<SUBMISSION>
<ACCESSION-NUMBER>0000950135-02-005744
<TYPE>424B3
<PUBLIC-DOCUMENT-COUNT>1
<FILING-DATE>20021230
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>STEMCELLS INC
<CIK>0000883975
<ASSIGNED-SIC>2836
<IRS-NUMBER>943078125
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>424B3
<ACT>33
<FILE-NUMBER>333-61726
<FILM-NUMBER>02872257
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>525 DEL REY AVE
<STREET2>STE C
<CITY>SUNNYVALE
<STATE>CA
<ZIP>94085
<PHONE>4087318670
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>525 DEL REY AVE
<STREET2>STE C
<CITY>SUNNYVALE
<STATE>CA
<ZIP>94085
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CYTOTHERAPEUTICS INC/DE
<DATE-CHANGED>19930328
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>b45076sce424b3.htm
<DESCRIPTION>STEMCELLS, INC. PROSPECTUS SUPPLEMENT
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<TITLE>StemCells, Inc. Prospectus Supplement</TITLE>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="right"><FONT size="2">Filed Pursuant to Rule&nbsp;424(b)(3)<BR>
Registration No.&nbsp;333-61726
</FONT>

<P align="center"><FONT size="2">StemCells, Inc.
</FONT>
<P align="center"><FONT size="2">Prospectus Supplement<BR>
(To Prospectus Dated July&nbsp;2, 2001)
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read this prospectus supplement and the related prospectus
carefully before you invest. Both documents contain information you should
consider when making your investment decision.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We delivered a draw down notice to Sativum Investments Limited, dated as
of December&nbsp;10, 2002, in connection with the common stock purchase agreement
dated as of May&nbsp;10, 2001 evidencing an equity line facility between us and
Sativum. In the draw down notice, we notified Sativum that we are exercising
our right to sell up to $263,000 of our common stock to Sativum based on the
formula in the stock purchase agreement, during the 20 trading days beginning
on December&nbsp;11, 2002. During the first 10 trading
days, Sativum purchased a total of 107,812&nbsp;shares of our common stock at an
average purchase price of $1.0977&nbsp;per share, net of Sativum&#146;s discount of six
percent. Our placement agents, Pacific Crest Securities, Inc. and Granite
Financial Group, Inc. received $2,367 and $1,184, respectively, as placement
fees in connection with this draw down, resulting in net proceeds to us of
$113,800 for the first 10 trading day settlement period after paying escrow
fees.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The attached prospectus relates to the resale of shares acquired by
Sativum pursuant to the stock purchase agreement. Because Sativum may sell
some or all of these shares, and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of these shares,
we cannot estimate the actual amount of shares that it will hold after the
completion of the offering.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to use the proceeds of this sale of common stock primarily for
general corporate purposes. We will not receive any proceeds from the resale
of our common stock by Sativum.
</FONT>
<P align="left"><FONT size="2"><I>Recent Development</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we previously reported, the Nasdaq Stock Market approved our
application to transfer the listing of our common stock from the National
Market to the SmallCap Market, effective December&nbsp;23, 2002 at the opening of
business.
</FONT>
<P align="center"><FONT size="2">The date of this prospectus supplement is December&nbsp;30, 2002.
</FONT>

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