to
your business. However, the future success of  your research and development appears to
depend significantly on these licensed agreemen ts and research collaborations. Also, you
disclose a potential $15 million maximum roya lty obligation to Cal Tech. Accordingly,
please disclose the principal terms of your li cense arrangements and collaborations with
research institutions and commercial entities.
 Definitive Proxy Statement filed April 13, 2010

Executive Compensation
Compensation Discussion and Analysis
Compensation of Named Executive Officers
Bonus Compensation, page 13

5. We note your response to comment 18 and di sagree with your conclusion that a more
detailed description of your corporate goals is not necessary. A more detailed description
of the goals is material to understanding how you incentivize and reward your executive

Mr. Martin McGlynn StemCells, Inc.   September 15, 2010 Page 3

officers. Please confirm that you will provide a more detailed description of these goals
in your 2011 proxy statement.

Please contact Frank Wyman, St aff Accountant, at (202) 551-3660 or Lisa Vanjoske,
Assistant Chief Accountant, at (202) 551-3614, if you have an y questions regarding the
processing of your response as well as any questions regarding comments on the financial
statements and related matters. You may contact  Karen Ubell, Staff Attorney, at (202) 551-3873
or Suzanne Hayes, Legal Branch Chief, at (202) 551-3675 with questions on any of the other
comments. In this regard, do not hesi tate to contact me at (202) 551-3679.

Sincerely,

Jim B. Rosenberg
Senior Assistant Chief Accountant