---




---




U.
S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





---




Form 10-QSB


(Mark One)


|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------




For the quarterly period ended September 30, 2001





OR





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




Commission File Number 0-27264





---




GENSTAR THERAPEUTICS CORPORATION


(Exact name of registrant as specified in its
charter)





Delaware

33-0687976(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification no.)





10865 Altman Row, 2 nd Floor, San Diego, CA, 92121


(Address of principal
executive offices) (Zip code)





Registrants Telephone Number, including area code: (858) 450-5949





---




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 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 number of shares of the Common Stock of the registrant outstanding as of November 7, 2001, was 23,584,998.





---

---




GENSTAR THERAPEUTICS CORPORATION


(A development stage enterprise)





INDEX TO FORM 10-QSB





PART I.    FINANCIAL INFORMATION





Page No.Item 1.

Financial StatementsCondensed Consolidated Balance Sheets September 30, 2001 (Unaudited) and December 31, 2000


2Condensed Consolidated Statements of Operations (Unaudited) Three and Nine months Ended September 30, 2001 and 2000 and the period from July 1, 1991 (inception)
to September 30, 2001


3Condensed Consolidated Statements of Cash Flows (Unaudited) Nine months Ended September 30, 2001 and 2000 and the period from July 1, 1991 (inception) to
September 30, 2001


4Notes to Unaudited Condensed Consolidated Financial Statements


5Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations


7PART II.    OTHER INFORMATIONItem 1.

Legal Proceedings


10Item 2.

Changes in Securities


10Item 3.

Defaults Upon Senior Securities


10Item 4.

Submission of Matters to a Vote of Security Holders


10Item 5.

Other Information


10Item 6.

Exhibits and Reports on Form 8-K


10Signatures


11




1


---

GENSTAR THERAPEUTICS CORPORATION


(A development stage
enterprise)





CONDENSED CONSOLIDATED BALANCE SHEETS





September 30, 2001

December 31, 2000(unaudited)ASSETSCurrent assets:Cash and cash equivalents

$   1,064,084


$   5,294,655Short-term investments

18,378,035


16,060,771Accounts receivable

69,018


13,177Investments underlying deferred compensation




69,481Other current assets

54,342


129,972Total
current assets

19,565,479


21,568,056Property and equipment, net

2,582,214


2,185,786Restricted cash

434,150


Deferred loan fee

382,918


585,639Other assets

513,776


104,990$23,478,537


$24,444,471LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$       656,941


$       449,264Accrued employee benefits

227,454


172,879Other accrued liabilities

174,513


250,972Current portion of notes payable

292,254


272,002Current portion of capital lease obligation


306,403


79,886Total
current liabilities

1,657,565


1,225,003Notes payable, net of current portion

302,699


524,492Capital lease obligation, net of current portion

421,433


84,955Other long-term liabilities

278,013


33,862Deferred compensation

459,907


417,324Advance from related party




1,975,597CommitmentsStockholders equity:Preferred Stock$0.001 par value, 5,000,000 shares
authorized:Series A
Preferred Stock, 5,830 and 5,830 shares issued and                         outstanding

6


6Series B
Preferred Stock, 12,890 and 7,041 shares issued and                         outstanding

13


7Series C
Preferred Stock, 2,000 and none shares issued and                         outstanding

2


Common Stock$0.001 par value, 50,000,000 shares
authorized;                23,583,503 and 22,726,052 issued and outstanding

23,584


22,726Unrealized gain on short-term investments

517,675


360,586Additional paid-in capital

50,488,421


41,933,843Deficit accumulated during development stage

(30,670,781
)

(22,133,930
)Total
stockholders equity

20,358,920


20,183,238$23,478,537


$24,444,471





See accompanying notes.




2


---




GENSTAR THERAPEUTICS CORPORATION


(A development stage enterprise)





CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)





Three Months Ended

Nine Months Ended

July 1, 1991 (inception) toSeptember 30, 2001


September 30, 2000


September 30, 2001


September 30, 2000


September 30, 2001Revenue

$         89,898


$         40,263


$       162,332


$       113,396


$   1,283,342Costs and expenses:Cost of sales













821,878Research and development

2,299,555


1,808,407


6,575,071


4,232,738


21,135,213Write-off of acquired in-process
               technology




21,718





1,654,924


7,110,429General and administrative

905,295


653,269


2,616,940


1,656,647


7,154,600Total
costs and expenses

3,204,850


2,483,394


9,192,011


7,544,309


36,222,120Loss from operations

(3,114,952
)

(2,443,131
)

(9,029,679
)

(7,430,913
)

(34,938,778
)Other income (expense)

(1,626
)

53


(1,522
)

(17,140
)

(21,170
)Interest expense

(111,002
)

(19,115
)

(364,293
)

(71,076
)

(1,260,293
)Interest income

249,540


364,550


858,643


862,369


1,823,667Net loss

$  (2,978,040
)

$  (2,097,643
)

$  (8,536,851
)

$  (6,656,760
)

$(34,396,574
)Basic and diluted loss per share

$              (0.13
)

$              (0.09
)

$              (0.37
)

$              (0.33
)Number of shares used in the      computation of basic and diluted
     loss per share

23,176,047


22,475,760


22,931,846


20,456,711











See accompanying notes.




3


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GENSTAR THERAPEUTICS CORPORATION


(A development stage enterprise)





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





For the nine months ended September 30,

July 1, 1999 (inception) to September 30, 20012001

2000Net loss

$   (8,536,851
)

$   (6,656,760
)

$(34,396,574
)Adjustments to reconcile net loss to net cash used in operating      activities:Write-off of in-process technology acquired with stock




1,519,500


6,975,005Expenses paid via advances from related party







695,557Depreciation and amortization

515,647


240,663


1,570,913Stock and options issued for services and other

166,108


307,804


663,039(Gain) loss on disposal of fixed assets

11,866


363


(69,578
)Amortization of debt discount and loan fee

202,721





878,378Deferred rent

244,147





278,010Change in assets and liabilities:Accounts receivable

(55,841
)

100,787


(69,018
)Other current assets

75,630


(60,931
)

(54,342
)Other assets

(773,455
)

(23,464
)

(947,926
)Accounts payable

207,677


217,315


656,941Other current liabilities

(21,884
)

58,428


383,883Deferred compensation

42,583


157,597


459,907Net cash
used in operating activities

(7,921,652
)

(4,138,698
)

(22,975,805
)Cash flows from investing activities:Purchase of short-term investments

(16,969,690
)

(15,149,952
)

(32,669,875
)Sale of short-term investments

14,809,515





14,809,515Purchase of property and equipment

(829,670
)

(1,163,751
)

(3,263,042
)Net cash
used in investing activities

(2,989,845
)

(16,313,703
)

(21,123,402
)Cash flows from financing activities:Advances from related party

3,872,768


4,142,669


12,193,883Repayment of note receivable from stockholder







20,000Proceeds from investors short-swing profit

123,820





123,820Proceeds from notes payable and other

653,233


750,000


2,833,233Repayment of capital lease and notes payable

(386,045
)

(140,688
)

(616,347
)Stock issuance costs







(1,965,976
)Proceeds from issuance of common stock upon exercise of
               options and warrants

419,963


371,873


885,290Proceeds from sale of common stock and preferred stock

2,000,000


23,425,978


27,308,736Repurchase of restricted stock

(2,813
)




(2,813
)Net advances from Medstone







3,883,465Capital contribution by Medstone







500,000Net cash
provided by financing activities

6,680,926


28,549,832


45,163,291Net (decrease) increase in cash and equivalents

(4,230,571
)

8,097,431


1,064,084Cash and equivalents, beginning of period

5,294,655


921,994


Cash and equivalents, end of period

$   1,064,084


$   9,019,425


$   1,064,084


See accompanying notes.




4


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GENSTAR THERAPEUTICS CORPORATION


(A development stage enterprise)





NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS


September 30, 2001





1.    The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments, consisting only of normal recurring
adjustments, which are necessary to state fairly the consolidated financial position, results of operations, and cash flows of GenStar Therapeutics Corporation as of and for the periods indicated. GenStar presumes that users of the interim financial
information have read or have access to the Companys audited consolidated financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2000 and that the
adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies or recent significant events, may be determined in that context. Accordingly, footnote and other disclosures which would substantially
duplicate the disclosures contained in Form 10-KSB for the year ended December 31, 2000 filed on April 2, 2001 by the Company have been omitted. The financial information herein is not necessarily representative of a full years operations.





2.    Cash and cash equivalents consist
primarily of highly liquid investments with original maturities of 90 days or less when purchased. Short-term investments consist of debt and equity securities with maturities in excess of 90 days when purchased. In accordance with the Financial
Accounting Standards Boards Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities, management determines the appropriate classification of short-term investment
securities at the time of purchase and reevaluates such designation as of each balance sheet date. Securities classified as available-for-sale are carried at fair value, with gains and losses, if any, reported as a separate component of
stockholders equity and included in comprehensive loss.





3.    In accordance with the Financial Accounting Standards Boards SFAS No. 128, Earnings per Share, net loss per share is based on the average number of
shares of common stock outstanding during the nine-month periods ended September 30, 2001 and 2000. Equivalent shares arising from convertible preferred stock, convertible debt, warrants for Common Stock and outstanding stock options have not been
included in the computation of net loss per share as their effect would be antidilutive.





4.    In February 2001, the Company entered into a capital lease agreement under which up to $2,325,000 in equipment may be leased. The Company financed
$653,000 of equipment under this lease agreement during the nine months ended September 30, 2001. Additionally, in April, 2001, the Company entered into an additional capital lease agreement under which $94,000 of equipment was financed. During the
nine months ended September 30, 2000 the Company acquired equipment valued at $96,000 under a capital lease agreement.





5.    Cash paid for interest during the nine months ended 2001 and 2000 was $149,000 and $46,000, respectively.




5


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GENSTAR THERAPEUTICS CORPORATION


(A development stage enterprise)





NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS


September 30, 2001





6.    SFAS No. 130, Reporting Comprehensive Income, reporting and displaying comprehensive income (loss) and its components which, for the Company, includes net
loss and unrealized gains and losses on investments. In accordance with SFAS No. 130, the accumulated balance of other comprehensive income is disclosed as a separate component of stockholders equity. For the three and nine months ended
September 30, 2001 and 2000, respectively, the comprehensive loss consisted of:





Three months ended September 30,

Nine months ended September 30,2001

2000

2001

2000Net loss

$(2,978,040
)

$(2,097,643
)

$(8,536,851
)

$(6,656,760
)Other comprehensive loss:Unrealized gain (loss) on investments

165,381


(9,418
)

157,089


(9,418
)Comprehensive loss

$(2,812,659
)

$(2,107,061
)

$(8,379,762
)

$(6,666,178
)





7.    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
which the Company adopted on January 1, 2001. SFAS No. 133 sets forth a comprehensive and consistent standard for the recognition of derivatives and hedging activities. The adoption of SFAS No. 133 did not have an impact on our results of operations
or financial condition as we currently hold no derivative financial instruments and do not currently engage in hedging activities.





8.    In June, 2001, the Financial Accounting Standards Board issued SFAS No. 141, Business Combinations, and No. 142, Goodwill and Other
Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method is no longer permitted. SFAS No. 141 also includes
guidance on the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination that is completed after June 30, 2001. SFAS No. 142 no longer permits the amortization of goodwill and indefinite-lived
assets. Instead, these assets must be reviewed annually (or more frequently under certain conditions) for impairment in accordance with this statement. The Company will adopt SFAS No. 142 effective January 1, 2002. The adoption of SFAS No. 142 is
not anticipated to have an impact on the Companys operations or financial condition as the Company does not currently have goodwill or other indefinitely lived assets.





9.    Certain amounts in the prior year financial statements have been reclassified to conform with current year
presentation.





10.    Under the terms of our
Developmental Collaboration Agreement and Credit Agreements with Baxter, Baxter was required to provide funding for pre-clinical development of the hemophilia product and when the Company treated the first patient in a Phase I Clinical Trial for the
hemophilia product, a milestone payment of $2,000,000 was due from Baxter. In June 2001, the first patient was treated using the hemophilia product and Baxter paid the $2,000,000 milestone payment in exchange for 2,000 shares of Series C Preferred
Stock. Additionally, the remaining balance under the Credit Agreement of $5,848,000 was converted to Series B Preferred Stock in August, 2001. The Series B Preferred Stock is convertible at Baxters option into 2,101,773 shares of Common Stock.




6


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Item 2.    Managements Discussion and Analysis of Financial
Condition and Results of Operation





Overview





GenStar commenced operations as a stand-alone entity in January 1996 and has been in the development stage since inception. Our original
mission was to develop products to treat diseases in urology, with a particular interest in prostate cancer. We had licensed technology that uses the IL-3 gene to treat several types of cancer, but did not have technology to deliver the gene. On
July 8, 1998, we entered into an agreement with Baxter Healthcare Corporation in which we acquired the exclusive rights to gene delivery technologies and laboratory equipment. The gene delivery technology will be used to enhance our existing
technology and to develop products to deliver other genes. Prior to our license of the technology, Baxter had been developing this technology for the treatment of hemophilia and cancer and has funded the development of our Factor VIII product for
hemophilia.





In exchange for the exclusive license to the gene
delivery technology and equipment, we issued 1,841,219 shares of common stock and 5,830 shares of Series A Preferred Stock to Baxter. The assets acquired from Baxter were valued based on the fair market value of our common stock on the date of the
agreement. We obtained an appraisal of the value of the equipment acquired. Based upon the very early stage of development of the technology, the value of the technology was charged to acquired in-process technology.





In May 2000, we acquired all of the outstanding shares of Allegro Cell Systems, Inc.
(Allegro) in exchange for 288,000 shares of GenStar Common stock and an obligation to issue an additional 12,000 shares of common stock. Allegro has a license to certain technologies for the treatment and prevention of AIDS and for lentiviral gene
therapy. Allegro had no products, revenues, employees, facilities or other assets. Based upon the very early stage of development of the technology and the lack of alternative future uses for it, the value of the technology was charged to acquired
in-process technology.





GenStars current activities consist
of the development of the MAXIMUM-AD gene transfer system for our hemophilia A product (MAX-AD FVIII), our DUAL-AD vector product for prostate cancer, and the MAXIMUM-AD and LENTI-HIV vector systems for the treatment and prevention of HIV/AIDS and
other sexually transmitted diseases. We anticipate defining additional uses for our vector technologies and potentially acquiring other technologies. We expect to incur increasing research and development expenditures as we focus our efforts on
further development of these products. We expect no product revenues in the near future and to incur significant losses for at least the next five years.





In our ongoing Phase I clinical trial for hemophilia A, we are testing one patient currently and will be accruing additional patients based on the study
protocol that has been cleared by the FDA. Our current patient continues to express Factor VIII approximately four months after treatment at a level of approximately 1%.





Results of Operations





| | Revenues
| | --------




GenStar has generated revenues to date of $1,283,000 from contract research agreements and grants. Total revenues for the nine months ended September 30, 2000 and 2001 were
$113,000 and $162,000, respectively, and for the three months ended September 30, 2000 and 2001 were $40,000 and $90,000, respectively. We anticipate seeking additional research agreements and grants to help fund research and development efforts. We
do not anticipate revenues from products for at least five years.





| | Research and development and acquired in-process technology expense
| | -------------------------------------------------------------------




Research and development expenses, excluding acquired in-process technology expenses, increased $2,342,000 to $6,575,000 during the
nine months ended September 30, 2001 compared to $4,233,000 for the nine months ended September 30, 2000. During the three months ended September 30, 2001 research and development expenses, excluding acquired in-process technology increased $492,000
to $2,300,000 compared to $1,808,000 for the three months ended September 30, 2000. Research and development expenses, excluding acquired in-process technology expenses, increased in both the nine month and three month periods ended




7


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September 30, 2001 compared to the same periods of 2000 due principally to an overall increase in research and development activity. In May 2000, the company acquired Allegro, which resulted in a
charge to write-off acquired in-process technology of $1,655,000. There were no acquired in-process technology expenses during either the nine months or three months ended September 30, 2001 compared to $1,655,000 for the nine months ended September
30, 2000 and $22,000 for the three months ended September 30, 2000. We anticipate increasing research and development expenditures in the future as we conduct preclinical and clinical testing necessary to bring our products to market.





| | General and administrative expense
| | ----------------------------------




General and administrative expense increased $960,000 during the nine months ended September 30, 2001 to $2,617,000 compared to $1,657,000 for the nine
months ended September 30, 2000. During the three months ended September 30, 2001 general and administrative expense increased $252,000 to $905,000 compared to $653,000 for the three months ended September 30, 2000. General and administrative
expenses include the costs of our administrative personnel and consultants, office lease expenses and other overhead costs, including legal and accounting costs. General and administrative expenses have increased related to the increased level of
operations, and we expect general and administrative expenses to continue to increase to support our increasing research and development activities.





| | Interest income and expense
| | ---------------------------




Interest income decreased $3,000 during the nine months ended September 30, 2001 to $859,000 compared to $862,000 for the nine months ended September 30,
2000. During the three months ended September 30, 2001 interest income decreased $115,000 to $250,000 compared to $365,000 for the three months ended September 30, 2000. Interest income is a result of the investment of excess cash in money market
accounts, corporate and international bonds and certificates of deposit. Interest expense increased $293,000 for the nine months ended September 30, 2001 to $364,000 compared to $71,000 for the nine months ended September 30, 2000. During the three
months ended September 30, 2001 interest expense increased $92,000 to $111,000 compared to $19,000 for the three months ended September 30, 2000. Interest expense in both 2000 and 2001 relates to equipment financing and interest accrued on the
deferred compensation liability.





Liquidity and Capital Resources





Net cash used by operating activities during the nine months ended September 30, 2000 and 2001 was
$4,139,000 and $7,922,000, respectively. Net cash used by operating activities consists primarily of GenStars net loss increased by non-cash expenses. Net cash used by investing activities during the nine months ended September 30, 2000 and
2001 was $16,314,000 and $2,990,000, respectively. Net cash used by investing activities consists of purchases and sales of short-term investments and the purchase of furniture and equipment. Net cash provided by financing activities of $28,550,000
for the nine months ended September 30, 2000 consists primarily of net proceeds from the sale of common stock and warrants for common stock of $23,798,000, proceeds from convertible notes payable of $750,000 and $4,143,000 paid by Baxter under the
credit agreement. Net cash provided by financing activities during the nine months ended September 30, 2001 of $6,681,000 consists primarily of $3,873,000 paid by Baxter under the credit agreement, proceeds from the sale of Series C Preferred Stock
to Baxter of $2,000,000, proceeds from our capital lease agreement of $653,000 and proceeds from the issuance of common stock upon exercise of options and warrants for common stock of $420,000, offset by repayments of capital lease and notes payable
of $386,000.





GenStars future capital requirements will
depend on many factors, including scientific progress in our research and development programs, our ability to establish collaborative arrangements with others for drug development, progress with preclinical and clinical trials, the time and costs
involved in obtaining regulatory approvals and effective commercialization activities. Medstone International, Inc. provided GenStar with a $500,000 capital contribution of cash on February 9, 1996. In July 1998, we completed an offering of 8%




8


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Convertible Subordinated Notes due September 30, 1999, which raised $1,030,000. These notes were converted to common stock on June 22, 1999. In April 1999, we completed another offering of
Convertible Subordinated Notes due March 30, 2000, which raised $400,000. These notes were converted to common stock on June 22, 1999. In January 2000, we raised $8.3 million from the sale of Common Stock and warrants for Common Stock. In February
2000, we raised an additional $17 million from the sale of Common Stock. GenStar has incurred net losses of $34,397,000 since its inception and has never been profitable during its existence. We expect to incur significant additional operating
losses over the next several years as our research and development efforts expand. Our ability to achieve profitability depends upon our ability, alone or with others, to successfully complete development of products, obtain required regulatory
approvals and manufacture and market products. The development of potential human therapeutic products involve a number of risks and uncertainties. Actual events may differ from the companys expectations. The results of human clinical trials
cannot be predicted. The outcome of these clinical trials will be dependent upon a number of factors, including approvals from regulatory agencies and enrollment of patients in the clinical trials that meet all of the eligibility criteria. The
results of gene therapy in animal models or in single patient studies does not guarantee that the same results can or will be repeated in subsequent patient studies because of several potential risks. These include the risk that side effects may
result from the treatments and other risks and uncertainties inherent in the development of gene therapy products. In addition, the timeline for clinical activity, results of pending or future clinical trails, and changes in the status of the
companys collaborative relationships, as well as the risk factors listed from time to time in the companys periodic reports with the Securities and Exchange Commission may affect the actual results achieved by the company. We may not be
successful and we may never attain significant revenues or profitability. Our operations to date have consumed substantial amounts of cash. The negative cash flow from operations is expected to continue and to accelerate for at least the next five
years. The development of our products will require a commitment of substantial funds to conduct the costly and time-consuming research, pre clinical and clinical testing necessary to bring our products to market and to establish manufacturing and
marketing capabilities.





We anticipate our existing capital
resources will enable us to maintain our current and planned operations through most of 2003. We will need to raise substantial additional capital to fund future operations. We intend to seek additional funding either through collaborative
arrangements or through public or private equity or debt financings. Additional financing may not be available on acceptable terms or at all. If adequate funds are not available, we may be required to delay or reduce the scope of our operations or
to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights we may otherwise have.





Quantitative and Qualitative Disclosures About Market Risk





The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities that we invest in may have market risk. This means that a change in prevailing interest rates may cause the fair value of the principal amount of the investment to fluctuate. For example,
if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the fair value of the principal amount of our investment will probably decline. To minimize this risk, we
maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including commercial paper, money market funds, government and non-government debt securities. The average duration of all of our investments has
generally been less than one year. Due to the short-term nature of these investments, we believe we have no material exposure to interest rate risk arising from our investments. Therefore, no quantitative tabular disclosure is required.





The Company does not conduct business with foreign entities, and
does not have any foreign exchange risk.




9


---




GENSTAR THERAPEUTICS CORPORATION


(A development stage enterprise)





PART II.    OTHER INFORMATION





Item 1.    LEGAL PROCEEDINGS





None.





Item 2.    CHANGES IN SECURITIES





None.





Item 3.    DEFAULTS UPON
SENIOR SECURITIES





None.





Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





Item
5.    OTHER INFORMATION





None.





Item 6.    EXHIBITS AND REPORTS ON FORM 8-K





None.




10


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SIGNATURES





In accordance with the requirements of the Exchange Act, the Registrant has caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.





| | GENSTAR THERAPEUTICS CORPORATION | 
| | -------------------------------- | 

| | A Delaware Corporation
| | ----------------------




|Date: November 13, 2001 |  | /s/    CARIN D. SANDVIK
|----------------------- |  | -----------------------

| | 
| | 

| | Carin D. Sandvik
| | ----------------

| | Sr. Director of Finance and Administration
| | ------------------------------------------

| | Chief Accounting Officer
| | ------------------------

| | (Principal accounting officer)
| | ------------------------------



11