CytoTherapeutics Reports Third Quarter Results

PROVIDENCE, RI, November 1, 1996 -- CytoTherapeutics, Inc. (NASDAQ: CTII) today reported a net loss for the third quarter ended September 30, 1996 of $3,608,000, or $0.23 per share, compared to a net loss of $2,523,000, or $0.19 per share, for the third quarter of 1995. Revenues from collaborative arrangements for the third quarter of 1996 totaled $1,791,000, compared to $1,986,000 in the corresponding quarter of 1995. Cash and marketable securities totaled $35,617,000 at September 30, 1996. The results of Modex Therapeutiques SA, the Company's 50% owned Swiss subsidiary which was formed in July 1996, are included in the 1996 financial statements.

The net loss for the nine months ended September 30, 1996 was $9,336,000, or $0.61 per share, compared with a net loss of $3,531,000, or $0.29 per share, for the same period in 1995. Revenues from collaborative arrangements for the nine months ended September 30, 1996 and 1995 were $5,306,000 and $9,845,000 respectively. Revenues for the first nine months of 1995 included a one-time licensing payment of $5,000,000 from Astra AB, the company's collaborator on its pain management program.

"We continue to be pleased by the progress we have made in both our clinical and pre-clinical programs," noted Sandra Nusinoff Lehrman, M.D., President and Chief Operating Officer. "We are currently reviewing with the FDA our protocol for the start of a Phase II trial of our pain management product. In addition, our collaborators have filed a protocol with French regulatory authorities for approval of the commencement of a pilot clinical study to treat Huntington's disease patients with hCNTF, using our cell encapsulation delivery system. Commencement of this trial would mark the first time that we will use our technology to deliver a growth factor directly into the brain."

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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. At its headquarters in Providence, Rhode Island, the Company is currently developing products for the treatment of chronic pain, ALS, Parkinson's disease and Huntington's disease, with additional research efforts directed to several other CNS disorders. Through its 50%-owned Swiss subsidiary, Modex Therapeutiques SA, the Company is also developing applications of its technology to treat diabetes, blood disorders and obesity. For additional information, visit the Company's Internet web site at http://cyto.com.

Certain statements in this press release include forward looking comments regarding, among other things, product development programs and clinical trials strategies. The Company's actual results may vary materially from those forward looking statements due to risks and uncertainties to which the Company is subject, such as delays in obtaining regulatory approval and other risks, which are described in Exhibit 99 to the Company's Annual Report on Form 10-K entitled "Cautionary Factors Relevant to Forward Looking Statements."

- Financial Exhibits Follow -

CytoTherapeutics, Inc.

Selected Financial Information (unaudited)

Condensed Statements of Operations
	September 30, 1996	September 30, 1995	September 30, 1996	September 30, 1995
Revenue from collaborative arrangements	$1,790,665	$1,986,002	$5,305,514	$9,845,018
Operating expenses:
-- Research and development	4,205,121	3,729,751	12,285,621	10,734,279
-- General and administrative	1,611,152	1,035,009	4,018,421	3,252,492
SUBTOTAL	5,816,273	4,764,760	16,304,042	13,986,771
Operating loss	(4,025,608)	(2,778,758)	(10,998,528)	(4,141,753)
Other income, net	417,449	256,239	1,662,478	611,113
Net loss	($3,608,159)	($2,522,519)	($9,336,050)	($3,530,640)
Net loss per share	($0.23)	($0.19)	($0.61)	($0.29)
Weighted average number of common shares outstanding	15,413,723	13,372,113	15,352,760	12,302,234


Condensed Balance Sheets
	September 30, 1996	December 31, 1995
Cash, cash equivalents and marketable securities	$35,616.660	$44,191,739
Prepaids and other current assets	1,248,133	1,471,285
Property, plant and equipment, net	9,987,535	7,892,763
Other assets	3,811,892	3,251,718
Total assets	$50,664,220	$56,807,505

Total current liabilities	$5,983,857	$5,974,989
Long-term obligations and other long-term liabilities	7,274,109	5,441,138
Total shareholders' equity	37,406,254	45,391,378
Total liabilities and shareholders' equity	$50,664,220	$56,807,505