EXHIBIT 99
 
           CAUTIONARY FACTORS RELEVANT TO FORWARD-LOOKING INFORMATION
 
    CYTOTHERAPEUTICS, INC. (THE "COMPANY") WISHES TO CAUTION READERS THAT THE
FOLLOWING IMPORTANT FACTORS, AMONG OTHERS, IN SOME CASES HAVE AFFECTED AND IN
THE FUTURE COULD AFFECT THE COMPANY'S RESULTS AND COULD CAUSE ACTUAL RESULTS AND
NEEDS OF THE COMPANY TO VARY MATERIALLY FROM FORWARD-LOOKING STATEMENTS MADE IN
THIS ANNUAL REPORT BY THE COMPANY ON THE BASIS OF MANAGEMENT'S CURRENT
EXPECTATIONS. THE BUSINESS IN WHICH THE COMPANY IS ENGAGED IS RAPIDLY CHANGING,
EXTREMELY COMPETITIVE AND INVOLVES A HIGH DEGREE OF RISK, AND ACCURACY WITH
RESPECT TO FORWARD-LOOKING PROJECTIONS IS DIFFICULT.
 
    EARLY STAGE DEVELOPMENT; HISTORY OF OPERATING LOSSES -- Substantially all of
the Company's revenues to date have been derived, and for the foreseeable future
substantially all of the Company's revenues will be derived, from collaborative
agreements, research grants and income earned on invested funds. The Company
will incur substantial operating losses in the future as the Company conducts
its research, development, clinical trial and manufacturing activities. There
can be no assurance that the Company will achieve revenues from product sales or
become profitable.
 
    FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING -- The development
of the Company's products will require the commitment of substantial resources
to conduct the time-consuming research, preclinical development and clinical
trials that are necessary for regulatory approvals and to establish production
and marketing capabilities, if such approvals are obtained. The Company will
need to raise substantial additional funds to continue its product development
efforts and intends to seek such additional funds through partnership,
collaborative or other arrangements with corporate sponsors, public or private
equity or debt financings, or from other sources. Future cash requirements may
vary from projections based on changes in the Company's research and development
programs, progress in preclinical and clinical testing, the Company's ability to
enter into, and perform successfully under, collaborative agreements,
competitive and technological advances, the need to obtain proprietary rights
owned by third parties, facilities requirements, changes in regulations and
other factors. Lack of necessary funds may require the Company to delay, reduce
or eliminate some or all of its research and product development programs or to
license its potential products or technologies to third parties. No assurance
can be given that funding will be available when needed, if at all, or on terms
acceptable to the Company.
 
    UNCERTAINTIES OF CLINICAL DEVELOPMENT AND NEW MODE OF THERAPY -- None of the
Company's proposed products has been approved for commercial sale or entered
Phase III clinical trials. Even if the Company's proposed products appear to be
promising at an early stage of research or development such products may later
prove to be ineffective, have adverse side effects, fail to receive necessary
regulatory approvals, be difficult or uneconomical to manufacture or market on a
commercial scale, be adversely affected by government price controls or
limitations on reimbursement, be precluded from commercialization by proprietary
rights of third parties, by regulatory restrictions, or be subject to
significant competition from other products. There can be no assurance that the
Company will be able to demonstrate, as required, that its implants, on a
consistent basis and on a commercial scale, among other things: (i) successfully
isolate transplanted cells from the recipient's immune system; (ii) remain
biocompatible with the tissue into which they are implanted, including, for
certain implants, brain tissue; (iii) adequately maintain the viability of cells
contained within the membrane for a sufficiently long time to be efficacious and
commercially viable; (iv) safely permit the therapeutic substances produced by
the cells within the membrane to pass through the membrane unto the patient in
controlled doses for extended periods; and (v) are sufficiently durable for the
intended indication. While clinicians have generally had little difficulty in
retrieving the Company's implants, there have been cases where the implant broke
on attempted explant. The Company has changed its implantation procedure and its
implants and is continuing a program of developing stronger implants. In
addition, the viability of implanted encapsulated cells varies depending of the
cell type, the implantation location and other factors. Lack of viability could
restrict certain of the Company's programs to indications
 
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where long-term delivery of the therapeutics substances is not required. There
can also be no assurance that the products that may be generated in the
Company's stem cell programs will: (i) survive and persist in the desired
locations, (ii) provide the therapeutic benefits intended, (iii) properly
differentiate and integrate into existing tissue in the desired manner, or (iv)
not cause tumors or other side effects.
 
    There has been increasing regulatory concern about the risks of cell
transplantation. Concern has focused on the use of cells derived from cows (such
as are used in the Company's pain program) and cells from primates and pigs. The
United Kingdom has adopted a moratorium on xenotransplantation pending further
research and discussion; the EC Commission has introduced a ban on the use of
"high-risk material" from cattle and sheep in the Member States of the European
Union in the manufacture of pharmaceuticals (this ban would apparently not
include the type of cells used in the Company's pain program). In addition, the
FDA has proposed guidelines which impose significant constraints on the conduct
of clinical trials utilizing xenotransplantion and are likely to significantly
affect the cost of producing the Company's products using nonhuman cells; such
costs could make the Company's products cost more to produce than the Company
receives for their production. Furthermore, the FDA has published a "Proposed
Approach to Regulation of Cellular and Tissue-Based Products" which relates to
the use of human cells. The Company cannot presently determine the effects of
such actions nor what other actions might be taken. Restrictions on the testing
or use of cells, whether human or nonhuman, as human therapeutics, could
adversely affect the Company's product development programs and the Company
itself. See "Government Regulation."
 
    DEPENDENCE ON OUTSIDE PARTIES -- The Company's strategy for the research,
development, commercialization and marketing of its products contemplates that
the Company will enter into various arrangements with corporate sponsors,
pharmaceutical companies, universities, research groups and others. There is no
assurance that the Company will be able to enter into any additional
arrangements on terms acceptable to the Company, or successfully perform its
obligations under its existing or any additional arrangements. If any of the
Company's collaborators fails to perform its obligations in a timely manner or
terminate their agreement with the Company, the development or commercialization
of the Company's product candidate or research program under such collaborative
agreement may be adversely affected. Moreover, the Company is particularly
dependent on its pain program partner, Astra AB, because changes in the
development of this particular program may significantly affect the Company's
stock price. In addition, because of the Company's obligation to repurchase
certain of the stock it sold to Genentech in connection with certain
terminations of the Parkinson's Agreement, any such termination could have an
adverse effect on the Company's liquidity.
 
    NEED FOR AND UNCERTAINTY OF OBTAINING PATENT PROTECTION -- Patent protection
for products such as those the Company proposes to develop is highly uncertain
and involves complex factual and evolving legal questions. No assurance can be
given that any patents issued or licensed to the Company will not be challenged,
invalidated or circumvented, or that the rights granted under such patents will
provide competitive advantages to the Company.
 
    EXISTENCE OF THIRD PARTY PATENTS AND PROPRIETARY RIGHTS; NEED TO OBTAIN
LICENSE -- A number of pharmaceutical, biotechnology and other companies,
universities and research institutions have filed patent applications or have
been issued patents relating to cell therapy and encapsulation and other
technologies potentially relevant to or required by the Company's expected
products. The Company cannot predict which, if any, of such applications will
issue as patents or the claims which might be allowed. The Company is aware that
a number of entities have filed applications relating to stem and/or progenitor
cells. The Company is also aware of a number of third-party patent applications
and patents relating to cell encapsulation or claiming use of genetically
modified cells to treat disease, disorder or injury. In particular, the Company
is aware of a third-party U.S. patent which relates the use of cells for
alleviating chronic pain in humans and of two issued U. S. patents claiming
certain methods for treating defective, diseased or damaged cells in the
mammalian CNS by grafting genetically modified cells. The Company cannot predict
 
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the effect of existing patent applications and patents on future unencapsulated
products. In addition, the Company is aware of third-party patents and patent
applications claiming rights to the neurotrophic factors (such as CNTF, NT 4/5,
Neurturin, and CT-1) which the Company hopes to deliver with its technology, and
to the production of these factors through the use of genetically modified
cells. The Company expects to use genetically modified cells to produce these
factors for use in its encapsulated products and expects that it may wish to
genetically modify its stem/progenitor cells. The Company may also be required
to seek licenses in regard to other cell lines, the techniques used in creating,
obtaining or maintaining such cell lines, the materials used in the manufacture
of its implants or otherwise. There can be no assurance that the Company will be
able to establish collaborative arrangements or obtain licenses to the foregoing
technology or to other necessary or desirable technology on acceptable terms, if
at all, or that the patents underlying any such licenses will be valid and
enforceable. See "Patents, Proprietary Rights and Licenses" in the Company's
Annual Report on Form 10-K.
 
    GOVERNMENT REGULATION -- The Company's research, preclinical development and
clinical trials, as well as the manufacturing and marketing of its potential
products, are subject to extensive regulation by governmental authorities in the
United States and other countries. The process of obtaining FDA and other
required regulatory approvals is lengthy, expensive and uncertain. There can be
no assurance that the Company or its collaborators will be able to obtain the
necessary approvals to commence or continue clinical testing or to manufacture
or market its potential products in anticipated time frames, if at all. In
addition, several legislative proposals have been made to reform the FDA. If
such proposals are enacted they may result in significant changes in the
regulatory environment the Company faces. These changes could result in
different, more costly or more time consuming approval requirements for the
Company's products, in the dilution of FDA resources available to review the
Company's products, or in other unpredictable consequences. See "Government
Regulation" in the Company's Annual Report on Form 10-K.
 
    SOURCES OF CELLS AND OTHER MATERIALS -- The Company's potential products
require genetically engineered cell lines or living cells harvested from animal
or human sources. There can be no assurance that the Company will successfully
identify or develop sources of the cells required for its potential products and
obtain such cells in quantities sufficient to satisfy the commercial
requirements of its potential products. These supply limitations may apply, in
particular, to primary cells which must be drawn directly from animal or human
sources, such as the bovine adrenal chromaffin cells currently used in the
Company's product for the treatment of pain. As an alternative to primary cells,
the Company is developing products based on the use of genetically altered
cells. Intellectual property rights to important genetic constructs used in
developing such cells, including the constructs used to develop cells producing
neurotrophic factors, are or may be claimed by one or more companies, which
could prevent the Company from using such cells. In addition, many suppliers of
materials used by the Company in its media, implants, and other components have
restricted the use of such materials for implantation into humans; if the
Company cannot obtain the necessary materials for its implants, the Company
would be adversely affected.
 
    MANUFACTURING UNCERTAINTIES -- The Company's pilot manufacturing plant, may
not have sufficient capacity to permit the Company to produce all the products
for all of the clinical trials it anticipates developing. In addition, the
Company has not developed the capability to commercially manufacture any of its
proposed products and is unaware of any other company which has manufactured any
membrane-encapsulated cell product on a commercial scale. There can be no
assurance that the Company will be able to develop the capability of
manufacturing any of its proposed products at a cost or in the quantities
necessary to make a commercially viable product, if at all.
 
    COMPETITION -- Competitors of the Company are numerous and include major
pharmaceutical and chemical companies, biotechnology companies, universities and
other research institutions. Currently, several of these competitors market and
sell therapeutic products for the treatment of chronic pain, Parkinson's disease
and other CNS conditions. In addition, most of the Company's competitors have
 
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substantially greater capital resources, experience in obtaining regulatory
approvals and, in the case of commercial entities, experience in manufacturing
and marketing pharmaceutical products, than the Company. A number of other
companies are attempting to develop methods of delivering therapeutic substances
within or across the blood brain barrier. There can be no assurance that the
Company's competitors will not succeed in developing technologies and products
that are more effective than those being developed by the Company or that would
render the Company's technology and products obsolete or non-competitive. See
"Competition" in the Company's Annual Report on Form 10-K.
 
    DEPENDENCE ON KEY PERSONNEL -- The Company is highly dependent on the
principal members of its management and scientific staff and certain of its
outside consultants. Loss of the services of any of these individuals could have
a material adverse effect on the Company's operations. In addition, the
Company's operations are dependent upon its ability to attract and retain
additional qualified scientific and management personnel. There can be no
assurance the Company will be able to attract and retain such personnel on
acceptable terms given the competition among pharmaceutical, biotechnology and
health care companies, universities and research institutions for experienced
personnel.
 
    REIMBURSEMENT AND HEALTH CARE REFORM -- In both domestic and foreign
markets, sales of the Company's potential products will depend in part upon the
availability and amounts of reimbursement from third-party health care payor
organizations, including government agencies, private health care insurers and
other health care payors such as health maintenance organizations and
self-insured employee plans. There is considerable pressure to reduce the cost
of therapeutic products. There can be no assurance that reimbursement will be
provided by such payors at all or without substantial delay, or, if such
reimbursement is provided, that the approved reimbursement amounts will provide
sufficient funds to enable the Company to sell its products on a profitable
basis. See "Reimbursement and Health Cost Control" in the Company's Annual
Report on Form 10-K.
 
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