UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED: 0-19871
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JUNE 30, 1999 COMMISSION FILE NUMBER
CYTOTHERAPEUTICS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 94-3078125
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No)
701 GEORGE WASHINGTON HIGHWAY
LINCOLN, RI 02865
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(Address of principal executive offices including zip code)
(401) 288-1000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter periods that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes___X____ No_________
At July 31, 1999, there were 18,531,758 shares of Common Stock, $.01 par value,
issued and outstanding. There were no issued and outstanding shares of Preferred
Stock.
Page 1 of 17
CYTOTHERAPEUTICS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (unaudited)
June 30, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Operations (unaudited)
Three and six months ended June 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows (unaudited)
Six months ended June 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
Page 2 of 17
PART I - ITEM 1 - FINANCIAL STATEMENTS
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CYTOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1999 December 31, 1998
(unaudited) (footnote 1)
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ASSETS
Current assets:
Cash and cash equivalents $ 4,752,168 $ 7,864,788
Marketable securities 7,036,116 9,520,939
Receivables from collaborative agreement 224,210 206,609
Other current assets 500,153 841,674
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Total current assets 12,512,647 18,434,010
Property, plant and equipment, net 7,588,565 8,356,009
Other assets 6,070,157 6,075,663
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Total assets $ 26,171,369 $ 32,865,682
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,800,251 $ 1,730,741
Deferred revenue 0 2,500,000
Current maturities of capitalized lease obligations 317,083 317,083
Current maturities of long term debt 750,000 1,000,000
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Total current liabilities 2,867,334 5,547,824
Capitalized lease obligations, less current maturities 3,130,417 3,261,667
Long term debt, less current maturities 0 500,000
Deferred rent 334,009 222,673
Redeemable stock 5,248,610 5,248,610
Common stock to be issued 187,500 187,500
Stockholders' equity
Common stock 179,800 178,003
Additional paid in capital 123,036,354 122,861,606
Deferred compensation (1,363,545) (1,472,919)
Accumulated deficit (107,436,798) (103,664,084)
Unrealized loss on marketable securities (12,312) (5,198)
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Accumulated other comprehensive loss (107,449,110) (103,669,282)
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Total stockholders' equity 14,403,499 17,897,408
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Total liabilities and stockholders' equity $ 26,171,369 $ 32,865,682
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See accompanying notes to condensed consolidated financial statements.
Page 3 of 17
PART I - ITEM 1 - FINANCIAL STATEMENTS
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CYTOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
Revenue from collaborative arrangements $ 2,520,672 $ 1,906,588 $ 5,021,707 $ 3,749,563
Operating expenses:
Research and development 3,280,826 4,917,357 6,847,383 9,417,019
General and administrative 1,172,856 1,264,249 2,168,315 2,411,255
------------ ------------ ------------ ------------
4,453,682 6,181,606 9,015,698 11,828,274
------------ ------------ ------------ ------------
Loss from operations (1,933,010) (4,275,018) (3,993,991) (8,078,711)
Other income (expense):
Investment income 184,220 351,522 406,331 745,496
Interest expense (91,229) (124,877) (185,054) (233,695)
------------ ------------ ------------ ------------
92,991 226,645 221,277 511,801
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Net loss ($ 1,840,019) ($ 4,048,373) ($ 3,772,714) ($ 7,566,910)
============ ============ ============ ============
Basic and diluted net loss per share ($0.10) ($0.22) ($0.20) ($0.42)
============ ============ ============ ============
Shares used in computing basic and diluted net
loss per share 18,514,236 18,199,870 18,483,437 18,192,212
============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements.
Page 4 of 17
PART I - ITEM 1 - FINANCIAL STATEMENTS
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CYTOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
(unaudited) June 30,
1999 1998
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Cash flows from operating activities:
Net loss $ (3,772,714) $ (7,566,910)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 1,163,295 1,039,208
Compensation expense relating to the grant
of stock options 189,650 117,758
Changes in operating assets and liabilities (2,075,873) 1,377,593
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Net cash used in operating activities (4,495,642) (5,032,351)
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Cash flows from investing activities:
Proceeds from sale of marketable securities 6,891,026 13,634,045
Purchases of marketable securities (4,397,676) (10,952,827)
Purchase of property, plant and equipment (131,113) (1,226,809)
Acquisition of other assets (274,510) (576,588)
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Net cash provided by investing activities 2,087,727 877,821
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Cash flows from financing activities:
Proceeds from the exercise of stock options 176,545 282,445
Proceeds from financing transactions 1,259,300
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Principal payments under capitalized lease obligations
and mortgage payable (881,250) (464,327)
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Net cash (used in) provided by financing activities (704,705) 1,077,418
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Decrease in cash and cash equivalents (3,112,620) (3,077,112)
Cash and cash equivalents, January 1 7,864,788 15,941,701
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Cash and cash equivalents, June 30 $ 4,752,168 $ 12,864,589
============ ============
See accompanying notes to condensed consolidated financial statements.
Page 5 of 17
PART I - ITEM 1 - FINANCIAL STATEMENTS
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1999 AND 1998
NOTE 1. BASIS OF PRESENTATION
The accompanying, unaudited, condensed consolidated financial
statements have been prepared by the Company in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the
accompanying financial statements include all adjustments, consisting
of normal recurring accruals considered necessary for a fair
presentation of the financial position, results of operations and cash
flows for the periods presented. Results of operations for the three
and six months ended June 30, 1999 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending
December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
For further information, refer to the audited financial statements and
footnotes thereto as of December 31, 1998 included in the Company's
Annual Report to Stockholders and the Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
NOTE 2. NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of
shares of common stock outstanding. Common equivalent shares from stock
options and warrants are excluded as their effect is antidilutive.
NOTE 3. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
As of January 1, 1998, the Company adopted Statement 130, REPORTING
COMPREHENSIVE INCOME. Statement 130 establishes new rules for reporting
and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's net income or
shareholders' equity. Statement 130 requires unrealized gains or losses
on the Company's available-for-sale securities, which prior to adoption
were reported separately in shareholders' equity to be included in
other comprehensive income.
For the three months end June 30, 1999 and 1998, total comprehensive
loss amounted to $1,840,000 and $4,048,000, respectively. For the first
six months of 1999 and 1998, total comprehensive loss amounted to
$3,780,000 and $7,561,000, respectively.
Page 6 of 17
NOTE 4. REDEEMABLE STOCK
See Management's Discussion and Analysis of Financial Condition and
Results of Operations regarding the Genentech Inc. resolution and the
impact on the Company's liquidity and capital resources.
NOTE 5. SUBSEQUENT EVENTS
In July 1999, the Company announced plans for the restructuring of its
cell therapy program and to focus its resources on the research and
development of its proprietary stem cell technology platform. The
Company terminated approximately 60 full time employees and has
incurred approximately $1,350,000 in separation costs. These expenses
have been recognized in the third quarter of 1999.
In July 1999, the Rhode Island Partnership for Science and Technology
("RIPSAT") alleged that the Company is in default under a funding
agreement entered into with RIPSAT in 1989, and demanded payment of
approximately $2.6 million. The Company believes that the Company is
not in default under this agreement and expects to contest any attempt
by RIPSAT to realize on its demand.
On August 5, 1999, the Company made a payment of approximately
$752,000, representing principal and interest, to the Lender to retire
the Credit Facility. (See Liquidity and Capital Resources) The Company
decided to retire the Credit Facility instead of seeking further
reduction in the Facility's unrestricted liquidity requirement. In
exchange for the retirement of the Credit Facility, the Lender granted
the Company a waiver of an unrestricted liquidity loan covenant
violation.
Page 7 of 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations of
the Company for the three and six months ended June 30, 1999 and 1998 should be
read in conjunction with the accompanying unaudited condensed consolidated
financial statements and the related footnotes thereto.
The statements contained in this report, other than statements of historical
fact, constitute forward-looking statements. Such statements include, without
limitation, all statements as to expectation or belief and statements as to the
Company's future results of operations, the progress of the Company'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. The Company's actual results may
vary materially from those contained in such forward-looking statements because
of risks to which the Company is subject, such as failure to obtain a corporate
partner or partners to support the Company's stem cell programs, negotiations
with Genentech, Inc. and RIPSAT, risks of delays in research, development and
clinical testing programs, obsolescence of the Company's technology, lack of
available funding, competition from third parties, intellectual property rights
of third parties, failure of the Company's collaborators to perform, regulatory
constraints, litigation and other risks to which the Company is subject. See
"Cautionary Factors Relevant to Forward-Looking-Information" filed herewith as
Exhibit 99 and incorporated herein by reference.
OVERVIEW
Since its inception in August 1988, the Company has been primarily engaged in
research and development of human therapeutic products. No revenues have been
derived from the sale of any products, and the Company does not expect to
receive revenues from product sales for at least several years. The Company has
not commercialized any product and in order for the Company to commercialize any
product the Company must, among other things, substantially increase its
research and development expenditures as research and product development
efforts accelerate and clinical trials are initiated or broadened. The Company
has incurred annual operating losses since inception and expects to incur
substantial operating losses in the future. As a result, the Company is
dependent
Page 8 of 17
upon external financing from equity and debt offerings and revenues from
collaborative research arrangements with corporate sponsors to finance its
operations. There can be no assurance that such financing or partnering revenues
will be available when needed or on terms acceptable to the Company. The
Company's results of operations have varied significantly from year to year and
quarter to quarter and may vary significantly in the future due to the
occurrence of material, nonrecurring events, including without limitation, the
receipt of one-time, nonrecurring licensing payments and the initiation or
termination of research collaborations.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
For the quarters ended June 30, 1999 and 1998, revenues from collaborative
agreements totaled $2,521,000 and $1,907,000, respectively. The increase in
revenues of $614,000, or 32%, results from increased funding for the quarter
from a Development, Marketing and License Agreement with AstraZeneca Group plc,
which was signed in March 1995 (the "Astra Agreement"). However, AstraZeneca
terminated this Agreement in June 1999, and the Company does not expect to
realize any further revenues under the Astra Agreement.
Research and development expenses totaled $3,281,000 for the three months ended
June 30, 1999, compared with $4,917,000 for the same period in 1998. The
decrease of $1,636,000, or 33%, from 1998 to 1999 was primarily attributable to
a reduction in spending on research agreements and a reduction in research and
development personnel expenses.
General and administrative expenses were $1,173,000 for the three months ended
June 30, 1999, compared with $1,264,000 for the same period in 1998.
Interest income for the three months ended June 30, 1999 and 1998 was $184,000
and $352,000, respectively. The decrease in interest income in 1999 was
attributable to the lower average investment balances during such period,
$13,318,000 vs. $23,669,000 in the second quarter of 1999 and 1998,
respectively.
Interest expense was $91,000 for the three months ended June 30, 1999, compared
with $125,000 for the same period in 1998. The
Page 9 of 17
decrease from 1999 to 1998 was attributable to lower outstanding debt and
capital lease balances in 1999 compared to 1998.
Net loss for the three months ended June 30, 1999 was $1,840,000, or $0.10 per
share, as compared to net loss of $4,048,000, or $0.22 per share, for the
comparable period in 1998. The decrease in net loss of $2,208,000, or 55%, from
1998 to 1999 is primarily attributable to a reduction in research and
development spending and a 32% increase in research funding from AstraZeneca.
However, as a result of termination of the Astra Agreement, the Company expects
to incur substantial wind-down costs in the 2nd half of 1999 and that results
for the first six months will not be indicative of results for the balance of
the year.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
For the six months ended June 30, 1999 and 1998, revenues from collaborative
agreements totaled $5,022,000 and $3,750,000. The increase in revenues of
$1,272,000, or 34%, increase in funding is primarily due to an increase in
revenues from the Astra Agreement, which, as noted above, was terminated in June
1999.
Research and development expenses totaled $6,847,000 for the six months ended
June 30, 1999, compared with $9,417,000 for the same period in 1998. The
decrease of $2,570,000, or 27%, from 1998 to 1999 was primarily attributable to
a reduction in spending on research agreements and a reduction in research and
development personnel expenses.
General and administrative expenses were $2,168,000 for the six months ended
June 30, 1999, compared with $2,411,000 for the same period in 1998. The
decrease of $243,000 or 10%, from 1998 to 1999 was primarily attributable to a
reduction in patent expenses, as well as a reduction in employee recruiting
expenses.
Interest income for the six months ended June 30, 1999 and 1998 was $406,000 and
$745,000, respectively. The decrease in interest income in 1999 was attributable
to the lower average investment balance during such period. The average
investment balances were $14,511,000 and $25,329,000 for the first six months of
1999 and 1998, respectively.
Interest expense was $185,000 for the six months ended June 30, 1999, compared
with $234,000 for the same period in 1998.
Page 10 of 17
Net loss for the six months ended June 30, 1999 was $3,773,000, or $0.20 per
share, as compared to a net loss of $7,567,000, or $0.42 per share, for the
comparable period in 1998. However, as noted above, the Company expects to incur
substantial wind-down costs in the 2nd half of 1999 and that results for the
first six months will not be indicative of results for the balance of the year.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations through the sale of
common and preferred stock, the issuance of long-term debt and capitalized lease
obligations, revenues from collaborative agreements, research grants and
interest income.
The Company had unrestricted cash, cash equivalents and marketable securities
totaling $11,788,000 at June 30, 1999. Cash equivalents and marketable
securities are invested in agencies of the U.S. government, investment grade
corporate bonds and money market funds.
The Company's liquidity and capital resources have been and will continue to be
significantly affected by the Company's relationship with corporate partners.
In March 1995, the Company signed a collaborative research and development
agreement with AstraZeneca for the development and marketing of certain
encapsulated-cell products to treat pain. AstraZeneca made an initial,
nonrefundable payment of $5,000,000, included in revenue from collaborative
agreements in 1995, a milestone payment of $3,000,000 in 1997 and was to remit
up to an additional $13,000,000 subject to achievement of certain development
milestones. Under the agreement, the Company was obligated to conduct certain
research and development pursuant to a four-year research plan agreed upon by
the parties. Over the term of the research plan, the Company originally expected
to receive annual payments of $5 million to $7 million from AstraZeneca, which
was to approximate the research and development costs incurred by the Company
under the plan. Subject to the successful development of such products and
obtaining necessary regulatory approvals, AstraZeneca was obligated to conduct
all clinical trials of products arising from the collaboration and to seek
approval for their sale and use. AstraZeneca had the exclusive worldwide right
to market products covered by the agreement. Until the later of either the
expiration of all patents included in the licensed technology or a specified
fixed term, the Company was entitled to a royalty on the
Page 11 of 17
worldwide net sales of such products in return for the marketing license granted
to AstraZeneca and the Company's obligation to manufacture and supply products.
AstraZeneca had the right to terminate the original agreement beginning April 1,
1998. On June 24, 1999 AstraZeneca, informed the Company of the results of
AstraZeneca's analysis of the double-blind, placebo-controlled trial of the
Company's encapsulated bovine cell implant for the treatment of severe, chronic
pain in cancer patients. AstraZeneca determined that, based on criteria it
established, the results from the 85-patient trial did not meet the minimum
statistical significance for efficacy established as a basis for continuing
worldwide trials for the therapy. AstraZeneca therefore indicated that it did
not intend to further develop the bovine cell-containing implant therapy and
executed its right to terminate the agreement.
Based on this decision the Company reduced its Rhode Island workforce by
approximately 60 full-time employees who had been focused on the development of
its encapsulated cell technology program for the encapsulated cell implant for
the treatment of chronic pain in cancer patients, in order to focus its efforts
on further development of its propriety stem cell platform.
In June, the Rhode Island Partnership for Science and Technology ("RIPSAT")
alleged that the Company is in default under a funding agreement entered into
with RIPSAT in 1989, and demanded payment of approximately $2.6 million. The
Company believes that the Company is not in default under this agreement and
expects to contest any attempt by RIPSAT to realize on its demand.
The Company's liquidity and capital resources have also been affected by the
termination of the Company's collaborative development and licensing agreement
with Genentech, Inc. relating to the development of products for the treatment
of Parkinson's disease. On May 21, 1998, Genentech exercised its right to
terminate the Parkinson's collaboration and requested that the Company redeem,
at a price of $10.01 per share, shares of the Company's Common Stock held by
Genentech. The Company has negotiated with Genentech regarding the amount of
such redemption (which the Company currently expects may be approximately $3.1
million) and the manner of payment for such redemption. Any such redemption will
have a material adverse effect on the Company's liquidity and capital resources.
Page 12 of 17
In May 1996, the Company secured an equipment loan facility with a bank (the
"Lender") in the amount of $2,000,000 (the "Credit Facility"). The Company had
borrowed $2,000,000 under this agreement as of June 30, 1999. The loan required
interest payments only for the first two years; principal payments were payable
over a two-year period which began in August 1998. The loan was secured by
equipment purchased with the proceeds of the Credit Facility. The current
balance on this Credit Facility as of June 30, 1999 was $750,000. The loan
agreement requires that, among other covenants, the Company maintain at all
times unrestricted liquidity in an amount equal to or in excess of $15 million.
The Company was in violation of this covenant as of March 31, 1999, and
accordingly classified the entire debt as current. On May 6, 1999, the Lender
granted a waiver of the loan covenant violation in exchange for the Company
making a payment to the Lender to reduce the outstanding principal balance to
$750,000 and agreeing to make the final payment under the Credit Facility by
February 1, 2000. The Lender also reduced the requirement to maintain
unrestricted liquidity to an amount equal to or in excess of $10 million. On
August 5, 1999, the Company made a payment of approximately $752,000, of
principal and interest, to the Lender to retire the Credit Facility. The Company
decided to retire the Credit Facility instead of seeking further reduction in
the unrestricted liquidity requirement. In exchange for the retirement of the
Credit Facility, the lender granted the Company a waiver of an unrestricted
liquidity loan covenant violation.
The Company has limited liquidity and capital resources and must obtain
significant additional capital resources in order to sustain its product
development efforts. Substantial additional funds will be required to support
the Company's research and development programs, for acquisition of
technologies and intellectual property rights, for preclinical and clinical
testing of its anticipated products, pursuit of regulatory approvals,
acquisition of capital equipment, laboratory and office facilities,
establishment of production capabilities and for general and administrative
expenses. The Company's ability to obtain additional capital will be
substantially dependent on the Company's ability to obtain partnering support
for its stem cell technology. Until the Company's operations generate
significant revenues from product sales, the Company must rely on cash
reserves and, if obtainable, proceeds from equity and debt offerings,
government grants and funding from collaborative arrangements to fund its
operations.
Page 13 of 17
The Company intends to pursue opportunities to obtain additional financing in
the future through equity and debt financings, lease agreements related to
capital equipment, grants and collaborative research arrangements. The source,
timing and availability of any future financing will depend principally upon
market conditions, interest rates and, more specifically, on the Company's
progress in its exploratory, preclinical and clinical development programs. 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.
The Company expects that its existing capital resources and income earned on
invested capital will be sufficient to fund its operations into the first
quarter of 2000. The Company's cash requirements may vary, however, depending on
numerous factors. Lack of necessary funds may require the Company to delay,
scale back or eliminate some or all of its research and product development
programs and/or its capital expenditures or to outlicense its potential products
or technologies to third parties.
YEAR 2000
The year 2000 problem results from the fact that computer programs were often
written using two digits rather than four to define the applicable year.
Computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. The Company has tested its
material software applications to determine whether each program is prepared to
accommodate date information for the year 2000 and beyond. The Company found all
of its material software programs to be year 2000 compliant and does not
anticipate any significant disruption of its operations as a result of the
failure of any of its software programs to be year 2000 compliant.
The Company is also testing the status of its facilities systems such as phones,
voice mail, heating/air conditioning, electricity and security systems and its
laboratory and manufacturing equipment to determine if they are year 2000
compliant. The Company expects to complete this testing in the third quarter of
1999. If any of the systems or equipment is found not to be year 2000 compliant,
the Company intends to either seek to repair the systems or equipment to cause
it to be year 2000 compliant or replace such systems or
Page 14 of 17
equipment with year 2000 compliant products. The cost to repair or replace any
such system or equipment that is not year 2000 compliant could be material. The
Company is also polling its major vendors and suppliers to determine if they are
year 2000 compliant and to identify any potential issues. Each of the suppliers
and vendors that has responded to the Company's inquiry has confirmed either
orally or in writing that it does not believe that its sales of products or
provision of services to the Company will be interrupted as a result of the year
2000 issue. As a result of its investigations, the Company does not currently
believe that it is reasonably likely that its operations will be significantly
impacted by the year 2000 issue. Although the Company believes that the cost of
remediation associated with achieving year 2000 compliance or the costs
associated with system failures will not be significant, there can be no
assurance that the failure of one or more of the Company's major suppliers to be
year 2000 compliant will not have an adverse effect on the Company's operations
or financial results.
ELECTION OF NEW DIRECTOR
The Company's Board of Directors elected Donald Kennedy, Ph.D., as a Director in
July 1999. Since 1960, Dr. Kennedy has held a number of academic research,
advisory and public policy positions related to health and the environment. Dr.
Kennedy currently co-directs the Center for Environmental Science and Policy in
the Institute for International Studies at Stanford University in Palo Alto,
California. With the election of Dr. Kennedy, the Company's Board includes seven
members.
Page 15 of 17
PART II - ITEM 1
LEGAL PROCEEDINGS
None.
PART II - ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) On May 11, 1999 the 1999 Annual Meeting of Stockholders was
held in Lincoln, Rhode Island.
(b) Not applicable.
(c) The following is a brief description of each matter voted upon
at the meeting and a breakdown of the votes cast for, against
or withheld, as well as the number of abstentions voted for
each proposal.
1. Proposal to elect the following nominees as Directors of
the Company: Richard M. Rose M.D., Moses Goddard, M.D.
Dr. Rose - 15,342,403 votes in favor
249,2363 votes withheld
Dr. Goddard - 15,433,003 votes in favor
158,763 votes withheld
2. Proposal to ratify the selection Ernst & Young LLP as
independent Public accountants of CytoTherapeutics, Inc. for
the fiscal year ending December 31, 1999.
For 15,520,639
Against 42,501
Abstain 28,626
PART II - ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 3.3 - Amended and Restated By-Laws of the Registrant
Exhibit 27 - Financial Data Schedule
Exhibit 99 - Cautionary Factors Relevant to Forward-Looking-
Information.
(b) REPORTS ON FORM 8-K
On June 28, 1999, the Company filed a current report on
Form 8-K to report the termination of the Company's
collaboration agreement with AstraZeneca Group plc.
Page 16 of 17
SIGNATURE
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 thereunto duly authorized.
CYTOTHERAPEUTICS, INC.
----------------------
(Name of Registrant)
AUGUST 13, 1999 /s/ PHILIP K. YACHMETZ
- ----------------- ----------------------
(Date) Acting Chief Financial Officer
(principal financial officer and
principal accounting officer)
Page 17 of 17