CytoTherapeutics Reports Year-End Results

PROVIDENCE, RI, January 22, 1996 -- CytoTherapeutics, Inc. (NASDAQ: CTII) today reported a net loss for the year ended December 31, 1995 of $8.89 million, or $0.69 per share, as compared to a net loss of $16.46 million, or $1.52 per share, in 1994. The loss for 1995 includes a non- recurring, non-cash charge related to the write-down of an investment in preferred stock in Neocrin Company of $2.33 million, or $0.18 per share. The write-down reflects an estimate of Neocrin's current valuation based upon their most recent financing. Excluding this loss, the net loss for 1995 was $6.56 million, or $0.51 per share. Cash and marketable securities totaled $44.19 million at December 31, 1995.

The Company's net loss for the fourth quarter ended December 31, 1995 was $5.36 million, or $0.35 per share, compared with a net loss of $4.57 million, or $0.42 per share, for the same period in 1994. Excluding the loss related to the investment in Neocrin, the net loss for the fourth quarter of 1995 was $3.03 million, or $0.20 per share.

"In 1995, we established and met an ambitious set of clinical and business objectives covering CytoTherapeutics' products in development for the treatment of neurological disorders," stated Seth A. Rudnick, M.D., Chairman and Chief Executive Officer. "During the year, we had three clinical trials in two indications ongoing, including our first company-sponsored IND in the United States. We reported successful preliminary results from a trial of our implant to treat ALS -- the first reported human clinical trial for a cell- containing implant to deliver a recombinant protein within the central nervous system.

"We are optimistic that this clinical momentum will allow us to move our pain program into Phase II trials in 1996, begin a second CNTF trial for the treatment of ALS and identify our third clinical candidate. While substantial work remains to be done, we believe these preliminary results suggest that our products may ultimately provide continuous, long-term delivery of therapeutic substances directly within the blood-brain barrier, potentially overcoming many of the delivery problems currently associated with other methods of treating central nervous system disorders.

"During the year, we substantially strengthened our financial position, ending the year with more than $44 million in cash and marketable securities. The combination of proceeds from two successful public offerings, together with funds received from our collaboration with Astra AB, brought more than $40 million into the Company during the year. We expect our existing capital resources, together with income from investments and research revenues from our corporate collaborators, will be sufficient to fund operations into the first half of 1998. Our goal of managing our loss to under $10 million for the year was also achieved," added Dr. Rudnick.

#########################

CytoTherapeutics, Inc. is a leader in the development of proprietary products and technology designed to deliver therapeutic substances to the central nervous system (CNS). The Company's CNS-focused technology is designed to provide controlled, site-specific and safe delivery of a variety of novel therapeutic substances across the blood-brain barrier, potentially overcoming a fundamental obstacle in the effective treatment of CNS diseases. The Company is currently developing products for the treatment of chronic pain, ALS, Parkinson's disease and Alzheimer's disease, with additional research efforts directed to several other CNS disorders. For additional information, visit the Company's Internet web site at http://www.cyto.com.

- FINANCIAL CHARTS FOLLOW -