CytoTherapeutics Announces First Quarter Financial Results; Shareholder Equity Increases 110%, Current and Total Liabilities Decrease 60%

SUNNYVALE, Calif. -- (BW HealthWire) -- May 15, 2000 -- CytoTherapeutics, Inc. (Nasdaq:CTII) today reported a decrease in current liabilities of $2.3 million (60%), a decrease in total liabilities of $7.6 million (60%), and an increase in shareholder equity of $3.9 million (110%) in the first quarter of the year 2000. These results, according to George Dunbar, Acting President and CEO of the Company, are primarily due to lower operating costs resulting from the recent restructuring of the Company and a settlement with Genentech, as announced earlier this year. In the course of restructuring, the Company phased out its former operations in Rhode Island and sold the technology that had been practiced there, and is now focused entirely on the discovery, development and commercialization of its platform stem cell technologies at its corporate headquarters in Sunnyvale, California.

Overall, the Company reported a net loss of $1.79 million, or $0.09 per diluted share, for the quarter ended March 31, 2000, compared to a net loss of $1.93 million, or $0.10 per diluted share, for the first quarter of 1999. The Company's total operating expenses for the first quarter of 2000 decreased to $1.79 million from $4.56 million for the same period in 1999. Cash, cash equivalents and short-term investments were $4.50 million for the first quarter 2000, compared with $13.74 million during the same period 1999. The Company had no collaborative revenue for the first quarter of 2000 as compared to $2.5 million for the same period in 1999. The 1999 collaborative revenue arose from a research agreement cancelled in June 1999, which related to the Company's former technology. The Company has not yet entered into any revenue-producing collaborations for its stem cell technology.

Subsequent to the end of the first quarter, CytoTherapeutics sold 1,500 shares of 6% cumulative convertible preferred stock plus a warrant for 75,000 shares of its common stock to members of its Board of Directors, as announced in April.

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CytoTherapeutics is a biotechnology company focused on the discovery, development and commercialization of stem cell-based therapies to treat diseases of the central 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.

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 CytoTherapeutics, Inc., or of StemCells California, Inc., its wholly-owned subsidiary (collectively, the "Company"). 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 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 achieve revenues from product sales or become profitable; and others that are described in Exhibit 99 to the Company's Annual Report on Form 10-K entitled "Cautionary Factors Relevant to Forward Looking Statements."

CONTACT: CytoTherapeutics, Inc.

              George Dunbar, 408/731-8670
              or
              IR PR Strategies, LLC
              Anette Breindl, 858/860-0266