CytoTherapeutics Obtains Exclusive, Worldwide Licenses to Technology for Discovering Pancreatic Stem/Progenitor Cells.

LINCOLN, R.I.--(BW HealthWire)--Dec. 21, 1998--

Proprietary Technology May Speed Discovery

Useful in Treatment of Diabetes

CytoTherapeutics, Inc. (Nasdaq:CTII) announced that it has obtained exclusive, worldwide licenses from The Scripps Research Institute (TSRI) to novel technology which may be useful in identifying and isolating pancreatic stem/progenitor cells. The licenses are based upon the work of Nora Sarvetnick, Ph.D., Associate Professor, Department of Immunology, at TSRI. Pancreatic islet cells produce insulin, a protein essential for metabolizing carbohydrates. The loss of these cells is characteristic of serious medical conditions, including diabetes.

Richard M. Rose, M.D., President and Chief Executive Officer of CytoTherapeutics, commented, "The discoveries covered by these licenses represent significant advances toward our discovery of the pancreatic islet stem cell. We believe that the use of Dr. Sarvetnick's technology will allow us to induce the production of these cells, thereby facilitating their isolation using specific markers. This will ultimately enable us to describe and patent these important stem cells. Such a discovery will mark a major step in the development of cell-based treatments for diabetes and other diseases characterized by loss of pancreatic function.

"These licenses demonstrate our continued interest in complementary stem cell-related technologies to build upon our leadership position in the field of stem cell therapy," he added.

An estimated 16 million people in the United States have diabetes mellitus, a serious, lifelong condition; approximately 650,000 new patients are diagnosed annually. Diabetes is widely recognized as one of the leading causes of death and disability in the United States and is associated with long-term complications that affect almost every major part of the body. Diabetes-related treatment costs exceed $100 billion annually.

CytoTherapeutics' licenses cover proprietary, novel transgenic animal models useful for identification and isolation of pancreatic stem/progenitor cells and stem/progenitor cells common to certain pancreatic and hepatic cells. The licenses also include rights to the use a factor critical to pancreatic development, as a putative marker for pancreatic stem/progenitor cells, such as islet stem/progenitor cells. The transgenic mouse models express growth factors which cause pancreatic phenotypic changes, including pancreatic duct cell proliferation, differentiation of certain pancreatic cells into other endodermal derivatives, increased islet and ductule development and intra islet ductule formation and proliferation of pancreatic cells generally. In related studies, a polyclonal antibody against the factor identifies cells in the intraductal islets, which suggests its presence in the stem/progenitor cells.

Dr. Sarvetnick is Associate Professor, Department of Immunology, at TSRI. She was awarded her Ph.D. degree in Biochemistry from the State University of New York at Stonybrook. Dr. Sarvetnick is an author of more than 100 scientific publications related to the fields of immunology and endocrine disorders.

TSRI, located in La Jolla, California, is the largest private, non-profit biomedical research organization in the world. Founded in 1961, TSRI has attained recognition as a national and international center of excellence focused on biomedical research. TSRI scientists are actively investigating biological and chemical aspects of more than 40 diseases, including AIDS, alcoholism, allergy, Alzheimer's disease, cancer, dementia, depression, diabetes, genetic diseases, hepatitis, infectious diseases, multiple sclerosis, renal disease, scleroderma, Sjogren's syndrome, sleep disorders, and diseases involving neural and muscular degeneration.

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 by delivering therapeutic substances directly to the site in the body where they are needed. The Company's stem cell programs seek to repair or repopulate 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.

Certain statements in this press release include forward-looking statements regarding, among other things, management, intellectual property rights, products, marketing, partnering, product development programs and clinical trial timing. CytoTherapeutics actual results may vary materially from those forward looking statements due to risks and uncertainties, such as delays in obtaining regulatory and other approvals or delays in product development, the need for additional intellectual property, the possible loss of existing intellectual property, the failure to achieve anticipated partnering agreements and other risks to which the company is subject and which are described in Exhibit 99 to the Company's Annual Report on Form 10-K entitled "Cautionary Factors Relevant to Forward Looking Statements."