##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number: 0-51110
  ViaCell, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

04-3244816(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)245 First Street,
    Cambridge, Massachusetts(Address of principal
    executive offices)

02142(Zip code)   (Registrants
    telephone number, including area code)(617) 914-3400
  Securities registered pursuant
    to Section 12(b) of the Act:

Name of Exchange On Which
    Registered:Common Stock, $0.01 par
    value

The Nasdaq Stock Market
    LLC   Securities registered pursuant to Section 12(g) of the
    Act: (Title of class) None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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ViaCell,
    Inc.
  Annual
    Report on
    Form 10-K
 For the
    Fiscal Year Ended December 31, 2006
  NOTE ABOUT
    REFERENCES TO VIACELL
    NOTE ABOUT
    TRADEMARKS
  ® ® sm tm ® ® ® tm
  NOTE ABOUT
    FORWARD-LOOKING STATEMENTS
   2




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##### 



TABLE OF
    CONTENTS
  
  Page NoPART IITEM 1


DESCRIPTION OF
    BUSINESS


4ITEM 1A


RISK
    FACTORS


17ITEM 1B


UNRESOLVED STAFF
    COMMENTS


30ITEM 2


PROPERTIES


31ITEM 3


LEGAL
    PROCEEDINGS


31ITEM 4


SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS


32PART IIITEM 5


MARKET FOR THE
    REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
    ISSUER PURCHASES OF EQUITY SECURITIES


32ITEM 6


SELECTED
    CONSOLIDATED FINANCIAL DATA


34ITEM 7


MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS


35ITEM 7A


QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT MARKET RISK


50ITEM 8


CONSOLIDATED
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


50ITEM 9


CHANGES IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE


50ITEM 9A


CONTROLS AND
    PROCEDURES


50ITEM 9B


OTHER
    INFORMATION


51PART IIIITEM 10


DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


52ITEM 11


EXECUTIVE
    COMPENSATION


53ITEM 12


SECURITY OWNERSHIP
    OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
    STOCKHOLDER MATTERS


53ITEM 13


CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE


53ITEM 14


PRINCIPAL
    ACCOUNTANT FEES AND SERVICES


54PART IVITEM 15


EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES


54Signatures


57Financial Statements


F-1EX-21.1 Subsidiaries of ViaCellEX-23.1 Consent of PricewaterhouseCoopers LLPEX-31.1 Section 302 Certification of C.E.O.EX-31.2 Section 302 Certification of C.F.O.EX-32.1 Section 906 Certificaton of C.E.O.EX-32.2 Section 906 Certification of C.F.O.   3




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##### Table of Contents



PART I  ITEM 1.
    DESCRIPTION
    OF BUSINESS  Overview
  sm
    Our
    ViaCell Reproductive Health Business
  in vitro
  ViaCord 
    Collection, Testing, Processing and Storage of Umbilical Cord
    Blood Stem Cells
  Background
     4




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ViaCord
    Service Offering
      Collection. tm
  Comprehensive Testing.
  Processing.
  Cryopreservation.
    Sales and
    Marketing
     5




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® ® ® tm .
  ViaCyte
  in vitro
  Background. in vitro
  ViaCyte Product Candidate.
  
    using our existing operational infrastructure and facilities,
    including our cell processing and storage facility in Hebron,
    Kentucky where long-term storage of oocytes would be
    maintained; and 6




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
    utilizing our sales, marketing and clinical support staff and
    our current marketing channels to educate consumers and
    healthcare professionals, including obstetricians,
    gynecologists, and oncologists.  Status of Program.
    Our
    Cellular Therapy Technology and Product Candidates
    Background
      Our
    Programs in Cellular Therapies
  Unrestricted
    Somatic Stem Cells  Cardiac
  in vitro
 7




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Background.
  Status of Program.
  Hematopoietic
    Stem Cells
     8




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21-28. 21-28,
    Pancreatic
    Stem Cells  Diabetes
    Other
    Areas of Interest
    Research
    and Development Expenses
   9




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Collaborations,
    Licenses and Strategic Relationships
    Stem
    Cell Internal Venture of Centocor Research &
    Development, Inc.
    Johns
    Hopkins University
  Ex vivo
  Genzyme
    Corporation
    Tyho
    Galileo Research Laboratory
  product-by-product, media-by-media country-by-country
 10




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Amgen
    Inc.
      Massachusetts
    General Hospital
    Intellectual
    Property
   11




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Competition
       12




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Government
    Regulation
  Regulations
    Relating to ViaCell
   13




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FDA
    Regulation of Biologics, Drugs, and Medical
    Devices
    Premarket Approval of Biologics and Drugs.
  
    pre-clinical laboratory and animal tests to assess a drugs
    biological activity and to identify potential safety problems;
    submission to the FDA of an IND, which must receive FDA
    clearance before clinical trials may begin;
    adequate and well-controlled human clinical trials to establish
    the safety and efficacy of the product for its intended
    indication;
    compliance with cGMP regulations and standards;
    submission to the FDA of a biologics license application, or
    BLA, or new drug application, or NDA, for marketing that
    includes adequate results of pre-clinical testing and clinical
    trials; and
    FDA review of the marketing application in order to determine,
    among other things, whether the product is safe, effective and
    potent for its intended uses.      Premarket Clearance or Approval of Medical
    Devices.
   14




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Compliance Requirements after Licensure, Approval or
    Clearance.
  Adverse Event Reporting.
  Outside the U.S.
  Regulations
    Relating To ViaCord
  FDA Regulations.
  State Regulations.
 15




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Privacy Laws.
    Other Regulations.
  Employees
   16




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ITEM 1A.
    RISK
    FACTORS    We may
    not achieve our goal of becoming cash flow positive, and may
    never become profitable.
    
    our ability to increase sales of our ViaCord service offering
    particularly in the face of significant competition;
    continued acceptance in the marketplace for private cord blood
    banking;
    the impact of any unexpected issues or failures related to the
    collection, processing, or storage of umbilical cord blood by us
    or others in the industry;
    the impact of any potential adverse outcome in the patent
    infringement lawsuit brought against us by PharmaStem, including
    legal expenses, and the material impact on our business if
    PharmaStem were able to obtain an injunction;
    the level of our expenses, including as a result of difficulties
    or delays related to our research and development programs, and
    any unexpected expenses; and
    the overall net impact on revenues and expenses of new licensing
    deals, collaborations or other strategic efforts.    We may
    not be able to sustain our current level of revenues or our
    recent growth rates.
   17




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If we
    do not prevail in the PharmaStem litigation, we may be prevented
    from selling our ViaCord service offering, or may have to incur
    significant expenses.
             18




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A
    third party could try to challenge the arbitrators
    decision related to our agreement with Mothers
    Work.
    The
    Government of Singapore may seek to recover grant funds received
    by us if we do not agree to extend the term of the current
    grant.
  and/or
 19




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If we
    are not able to successfully develop and commercialize new
    products, our future prospects may be limited.
            We may
    not be able to successfully develop our ViaCyte oocyte
    cryopreservation product candidate.
  in vitro
 20




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We may
    not be able to raise additional funds necessary to fund our
    operations.
      
    the level of cash flows from sales of our ViaCord service
    offering;
    the scope and results of our research and development programs;
    the clinical pathway for each of our product candidates,
    including the number, size, scope and cost of clinical trials
    required to establish safety and efficacy;
    the results of litigation and other disputes;
    the costs associated with expanding our portfolio of product
    candidates through licensing, collaborations or acquisitions;
    the costs of increasing or expanding our ViaCord sales and
    marketing efforts;
    the costs of research and development work focused on developing
    clinical and commercial scale processes for manufacturing
    cellular products and, if we advance our products, the costs of
    building and operating our manufacturing facilities, both to
    support our clinical activities and also in anticipation of
    growing our commercialization activities;
    funds spent in connection with acquisitions of related
    technologies or businesses, including contingent payments that
    may be made in connection with our acquisition of Kourion
    Therapeutics;
    the costs of maintaining, expanding and protecting our
    intellectual property portfolio, including litigation costs and
    liabilities; and
    our ability to establish and maintain collaborative arrangements
    and obtain milestones, royalties and other payments from
    collaborators.   21




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We
    depend on patents and other proprietary rights that may fail to
    protect our business.
  and/or
       22




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Third
    parties may own or control patents or patent applications that
    are infringed by our technologies or product
    candidates.
          Our
    success will depend in part on establishing and maintaining
    effective strategic partnerships and
    collaborations.
   23




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Our
    cell preservation activities are subject to regulations that may
    impose significant costs and restrictions on us.
  Cord blood preservation.
    Oocyte cryopreservation.
  We
    have only limited experience manufacturing cell therapy product
    candidates, and we may not be able to manufacture our product
    candidates in quantities sufficient for clinical studies or for
    commercial scale.
   24




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We are
    dependent on our existing suppliers and establishing
    relationships with certain other suppliers to successfully
    commercialize our ViaCord service offering, for certain
    components of our product candidates and to manufacture and
    supply our ViaCyte product candidate. The loss of such suppliers
    or our inability to establish such relationships may inhibit our
    ability to commercialize ViaCord, delay development or limit our
    ability to manufacture our stem cell therapy products or our
    ViaCyte product candidate.
         25




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If our
    cord blood processing and storage facility or our clinical
    manufacturing facilities are damaged or destroyed, our business,
    programs and prospects could be negatively
    affected.
        Our
    competitors may have greater resources or capabilities or better
    technologies than we have, or may succeed in developing better
    products or develop products more quickly than we do, and we may
    not be successful in competing with them.
     26




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Due to
    the nature of our cell preservation activities, harm to our
    reputation could have a significant negative impact on our
    financial condition. Damage to or loss of our customers
    property held in our custody could potentially result in
    significant legal liability.
      The
    manufacture and sale of products may expose us to product
    liability claims for which we could have substantial
    liability.
    Our
    success is dependent upon recruiting and retaining qualified
    management and other personnel.
   27




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We may
    face difficulties in managing and maintaining the growth of our
    business.
        Our
    business could be disrupted or harmed and we could be subject to
    liability if we are unable to operate our information systems
    effectively, successfully implement new technologies and protect
    the confidentiality of our or our customers
    data.
  and/or
  If we
    acquire other businesses or technologies the transactions may be
    dilutive and we may be unable to integrate them successfully
    with our business, our financial performance could
    suffer.
   28




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The
    successful commercialization of products may depend on patients
    and physicians obtaining reimbursement for products from third
    party payers.
        We
    face potential liability related to the privacy of health
    information we obtain from research collaborators or from
    providers who enroll patients and collect cord blood or human
    oocytes.
     29




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Ethical
    and other concerns surrounding the use of stem cell therapy may
    negatively affect regulatory approval or public perception of
    our products and product candidates, thereby reducing demand for
    our products and product candidates.
    Our
    business involves the use of hazardous materials that could
    expose us to environmental and other liability.
  clean-up
  Volatility
    of Our Stock Price.
    
    material public announcements;
    the data, positive or negative, generated from the development
    of our product candidates;
    setbacks or delays in any of our development programs;
    the outcome of material litigation;
    the financial results achieved by our cord blood preservation
    business;
    the impact of competition;
    unusual or unexpectedly high expenses;
    developments related to patents and other proprietary rights;
    market trends affecting stock prices in our industry; and
    economic or other external factors.  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   30




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ITEM 2.
    PROPERTIES        ITEM 3.
    LEGAL
    PROCEEDINGS      and/or
     31




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ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5.
    MARKET
    FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    for Common Equity
      Price per ShareFor the Year Ended December 31, 2006

High


LowFirst Quarter

$
6.28


$
4.79Second Quarter


5.95



3.90Third Quarter


4.54



3.56Fourth Quarter


5.84



4.10   Price per ShareFor the Year Ended December 31, 2005

High


LowFirst Quarter (from
    January 21, 2005)

$
14.60


$
6.75Second Quarter


11.39



5.42Third Quarter


11.51



4.97Fourth Quarter


6.37



4.66  32




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Equity Compensation Plan InformationNumber of SecuritiesRemaining Available forNumber of Securities to be


Weighted Average


Future Issuance UnderIssued Upon Exercise of


Exercise Price of


Equity Compensation PlanOutstanding Options,


Outstanding Options,


(Excluding SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Referenced in Column (a))(a)Equity compensation plan approved
    by security holders


3,991,327


$
3.02



1,829,118   Holders
    Dividends
    Sales of
    Unregistered Securities
    Use of
    Proceeds from Registered Securities
  Form S-1 No. 333-114209)
        Issuer
    Purchase of Equity Securities
   33




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ITEM 6.
    SELECTED
    CONSOLIDATED FINANCIAL DATA    Years Ended December 31,2006


2005


2004


2003(1)


2002(In thousands, except share and per share data)Consolidated Statement of
    Operations Data:Total revenues

$
54,426


$
44,443


$
38,274


$
31,880


$
20,375Operating expenses:Cost of processing and storage
    revenues:(2)Direct costs


10,253



8,298



7,396



7,148



5,897Royalty (recovery) expense










(3,258
)


3,258



Total cost of processing and
    storage revenues


10,253



8,298



4,138



10,406



5,897Research and development


13,984



13,653



16,030



14,299



13,918Sales and marketing


37,154



24,909



19,497



21,373



17,248General and administrative


18,525



13,835



15,551



16,960



14,205In-process technology(3)














23,925



5,889Restructuring


(1,070
)


305



3,188







Total operating expenses


78,846



61,000



58,404



86,963



57,157Loss from operations


(24,420
)


(16,557
)


(20,130
)


(55,083
)


(36,782
)Interest income (expense), net


3,090



1,880



(967
)


(385
)


744Net loss before cumulative effect
    of change in accounting principle

$
(21,330
)

$
(14,677
)

$
(21,097
)

$
(55,468
)

$
(36,038
)Cumulative effect of change in
    accounting principle


283















Net loss attributable to common
    stockholders

$
(21,047
)

$
(15,663
)

$
(34,168
)

$
(64,884
)

$
(44,182
)Net loss per common share, basic
    and diluted before cumulative effect of change in accounting
    principle

$
(0.56
)

$
(0.44
)

$
(12.62
)

$
(24.63
)

$
(17.60
)Cumulative effect of change in
    accounting principle


0.01















Net loss per common share, basic
    and diluted

$
(0.55
)

$
(0.44
)

$
(12.62
)

$
(24.63
)

$
(17.60
)Weighted average shares used in
    computing net loss per common share, basic and diluted


38,377,238



35,777,308



2,707,219



2,634,096



2,510,632   34




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As of December 312006


2005


2004


2003


2002(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
18,039


$
33,138


$
6,746


$
39,008


$
15,239Investments


33,206



27,406



21,839



7,824



13,949Working capital


48,004



60,946



14,437



22,857



25,407Total assets


82,282



94,230



61,091



78,161



56,119Long-term debt obligations,
    including current portion


82



1,627



18,736



19,238



5,173Redeemable convertible preferred
    stock










175,173



162,141



110,912Total stockholders equity
    (deficit)


38,317



56,010



(160,957
)


(130,151
)


(70,487
)     (1)
    
    We acquired Kourion Therapeutics in September 2003, and our
    financial results for the year ended December 31, 2003
    include the results of Kourion Therapeutics operations for
    the three months ended December 31, 2003. Had we included
    the results of Kourion Therapeutics operations for the
    full fiscal year 2003, we would have reported additional
    revenues, operating expenses and net loss of $0.6 million,
    $2.8 million and $2.1 million, respectively.(2)
    
    In October 2003, a jury awarded PharmaStem a royalty of
    $2.9 million on our cord blood processing and storage
    revenues based on a claim of patent infringement. As a result,
    we recorded an expense of $3.3 million, included in cost of
    processing and storage revenues, in 2003 to cover our exposure
    to PharmaStem. In 2004, the Delaware district court overturned
    the jury verdict. Based on the district courts ruling, we
    reversed the entire royalty accrual in 2004.(3)
    
    In-process technology expense for the year ended
    December 31, 2003 included $22.1 million, being the
    fair value of technology acquired in the purchase of Kourion
    Therapeutics, and $1.8 million in respect of technology
    acquired from Amgen and GlaxoSmithKline. The expense in the year
    ended December 31, 2002 represented the fair value of
    warrants related to technology licensed from Amgen of
    $5.9 million.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS    Overview
  sm
 35




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Revenues
      and/or
  Operating
    Expenses
   36




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37




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sub-leased sub-lessee,
        Results
    of Operations
  Years
    Ended December 31, 2006, 2005 and 2004 (amounts in
    millions, year over year changes based on rounded amounts in
    millions)
  $ Change


% Change


$ Change


% Change2006


2005


2004


2005 to 2006


2005 to 2006


2004 to 2005


2004 to 2005Processing revenues

$
43.5


$
36.1


$
31.7


$
7.4



20
%

$
4.4



14
%Storage revenues


10.6



7.7



5.1



2.9



38
%


2.6



51
%Total processing and storage
    revenues


54.1



43.8



36.8



10.3



24
%


7.0



19
%Grant and contract revenues


0.3



0.6



1.5



(0.3
)


(50
)%


(0.9
)


(60
)%Total revenues

$
54.4


$
44.4


$
38.3


$
10.0



23
%

$
6.1



16
%       38




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$ Change


% Change


$ Change


% Change2006


2005


2004


2005 to 2006


2005 to 2006


2004 to 2005


2004 to 2005Cost of processing and storage
    revenues:Direct costs

$
10.3


$
8.3


$
7.4


$
2.0



24
%

$
0.9



12
%Royalty recovery










(3.3
)






0
%


3.3



100
%Total cost of processing and
    storage revenues

$
10.3


$
8.3


$
4.1


$
2.0



24
%

$
4.2



102
%         $ Change


% Change


$ Change


% Change2006


2005


2004


2005 to 2006


2005 to 2006


2004 to 2005


2004 to 2005Research and development

$
14.0


$
13.7


$
16.0


$
0.3



2
%

$
(2.3
)


(14
)%       $ Change


% Change


$ Change


% Change2006


2005


2004


2005 to 2006


2005 to 2006


2004 to 2005


2004 to 2005Sales and marketing

$
37.2


$
24.9


$
19.5


$
12.3



49
%

$
5.4



28
%     $ Change


% Change


$ Change


% Change2006


2005


2004


2005 to 2006


2005 to 2006


2004 to 2005


2004 to 2005General and administrative

$
18.5


$
13.8


$
15.6


$
4.7



34
%

$
(1.8
)


(12
)%  39




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$ Change


% Change


$ Change


% Change2006


2005


2004


2005 to 2006


2005 to 2006


2004 to 2005


2004 to 2005Restructuring

$
(1.1
)

$
0.3


$
3.2


$
1.4



(467
)%

$
(2.9
)


(91
)%   sub-lessee
    sub-leased sub-lessee.
    Balance, December 31, 2004

$
907Adjustments


255Payments


(530
)Balance, December 31, 2005


632Adjustments


(34
)Payments


(598
)Balance, December 31, 2006

$
   40




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##### Table of Contents



$ Change


% Change


$ Change


% Change2006


2005


2004


2005 to 2006


2005 to 2006


2004 to 2005


2004 to 2005Interest income

$
3.2


$
2.2


$
0.5


$
1.0



45
%

$
1.7



340
%Interest expense


(0.1
)


(0.3
)


(1.5
)


0.2



(67
)%


1.2



(80
)%Total interest income (expense),
    net

$
3.1


$
1.9


$
(1.0
)

$
1.2



63
%

$
2.9



290
%         Liquidity
    and Capital Resources
      Years Ended December 31,


$ Change


$ Change2006


2005


2004


2005 to 2006


2004 to 2005Net cash used in operating
    activities

$
(8.4
)

$
(1.4
)

$
(15.1
)

$
(7.0
)

$
13.7Net cash used in investing
    activities


(6.7
)


(9.5
)


(15.6
)


2.8



6.1Net cash provided by (used in)
    financing activities


(0.1
)


37.6



(1.3
)


(37.7
)


38.9Cash and cash equivalents, end of
    period

$
18.0


$
33.1


$
6.7


$
(15.1
)

$
26.4        41




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Commitments
    and Contingencies
    Less Than


One to Three


Four to Five


After FiveContractual Obligations

Total


One Year


Years


Years


YearsOperating lease obligations

$
15.0


$
1.8


$
3.8


$
4.0


$
5.4Capital lease obligations


0.1



0.1











Purchase obligations(1)


20.0



6.5



11.1



1.1



1.3Contingent purchase price(2)


8.2



2.2











6.0Total contractual obligations

$
43.3


$
10.6


$
14.9


$
5.1


$
12.7     (1)
    
    Of the $20.0 million payable under purchase obligations,
    $2.2 million relates to cancelable agreements.(2)
    
    See Note 8 to our consolidated financial statements.    Guarantors Accounting
    and Disclosure Requirements for Guarantees, Including Indirect
    Guarantees of Indebtedness of Others
 42




---



##### Table of Contents



Regulation S-K.
  Loan
    Obligation
    Lease
    Obligations
      sub-lease sub-lease sub-lessee
    Acquisition
    of Kourion Therapeutics
   43




---



##### Table of Contents



License
    Agreement
    Other
    Arrangements
  Mothers
    Work Data and Marketing Services
  ® ® ® tm .
  SCIV
    Centocor Research Collaboration
   44




---



##### Table of Contents



Amgen
    Collaboration
    Miltenyi
        Net
    Operating Loss Carryforwards
   45




---



##### Table of Contents



Legal
    Proceedings
      and/or
       46




---



##### Table of Contents



Critical
    Accounting Estimates
    
    revenue recognition;
    accounting for stock-based compensation;
    accounting for accounts receivable;
    accounting for research and development expenses; and
    accounting for the Mothers Work indemnification agreement.  Revenue Recognition.
  Revenue Recognition, corrected
    copy No. 00-21 Revenue Arrangements with Multiple Deliverables 00-21)
    No. 00-21 .
  Accounting for Stock-Based Compensation.
 47




---



##### Table of Contents



stock-based
  Accounting for accounts receivable.
  Accounting for research and development
    expenses.
 48




---



##### Table of Contents



Accounting for the Mothers Work indemnification
    agreement. ® ® ® tm . Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others
  Recent
    Accounting Pronouncements
       49




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Quantitative
    and Qualitative Disclosures About Market Risks
  Investment
    Risk
    Foreign
    Exchange Risk
    Interest
    Rate Risk
    ITEM 8.
    CONSOLIDATED
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  page F-1.
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures and Internal Control over Financial
    Reporting
  Controls
    and Procedures
  Rules 13a-15(e) 15d-15(e)
 50




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##### Table of Contents



Changes
    in Internal Control over Financial Reporting
    Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of our assets;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that our receipts and expenditures are being made only in
    accordance with authorizations of our management and
    directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on the financial
    statements.      page F-2 Form 10-K.
  ITEM 9B.
    OTHER
    INFORMATION   51




---



##### Table of Contents



PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE        MANAGEMENT
  Executive
    Officers
    Name

Age

PositionsExecutive Officers:Marc D. Beer


42


President, Chief Executive Officer
    and DirectorAnne Marie Cook


45


General Counsel, Senior Vice
    President, Business and Corporate DevelopmentStephen G. Dance


55


Senior Vice President, Finance and
    Chief Financial OfficerJim Corbett


44


President, ViaCell Reproductive
    HealthMorey Kraus


48


Vice President and Chief
    Technology OfficerMary T. Thistle


47


Senior Vice President, Business
    Development, ViaCell Reproductive Health   Executive
    Officers
  Marc D. Beer. in vitro
  Anne Marie Cook.
 52




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##### Table of Contents



Stephen G. Dance.
  Jim Corbett.
  Morey Kraus.
  Mary T. Thistle.
  ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE   53




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##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Consolidated Financial Statements
    Page Number inThis
    Form 10-KReport of
    Independent Registered Public Accounting Firm


F-1Consolidated
    Balance Sheets


F-3Consolidated
    Statements of Operations


F-4Consolidated
    Statements of Comprehensive Loss


F-5Consolidated
    Statements of Stockholders Equity (Deficit)


F-6Consolidated
    Statements of Cash Flows


F-7Notes to
    Consolidated Financial Statements


F-8   Financial Statement Schedules
    Exhibits
  Exhibit No.

Description of Document3
.1(1)

Sixth Amended and Restated
    Certificate of Incorporation.3
.2(1)

Amended and Restated By-laws.4
.1(1)

Specimen Stock Certificate.4
.2(5)

Form of Warrant to purchase Common
    Stock, together with a list of holders.4
.3(1)

Warrant issued to Amgen Inc. on
    April 9, 2002.4
.4(9)

Warrant issued to Amgen Inc. on
    August 29, 2005.10
.1(4)

Amended and Restated 1998 Equity
    Incentive Plan.**10
.2(7)

Form of Non-statutory Stock Option
    Certificate.**10
.3(7)

Form of Incentive Stock Option
    Certificate.**10
.4(1)

Letter agreement dated
    September 12, 2003 between ViaCell and Jan van Heek.**10
.5(1)

Letter agreement dated
    November 4, 2003 between ViaCell and Vaughn M. Kailian.**10
.6(6)

Letter agreement dated
    December 15, 2002 between ViaCell and Paul Hastings.**10
.7(1)

Stock Purchase Agreement dated
    September 30, 2003 by and among ViaCell, Kourion
    Therapeutics AG and the shareholders of Kourion Therapeutics.10
.8(2)

Amendment to Stock Purchase
    Agreement dated October 25, 2004 by and among ViaCell,
    Kourion Therapeutics AG and the shareholders of Kourion
    Therapeutics.10
.9(1)

Non-Exclusive License Agreement
    dated January 1, 2003 between ViaCell and SmithKline
    Beecham Corporation d/b/a GlaxoSmithKline and Glaxo Group
    Limited.10
.10(1)

Collaboration Agreement dated
    December 23, 2003 between ViaCell and Amgen Inc. 54




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##### Table of Contents



Exhibit No.

Description of Document10
.11(1)

License Agreement dated
    March 15, 2002 between ViaCell Endocrine Science, Inc. and
    the General Hospital Corporation, d/b/a Massachusetts General
    Hospital.10
.12(1)

License Agreement dated
    August 1, 2002 between ViaCell and Massachusetts Institute
    of Technology.10
.13(1)

Lease Agreement dated
    April 12, 2002 between ViaCell and Dugan Financing LLC.10
.14(1)

Lease Agreement dated
    December 22, 2003 between ViaCell and MA-Riverview/245
    First Street, LLC.10
.15(10)

First Amendment dated
    February 14, 2006 to Lease Agreement between ViaCell and
    MA-Riverview/245 First Street, LLC.10
.16(1)

Letter Agreement dated
    March 11, 2004 between ViaCell and Stephen Dance.**10
.17(2)

License Agreement dated
    September 1, 2004 between Tyho Galileo Research Laboratory,
    LLC and ViaCell.10
.18(3)

Research Agreement dated
    December 13, 2004 between Genzyme Corporation and ViaCell.10
.19(8)

Development Agreement dated
    January 24, 2005 between ViaCell and Miltenyi Biotec GmbH.10
.20(8)

Supply Agreement dated
    January 24, 2005 between ViaCell and Miltenyi Biotec GmbH.10
.21(9)

Amendment No. 1 to
    Collaboration Agreement dated August 29, 2005 between
    ViaCell and Amgen Inc.10
.22(9)

Warrant Purchase Agreement dated
    August 29, 2005 between ViaCell and Amgen Inc.10
.23(9)

Exclusive License Agreement dated
    August 29, 2005 among Johns Hopkins University, Zheijiang
    University and ViaCell.10
.24(4)

2004 Employee Stock Purchase
    Plan.**10
.25(11)

Amended and restated employment
    agreement dated March 12, 2007 between ViaCell and Marc D.
    Beer.**10
.26(11)

Amended and restated letter
    agreement dated March 12, 2007 between ViaCell and Anne
    Marie Cook.**10
.27(11)

Amended and restated letter
    agreement dated March 12, 2007 between ViaCell and Jim
    Corbett.**10
.28(11)

Amended and restated employment
    agreement dated March 12, 2007 between ViaCell and Morey
    Kraus.**10
.29(11)

Amended and restated letter
    agreement dated March 12, 2007 between ViaCell and Mary
    Thistle.**21
.1

Subsidiaries of ViaCell.23
.1

Consent of PricewaterhouseCoopers
    LLP.31
.1

Rule 13a-14(a)/15d-14(a)
    Certification of Principal Executive Officer.31
.2

Rule 13a-14(a)/15d-14(a)
    Certification of Principal Financial Officer.32
.1

Section 1350 Certification of
    Chief Executive Officer.32
.2

Section 1350 Certification of
    Chief Financial Officer.     (1)
    
    Incorporated by reference to the Companys registration
    statement on Form
    S-1
    (No. 333-114209)
    filed with the Securities and Exchange Commission (the
    SEC) on April 5, 2004.(2)
    
    Incorporated by reference to the Companys Amendment
    No. 3 to the registration statement on
    Form S-1
    (No. 333-114209)
    filed with the SEC on October 26, 2004.(3)
    
    Incorporated by reference to the Companys Amendment
    No. 5 to the registration statement on
    Form S-1
    (No. 333-114209)
    filed with the SEC) on December 27, 2004.(4)
    
    Incorporated by reference to the Companys Amendment
    No. 6 to the registration statement on
    Form S-1
    (No. 333-114209)
    filed with the SEC on January 3, 2005.(5)
    
    Incorporated by reference to the Companys registration
    statement on Form
    S-1
    (No. 333-81650)
    filed with the SEC on January 30, 2002. 55




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##### Table of Contents



(6)
    
    Incorporated by reference to the Companys Amendment
    No. 1 to the registration statement on
    Form S-1
    (No. 333-81650)
    filed with the SEC on March 25, 2002.(7)
    
    Incorporated by reference to the Companys annual report on
    Form 10-K
    (No. 000-51110)
    filed with the SEC on March 31, 2005.(8)
    
    Incorporated by reference to the Companys quarterly report
    on
    Form 10-Q
    (No. 000-51110)
    filed with the SEC on May 13, 2005.(9)
    
    Incorporated by reference to the Companys quarterly report
    on
    Form 10-Q
    (No. 000-51110)
    filed with the SEC on November 14, 2005.(10)
    
    Incorporated by reference to the Companys annual report on
    Form 10-K
    (No. 000-51110)
    filed with the SEC on March 31, 2006.(11)
    
    Incorporated by reference to the Companys current report
    on
    Form 8-K
    (No. 000-51110)
    filed with the SEC on March 13, 2007.  
    
    This exhibit has been filed separately with the Commission
    pursuant to an application for confidential treatment. The
    confidential portions of this exhibit have been omitted and are
    marked by an asterisk.**
    
    Indicates a management contract or compensatory plan. 56




---



##### Table of Contents



SIGNATURES      By
    /s/  Marc
    D. Beer         Signature

Title

Date/s/  Marc
    D. BeerMarc
    D. Beer

Chief Executive Officer and
    Director (Principal Executive Officer)

March 16, 2007/s/  Stephen
    G. DanceStephen
    G. Dance

Chief Financial Officer
    (Principal Financial Officer and
    Principal Accounting Officer)

March 16, 2007/s/  Barbara
    BiererBarbara
    Bierer

Director

March 16, 2007/s/  Paul
    BlakePaul
    Blake

Director

March 16, 2007/s/  Paul
    HastingsPaul
    Hastings

Director

March 16, 2007/s/  Vaughn
    M. KailianVaughn
    M. Kailian

Director

March 16, 2007/s/  Denise
    Pollard-KnightDenise
    Pollard-Knight

Director

March 16, 2007/s/  James
    SiglerJames
    Sigler

Director

March 16, 2007/s/  James
    TullisJames
    Tullis

Director

March 16, 2007/s/  Jan
    van HeekJan
    van Heek

Director

March 16, 2007  57




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm      Consolidated
    financial statements
      Internal
    control over financial reporting
  Internal Control    Integrated
    Framework Internal Control    Integrated
    Framework
   F-1




---



##### Table of Contents



F-2




---



##### Table of Contents



ViaCell,
    Inc.



Consolidated
    Balance Sheets  As of December 31,2006


2005(In thousands except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
18,039


$
33,138Short-term investments


33,206



27,406Accounts receivable, less
    allowances of $1,787 and $1,068 in 2006 and 2005, respectively


12,616



13,736Prepaid expenses and other current
    assets


2,008



2,679Restricted cash






162Total current assets


65,869



77,121Property and equipment, net


8,376



8,702Goodwill


3,621



3,621Intangible assets, net


2,621



2,823Restricted cash


1,795



1,932Other assets






31Total assets

$
82,282


$
94,230LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    obligations

$
55


$
1,543Accounts payable


960



1,141Accrued expenses


9,550



7,706Deferred revenue


7,300



5,785Total current liabilities


17,865



16,175Deferred revenue


14,666



9,930Deferred rent


3,252



3,876Contingent purchase price


8,155



8,155Long-term debt obligations, net of
    current portion


27



84Total liabilities


43,965



38,220Commitments and contingencies
    (Note 8)Stockholders equity:Preferred stock, $0.01 par
    value; authorized 5,000,000 shares in 2006 and 2005






Common stock, $0.01 par
    value; authorized 100,000,000 shares in 2006 and 2005,
    respectively; issued and outstanding 38,525,036 and
    38,117,725 shares in 2006 and 2005, respectively


385



381Additional paid-in capital


232,215



229,955Deferred compensation






(1,087
)Accumulated deficit


(194,490
)


(173,443
)Accumulated other comprehensive
    income


207



204Total stockholders equity


38,317



56,010Total liabilities and
    stockholders equity

$
82,282


$
94,230    F-3




---



##### Table of Contents



ViaCell,
    Inc.



Consolidated
    Statements of Operations  Years Ended December 31,2006


2005


2004(In thousands except share and per share data)Processing and storage revenues

$
54,136


$
43,775


$
36,805Grant and contract revenues


290



668



1,469Total revenues


54,426



44,443



38,274Operating expenses:Cost of processing and storage
    revenues:Direct costs


10,253



8,298



7,396Royalty recovery










(3,258
)Total cost of processing and
    storage revenues


10,253



8,298



4,138Research and development


13,984



13,653



16,030Sales and marketing


37,154



24,909



19,497General and administrative


18,525



13,835



15,551Restructuring


(1,070
)


305



3,188Total operating expenses


78,846



61,000



58,404Loss from operations


(24,420
)


(16,557
)


(20,130
)Interest income (expense):Interest income


3,141



2,216



530Interest expense


(51
)


(336
)


(1,497
)Total interest income (expense),
    net


3,090



1,880



(967
)Loss before cumulative effect of
    change in accounting principle


(21,330
)


(14,677
)


(21,097
)Cumulative effect of change in
    accounting principle


283







Net loss


(21,047
)


(14,677
)


(21,097
)Accretion on redeemable
    convertible preferred stock






(986
)


(13,071
)Net loss attributable to common
    stockholders

$
(21,047
)

$
(15,663
)

$
(34,168
)Net loss per share:Basic and diluted net loss per
    common share before cumulative effect of change in accounting
    principle

$
(0.56
)

$
(0.44
)

$
(12.62
)Cumulative effect of change in
    accounting principle


0.01







Basic and diluted net loss per
    common share

$
(0.55
)

$
(0.44
)

$
(12.62
)Weighted average shares used in
    basic and diluted net loss per share computation


38,377,238



35,777,308



2,707,219    F-4




---



##### Table of Contents



ViaCell,
    Inc.



Consolidated
    Statements of Comprehensive Loss  Years Ended December 31,2006


2005


2004(In thousands)Net loss

$
(21,047
)

$
(14,677
)

$
(21,097
)Foreign currency translation
    adjustment


3



(105
)


(175
)Comprehensive loss

$
(21,044
)

$
(14,782
)

$
(21,272
)    F-5




---



##### Table of Contents



ViaCell,
    Inc.



Consolidated
    Statements of Stockholders Equity (Deficit)  AccumulatedPreferred Stock


Common Stock


Additional








Other


TotalPar





Par


Paid-In


Deferred


Accumulated


Comprehensive


StockholdersShares


Value


Shares


Value


Capital


Compensation


Deficit


Income


Equity (Deficit)(In thousands except share data)Balance, December 31, 2003


182,857


$
2



2,659,854


$
27


$
1,437


$
(3,422
)

$
(128,679
)

$
484


$
(130,151
)Stock option exercises










89,915



1



107















108Accretion on redeemable convertible
    preferred stock


















(4,081
)






(8,990
)






(13,071
)Non-employee stock-based
    compensation










14,192







415















415Deferred compensation


















2,882



(2,882
)










Forfeiture of stock options


















(413
)


413











Modification of stock options


















774















774Amortization of deferred
    compensation


















(1,121
)


3,361











2,240Net loss


























(21,097
)






(21,097
)Translation adjustment






























(175
)


(175
)Balance, December 31, 2004


182,857


$
2



2,763,961


$
28


$



$
(2,530
)

$
(158,766
)

$
309


$
(160,957
)Stock option exercises










685,157



7



1,157















1,164Initial public offering










8,625,000



86



56,062















56,148Initial public offering costs


















(2,899
)














(2,899
)Accretion on redeemable convertible
    preferred stock


















(986
)














(986
)Conversion of redeemable
    convertible preferred stock (Series A and B)


(182,857
)


(2
)


182,857



2



















Conversion of redeemable
    convertible preferred stock (Series C through K)










25,628,075



256



175,903















176,159Issuance of common stock upon
    exercise of warrants, net










229,818



2



(2
)














Non-employee stock-based
    compensation










2,857







20















20Deferred compensation, net


















700



1,443











2,143Net loss


























(14,677
)






(14,677
)Translation adjustment






























(105
)


(105
)Balance, December 31, 2005





$
0



38,117,725


$
381


$
229,955


$
(1,087
)

$
(173,443
)

$
204


$
56,010Stock option exercises










198,938



2



539















541Issuance of common stock upon
    exercise of warrants, net










208,373



2



(2
)














Reversal of deferred compensation


















(1,087
)


1,087











Stock-based compensation


















2,810















2,810Net loss


























(21,047
)






(21,047
)Translation adjustment






























3



3Balance, December 31, 2006





$




38,525,036


$
385


$
232,215


$



$
(194,490
)

$
207


$
38,317    F-6




---



##### Table of Contents



ViaCell,
    Inc.



Consolidated
    Statements of Cash Flows  Years Ended December 31,2006


2005


2004(In thousands)Cash flows from operating
    activities:Net loss

$
(21,047
)

$
(14,677
)

$
(21,097
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and amortization


2,244



2,110



2,577Stock-based compensation


3,095



2,163



3,429Cumulative effect of change in
    accounting principle


(283
)






Reserve for bad debt


1,502



515



248Non-cash interest expense on
    related party notes






88



1,142(Gain) loss on disposal of property
    and equipment


(528
)


17



2,155Tenant improvement allowance


60



2,437



1,004Changes in assets and liabilities,
    excluding the effect of acquisition:Accounts receivable


(367
)


(3,276
)


(3,376
)Prepaid expenses and other current
    assets


(192
)


2,853



(615
)Accounts payable


(208
)


(115
)


(2,192
)Accrued expenses


2,050



51



(2,513
)Deferred revenue


6,251



5,527



4,092Deferred rent


(1,005
)


873



31Net cash used in operating
    activities


(8,428
)


(1,434
)


(15,115
)Cash flows from investing
    activities:Purchases of property and equipment


(1,791
)


(3,923
)


(2,393
)Proceeds from sale of property and
    equipment


603







Proceeds from maturities and sales
    of investments


50,645



36,532



22,682Purchases of investments


(56,444
)


(42,099
)


(36,697
)Restricted cash


317







732Security deposit






7



85Net cash used in investing
    activities


(6,670
)


(9,483
)


(15,591
)Cash flows from financing
    activities:Proceeds from exercise of stock
    options


541



1,164



108Net proceeds from sale of common
    stock in initial public offering, net of offering costs






53,249



Proceeds from return of security
    deposits on debt obligations


943



414



403Repayments on credit facilities


(1,485
)


(1,674
)


(1,562
)Repayments of notes payable to
    related party, including accrued interest






(15,510
)


Payments on capital lease principal


(65
)


(86
)


(267
)Net cash (used in) provided by
    financing activities


(66
)


37,557



(1,318
)Effect of change in exchange rates
    on cash


65



(248
)


(238
)Net (decrease) increase in cash and
    cash equivalents


(15,099
)


26,392



(32,262
)Cash and cash equivalents,
    beginning of period


33,138



6,746



39,008Cash and cash equivalents, end of
    period

$
18,039


$
33,138


$
6,746Supplemental disclosures of cash
    flow information and non cash transactions:Interest paid

$
53


$
273


$
325Income taxes paid


71



153



73Accretion of redeemable convertible
    preferred stock






986



13,071Equipment purchased under capital
    lease, net of disposals






56



140    F-7




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##### Table of Contents



ViaCell,
    Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Organization
    and Nature of Business  sm
      2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Use of
    Estimates
   F-8




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##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Cash,
    Cash Equivalents and Investments
  held-to-maturity available-for-sale held-to-maturity held-to-maturity.
  December 31, 2006


December 31, 2005Amortized





Unrealized


Amortized





UnrealizedCost


Fair Value


Gain


Cost


Fair Value


LossCash and cash equivalents (money
    market accounts)

$
14,492


$
14,492


$



$
29,807


$
29,807


$
Government securities


1,144



1,144







1,432



1,432



Cash


2,403



2,403







1,899



1,899



Total cash and cash equivalents


18,039



18,039







33,138



33,138



Short-term investments:Commercial paper


33,206



33,216



10



27,406



27,362



(44
)Total cash, cash equivalents and
    short term investments

$
51,245


$
51,255


$
10


$
60,544


$
60,500


$
(44
)     Revenue
    Recognition
  Revenue Recognition in Financial
    Statements.
  No. 00-21, Revenue Arrangements with Multiple Deliverables 00-21). 00-21
  a)
    The delivered items have value to a customer on a standalone
    basis;b)
    There is objective and reliable evidence of the fair value of
    the undelivered items; andc)
    Delivery or performance is probable and within the control of
    the vendor for any undelivered items that have a right of return. F-9




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
               No. 01-09 01-09), Accounting for Consideration Given by a Vendor 01-09 states
      Accounts
    Receivable
   F-10




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Cost
    of Processing and Storage Revenues
      Advertising
    Costs
    Research
    and Development Expenses
    Foreign
    Currency Translation
  Foreign Currency
    Translation.
  Income
    Taxes
    Property
    and Equipment
   F-11




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use
    EstimatedAsset Classification

Useful LifeSoftware


2-3 yearsLaboratory equipment


5-10 yearsOffice and computer equipment


3-5 yearsLeasehold improvements


Life of leaseFurniture and fixtures


5-7 years     Fair
    Value of Financial Instruments
    Goodwill
    and Other Intangible Assets
    
    goodwill;
    employment contracts; and
    trademarks.  Goodwill and Other Intangible Assets
    Accounting
    for the Impairment of Long-Lived Assets
  Accounting
    for the Impairment or Disposal of Long-Lived Assets.
  
    a significant change in the manner in which an asset is used;
    a significant decrease in the market value of an asset;
    a significant adverse change in its business or the industry in
    which an asset is sold; and F-12




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    a current period operating cash flow loss combined with a
    history of operating or cash flow losses or a projection or
    forecast that demonstrates continuing losses associated with the
    asset.    Concentration
    of Credit Risk and Other Risks and Uncertainties
          Balance at


Additions to





Balance atBeginning of


Costs and





End ofPeriod


Expenses


Write-Offs


PeriodDecember 31, 2006

$
1,068



1,502



(783
)

$
1,787December 31, 2005

$
1,197



515



(644
)

$
1,068December 31, 2004

$
1,044



248



(95
)

$
1,197       Stock-Based
    Compensation
   F-13




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  ( )
  Years Ended December 31,2006


2005


2004Cost of processing and storage
    revenues

$
67


$
20


$
32Research and development


446



294



896Sales and marketing


282



207



175General and administrative


2,300



1,642



2,083Restructuring










243Total stock-based compensation
    expense

$
3,095


$
2,163


$
3,429     Years EndedDecember 31


December 312005


2004Net loss attributable to common
    stockholders as reported

$
(15,663
)

$
(34,168
)Add: employee stock-based
    compensation expense included in reported net loss


2,143



3,014Deduct: total employee stock-based
    compensation expense determined under fair value based method
    for all awards


(4,630
)


(5,175
)Pro forma net loss attributable to
    common stockholders

$
(18,150
)

$
(36,329
)Basic and diluted net loss per
    common share as reported

$
(0.44
)

$
(12.62
)Pro forma basic and diluted net
    loss per common share

$
(0.51
)

$
(13.42
)    F-14




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     December 31,2006


2005


2004Risk-free interest rate


4.66
%


3.92
%


2.86
%Expected life


4.57 years



5 years



5 yearsExpected volatility


65
%


100
%


100
%Dividend yield


0
%


0
%


0
%     WeightedNumber of


Number of








AverageOptions


Options





Aggregate


ExerciseAmounts in Thousands Except Share Data

Authorized


Outstanding


Exercise Price


Exercise Price


PriceOutstanding, December 31, 2005


7,200,000



3,930,694


$
0.30-11.10


$
10,876


$
2.77Granted






613,525



4.00- 5.21



3,035



4.95Exercised






(199,018
)


0.30- 5.21



(541
)


2.72Canceled and forfeited






(353,874
)


0.30-11.10



(1,319
)


3.73Outstanding, December 31, 2006


7,200,000



3,991,327


$
0.30-11.10


$
12,051


$
3.02Exercisable, December 31, 2006






2,333,832


$
0.30-11.10


$
5,960


$
2.55   Options Outstanding at December 31, 2006


Options Exercisable at December 31, 2006Weighted AverageRemainingNumber of Shares

Contractual Life


Exercise Price


Number of Shares1,252,543


3.36


$
0.30



952,54332,200


4.36



0.75



32,20096,986


4.38



0.95



96,986718,625


4.97



2.00



361,37530,775


7.41



4.00



16,70965,375


9.55



4.04



5,09223,650


9.95



4.50



1,250981,210


6.85



5.00



586,362259,812


9.38



5.03



92,834210,870


9.17



5.21



41,026135,452


8.72



5.31



42,8089,562


8.93



5.62



2,65525,000


8.32



7.25



10,93793,533


8.01



8.17



66,3087,000


8.36



9.00



1,75040,000


8.78



10.89



20,0008,734


8.53



11.10



2,9973,991,327










2,333,832  F-15




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Segment
    Information
      December 31, 2006


December 31, 2005Long-lived assets, netUnited States

$
8,183


$
8,430Singapore


193



272Total long-lived tangible assets,
    net

$
8,376


$
8,702     Years EndedDecember 31, 2006


December 31, 2005United States

$
54,136


$
43,812Germany






(101
)Singapore


290



732Total Revenues

$
54,426


$
44,443   Comprehensive
    Loss
    Net
    Loss Per Common Share
   F-16




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Years Ended December 31,2006


2005


2004Basic and diluted net loss per
    shareNet loss attributable to common
    stockholders

$
(21,047
)

$
(15,663
)

$
(34,168
)Weighted average number of common
    shares outstanding


38,377



35,777



2,707Basic and diluted net loss per
    share

$
(0.55
)

$
(0.44
)

$
(12.62
)     Years Ended December 31,2006


2005


2004Options


3,787,146



3,746,395



4,222,211Warrants


1,558,541



3,349,455



1,428,750Convertible preferred stock






1,433,941



25,810,932   Recent
    Accounting Pronouncements
       F-17




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   3.
    Property
    and Equipment    December 31,2006


2005Software

$
3,389


$
3,098Laboratory equipment


5,996



5,230Office and computer equipment


3,021



2,611Leasehold improvements


5,310



5,267Furniture and fixtures


907



767Construction in progress


46



8Property and equipment, gross


18,669



16,981Less: accumulated depreciation and
    amortization


(10,293
)


(8,279
)Property and equipment, net

$
8,376


$
8,702         4.
    Intangible
    Assets and Goodwill        December 31,2006


2005Goodwill

$
3,621


$
3,621Intangible assets:Trademark

$
4,400


$
4,400Employment agreements


288



288Intangible assets, gross


4,688



4,688Less: accumulated amortization


(2,067
)


(1,865
)Intangible assets, net

$
2,621


$
2,823    F-18




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   5.
    Accrued
    Expenses    December 31,2006


2005Payroll and payroll related

$
1,904


$
1,541Management incentive


1,047



881Professional fees


1,829



1,206Accrued marketing


2,079



1,260Accrued restructuring
    (Note 12)






632Deferred rent, current


345



619Accrued taxes


459



537Other


1,887



1,030Accrued expenses

$
9,550


$
7,706   6.
    Income
    Taxes    2006


2005


2004Domestic

$
(21,398
)

$
(13,104
)

$
(16,019
)Foreign


351



(1,573
)


(5,078
)Total Loss Before Income Taxes

$
(21,047
)

$
(14,677
)

$
(21,097
)     Years Ended December 31,2006


2005


2004US Statutory rate


34.00
%


34.00
%


34.00
%State taxes, net


(0.12
)%


(0.66
)%


3.70
%Foreign rate differential


(0.77
)%


0.02
%


1.80
%Benefit of tax credits


1.47
%


4.37
%


2.60
%Change in valuation allowance


(31.22
)%


(34.41
)%


(36.80
)%Stock-based compensation


(1.78
)%


(1.41
)%


(5.10
)%Other


(1.78
)%


(1.03
)%


(0.20
)%Change in local tax rate


0.00
%


(1.89
)%


0.00
%Effective tax rate


(0.20
)%


(1.01
)%


0.00
%    F-19




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,2006


2005


2004Deferred tax assets:Operating loss carryforwards

$
41,506


$
37,323


$
35,436Tax credit carryforwards


4,470



4,315



3,484Stock-based compensation


1,727



2,802



3,790Temporary differences


14,403



10,238



8,51062,106



54,678



51,220Less: valuation allowance


(61,045
)


(53,614
)


(50,002
)Net deferred tax assets


1,061



1,064



1,218Deferred tax liabilities:Intangible assets


(1,061
)


(1,064
)


(1,218
)Net deferred taxes

$



$



$
       No. SFAS (SFAS 109-2),
    Balance atBeginning of








Balance atDescription

Period


Additions


Deductions


End of Period2006

$
53,614



7,431






$
61,0452005

$
50,002



3,612






$
53,6142004

$
42,234



7,768






$
50,002  F-20




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  7.
    Long-Term
    Debt Obligations    December 31,2006


2005Debt facility loans

$



$
1,480Capital lease obligations


82



147Total long-term debt


82



1,627Less: current portion


(55
)


(1,543
)Total long-term debt, net of
    current portion

$
27


$
84   Debt
    facility loans
    Capital
    Lease Obligations
  Accounting for Leases.
    Year Ending December 31,2007

$
562008


282009


Total payments


84Less: interest


(2
)Total debt


82Less: current portion


(55
)Total long-term debt

$
27   8.
    Commitments
    and Contingencies  Contingent
    Purchase Price
     F-21




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Leases
      Year Ending December 31,2006

$
1,8732007


1,8532008


1,9242009


1,9362010


2,005Thereafter


5,448Total lease payments

$
15,039          F-22




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Agreements
  ® ® ® tm .
     F-23




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     and/or
    Litigation
   F-24




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     and/or
         F-25




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Physician
    Indemnification Program
  Guarantors Accounting and
    Disclosure Requirements for Guarantees, Including Indirect
    Guarantees of Indebtedness of Others
  ViaCord
    Guarantee Program
  Accounting for Contingencies.
    For theYears EndedDecember 31,2006


2005Balance at the beginning of the
    period

$
92


$
73Accrual for additional units sold
    during the period


8



19Balance at the end of the period

$
100


$
92   9.
    Common
    and Preferred Stock   F-26




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   10.
    Warrants           F-27




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     11.
    Employee
    Benefit Plan    12.
    Restructuring  sub-leased sub-lessee.
          Balance, December 31, 2004

$
907Adjustments


255Payments


(530
)Balance, December 31, 2005


632Adjustments


(34
)Payments


(598
)Balance, December 31, 2006

$
  F-28




---



##### Table of Contents



ViaCell,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  13.
    Unaudited
    Quarterly Financial Information  Selected
    Quarterly Consolidated Financial Data:
  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In thousands, except per share data)Year ended December 31, 2006Total revenues

$
12,081


$
13,539


$
14,667


$
14,139Loss from operations

$
(6,092
)

$
(7,665
)

$
(5,281
)

$
(5,382
)Net loss attributable to common
    stockholders

$
(5,111
)

$
(6,879
)

$
(4,462
)

$
(4,595
)Net loss per common share (basic
    and diluted)

$
(0.13
)

$
(0.18
)

$
(0.12
)

$
(0.12
)Year ended December 31, 2005Total revenues

$
10,140


$
11,383


$
11,690


$
11,230Loss from operations

$
(4,196
)

$
(3,515
)

$
(3,976
)

$
(4,870
)Net loss attributable to common
    stockholders

$
(5,023
)

$
(3,095
)

$
(3,558
)

$
(3,987
)Net loss per common share (basic
    and diluted)

$
(0.17
)

$
(0.08
)

$
(0.09
)

$
(0.10
)  F-29