CytoTherapeutics Reports 1998 Year-End Financial Results

LINCOLN, R.I. -- (BW HealthWire) -- Feb. 18, 1999 -- CytoTherapeutics, Inc. (Nasdaq:CTII) today reported its financial results for the year ended December 31, 1998. The net loss for the year ended December 31, 1998 of $12,628,000, or $0.69 per share, compared with a net loss of $18,114,000, or $1.08 per share, for the same period in 1997. Cash and marketable securities at December 31, 1998, totaled $17,386,000.

Total revenues for the year ended December 31, 1998 were $8,803,000, compared to $10,617,000 for 1997. Revenues for 1997 included a one-time milestone payment of $3,000,000 from Astra AB, the Company's collaborator on its pain management program.

Operating loss for 1998 was $13,458,000, as compared with $22,488,000, in 1997. Operating loss for 1997 included a one-time research and development expense of $8,344,000 associated with the acquisition by the Company of StemCells, Inc., as well as $1,185,000 attributable to the Company's recognition during the period of Modex's loss from its operations.

The Company's net loss for the fourth quarter ended December 31, 1998 was $2,193,000, or $0.12 per share, compared to a net loss of $1,086,000, or $0.06 per share, for the fourth quarter of 1997. The net loss for the fourth quarter of 1997 included a one-time gain related to the Company's sale of a portion of its 50% interest in Modex. Revenues from collaborative arrangements for the fourth quarter of 1998 totaled $2,514,000, compared to $1,877,000 in the corresponding quarter of 1997. The increase in revenue from collaborative arrangements reflects an increase in funding by more than 20 percent from Astra AB.

"1998 was a transition year for the Company," stated Richard M. Rose, M.D., President and Chief Executive Officer. "As we enter 1999, however, we have taken important steps to reduce the Company's operating loss, to position the Company for development of its two core technologies, and to firmly establish our leadership in the field of stem cell technology."

"In the second half of 1998, we reduced our operating loss by more than 30 percent compared to the first half of 1998. Our current operating loss is approximately $650,000 per month," he added.

"During 1998, Astra increased its funding support for the pain program by $1.5 million. Astra restarted the European Phase II clinical trial of the pain control implant in June following the successful redesign of the implant surgical procedure. Astra expects patient enrollment for the current trial to be completed shortly; efficacy data is expected around mid-year."

"With more than 60 total issued U.S. Patents, we believe that CytoTherapeutics has assembled a dominant patent estate covering both its platform technologies in the field of cell therapy. The Company has a long-established leadership position of 56 patents covering the field of encapsulated-cell technology, with more than 20 patents having issued in 1998 alone."

"The future of the Company requires that we firmly establish our leadership in the field of stem cell technology by discovering and owning the right cell first," Rose stated. "We have assembled a pre-eminent team of proven stem cell researchers, many of whom have established track records in the discovery of these cells. In 1998 alone, 5 U.S. Patents issued covering our proprietary stem cell technology. Our portfolio now consists of 10 issued U.S. Patents," Rose continued.

"In December, we announced the issuance of a U.S. Patent with broad claims covering methods for expanding human neural stem cell cultures, the composition of human neural stem cell cultures expanded by these methods, and for use of these cultures in human transplantation. In December, we also licensed proprietary technology that we believe will speed our discovery of the pancreatic stem cell, a therapeutic with the potential to cure diabetes."

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CytoTherapeutics, Inc. is developing cell-based human therapeutics. The Company's encapsulated-cell technology is designed to treat a number of serious diseases and disorders of the central nervous system (CNS), including chronic pain, by delivering therapeutic proteins directly to the CNS. 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. For additional information, visit the Company's Internet web site at http://www.cyto.com.

All statements in this press release other than statements of historical fact represent forward-looking statements, including, without limitation, comments regarding the availability of funds, technical and business progress, relationships with partners, licensees and affiliates, manufacturing capacity and clinical trials. 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 product development and in obtaining regulatory approvals, adverse clinical trial results, failure to meet milestones or other obligations under collaborative agreements, 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 Consolidated Financial Information (unaudited)

Condensed Consolidated Statements of Operations                     

                     Three Months Ended       Twelve Months Ended
                   December 31, December 31, December 31, December 31, 
                       1998         1997         1998        1997
Revenue from collaborative
 arrangements     $  2,514,043 $  1,877,405 $  8,803,163 $ 10,617,443
Operating expenses:
 Research and
  development        3,959,198    4,867,755   17,658,530   18,603,523
 Acquired research
  and development            0       31,262            0    8,343,684
 General and
  administrative       910,427    1,299,595    4,602,758    6,158,410

                     4,869,625    6,198,612   22,261,288   33,105,617

Operating loss      (2,355,582)  (4,321,207) (13,458,125) (22,488,174)
Gain on partial
 sale of Modex
 investment                  0    3,386,808            0    3,386,808
Interest income, 
 net                   113,428      264,111      781,381    1,493,269
Other income
 (expense)              48,914     (416,123)      48,914     (505,483)


Net loss          ($ 2,193,240)($ 1,086,411)($12,627,830)($18,113,580)

Net loss
 per share        ($      0.12)($      0.06)($      0.69)($      1.08)

Weighted average
 number of common
 shares outstanding 18,405,323   17,284,533   18,290,548   16,704,144


Condensed Consolidated Balance Sheets
                                 December 31, 1998  December 31, 1997

Cash, cash equivalents and
 marketable securities               $17,385,727        $29,050,198
Prepaids and other current assets      1,048,283          1,129,194
Property, plant and equipment, net     8,356,009          7,922,751
Other assets                           6,075,663          6,199,323

Total assets                         $32,865,682        $44,301,466


Total current liabilities            $ 5,547,824        $ 5,203,576
Long-term obligations and
 other long-term liabilities           3,984,340          4,108,025
Redeemable common stock                5,248,610          5,583,110
Common stock to be issued                187,500            506,600
Total stockholders' equity            17,897,408         28,900,155

Total liabilities and
 stockholders' equity                $32,865,682        $44,301,466

     

     CONTACT: CytoTherapeutics, Inc.
              John S. McBride, 401/288-1000, ext. 2126 
              or
              Elizabeth A. Razee, 401/288-1000, ext. 2132