UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

      (Mark One)

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

                  For the quarterly period ended June 30, 2000

                                       OR

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

        For the transition period from _____________ to ________________

                          Commission File No. 000-20139

                                  Diacrin, Inc.
             (Exact name of registrant as specified in its charter)


            Delaware                                     22-3016912
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification No.)


                 Building 96 13th Street, Charlestown Navy Yard,
                   Charlestown, MA 02129 (Address of principal
                     executive offices, including zip code)

                                 (617) 242-9100
              (Registrant's telephone number, including area code)

         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
                            ----                           ----

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
      classes of common stock, as of the latest practicable date.

         As of July 31, 2000, 17,908,659 shares of the registrant's Common Stock
were outstanding.


<PAGE>


                                  Diacrin, Inc.
                                      Index




                                                                            Page
PART I. -         FINANCIAL INFORMATION

Item 1.           Financial Statements

                    Balance Sheets as of
                    December 31, 1999 and June 30, 2000.....................   3

                    Statements of Operations for each of the three and six month
                    periods ended June 30, 1999 and 2000....................   4

                    Statements of Cash Flows for each of the six month periods
                    ended June 30, 1999 and 2000............................   5

                    Notes to Financial Statements...........................   6

Item 2.           Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.....................   9

Item 3.           Quantitative and Qualitative Disclosure About
                     Market Risk............................................  12

PART II. -        OTHER INFORMATION

Item 2.           Changes in Securities and Use of Proceeds.................  13

Item 4.           Submission of Matters to a Vote of Security Holders.......  13

Item 6.           Exhibits and Reports on Form 8-K..........................  14

SIGNATURES..................................................................  15







                                     - 2 -

<PAGE>


                                                              Diacrin, Inc.
                                                              Balance Sheets
                                                               (Unaudited)
<TABLE>
<CAPTION>

                                                                        December 31,                    June 30,
                                                                           1999                          2000
<S>                                                              <C>                          <C>
ASSETS
Current assets:
     Cash and cash equivalents                                        $    2,194,001            $     26,454,464
     Short-term investments                                               16,582,252                  13,075,045
     Interest receivable and other current assets                            329,365                     458,588
                                                                  ------------------          ------------------

         Total current assets                                             19,105,618                  39,988,097
                                                                    ----------------            ----------------

Property and equipment, at cost:
     Laboratory and manufacturing equipment                                  893,962                     959,289
     Equipment under capital lease                                           675,262                     675,262
     Furniture and office equipment                                          303,436                     317,221
     Leasehold improvements                                                   77,529                      77,529
                                                                 -------------------         -------------------
                                                                           1,950,189                   2,029,301
     Less- Accumulated depreciation and amortization                       1,437,649                   1,543,739
                                                                    ----------------           -----------------
                                                                             512,540                     485,562
                                                                   -----------------          ------------------

Long-term investments                                                      2,644,084                  16,399,852
Investment in joint venture                                                  103,730                     -
                                                                   -----------------           -----------------
                                                                           2,747,814                  16,399,852
                                                                    ----------------            ----------------


                                                                     $    22,365,972             $    56,873,511
                                                                     ===============             ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                              $         138,768            $        144,735
     Accrued expenses                                                      1,251,410                   1,172,622
     Deferred revenue                                                        438,727                      15,927
     Current portion of long-term debt                                       143,350                     130,825
                                                                  ------------------          ------------------
         Total current liabilities                                         1,972,255                   1,464,109
                                                                   -----------------           -----------------

Long-term debt                                                               249,167                     184,167
                                                                   -----------------          ------------------

Stockholders' equity:
     Preferred stock, $.01 par value, authorized--
         5,000,000 shares; none issued and outstanding                        -                           -
     Common stock, $.01 par value; authorized-- 30,000,000
         shares; issued and outstanding--14,386,183 shares
         and 17,908,659 shares at December 31, 1999
         and June 30, 2000, respectively                                     143,862                     179,087
     Additional paid-in capital                                           64,250,741                 101,352,763
     Accumulated deficit                                                 (44,250,053)                (46,306,615)
                                                                    ----------------            ----------------
              Total stockholders' equity                                  20,144,550                  55,225,235
                                                                    ----------------            ----------------

                                                                    $     22,365,972             $    56,873,511
                                                                    ================             ===============

</TABLE>


                 See Accompanying Notes to Financial Statements



                                     - 3 -

<PAGE>


                                                            Diacrin, Inc.
                                                       Statements of Operations
                                                             (Unaudited)
<TABLE>
<CAPTION>

                                                            Three Months                       Six Months
                                                            Ended June 30,                    Ended June 30,
                                                       1999             2000               1999             2000
                                                   ----------        ---------           -------           ------
<S>                                           <C>                 <C>              <C>                 <C>

REVENUES:
   Research and development                    $      879,322      $   506,587       $  1,677,339       $ 1,042,626
   Interest income                                    334,836          897,207            693,062         1,223,984
                                                   ----------       ----------          ---------         ---------
       Total revenues                               1,214,158        1,403,794          2,370,401         2,266,610
                                                   ----------       ----------          ---------         ---------

OPERATING EXPENSES:
    Research and development                        1,581,633        1,560,868          3,198,249         2,943,461
    General and administrative                        331,559          310,316            653,589           676,789
   Interest expense                                    12,458            8,155             27,955            16,697
                                                   ----------       ----------          ---------        ----------
       Total operating expenses                     1,925,650        1,879,339          3,879,793         3,636,947
                                                   ----------       ----------          ---------        ----------

EQUITY IN OPERATIONS
    OF JOINT VENTURE                                 (371,660)        (332,038)          (838,668)         (686,225)
                                                   ----------       ----------          ---------        ----------

NET LOSS                                         $ (1,083,152)   $    (807,583)      $ (2,348,060)     $ (2,056,562)
                                                 =============   =============      =============      ============

NET LOSS PER COMMON SHARE                       $        (.08)    $       (.05)      $       (.16)     $       (.13)
                                                ==============   =============      =============      ============

SHARES USED IN COMPUTING
    NET LOSS PER COMMON SHARE                      14,359,222       17,907,890         14,354,748        16,225,528
                                                   ==========       ==========         ==========        ==========


</TABLE>











                 See Accompanying Notes to Financial Statements



                                     - 4 -

<PAGE>


                                                            Diacrin, Inc.
                                                       Statements of Cash Flows
                                                             (Unaudited)
<TABLE>
<CAPTION>
                                                                                         Six Months
                                                                                       Ended June 30,
                                                                                  1999              2000
<S>                                                                        <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                $ (2,348,060)     $ (2,056,562)
    Adjustments to reconcile net loss to net
       cash used in operating activities-
          Depreciation and amortization                                          126,706           106,090
          Equity in operations of joint venture                                  838,668           686,225
    Changes in assets and liabilities-
       Interest receivable and other current assets                             (129,577)         (129,223)
       Accounts payable                                                         (155,748)            5,967
       Accrued expenses                                                           (7,352)         (219,180)
       Deferred revenue                                                         (338,855)         (422,800)
                                                                             -----------       -----------

              Net cash used in operating activities                           (2,014,218)       (2,029,483)
                                                                             -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Decrease in short-term investments                                         3,101,994         3,507,207
    Purchases of property and equipment, net                                     (17,981)          (79,112)
    Increase in long-term investments                                         (2,901,863)      (13,755,768)
    Investment in joint venture                                               (1,226,027)         (789,645)
    Return of capital for services provided on behalf of joint venture           442,377           347,542
                                                                             -----------       -----------

              Net cash used in investing activities                             (601,500)      (10,769,776)
                                                                             -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from sale of common stock                                        39,535        37,137,247
    Principal payments on long-term debt                                        (183,367)          (77,525)
                                                                             -----------       -----------

              Net cash (used in) provided by financing activities               (143,832)       37,059,722
                                                                             -----------       -----------
NET (DECREASE) INCREASE IN CASH
    AND CASH EQUIVALENTS                                                      (2,759,550)       24,260,463

CASH AND CASH EQUIVALENTS, beginning of period                                 4,995,054         2,194,001
                                                                             -----------       -----------

CASH AND CASH EQUIVALENTS, end of period                                   $   2,235,504    $   26,454,464
                                                                           =============    ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Interest paid during the period                                        $      27,955    $       16,697
                                                                           =============    ==============


</TABLE>

                 See Accompanying Notes to Financial Statements


                                     - 5 -

<PAGE>



                                  Diacrin, Inc.
                          Notes to Financial Statements
                                   (Unaudited)

1.       Operations and Basis of Presentation

         Diacrin,  Inc. (the "Company") was incorporated on October 10, 1989 and
is developing transplantable cells for the treatment of human diseases which are
characterized by cell dysfunction or cell death and for which current  therapies
are either inadequate or nonexistent.

         The  financial  statements  included  herein have been  prepared by the
Company,  without audit, pursuant to the rules and regulations of the Securities
and  Exchange  Commission  and  include,  in  the  opinion  of  management,  all
adjustments,  consisting of normal, recurring adjustments,  necessary for a fair
presentation  of  interim  period  results.  Certain  information  and  footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant to such rules and regulations.  The Company believes, however, that its
disclosures are adequate to make the information  presented not misleading.  The
results for the interim  periods  presented  are not  necessarily  indicative of
results to be expected  for the full fiscal  year.  These  financial  statements
should be read in conjunction  with the audited  financial  statements and notes
thereto  included in the Company's  latest Annual Report on Form 10-K filed with
the Securities and Exchange Commission.

2.       Summary of Significant Accounting Policies

         (a)      Research and Development

         In  September  1996,  the Company and Genzyme  Corporation  ("Genzyme")
formed a joint  venture  (the  "Joint  Venture")  to develop  and  commercialize
NeuroCell(TM)-PD  for Parkinson's disease and  NeuroCell(TM)-HD for Huntington's
disease (the "Joint Venture  Products").  The Joint Venture is funded by Genzyme
and the Company in  accordance  with the terms of the joint  venture  agreement.
Collaborative  revenue  under  the  joint  venture  agreement  with  Genzyme  is
recognized as revenue to the extent that the Company's  research and development
costs are funded by Genzyme  through the Joint  Venture.  The  Company  receives
non-refundable  monthly  advances  from  the  Joint  Venture.  Deferred  revenue
represents  amounts  received  prior to  recognition  of revenue.  Research  and
development costs are expensed as incurred.

         (b)      Net Loss per Common Share

          In  accordance  with  Statement  of  Financial   Accounting  Standards
("SFAS") No. 128,  Earnings  per Share,  basic and diluted net loss per share is
calculated  by dividing  the net loss by the weighted  average  number of common
shares  outstanding for all periods  presented.  Diluted weighted average shares
outstanding for all periods  presented  exclude the potential common shares from
stock options and warrants of 3,979,105 and 4,038,047 at June 30, 1999 and 2000,
respectively, because to include such shares would be antidilutive.



                                     - 6 -


<PAGE>


                                  Diacrin, Inc.
                          Notes to Financial Statements
                                   (Unaudited)

         (c)       New Accounting Standards

         In June 1998,  the FASB issued SFAS No. 133,  Accounting for Derivative
Instruments  and Hedging  Activities.  The  statement is effective  for the year
ended  December 31, 2000.  SFAS No. 133  establishes  accounting  and  reporting
standards for derivative  instruments  including certain derivative  instruments
embedded in other contracts  (collectively  referred to as derivatives)  and for
hedging  activities.  The Company does not expect  adoption of this statement to
have a material impact on the Company's financial statements.

         In March 2000, the FASB issued  Interpretation  No. 44, "Accounting for
Certain  Transactions  Involving Stock  Compensation" an  Interpretation  of APB
Opinion No. 25. The interpretation  clarifies the application of APB Opinion No.
25 in certain  situations,  as defined.  The Interpretation is effective July 1,
2000, but covers certain events  occurring  during the period after December 15,
1998,  but before the effective  date. To the extent that events covered by this
interpretation  occur during the period after December 15, 1998, but before July
1, 2000,  the effects of applying this  interpretation  would be recognized on a
prospective basis from the effective date. Accordingly, upon initial application
of the final  interpretation,  (a) no adjustments would be made to the financial
statements  for periods  before the  effective  date and (b) no expense would be
recognized for any additional compensation cost measured that is attributable to
periods  before  the  effective  date.  We  expect  that  the  adoption  of this
interpretation  will not  have a  material  impact  on the  Company's  financial
position or results of operations.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting   Bulletin   (SAB)  No.  101,   "Revenue   Recognition  in  Financial
Statements." SAB No. 101, as amended, is effective for the fourth quarter of all
fiscal periods beginning after December 15, 1999. Adoption of SAB No. 101 is not
expected  to have a  material  impact on the  Company's  financial  position  or
results of operations.

3.          Stock Offering

         In March 2000, the Company completed an offering of 3,450,000 shares of
its common stock for $11.50 per share resulting in net proceeds of approximately
$37 million.



                                     - 7 -


<PAGE>



4.       Cash Equivalents and Investments

         The  Company's  cash  equivalents  and  investments  are  classified as
held-to-maturity  and are carried at amortized cost, which  approximates  market
value. Cash equivalents,  short-term  investments and long-term investments have
maturities  of less than three  months,  less than one year and greater than one
year,  respectively.  Cash  equivalents,  short-term  investments  and long-term
investments at December 31, 1999 and June 30, 2000 consisted of the following:
<TABLE>
<CAPTION>

                                                                            December 31,              June 30,
                                                                                1999                    2000
                                                                         --------------------    -------------------
<S>                                                                      <C>                     <C>
Cash and cash equivalents-
    Cash                                                                     $           738     $              725
    Money market mutual fund                                                       2,193,263             16,544,852
    Commercial paper                                                              -                       9,908,887
                                                                         --------------------    -------------------
                                                                             $     2,194,001     $       26,454,464
                                                                         ====================    ===================

Short-term investments-
    Corporate notes (remaining avg. mat. of 6 mos. at June 30, 2000)         $    16,582,252     $       13,075,045
                                                                         ====================    ===================

Long-term investments-
    Corporate notes (remaining avg. mat. of 15 mos. at June 30, 2000)        $     2,644,084     $       16,399,852
                                                                         ====================    ===================
</TABLE>




                                     - 8 -


<PAGE>






Item 2.           Management's Discussion and Analysis of Financial Condition
                  and Results of Operations

Overview

         Since our  inception,  we have  principally  focused  our  efforts  and
resources on research and  development  of cell  transplantation  technology for
treating human diseases that are characterized by cell dysfunction or cell death
and for which  current  therapies  are either  inadequate  or  nonexistent.  Our
primary  source of working  capital to fund those  activities  has been proceeds
from the sale of equity and debt securities. In addition,  commencing October 1,
1996, we have received funding from our joint venture with Genzyme in support of
the NeuroCell(TM)-PD and NeuroCell(TM)-HD  product development programs. We have
not received any revenues from the sale of products to date and do not expect to
generate  product  revenues  for the next  several  years.  We have  experienced
fluctuating  operating  losses since  inception  and expect that the  additional
activities  required to develop and  commercialize  our products  will result in
increasing operating losses for the next several years. At June 30, 2000, we had
an accumulated deficit of $46.3 million.

         In September  1996,  we formed a joint  venture with Genzyme to develop
and commercialize NeuroCell(TM)-PD and NeuroCell(TM)-HD. Under the joint venture
agreement  Genzyme  agreed to fund 100% of the first $10 million of  development
and commercialization  costs incurred after October 1, 1996, 75% of the next $40
million and 50% of all development and commercialization  costs in excess of $50
million.  After  Genzyme  funds the first $10 million,  we are  responsible  for
funding  25%  of  the  next  $40  million  and  50%  of  all   development   and
commercialization costs in excess of $50 million.

         Through  December  31,  1997,  Genzyme  made  100%  of the  total  cash
contributions  to the joint venture.  During the first quarter of 1998, we began
making  cash  contributions  to the  joint  venture  equal  to 25% of the  joint
venture's funding requirements. As of June 30, 2000, approximately $26.3 million
had been  contributed  to the joint  venture by Genzyme and  approximately  $5.4
million  had been  contributed  by us. We expect that the joint  venture's  2000
product  development  plans,  together with our  continued  funding of the joint
venture,  will increase our cash and  investments  used in 2000 as compared with
1999.

          We record as research  and  development  expense all costs  related to
NeuroCell(TM)-PD  and  NeuroCell(TM)-HD  incurred  by us on  behalf of the joint
venture.  We then recognize research and development revenue equal to the amount
of reimbursement  received by us from the joint venture out of funds contributed
by Genzyme.  We do not recognize research and development revenue for amounts we
received  from the joint  venture  out of funds  contributed  by us. As  Genzyme
incurs costs on behalf of the joint  venture that we are  obligated to fund,  we
recognize  an  expense  in our  statement  of  operations  captioned  "Equity in
operations of joint venture."

Results of Operations

Three Months Ended June 30, 2000 Versus Three Months Ended June 30, 1999

                  Research and development  revenues of  approximately  $507,000
for the three months ended June 30, 2000 and $879,000 for the three months ended
June 30, 1999 were derived  exclusively from the Joint Venture.  The decrease in
revenues was  primarily a result of a decrease in clinical  production  activity
related to the Joint Venture  products as the Joint Venture  completed  accruing
patients into its Phase 2/3 clinical trial in 1999.



                                     - 9 -


<PAGE>

         Interest  income was  $897,000  and $335,000 for the three months ended
June 30, 2000 and 1999,  respectively.  The 168% increase in interest income was
due to greater cash balances available for investment in the current year period
as a result of the Company's public stock offering completed in March 2000.

         Research and development  expenses of $1.6 million for the three months
ended June 30, 2000 and 1999 remained relatively unchanged between the periods.

         General and  administrative  expenses of $310,000  and $332,000 for the
three months  ended June 30, 2000 and 1999,  respectively,  remained  relatively
unchanged between the periods.

         For the three months ended June 30, 2000 and 1999, the Company recorded
an expense of  $332,000  and  $372,000,  respectively,  related to its equity in
operations of the joint  venture.  This expense was due to funds  contributed by
the Company to the Joint  Venture  that were used to fund  expenses  incurred by
Genzyme on behalf of the Joint Venture.

         The Company incurred a net loss of approximately $808,000 for the three
months  ended June 30,  2000  versus  approximately  $1.1  million for the three
months ended June 30, 1999.

Six Months Ended June 30, 2000 Versus Six Months Ended June 30, 1999

                  Research and  development  revenues  were  approximately  $1.0
million for the six months  ended June 30, 2000 versus $1.7  million for the six
months ended June 30, 1999 and were derived  exclusively from the Joint Venture.
The  decrease  in  revenues  was  primarily  a result of a decrease  in clinical
production  activity  related to the Joint Venture products as the Joint Venture
completed accruing patients into its Phase 2/3 clinical trial in 1999.

         Interest  income was $1.2 million and $693,000 for the six months ended
June 30, 2000 and 1999,  respectively.  The 77% increase in interest  income was
due to greater cash balances available for investment in the current year period
as a result of the Company's public stock offering completed in March 2000.

         Research and development  expenses were $2.9 million for the six months
ended June 30, 2000 versus $3.2  million for the six months ended June 30, 1999.
This 8%  decrease  was  primarily  due to a  reduction  in  clinical  production
activity as the Company's  Joint Venture  completed  accruing  patients into its
Phase  2/3  clinical  trial  of  NeuroCell(TM)-PD  in 1999  and a  reduction  in
preclinical  related research as most of the Company's  product  candidates move
toward clinical testing.

         General and  administrative  expenses of $677,000  and $654,000 for the
six  months  ended June 30,  2000 and 1999,  respectively,  remained  relatively
unchanged between the periods.

         For the six months ended June 30, 2000 and 1999,  the Company  recorded
an expense of  $686,000  and  $839,000,  respectively,  related to its equity in
operations of the joint  venture.  This expense was due to funds  contributed by
the Company to the Joint  Venture  that were used to fund  expenses  incurred by
Genzyme on behalf of the Joint Venture.

         The Company incurred a net loss of  approximately  $2.1 million for the
six months  ended June 30, 2000 versus  approximately  $2.3  million for the six
months ended June 30, 1999.



                                     - 10 -


<PAGE>

Liquidity and Capital Resources

         We have financed our  activities  primarily  with the net proceeds from
the sale of equity and debt  securities  aggregating  $101  million and with the
interest  earned  thereon.  In addition,  we have recorded  approximately  $13.4
million in revenue from our joint venture since it commenced on October 1, 1996.
At June 30, 2000, we had cash and cash equivalents,  short-term  investments and
long-term investments aggregating approximately $55.9 million.

         In February 1996, we issued redeemable  warrants in connection with our
initial  public  offering.  The  warrants  are  exercisable  for an aggregate of
2,875,000  shares of common stock at an exercise price of $16.00 per share.  The
warrants  expire on the earlier of  redemption of the warrants by us or December
31, 2000. We may redeem the warrants,  upon 30 days given notice, if the average
closing  price of the common  stock for any  20-consecutive-day  trading  period
exceeds 150% of the exercise  price of the  warrants.  The  redemption  price is
$0.01 per warrants. At June 30, 2000 there were 2,872,800 warrants outstanding.

         We have purchased approximately $2.3 million of capital equipment since
inception.  In November  1997, we borrowed  $650,000 at the prime rate plus 0.5%
(10% at June 30,  2000) under an  unsecured  five-year  term loan with a bank to
finance our biomedical  animal facility acquired during 1997. We had no material
commitments for capital expenditures as of June 30, 2000.

         In accordance with the joint venture agreement,  Genzyme agreed to make
financing  available  to us from and after the date that  Genzyme  provides  the
initial  $10  million of funding to the joint  venture.  Genzyme  agreed to make
available an unsecured, subordinated line of credit of up to an aggregate amount
of $10 million. We may draw on this facility only in the event that our cash and
cash  equivalents  are  insufficient  to  fund  our  budgeted  operations  for a
specified  period  of  time,  and we may use  the  funds  only  to fund  capital
contributions to the joint venture.  The facility will be available  through the
date  five  years  after  the  date  we  first  draw  on the  facility,  and all
outstanding  principal  and  interest  will  be due on that  fifth  anniversary.
Advances will be interest-bearing, evidenced by a promissory note and subject to
other customary conditions.  The aggregate amount of draws under the facility in
any calendar  year may not exceed $5 million.  We have not made any draws on the
facility as of June 30, 2000, and do not anticipate  drawing on the facility for
the foreseeable future.

         We believe that our  existing  funds,  together  with  expected  future
funding under the joint venture  agreement  with Genzyme,  will be sufficient to
fund our operating  expenses and capital  requirements as currently  planned for
the foreseeable future.  However, our cash requirements may vary materially from
those now planned because of results of research and development,  the scope and
results of  preclinical  and  clinical  testing,  any  termination  of the joint
venture,  relationships with future strategic partners, changes in the focus and
direction  of  our   research  and   development   programs,   competitive   and
technological  advances,  the FDA's regulatory process, the market acceptance of
any approved products and other factors.

         We  expect  to incur  substantial  additional  costs,  including  costs
related to ongoing  research and development  activities,  preclinical  studies,
clinical trials, expanding our cell production capabilities and the expansion of
our laboratory and  administrative  activities.  Therefore,  in order to achieve
commercialization or our potential products, we may need substantial  additional
funds.  We  cannot  assure  you that we will be able to  obtain  the  additional
funding that we may require on acceptable terms, if at all.



                                     - 11 -

<PAGE>



Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         We own financial instruments that are sensitive to market risks as part
of our investment  portfolio.  The investment  portfolio is used to preserve our
capital  until we are required to fund  operations,  including  our research and
development activities. None of these market-risk sensitive instruments are held
for trading  purposes.  We do not own  derivative  financial  instruments in our
investment  portfolio.  The investment  portfolio contains  instruments that are
subject to the risk of decline in interest rates.

         Our investment  portfolio  includes  investment grade debt instruments.
These  bonds are subject to interest  rate risk,  and could  decline in value if
interest rates fluctuate.  Due to the short duration and conservative  nature of
these  instruments,  we do not  believe  that we  have a  material  exposure  to
interest rate risk.





                                     - 12 -


<PAGE>



                           PART II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

         (c) The Company did not sell any equity  securities  during the quarter
ended June 30, 2000 that were not registered under the Securities Act.

         (d) The following  information  updates and supplements the information
regarding use of proceeds  originally filed by Diacrin on Form SR for the period
ended May 12,  1996,  as amended to date and relates to  securities  sold by the
Company pursuant to the  Registration  Statement on Form S-2  (Registration  No:
33-80773)  which was declared  effective on February 12, 1996:  Through June 30,
2000, the Company has used  approximately  $16,400,000 of the total net proceeds
from its  initial  public  offering of  $20,911,755.  Of the  $16,400,000  used,
approximately  $370,000 was used for the purchase of  machinery  and  equipment;
approximately $939,000 was used for repayment of indebtedness; and approximately
$15,091,000 was used for working  capital.  The unused proceeds of approximately
$4,512,000  are  in  temporary   investments   consisting  of  corporate  notes,
commercial  paper and a money market mutual fund.  All proceeds used or invested
were direct or indirect payments to others.

Item 4.  Submission of Matters to a Vote of Security Holders

         At the Company's Annual Meeting of Stockholders  held on June 29, 2000,
the following proposals were adopted by the vote specified below:

         Proposal                                       For           Withheld

1.    Election of Directors:
     Thomas H. Fraser                                14,578,763        345,420
     Zola P. Horovitz                                14,883,263         40,920
     John W. Littlechild                             14,883,263         40,920
     Stelios Papadopolous                            14,883,263         40,920
     Joshua Ruch                                     14,883,263         40,920
     Henri Termeer                                   14,883,263         40,920

                                                  For        Against   Abstain

2. To ratify the selection of
Aurthur Andersen, LLP, as the Company's
independent auditors for fiscal 2000:          14,899,719     16,624     7,840





                                     - 13 -


<PAGE>




Item 6.  Exhibits and Reports on Form 8-K

         (b) On June 30, 2000,  the Company  filed a current  Report on Form 8-K
incorporating  by  reference  under  Item 5 a press  release  issued by  Genzyme
Corporation relating to NeuroCell(TM)-PD.








                                     - 14 -


<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                              Diacrin, Inc.



August 11, 2000                                   /s/  Thomas H. Fraser
                                                --------------------------
                                                       Thomas H. Fraser
                                                       President and
                                                       Chief Executive Officer



                                                  /s/  Kevin Kerrigan
                                                --------------------------
                                                       Kevin Kerrigan
                                                       Controller





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