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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO
SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 26, 1997
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CYTOTHERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19871 04-3078125
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
701 GEORGE WASHINGTON HIGHWAY
LINCOLN, RHODE ISLAND 02865
(Address of principal executive offices, including zip code)
(401) 288-1000
(Registrant's telephone number including area code)
TWO RICHMOND SQUARE
PROVIDENCE, RHODE ISLAND 02906
(Former name or address, if changed since last report)
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PAGE 1 OF 9 PAGES.
EXHIBIT INDEX ON PAGE 5.
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This report may contain certain forward-looking statements regarding,
among other things, CTI's results of operations, the progress of CTI's product
development and clinical programs, the need for, and timing of, additional
capital and capital expenditures, partnering prospects, the need for additional
intellectual property rights, effects of regulations, the need for additional
facilities and potential market opportunities. CTI's actual results may vary
materially from those contained in such forward-looking statements because of
risks to which CTI is subject such as risks of delays in research, development
and clinical testing programs, obsolescence of CTI's technology, lack of
available funding, competition from third parties, failure of CTI's
collaborators to perform, failure to consummate proposed transactions,
regulatory constraints, litigation and other risks to which CTI is subject. See
"Cautionary Factors Relevant to Forward-Looking Statements" filed herewith as
Exhibit 99 and incorporated herein by reference.
ITEM 2. ACQUISITION OF ASSETS
On September 26, 1997, CytoTherapeutics, Inc. ("CTI") announced the
closing of the merger of StemCells, Inc. ("StemCells") and a wholly-owned
subsidiary of CTI. Through the merger, CTI acquired StemCells in exchange for
1,580,000 newly issued shares of CTI's common stock, $.01 par value.
Simultaneously with the acquisition of StemCells, Richard M. Rose, M.D., became
President, Chief Executive Officer and a Director of CTI and Dr. Irving Weissman
became a Director of CTI.
Upon the consummation of the merger, CTI entered into consulting
arrangements with the principal scientific founders of StemCells including, Dr.
Weissman, of Stanford University, Fred Gage, Ph.D., of Salk Institute and David
Anderson, of the California Institute of Technology and the Howard Hughes
Medical Institute. Under the terms of the consulting arrangements, each of Drs.
Weissman, Gage and Anderson will join CTI's Scientific Advisory Board with Dr.
Weissman serving as the Chairman of the Scientific Advisory Board.
To attract and retain Drs. Rose, Weissman, Gage and Anderson, and to
move CTI's expanded stem cell program forward, CTI awarded these individuals
options to acquire a total of approximately one million six hundred thousand
shares of CTI common stock, at an exercise price of $5.25 per share;
approximately 94,000 of these options are excercisable immediately, 1.1 million
of these options vest and become exercisable only on the achievement of
specified milestones related to CTI's stem cell development program, such as
corporate partnering events, the initiation of clinical trials and regulatory
filings and approvals; and the remaining 500,000 options vest over eight years.
Conduct of the stem cells research following completion of the merger
will be conducted pursuant to the provisions of an agreement between CTI and
Drs. Weissman and Gage providing for a two year research plan. If the goals of
the research plan are accomplished, the stem cells research will continue to be
conducted under an extension of such Research Plan approved by a Research
Committee consisting of two persons chosen by Drs. Gage and Weissman, two
persons chosen by CTI and a fifth member appointed by Drs. Gage and Weissman,
subject to the reasonable approval of CTI. Increases in stem cells research
funding of not more than 25% a year approved by the Committee will be funded by
CTI as long as the goals of the Research Plan are being met, provided, however,
that CTI will retain the option of ceasing or reducing neural stem cell research
even if all Research Plan goals are being met by accelerating the vesting of all
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still-achievable performance-based options and ceasing or reducing non-neural
stem cell research even if all Plan goals are being met by affording the
scientific founders the opportunity to continue development of the non-neural
stem cell research by licensing the technology related to such research to the
founders in exchange for a payment to CTI equal to all funding for such
research, plus royalty payments.
ITEM 5. OTHER EVENTS
Construction of CTI's new headquarters and research and development
facility has recently been completed at a cost of approximately $7.5 million.
CTI is currently in negotiations regarding the possible sale and leaseback of
such facility. In addition, CTI is also involved in active discussions with a
group of potential investors regarding a possible investment in CTI's 50% owned
subsidiary, Modex Therapeutiques S.A., including the possible sale to such
investors of a portion of CTI's current ownership interest. As currently
anticipated, CTI would reduce its current ownership in Modex to a minority
position, receive cash, be relieved of certain future funding and milestone
obligations, expand the field of encapsulated products outside the central
nervous system which are exclusively licensed to Modex and enter into
arrangements to manufacture Modex products based on such licensed technology.
The two proposed transactions described above are the subject of
ongoing negotiations and no definitive agreements have been reached with respect
to either transaction; there can be no assurance that either transaction will be
completed or, if completed, will be completed on the terms described above.
ITEM 7. EXHIBITS
Exhibit 99 Cautionary Factors Relevant to Forward-Looking Statements
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CYTOTHERAPEUTICS, INC.
By /s/ Frederic A. Eustis III
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Title: Executive Vice President
Date: October 2, 1997
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Exhibit Index Page
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Exhibit 99 Cautionary Factors Relevant to Forward-Looking 6
Statements
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