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Executive Summary

CYTOTHERAPEUTICS' NEUROCRIB CELLULAR IMPLANT FOR PARKINSON's disease is "12 to 18 months away" from clinical trials, the start- up said in a prospectus for an initial public offering filed with the Securities and Exchange Commission on Feb. 19. The Providence, R.I-based biocompatible therapeutic implant developer estimates that there are about 320,000 mid- to late-stage Parkinson's patients in North America and Europe. CytoTherapeutics has studied prototype implants in small animals and primates and found that the implants have "demonstrated effectiveness in reversing Parkinson's-like symptoms for periods of approximately six months in small animals and approximately six months in ongoing studies in primates." In primates, the company found "significantly improved functionality" with the implants, which, when removed, resulted in the reappearance of Parkinson's symptoms. The prospectus notes, however, that success from implants made from "automated manufacturing equipment" proved to be inconsistent in animal trials compared to the hand-made prototypes. The NeuroCRIB implant is a cylindrical semi-permeable membrane containing dopamine-producing mammalian cells known as PC-12 cells for which CytoTherapeutics has a non-exclusive license. Neurosurgically implanted into the corpus stratium, NeuroCRIB is believed by the company to provide dopamine on a self-regulated basis to the brains of Parkinson's patients. By encapsulating the mammalian cells in a semi-permeable membrane, CytoTherapeutics believes patients will be protected from potential bacterial and viral infection. The use of the membrane technology is also believed by the company to negate the need for close tissue matches, the prospectus notes, and "transplanted cells could be derived from animal as well as human sources, and from both naturally occurring and genetically engineered cell lines, all without fear of rejection by the recipient's immune systems." In addition, membrane encapsulated transplants would be retrievable after implantation, enabling cells to be modified or replaced. CytoTherapeutics is also developing EndoCRIB for treating Type I diabetes. Now in preclinicals, EndoCRIB is expected to enter early clinical trials within two years, targeting two patient populations: "diabetics expected to develop end stage renal disease (kidney failure) within three years and 'difficult to control' diabetics whose blood glucose fluctuations are particularly difficult to regulate with conventional administration of insulin," the prospectus states. In addition, CytoTherapeutics believes its cell-based encapsulation thearapy may prove effective in treating chronic pain, epilepsy, Huntington's disease, Lou Gehrig's disease, Alzheimer's and AIDS dementia. This membrane/cell technology also may have "application as a delivery vehicle for genetically engineered cells designed to produce disease-specific therapies," according to the prospectus. CytoTherapeutics' implants will be regulated by the Center for Biologics Evaluation & Review as biologicals, with the Center for Drugs contributing to the medical review, company scientist Lisa Christenson, PhD, told a BioEast '92 meeting in Washington, D.C. Jan. 14 ("The Pink Sheet" Jan. 20, p. 12). The offering went through on March 25, with 2.25 mil. shares sold for $11 per share, netting $22.5 mil. The offering was underwritten by Robertson, Stephens and Oppenheimer & Co. The company originally planned a per share price of $13 per share, which would have netted $26.7 mil., to fund the company through the end of 1994. As of Dec. 31, CytoTherapeutics had approximately $13.5 mil. in cash. Incorporated in 1988, CytoTherapeutics, which was formerly called Cellular Transplants, has approximately 50 employees. The chairman is Grant Heidrich, a general partner with the venture capital group Mayfield Fund and a director of MIPS Computer Systems. Seth Rudnick, formerly a senior VP with R. W. Johnson, is CytoTherapeutics' president and CEO. Thomas Wiggans, who was until recently Serono Labs' managing director, is exec VP and chief financial and operating officer. VP-R&D Michael Lysaght, PhD, joined the company from Baxter. Company cofounder Mark Levin is also a general partner with the Mayfield Fund and Mayfield Medical Fund. Mayfield beneficially owns 47.2% of CytoTherapeutics.

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