U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                For the quarterly period ended March 31, 2001

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

            For the transition period from _________ to _____________

                        Commission File Number 000-27353


                            SELECT THERAPEUTICS INC.
        (Exact name of small business issuer as specified in its charter)

                 Delaware                                         98-0169105
    (State or other jurisdiction of                           (I.R.S. Employer
     incorporation or organization)                          Identification No.)

      50 Cummings Park, Woburn, MA                                 01801
(Address of principal executive offices)                         (Zip Code)

                                 (781) 939-0995
                (Issuer's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period 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 __

The aggregate  number of shares  outstanding of the Issuer's  Common Stock,  its
sole class of common equity, was 12,572,784 as of May 10, 2001.

Transitional Small Business Issuer Disclosure Format: Yes __ No _X_

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.


SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets

(Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                         March 31,             June 30,
                                                                          2001                   2000
-------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                   <C>
Assets

Cash and cash equivalents                                              $  1,862,400              $  7,901,300
Accounts receivable, net                                                         --                    17,100
Receivable from Cell Science Therapeutics                                   142,100                        --
Inventory                                                                        --                    29,900
Prepaid expenses and other assets                                            48,200                    56,500
-------------------------------------------------------------------------------------------------------------
     Total current assets                                                 2,052,700                 8,004,800

Property, plant and equipment, net                                            1,000                   108,900
Investment in Cell Science Therapeutics                                   2,446,800                        --

-------------------------------------------------------------------------------------------------------------
     Total assets                                                      $  4,500,500              $  8,113,700
-------------------------------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Liabilities:
   Accounts payable and accrued liabilities                            $  1,049,800              $    811,100
-------------------------------------------------------------------------------------------------------------
     Total current liabilities                                            1,049,800                   811,100
-------------------------------------------------------------------------------------------------------------

Shareholders' equity:
  Preferred stock, $0.0001 par value;
    1,000,000 shares authorized; no shares
    issued and outstanding                                                       --                        --
  Common stock, $0.0001 par value;
    50,000,000 shares authorized; 12,562,784
    and 11,862,308 shares issued and outstanding
    at March 31, 2001 and June 30, 2000, respectively                         1,300                     1,200
  Additional paid in capital                                             17,470,100                16,609,400
  Deficit accumulated during the development stage                      (14,020,700)               (9,308,000)
-------------------------------------------------------------------------------------------------------------
     Total shareholders' equity                                           3,450,700                 7,302,600

-------------------------------------------------------------------------------------------------------------
     Total liabilities and shareholders' equity                        $  4,500,500              $  8,113,700
-------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.



                                       F-1
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations

(Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                                               Period from
                                                                                                                Inception
                                                                                                               (December 6,
                                                      Three months ended            Nine months ended         1996) through
                                                           March 31,                    March 31,               March 31,
                                                    2001            2000           2001           2000             2001
--------------------------------------------------------------------------------------------------------------------------

<S>                                            <C>             <C>            <C>             <C>            <C>
Revenue                                        $         --    $    77,500    $         --    $   170,600    $    317,700
Cost of revenue                                          --         43,200              --         56,900              --
-------------------------------------------------------------------------------------------------------------------------
                                                         --         34,300              --        113,700         317,700


Operating expenses:
Research and development                            183,700        718,400       2,369,500      1,050,000       6,404,200
Selling, general and administration                 633,700      1,195,900       2,050,500      1,912,100       6,670,000
Write-down of intangible assets                          --             --              --             --         640,800
Depreciation and amortization                            --         74,900           6,600        224,700         477,000
-------------------------------------------------------------------------------------------------------------------------
      Loss from operations                         (817,400)    (1,954,900)     (4,426,600)    (3,073,100)    (13,874,300)

Interest income                                      79,300             --         266,100            500         405,800
Other income                                             --             --           1,000             --           1,000
Equity in loss of Cell Science Therapeutics        (553,200)            --       (553,200)            --        (553,200)

-------------------------------------------------------------------------------------------------------------------------
Net loss                                       $ (1,291,300)   $(1,954,900)   $ (4,712,700)   $(3,072,600)   $(14,020,700)
-------------------------------------------------------------------------------------------------------------------------

Basic and diluted net loss per share            $     (0.11)   $     (0.23)    $     (0.39)   $     (0.44)

Weighted average number of shares
used in computing basic and diluted
net loss per share                               12,202,960      8,559,318      12,003,216      6,956,082

------------------------------------------------------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.



                                       F-2
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                                              Period from
                                                                                                               Inception
                                                                                                              (December 6,
                                                                                   Nine months ended         1996) through
                                                                                        March 31,              March 31,
                                                                                   2001           2000            2001
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>           <C>
Cash provided by (used in)

Operating activities:
   Net loss for the period                                                      $(4,712,700)   $(3,072,600) $(14,020,700)
   Items not involving cash:
     Depreciation and amortization                                                    6,600        224,700       477,000
     Write-down of intangible assets                                                     --             --       640,800
     Issue of common shares for services and license fees                           493,200        183,600     1,516,900
     Issue of stock options for services                                             60,700             --       743,000
     Issue of warrants for services                                                 261,900             --       261,900
     Stock compensation expense                                                      45,000             --       644,000
     Gain on disposal of Sierra                                                      (1,000)            --        (1,000)
     Equity in loss of Cell Science Therapeutics                                    553,200             --       553,200
   Changes in working capital, net of effect of Sierra disposition:
     Accounts receivable                                                             17,100          7,400       100,000
     Inventory                                                                        3,100          9,300         7,600
     Prepaid expenses and other assets                                                5,800          3,000       (49,500)
     Accounts payable and accrued liabilities                                       371,300       (145,900)    1,109,000
     Receivable from Cell Science Therapeutics                                     (142,100)            --      (142,100)
--------------------------------------------------------------------------------------------------------------------------
   Net cash used in operations                                                   (3,037,900)    (2,790,500)   (8,159,900)
--------------------------------------------------------------------------------------------------------------------------

Investing activities:
   Additions to property, plant and equipment                                            --        (37,800)      (76,600)
   Deposit of restricted cash                                                            --         72,000            --
   Cash balance related to Sierra disposition                                        (1,000)            --        (1,000)
   Investment in Cell Science Therapeutics                                       (3,000,000)            --    (3,000,000)
--------------------------------------------------------------------------------------------------------------------------
   Net cash (used in) provided by investing activities                           (3,001,000)        34,200    (3,077,600)
--------------------------------------------------------------------------------------------------------------------------

Financing activities
   Proceeds from issuance of common shares                                               --     11,507,400    13,385,900
   Repayment of loans due to former shareholders
     of Sierra Diagnostics                                                               --             --      (286,000)
--------------------------------------------------------------------------------------------------------------------------
   Net cash provided by financing activities                                             --     11,507,400    13,099,900
--------------------------------------------------------------------------------------------------------------------------

(Decrease) increase in cash                                                      (6,038,900)     8,751,100     1,862,400

Cash and cash equivalents, beginning of period                                    7,901,300        120,900            --

--------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                        $ 1,862,400    $ 8,872,000  $  1,862,400
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       F-3
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated  Financial Statements
Nine months ended March 31, 2001 and 2000
(Unaudited)

--------------------------------------------------------------------------------

1. Basis of presentation

In the opinion of management, the unaudited consolidated financial statements of
Select Therapeutics Inc. (the "Company") included herein have been prepared on a
consistent  basis  with  the  June  30,  2000  audited  consolidated   financial
statements and include all material adjustments,  consisting of normal recurring
adjustments,  necessary to fairly  present the  information  set forth  therein.
These  interim  financial  statements  should  be read in  conjunction  with the
audited  consolidated  financial  statements  and  notes  thereto  filed  in the
Company's Form 10KSB for the year ended June 30, 2000. The Company's  results of
operations  for the first  three  quarters  of fiscal  2001 are not  necessarily
indicative of future operating results.


The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts  reported in the financial  statements.  Actual results could
differ materially from those estimates.

2. Cash and cash equivalents

Cash and cash  equivalents  includes cash and  investments  in US Treasury bills
with maturity dates of less than 90 days.

3. Capital Stock

(a)  During the nine months ended March 31,  2001,  the Company  issued  134,000
     shares of common stock as consideration for consulting services and license
     fees.

(b)  In September 2000, as part of a termination agreement,  the Company granted
     an option to a former  consultant to purchase 15,000 shares of common stock
     at an  exercise  price of $4.00 per  share, which was equal to fair  market
     value at the date of grant.  The option vested  immediately  and expires on
     September 10, 2002. The fair value of the option as determined by the Black
     Scholes   Model,  amounting  to  $45,000,  was  expensed  in   the  current
     period.

     In October 2000, the Company  granted an option to a consultant to purchase
     15,000 shares of common stock at an exercise price of $4.25 per share.  The
     option vested  immediately  and expires on October 25, 2007. The fair value
     of the  option as  determined  by the Black  Scholes  Model,  amounting  to
     $60,700, was expensed in the current period.

(c)  In October 2000,  the Company  granted Class C warrants to purchase  62,000
     shares of common  stock at a price of $2.00  per  share  exercisable  until
     December 31, 2002 as consideration for consulting services.  The fair value
     of the warrants as  determined  by the Black  Scholes  Model,  amounting to
     $211,300, was expensed in the current period.

(d)  In February 2001, the Company  granted Class D warrants to purchase  30,000
     shares of common  stock at a price of $3.00  per  share  exercisable  until
     January 22, 2006 as consideration for consulting  services.  The fair value
     of the warrants as  determined  by the Black  Scholes  Model,  amounting to
     $50,600, was expensed in the current period.

                                       F-4
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements (continued)
Six months ended March 31, 2001 and 2000
(Unaudited)

--------------------------------------------------------------------------------

(e)  In February  2001,  the Company  issued 566,476 common shares and 1,132,950
     warrants to  purchase  common  shares to  investors  in its  October  1999,
     November  1999 and  January/March  2000 private  offerings.  Each  investor
     received  0.1 share of common stock and one Class E warrant to purchase 0.2
     shares of common  stock at a price of $2.00 per  share,  exercisable  until
     December  31,  2002,  for each  share of common  stock  purchased  in these
     offerings.  This  issuance  was recorded as an  adjustment  to the original
     purchase price.

4. Net loss per share

The basic and diluted net loss per share has been calculated  using the weighted
average number of common shares  outstanding  during the period. The calculation
of  diluted  net loss per  share  excludes  potential  shares  of  common  stock
equivalents  relating to  outstanding  common stock  warrants of  2,960,852  and
1,161,950  and options of 1,280,000 and 1,250,000 as of March 31, 2001 and 2000,
respectively, as their inclusion would be anti-dilutive.

5. Disposition

On  November 3, 2000,  the  Company  sold its  wholly-owned  subsidiary,  Sierra
Diagnostics,  to a group of  private  investors  and  management  of  Sierra  in
exchange for a 6% royalty on future sales of Sierra's current products in excess
of specified  thresholds and a promissory  note in the amount of $1.394 million,
the amount of Select's  intercompany advances receivable from Sierra at the time
of the sale. The sale was effective as of October 1, 2000. The net book value of
Sierra at this time was ($1,000)  comprised of: $1,000 cash,  $26,800 inventory,
$2,500 prepaid  expenses,  $101,300  property,  plant and equipment and $132,600
accounts payable and accrued liabilities.  The note is secured by certain patent
rights of Sierra and bears  interest at a rate of 9.5% to December 31, 2000, and
thereafter to be adjusted quarterly based on a published prime rate. There is no
fixed term to maturity and repayments are contingent upon certain future events.
A reserve  against  the full  amount of the note  receivable  has been  provided
because there are significant  uncertainties  as to Sierra's ability to generate
the  cash  flows  from  sales  of  current  Sierra  products  necessary  to make
repayments  under the promissory  note. This resulted in a net gain of $1,000 on
the disposition of Sierra. Interest income on the promissory note of $33,100 was
recognized in the three months ended March 31, 2001 and the related  payment was
received May 2001.

6. Formation of joint venture

On January 2, 2001,  the  Company  and  Cytomatrix,  LLC formed a joint  venture
organized as a Delaware  corporation and named Cell Science  Therapeutics,  Inc.
("CST").  The  Company  and  Cytomatrix  each own 50% of the equity of CST which
operates out of Cytomatrix' premises located in Woburn, Massachusetts.

                                       F-5
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements (continued)
Six months ended March 31, 2001 and 2000
(Unaudited)

--------------------------------------------------------------------------------

CST is developing  biopharmaceutical  products based on proprietary technologies
in cell culture, tissue engineering and immunotherapy. Cytomatrix contributed to
CST  all  its  intellectual   property  and  other  assets  relating  to  tissue
engineering and design of regenerative  T-cells. The Company contributed all its
intellectual  property and other assets relating to its verotoxin-based  vaccine
program  incorporating  its Activate (TM) technology for presenting  antigens to
dendritic  cells and its  verotoxin-based  Veropulse  (TM)  tumor  cell  purging
technology. These assets contributed were carried on the Company's balance sheet
at a net book value of nearly zero since all related costs have been expensed as
research and  development.  CST also  includes the  development  facilities  and
personnel infrastructure of Cytomatrix.

Funding for CST was provided as follows:  the Company contributed  $3,000,000 in
cash and Cytomatrix contributed $220,000 in cash; also Cytomatrix contributed an
aggregate of  approximately  $1,810,000 in approved grant funding which is to be
paid to it over the next 30 months,  as well as any funding  from  grants  which
were in the  approval  process;  finally,  the Company will make loans to CST to
provide any additional  monies needed to fund its annual  operating  plans.  The
Company is accounting for its interest in CST under the equity method.

7. Pro forma Results of Operations

The unaudited pro forma  consolidated  statements of operations  presented below
reflect the Company's  financial  results assuming the disposition of Sierra and
the formation of CST had occurred at the beginning of each period.  Accordingly,
it  excludes  all  revenues  and  costs of Sierra  and  includes  the  effect of
transferring  certain of Select's  operations  to CST and  recognizing  Select's
equity  interest in the results of CST for the nine months  ended March 31, 2001
and March 31, 2000.

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Pro forma Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                                       Nine months ended
                                                            March 31,
                                                      2001             2000
-------------------------------------------------------------------------------
<S>                                              <C>               <C>
Revenue                                          $         --      $        --

Operating expenses:
Research and development                            1,184,500          472,600
Selling, general and administration                 1,567,700          973,600
Depreciation and amortization                             400               --
-------------------------------------------------------------------------------
      Loss from operations                         (2,752,600)      (1,446,200)

Interest income                                       266,100              500
Equity in loss of Cell Science Therapeutics        (1,727,100)        (671,200)
-------------------------------------------------------------------------------
Net loss                                         $ (4,213,600)     $(2,116,900)
-------------------------------------------------------------------------------

Basic and diluted net loss per share             $      (0.35)     $     (0.30)

Weighted average number of shares
used in computing basic and diluted
net loss per share                                 12,003,216        6,956,082
-------------------------------------------------------------------------------
</TABLE>


                                       F-6
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements (continued)
Six months ended March 31, 2001 and 2000
(Unaudited)

--------------------------------------------------------------------------------

8. Cell Science Therapeutics Statement of Operations

The summarized results of CST, the Company's 50% owned equity investee,  for the
period from inception (January 2, 2001) to March 31, 2001 are presented below.

The  Company is deemed to have an interest  in the  carryover  value only of the
assets which  Cytomatrix  contributed to CST;  therefore,  these results exclude
amortization of goodwill and intangibles  created upon the deemed acquisition of
Cytomatrix by CST. Furthermore,  Cytomatrix incurred stock compensation charges
on behalf of CST of $279,200 during the quarter ended March 31, 2001 in relation
to  employees of CST.  These  charges  have been  recognized  by CST through the
appropriate  operating expense categories and as additional paid in capital from
Cytomatrix. The Company's benefit from Cytomatrix's contribution to CST relating
to these costs  ($139,600)  was recorded as an increase in its investment in CST
with a corresponding reduction of its 50% share in CST's $1,385,500 net loss for
the period.


Cell Science Therapeutics, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
Statement of Operations
(unaudited)
------------------------------------------------------------------------
                                                            Period from
                                                             Inception
                                                            (January 2,
                                                           2001) through
                                                             March 31,
                                                                2001
------------------------------------------------------------------------

Revenue                                                      $ 450,100

Operating expenses:
Research and development                                     1,206,600
Selling, general and administration                            584,900
Depreciation and amortization                                   27,500
------------------------------------------------------------------------
      Loss from operations                                  (1,368,900)

Interest income                                                 10,300
Interest expense                                               (26,900)

------------------------------------------------------------------------
Net loss                                                  $ (1,385,500)
------------------------------------------------------------------------


                                       F-7
<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.

THIS  ITEM  CONTAINS   STATEMENTS   WHICH  ARE  NOT  HISTORICAL  FACTS  AND  ARE
FORWARD-LOOKING  STATEMENTS WHICH REFLECT MANAGEMENT'S  EXPECTATIONS,  ESTIMATES
AND ASSUMPTIONS.  SUCH STATEMENTS ARE BASED ON INFORMATION AVAILABLE AT THE TIME
THIS FORM 10Q-SB WAS PREPARED  AND INVOLVE  RISKS AND  UNCERTAINTIES  THAT COULD
CAUSE  FUTURE  RESULTS,  PERFORMANCE  OR  ACHIEVEMENTS  OF THE COMPANY TO DIFFER
SIGNIFICANTLY FROM PROJECTED RESULTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY INCLUDE, WITHOUT LIMITATION,  THE HIGH COST AND UNCERTAINTY OF
THE RESEARCH AND DEVELOPMENT OF PHARMACEUTICAL PRODUCTS, THE UNPREDICTABILITY OF
THE DURATION AND RESULTS OF THE U.S.  FOOD AND DRUG  ADMINISTRATION'S  REVIEW OF
NEW DRUG  APPLICATIONS,  THE COMPANY'S NEED FOR AND ABILITY TO OBTAIN ADDITIONAL
CAPITAL,  THE  POSSIBLE  IMPAIRMENT  OF, OR  INABILITY  TO OBTAIN,  INTELLECTUAL
PROPERTY RIGHTS AND THE COST OF OBTAINING SUCH RIGHTS FROM THIRD PARTIES AND THE
COMPANY'S DEPENDENCE ON THIRD PARTIES TO RESEARCH, DEVELOP, MANUFACTURE AND SELL
ITS PRODUCTS, IF ANY.

Overview

     We  are a  development  stage  biopharmaceutical  company  incorporated  in
Delaware in January 1997,  under the name VT Development,  Inc. In July 1997, we
changed our name to Select  Therapeutics Inc. Our principal place of business is
located at 50 Cummings  Park,  Woburn,  Massachusetts  01801,  and our telephone
number is (781) 939-0995.  As of February 13th, 2001, our common stock is listed
on The American Stock Exchange under the symbol "XZL".

     Since  our  inception,  we have  focused  our  resources  primarily  on the
development  of  cell-based  therapeutics.  To date,  none of these  proprietary
programs has reached a  commercial  stage and hence,  we do not have,  nor do we
anticipate   in  the   next   several   years  to   have,   revenues   from  our
biopharmaceutical  therapeutic products. We have incurred an accumulated deficit
of  $14,020,700  as of March 31, 2001. We have funded our  operations  through a
series of private placements during this period.

The Company

     We have a series of therapeutic  projects  either in "discovery  research",
"product development" or "clinical development";  we utilize these formal stages
of product progression to track progress, performance, competition, and cost for
each  project  on  an  increasingly  more  detailed  basis  as we  approach  the
commercialization  phase. Our programs primarily are aimed at satisfying defined
market needs in the areas of cancer, infectious diseases and tissue engineering,
and are based on an  intellectual  property  position that, we believe,  is both
broad  and  strong.   Several  of  our  development  programs  involve  ex  vivo
technologies in which patients'  tissues are manipulated  outside the body, and,
as such may be less costly to  investigate  and quicker to develop  than in vivo
agents. As discussed below, we have applied for and received regulatory approval
from the U.S.  FDA to use our  technologies  to initiate  human  trials that are
expected to commence in the near future.

     For the past several years, we have purposely managed Select primarily as a
"virtual"  company.  As such,  we  minimized  the  costs of  infrastructure  and
leveraged the research we sponsored in several medical and academic centers.  By
the end of fiscal 2000 (June 30, 2000)  certain of those  programs had reached a
stage  where  Management  felt it was time to adopt a more  traditional  product
development process.

     Effective January 2, 2001, our "virtual"  business  operations ceased when,
for  reasons  of  product  development  as well as  technology  synergy,  we and
Cytomatrix,  LLC  ("Cytomatrix"),  a California limited liability company in the
development stage, formed a joint venture named Cell Science Therapeutics,  Inc.
("CST"  or  the  "Joint  Venture"),  a  Delaware  corporation  of  which  we and
Cytomatrix each own 50% of the outstanding common stock.  Hence, in this report,
unless the context indicates  otherwise,  all references to Select  Therapeutics
Inc.'s  business  and affairs  include the  business and affairs of Cell Science
Therapeutics, Inc. Although Select maintains its independent


                                       2
<PAGE>

corporate   existence  and  advances  certain  programs  separately  from  those
conducted  by  the  Joint  Venture,   our  primary  operations  and  development
activities  reside  in  the  Joint  Venture.  All  of  Cytomatrix  programs  and
technology  have been  transferred to the Joint Venture as has their  scientific
staff and  intellectual  property.  We believe that through the Joint Venture we
will create a significant entity in the emerging field of cell-based therapy for
cancer  and  other   diseases.   To  the  Joint  Venture  we   contributed   our
Verotoxin-based   technologies  for:  (1)  receptor-specific   (CD77)  cytotoxic
therapeutics  and;  (2)  technology  for antigen  delivery to  dendritic  cells.
Cytomatrix  contributed its proprietary  TransStem(TM)  cell culturing  systems,
including the  Cytomatrix(TM)  based cell culture bioreactor  products,  and its
related  adult  stem  cell,  and  regenerative   immunotherapy  program  (T-cell
expansion  program),  constituting  all its  business.  This has resulted in the
Joint Venture  having a set of related  product  development  programs,  some of
which are entering clinical development.  Cytomatrix has also contributed to the
Joint Venture all of its  technology,  scientific and  administrative  teams and
premises, giving us the benefits of Cytomatrix' established and staffed facility
in Woburn, Massachusetts.  Including the Joint Venture, we now employ 25 people,
11 with doctoral level degrees,  working out of approximately 10,000 square feet
of office and laboratory  space. In addition,  Steve  Peltzman,  formerly CEO of
Cytomatrix, became our CEO and Chairman of the Joint Venture. Our Current Report
on Form 8-K filed with the  Securities  and Exchange  Commission  on January 11,
2001 contains the provisions of the joint venture  agreement,  including without
limitation, our option to purchase Cytomatrix and thus the balance of the equity
in the Joint Venture, and the text of such agreement.

     During the third  quarter of fiscal 2001,  which ended March 31,  2001,  we
concentrated our efforts on managing this consolidation  effort,  setting up the
operations towards increasing  efficiencies and streamlining  structure. We have
the benefit of a strong  portfolio of  opportunities  each of which must compete
for resources and priority status.

     It has been said, the key currency in the biotechnology and  pharmaceutical
market is patents and strong  intellectual  property.  A central activity for us
has been, and continues to be, the  acquisition,  development and maintenance of
intellectual   property   positions  directly  in  support  of  defined  product
development  opportunities.  We continue to expend significant funds and efforts
on licenses and patent protection. In addition, we are continually examining our
intellectual  property  positions in relation to competitive  activities and our
ability to operate and defend our positions in relation to products.  We believe
that this is a key value element for our development.

     We and the  Joint  Venture  have  on hand  sufficient  cash  to  cover  our
respective  current  levels of operating  expenses for the next three  quarters.
Hence,  we are seeking  additional  equity  funding for both Select and CST. The
joint venture will also continue to seek additional,  non-dilutive  funding from
federal grants and other similar sources.  To date,  Cytomatrix has been granted
more  than  $9.0  million  dollars  from  such  funding  sources.  We have  been
aggressively  working with bankers,  analysts,  institutions and venture capital
funds  during the past  couple of months and expect to continue to do so for the
foreseeable  future. Not surprisingly,  as a small,  newcomer to the AMEX and as
part of the  several  hundred  companies  that  constitute  the  public  biotech
industry,  we are not particularly well known. It is our job as managers of this
company to improve the  awareness  and  understanding  of Select.  This is not a
short-term  job,  nor is it one to be solely  delegated  to an  Investor  and/or
Public  Relations  firm. We have to communicate  our goals,  the progress of our
programs,  the risks and the resources required; in other words, we have to tell
the Select story and sell some equity to raise the necessary capital to complete
the game-plan.  We believe,  despite the external market conditions,  we will be
able to  successfully  accomplish  this goal and move forward with  building the
value of the Company.

     The  process  of  developing   therapeutic  products  requires  significant
discovery  research,  product  development as well as pre-clinical  and clinical
testing of those products in order to gain regulatory approval. These activities
are expected to result in continuing cash outflows and operating  losses.  We do
not   expect   to   generate   any   meaningful   product   revenues   from  our
biopharmaceutical  programs  until a clinical  candidate  completes its clinical
trials,  obtains regulatory approval for  commercialization  and is successfully
marketed.  Risks  extend  beyond  technical  and  clinical  development  and, in
particular,  involve  intellectual  property  rights,  the need for  substantial
additional   capital,   competitive  and  medical  economic  factors  which  are
continually changing and issues of insurance  reimbursement,  all of which apply
also to the  biotechnology  industry in general.  There can be no assurance that
additional  funding


                                       3
<PAGE>

will be available to us when needed or on  commercially  reasonable  terms if at
all, or that we or the Joint Venture will be able to develop any viable product.

Program Review - The Joint Venture

     Select  Therapeutics  Inc.  plans to build  three  businesses  based on its
patented  technologies in growing and engineering  cells.  Two of these business
units relate to existing  markets.  The first  business  aims at providing  cell
biologists,  academic  researchers  and  production  engineers a product line of
novel bioreactors based upon a patented  3-dimensional matrix capable of growing
cells to extraordinary  densities and providing additional  performance and cost
benefits. In the second business,  Select intends to set a new standard for bone
marrow transplantations by providing systems that enable a several-fold increase
in  the  number  of  quality  stem  cells  transplanted  without  using  harmful
cytokines.  Furthermore,  this  expansion  capability  is expected to permit the
establishment  of large  central  banks of cord  blood stem cells that have been
identified as an alternative,  and potentially  preferable,  source of stem cell
transplants--if the number of quality stems cells can be expanded to satisfy the
need of an adult patient.  Select's technology has been designed to do just that
and clinical  trials are underway  aimed at the stem cell (a.k.a "bone  marrow")
transplantation  market,  a  market  that is  growing  rapidly  and has  reached
approximately 60,000 procedures per year.

     The Company's  third  business  unit is  "Regenerative  Immunotherapy"  and
tissue engineering. Regenerative Immunotherapy is a process by which a patient's
T-cells  are  re-generated  and  expanded  from stem cells to generate a de novo
repertoire of T-cells.  The human body is bombarded daily with infectious agents
and carcinogens and other  potentially  DNA damaging,  cancer-causing  entities.
Viral infection or cancer may occur when these assaults overwhelm the ability of
the body's immune system  (T-cells) to eliminate  diseased cells,  often because
certain  of the  patient's  existing  immune  cells (T cells)  are  compromised,
deficient or ineffectual. The Company's T cell Regenerative Immunotherapy system
is  intended  to make a fresh set of the  patient's  own T cells  which are then
infused into the patient to help cure or contain the disease. The goal of T-cell
therapy is to restore and amplify the number of the relevant immune cells in the
body in order to enhance  the body's  natural  ability  to  recognize  and fight
disease. In addition,  Select's  Verotoxin(TM) protein technology has been shown
in both in vitro (in the lab) and in vivo (animal  models)  experiments  to be a
potentially  unique vector (delivery system) for the presentation of antigens to
specific  components  of the immune  system  (dendritic  cells).  The vital role
played by these dendritic cells has been recently  recognized by  immunologists.
Dendritic  cells are able to stimulate the  activation of T-cells to direct them
to mount an effective  immune  response  against  pathogens or malignant  cells.
SELECT  is  producing  product  for  pre-clinical  testing  and for use in human
therapeutic-vaccine trials for cancer and/or infectious disease in 2002.

                                  PRODUCT FOCUS

Near Term: Hematopoietic (blood) Stem Cell Transplants

     For a number of cancers,  the use of high dose  chemotherapy  and  ablative
irradiation,  followed  by the  infusion of stem  cells,  has been  historically
referred to as Bone Marrow  Transplantation  (BMT).  Following this  near-lethal
treatment,  hematopoietic  (blood)  cells  must be  transplanted  to rescue  the
patient and restore his/her ability to make white cells and platelets. When stem
cells accomplish this, it is called engraftment. The probability of a successful
engraftment  is  typically  proportional  to the  number of  quality  stem cells
infused. SELECT's technology is being tested in humans to establish the benefits
of a several fold increase in the number of available  stem cells.  This work is
being conducted in Boston's Dana Farber Cancer  Institute under an open IND (the
FDA document that sanctions  clinical  trials of this sort).  The current market
for BMT is approximately  60,000  procedures per year. The Company is developing
two products for this market:

1.   TranStem(TM),  for expanding  autologous (the patient's own) stem cells for
     improved transplants,

2.   TransCord(TM),  for expanding  allogeneic  stem cells from  umbilical  cord
     blood for pediatric and adult transplants.

The  TranStem(TM)  system  is to  begin  Phase  I/II  trials  by  mid-2001.  The
TransCord(TM) product is scheduled for Phase I/II trials beginning in 2002.


                                        4
<PAGE>

Mid Term: Regenerative Immunotherapy

     Select's technology has been shown in both in vitro and in vivo experiments
to deliver antigens  specifically to dendritic cells and cause them to stimulate
the  antigen-specific  activation  of T-cells.  Select is producing  GLP-quality
product  to  conduct  further  proof of  principle  experiments  and  expects to
authorize    production   of   cGMP   quality   product   for   use   in   human
therapeutic-vaccine  trials for cancer and/or  infectious  disease in 2002.  The
Company is also continuing to develop the de novo T cell production  technology.
The mid-term product opportunities are as follows:

1.   RegenImmune(TM), de novo regeneration of a broad repertoire of T-cells

2.   Activate(TM),  stimulation  of the body's  immune  system to treat  certain
     cancers or infectious  diseases by using a novel antigen delivery system to
     activate dendritic cells

These programs are scheduled to initiate clinical testing in 2002.

Discovery Research: Tissue Engineering

1.   Patented adult-derived stem cells for tissue repair and gene therapy.

2.   Tissue Plasticity and Engineering  Technology  programs for producing rare,
     unusual and/or difficult to generate cells for clinical applications.

3.   Cell  Production for Diabetes (Islet cells),  liver failure  (hepatocytes);
     and  neuro-degenerative   diseases  such  as  Parkinson's  and  Alzheimer's
     Diseases (neural cells).

                                PRODUCT STRATEGY

     Select's initial product focus is on diseases in which  hematopoietic  stem
cells (HSCs) and their  progenitors  play an  important  role.  As such,  we are
proceeding with three clinical  programs that currently have an open IND's whose
focus is on  decreasing  the  morbidity,  improving  the  clinical  utility and,
ultimately,  increasing  accessibility of stem cell  transplants  throughout the
world.  Last year,  approximately  sixty  thousand  stem cell  transplants  were
performed. We believe that this number could ultimately double when a safe, cost
effective  therapeutic  system  becomes  commercially  available  that satisfies
several  important  medical  needs:  1.)  expansion  of  pluripotent  stem cells
typically  infused  into a patient  beyond  the  minimum  number of these  cells
necessary for engraftment;  and 2.) establishing the safety and clinical utility
of cord (umbilical) blood as an alternative,  and ultimately,  preferable source
of stem cells for  allogeneic  (donor based)  transplants.  Currently,  the stem
cell-rich  cord  blood  has  sufficient  number  of cells to  safely  transplant
patients up to about 50 pounds.  SELECT's stem cell  expansion  technology  will
enter clinical trials to demonstrate its use for adult patients in late 2001 or,
at the latest, early 2002.

     We believe our  products  will  become well  accepted by this market as the
clinical  trials  demonstrate  important  clinical  benefits  derived  from  our
patented  technology.  For  example,  compared  with the  current  gold-standard
process,  the Company's stem cell  transplantation  system has been shown,  in a
pre-clinical  model, to expand a population of stem cells that provide  superior
engraftment  under  conditions  in which no  cytokines or serum are added to the
expansion  process.  The annual  market  potential  for the types of products we
intend to introduce into stem cell transplantation is estimated at approximately
a quarter of a billion  dollars and could double over the next 5 years.  We view
these three  clinical stem cell  transplant  programs as part of our  near-term,
first wave of products.  The first of these is expected to be in clinical trials
in the  summer  of  2001  and a  second  trial  for  cord  blood  scheduled  for
approximately 6 to 9 months later.

     Select's  mid-term  focus is aimed at  immunotherapy,  a  strategy  that 1)
recognizes  the  body's  disease-fighting  capabilities  inherent  in the immune
system and 2) develops products that restore,  repair, or boost this capability.
One  component  of our  development  program  entails  the  production  of new T
lymphocytes  that  can be used to


                                        5
<PAGE>

replenish  the immune  system in bulk or to recognize  specific  disease-related
antigens.  That is, this  technology is expected to enable the generation of key
effector T-cells of the immune system in a timely and  cost-effective  manner. T
lymphocytes are the effector cells that recognize and eliminate disease from the
body. Our  technology  uses a patient's stem cells as a source to generate a new
potent  repertoire  of T-cells  which data  suggest  will be capable of fighting
disease and restoring the patient's immunologic competency.  We have developed a
novel model of in vitro T lymphopoiesis that  recapitulates the  differentiation
of functional T-cells from lineage negative bone marrow progenitor cells. To the
Company's  knowledge,  we (and our  collaborators at the  Massachusetts  General
Hospital) are the first to have achieved this scientific breakthrough.

     Select's  Activate(TM)  product is a  non-viral  vector  engineered  from a
cyto-toxic  bacterial  protein from which the toxin  component has been removed.
The  remaining  molecule is a  proprietary  delivery  system that  enhances  the
presentation of antigens to specific  components of the immune system (dendritic
cells). By doing so, the sentinel dendritic system activates T-cells to mount an
effective immune response against  pathogens or malignant cells. The immunogens,
vector  system  and  any  adjuvants   utilized  to  boost   immunogenicity   are
collectively  referred  alternatively  to as  therapeutic  vaccines  or adoptive
immunotherapy.  Our  technology  has been  shown  in both in  vitro  and in vivo
experiments to present  antigens  specifically to dendritic cells and cause them
to stimulate the activation of T-cells.  Importantly, the technology by-pass the
normal antigen  processing  pathways  inside the cell that normally  degrade and
change  the  original  antigen.  This may  allow  for  better  retention  of the
immunogenicity of stimulatory proteins. Further, the antigen is presented on the
surface of the dendritic cells directly in the context of MHC Class I molecules,
an end-result that has been difficult to accomplish with other technologies. The
Company is producing  GLP-quality material to conduct further proof of principle
experiments and expects to authorize production of cGMP quality material for use
in human  therapeutic-vaccine  trials for cancer  and/or  infectious  disease in
2002.

     These  technologies  are expected to enter early clinical  trials next year
(2002) to demonstrate safety and initial efficacy as individual projects.  It is
possible  the  ultimate  clinical  benefit  to be  derived  from this  technical
platform will incorporate both technologies  (T-cell  regeneration and dendritic
cell  activation)  as  part  of  a  combined  therapeutic  regimen.  This  could
potentially  overcome one of the major hurdles  associated with  conventional ex
vivo cell therapy:  its inability to produce and stimulate sufficient numbers of
antigen-specific  cells. The goal of the Company's immunotherapy products is the
generation  of high  quantities  of the  relevant  immune  cells  in the body to
enhance the body's natural ability to recognize and fight disease.

     In the  long-term,  we will  focus  on the  development  of  advanced  cell
therapies  that  utilize the  plasticity  capabilities  of certain stem cells to
generate  difficult-to-make or rare functional cells. Our strategy in addressing
opportunities in this area is to build a base  intellectual  property  portfolio
that positions us with key process and  composition of matter  capabilities.  We
have  already  licensed  from  external  sources and filed  in-house a series of
patent applications we believe will be central to practicing this area of tissue
engineering. We will also focus on leveraging our existing technologies into new
areas, such as the production on pancreatic islet cells,  liver cells and neural
cells for applications in other areas of cell therapy.

Additional Program Review - Select Therapeutics:

     Tissue  Repair.  As part  of our  overall  corporate  strategy,  we  remain
     proactive  in the  pursuit of  exceptional  technology  that adds depth and
     breadth to our cell-based  therapeutic  programs. As such, we have acquired
     certain  technologies  involving  certain uses of basic,  pluripotent  stem
     cells which are derived  from  adults.  These cells have been shown to have
     great  potential  in tissue  repair and gene therapy and are not subject to
     the reservations on use which apply to embryo-derived stem cells.

     The Company  recently  announced that it had obtained  several  licenses to
     technology  developed by Dr.  Darwin  Prockop who has joined the  Company's
     Scientific  Advisory Board.  Dr. Prockop is director of the recently opened
     Tulane  Center for Gene  Research,  which is  dedicated to using adult stem
     cells for  treating  certain  diseases.  At its  opening,  the results of a
     medical  breakthrough study were announced marking the first successful use
     of adult  stem  cells to treat  osteogenesis  imperfecta  or  brittle  bone
     disease,  a genetic


                                        6
<PAGE>

     disease  that causes bone  fragility  leading to  fractures  during  normal
     activity.  The disease  affects  approximately  20,000  American  children.
     Results of the study  appeared in the March 1, 2001 issue of  "Blood",  the
     peer-reviewed journal of the American Society of Hematology.  The stem cell
     technique,  based on the research of Dr.  Prockop and his  associates,  was
     successfully used by Dr. Ed Horwitz to treat five young patients  suffering
     from  brittle  bone  disease at St. Jude  Children's  Research  Hospital in
     Memphis.

     Mucolytic. We have maintained a research program on a proprietary mucolytic
     (thinning agent for mucous secretions) compound with potential applications
     in the management of cystic fibrosis and other lung diseases.  This program
     has made  good  progress  with the  collaborative  efforts  of Beth  Israel
     Deaconess  Medical  Center in Boston,  and  several  key claims in a United
     States patent  application  have been allowed.  We are proceeding with this
     program and,  when  appropriate,  will seek a commercial  partner or use an
     alternative  strategy.  Since this is not a cell-based product opportunity,
     we  expect  to  partner  this  earlier  than  we  would  partner  our  core
     proprietary clinical products.

Results of Operations

Three months and nine months ended March 31, 2001 and 2000.

     For the quarter  ended March 31, 2001, we incurred a net loss of $1,291,300
compared with a net loss of $1,954,900 for the corresponding quarter ended March
31, 2000. For the nine months ended March 31, 2001, the net loss was $4,712,700,
compared to $3,072,600 in the corresponding  2000 period.  The net loss for each
of the three  months and nine  month  period  ended  March 31,  2000  included a
noncash Stock Compensation charge of $1,281,300.  Excluding this noncash charge,
the large increases reflect our improved  operating  position and our ability to
incur expenses to move  development  programs  forward as well as unusually high
legal,  accounting and  investment  banking fees in relation to the formation of
the Joint  Venture.  We had an  accumulated  deficit of $14,020,700 at March 31,
2001.  The  significant  losses and deficit are the result of our  research  and
development  efforts in our development stage, and we expect losses and deficits
to continue and increase for the next several years as we pursue development and
commercialization  of our  intellectual  property  resources.  Personnel  costs,
including retained consultants and external contractors,  historically have been
the largest  ongoing cost of operations and in the future should be satisfied in
large part through the operations of the Joint Venture.

     During the quarter ended March 31, 2001 we had interest  income of $79,300.
During the corresponding  period in 2000, there was no interest income.  For the
nine months ended March 31, 2001, the interest income was $266,100,  compared to
$500 in the corresponding 2000 period. For the nine months ended March 31, 2001,
we generated no revenues  from sales of products of Sierra  Diagnostics,  a 100%
owned subsidiary,  which was sold on November 3, 2000. The sale was effective as
of October 1, 2000. We had no other product or license revenues. The significant
reduction in our depreciation and amortization  expense in the current three and
nine month periods results from  disposition of the Sierra fixed assets. A minor
gain of $1,000 was  recorded on the  disposition  of Sierra in the three  months
ended December 31, 2000.

     All our  research  and  development  activities  are  expensed as incurred.
Patent costs are expensed due to the  uncertainties  involved in realizing value
from specific patents.

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2001, we had a cash position of  $1,862,400  principally  as a
result of the  remaining  net  proceeds  from a $9.5 million  private  placement
closed  in  March  2000,  reduced  by cash  used  in  operations  since  and the
investment of $3,000,000 in Cell Science Therapeutics in January 2001. Funds are
kept in US  Treasury  Bills or  equivalent  securities.  Management  notes  that
significantly  greater  resources will be required in order to bring its current
candidate therapeutic products into clinical investigations and to market.

     There were no significant capital expenditures during the nine months ended
March 31,  2001.  We have  financed our


                                       7
<PAGE>

operations since inception primarily through private placements of common stock.
Our cash on hand at March 31,  2001 should be  sufficient  to meet our needs for
the next three  quarters.  Nonetheless,  we are seeking to raise the  additional
equity financing required to fund the continued development of our technologies,
including  those of the Joint Venture.  While we are optimistic  that such funds
will be  obtained,  especially  in view of the  February 13, 2001 listing of our
common  stock on the  American  Stock  Exchange  which we believe over time will
significantly  improve our access to capital markets,  there can be no assurance
that our financing efforts will be successful.

     The  allocation of limited  resources is an ongoing issue for us as we move
from research activities into the more costly clinical  investigations  required
to bring products to market. We will require  substantial  additional funding in
order to complete research and development  activities and sublicense  potential
products. Our future capital requirements will depend on many factors, including
scientific  progress  in  research  and  development  programs,   the  size  and
complexity of our  programs,  the scope and results of  preclinical  studies and
clinical trials, our ability to establish and maintain  corporate  partnerships,
the time and  costs  involved  in  obtaining  regulatory  approvals,  the  costs
involved  in  filing,   prosecuting  and  enforcing  patent  claims,   competing
technological and market developments, the cost of manufacturing preclinical and
clinical  material  and other  factors not within our  control.  There can be no
assurance  that  the  additional  financing  necessary  to meet  our  short  and
long-term capital requirements will be available on acceptable terms or at all.

     Insufficient  funds in the  future may  require us to delay,  scale back or
eliminate  some or all of our research or development  programs,  to lose rights
under  existing  licenses  or to  relinquish  greater  or all  rights to product
candidates at an earlier stage of development or on less favorable terms than we
would otherwise choose or may adversely affect our ability to operate as a going
concern.   If  additional  funds  are  raised  by  issuing  equity   securities,
substantial dilution to existing stockholders may result.

                           PART II - OTHER INFORMATION

Item 2. Changes in Securities.

     In January 2001, the Company issued to the University of Alberta in
connection with a License Agreement, 5,000 shares of the Company's Common Stock,
pursuant to the exemption from registration provided by Section 4(2).

     In February 2001, pursuant to the exemption from registration provided by
Section 4(2), the Company issued to Rubenstein Investor Relations, Inc. warrants
to purchase an aggregate of 30,000 shares of the Company's Common Stock at a
price of $3.00 per share until January 22, 2006.

     In February 2001, the Company issued to investors in its October 1999,
November 1999 and March 2000 private placements 566,476 additional shares of its
Common Stock and warrants to purchase 1,132,950 shares of its Common Stock at a
price of $2.00 per share until December 31, 2002.


                                        8

<PAGE>

Item 6.   Exhibits and Reports on Form 8-K.

     (a) Exhibits.

     None.

     (b) Reports on Form 8-K.


     On January 11, 2001, the Company reported that,  effective January 2, 2001,
the Company and  Cytomatrix,  LLC entered into a Joint  Venture and  Shareholder
Agreement  providing  for the  formation of a joint  venture  named Cell Science
Therapeutics,  Inc. On March 19, 2001, the Company filed an amendment  enclosing
Cytomatrix's  financial  statements  as of and for the years ended  December 31,
2000 and 1999 and for the period from inception (May 31, 1996) through  December
31, 2000.

     On February 20, 2001,  the Company  reported that,  effective  February 16,
2001,  the  Company's  Board of Directors  declared a dividend of one right (the
"Right")  for  each   outstanding   share  of  the  Company's  Common  Stock  to
stockholders of record at the close of business on February 28, 2001. Each Right
entitles the registered  holder to purchase from the Company one  one-thousandth
of a share of Series A Junior  Participating  Preferred Stock, $0.0001 par value
per share, at a purchase price of $100.00 in cash, subject to adjustment.




                                        9

<PAGE>

                                   SIGNATURES


     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                         SELECT THERAPEUTICS INC.



Dated: May 15, 2001                              By: /s/ Steve M. Peltzman
                                                     ------------------------
                                                 Name: Steve M. Peltzman
                                                 Title: Chief Executive Officer


Dated: May 15, 2001                              By: /s/ Michelle C. Guertin
                                                     ------------------------
                                                 Name: Michelle C. Guertin
                                                 Title: Chief Accounting Officer

                                        10