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 September 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 October 31, 2000,  17,909,704  shares of the registrant's  Common
Stock were outstanding.

                                      -1-

<PAGE>


                                  Diacrin, Inc.
                                      Index




                                                                           Page
PART I. - FINANCIAL INFORMATION

Item 1.   Financial Statements

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

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

           Statements of Cash Flows for each of the nine month periods
           ended September 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 6.           Exhibits and Reports on Form 8-K............................13

SIGNATURES....................................................................14


                                      -2-

<PAGE>


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


                                                                        December 31,                September 30,
                                                                           1999                        2000
<S>                                                                <C>                         <C>
ASSETS
Current assets:
     Cash and cash equivalents                                        $    2,194,001            $     20,711,654
     Short-term investments                                               16,582,252                  22,912,965
     Interest receivable and other current assets                            329,365                     677,782
                                                                  ------------------          ------------------

         Total current assets                                             19,105,618                  44,302,401
                                                                    ----------------            ----------------

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                   1,597,692
                                                                    ----------------           -----------------
                                                                             512,540                     431,609
                                                                   -----------------          ------------------

Long-term investments                                                      2,644,084                  11,498,222
Investment in joint venture                                                  103,730                      10,665
                                                                   -----------------         -------------------
                                                                           2,747,814                  11,508,887
                                                                    ----------------            ----------------


                                                                      $    22,365,972            $    56,242,897
                                                                      ===============            ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                              $         138,768           $          98,667
     Accrued expenses                                                      1,251,410                   1,181,712
     Deferred revenue                                                        438,727                     261,852
     Current portion of long-term debt                                       143,350                     130,000
                                                                  ------------------          ------------------
         Total current liabilities                                         1,972,255                   1,672,231
                                                                   -----------------           -----------------

Long-term debt                                                               249,167                     151,667
                                                                   -----------------          ------------------

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 17,909,704 shares at December 31, 1999
         and September 30, 2000, respectively                                143,862                     179,097
     Additional paid-in capital                                           64,250,741                 101,366,972
     Accumulated deficit                                                 (44,250,053)                (47,127,070)
                                                                    ----------------            ----------------
              Total stockholders' equity                                  20,144,550                  54,418,999
                                                                    ----------------            ----------------

                                                                    $     22,365,972             $    56,242,897
                                                                    ================             ===============


                                              See Accompanying Notes to Financial Statements

</TABLE>

                                      -3-

<PAGE>


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

                                                            Three Months                        Nine Months
                                                        Ended September 30,                  Ended September 30,
                                                       1999             2000              1999              2000
                                                   ----------        ---------         ---------         ---------
<S>                                           <C>                <C>                <C>                <C>
REVENUES:
   Research and development                    $      712,185    $     594,131       $  2,389,523       $ 1,636,757
   Interest income                                    319,429          948,873          1,012,491         2,172,857
                                                   ----------       ----------          ---------         ---------

       Total revenues                               1,031,614        1,543,004          3,402,014         3,809,614
                                                   ----------       ----------          ---------         ---------

OPERATING EXPENSES:
    Research and development                        1,454,553        1,652,491          4,652,802         4,595,952
    General and administrative                        300,221          346,905            953,810         1,023,694
   Interest expense                                     8,977            6,563             36,931            23,260
                                                   ----------       ----------          ---------        ----------

       Total operating expenses                     1,763,751        2,005,959          5,643,543         5,642,906
                                                   ----------       ----------          ---------        ----------

EQUITY IN OPERATIONS
    OF JOINT VENTURE                                 (441,936)        (357,500)        (1,280,604)       (1,043,725)
                                                   ----------       ----------          ---------        ----------

NET LOSS                                         $ (1,174,073)   $    (820,455)      $ (3,522,133)     $ (2,877,017)
                                                 =============   ==============      =============     =============

NET LOSS PER COMMON SHARE                      $        (.08)    $        (.05)        $     (.25)      $      (.17)
                                               ==============   ===============         ===========      ===========

SHARES USED IN COMPUTING
    NET LOSS PER COMMON SHARE                      14,367,608       17,909,132          14,359,082       16,790,826
                                                   ==========       ==========          ==========       ==========













                                                See Accompanying Notes to Financial Statements


</TABLE>

                                      -4-

<PAGE>


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

                                                                                       Nine Months
                                                                                   Ended September 30,
                                                                                 1999              2000
                                                                             -----------        ----------
<S>                                                                       <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                $ (3,522,133)     $ (2,877,017)
    Adjustments to reconcile net loss to net
       cash used in operating activities-
          Depreciation and amortization                                          183,231           160,043
          Equity in operations of joint venture                                1,280,604         1,043,725
    Changes in assets and liabilities-
       Interest receivable and other current assets                             (140,974)         (348,417)
       Accounts payable                                                         (146,308)          (40,101)
       Accrued expenses                                                          (98,256)          (64,698)
       Deferred revenue                                                         (338,855)         (176,875)
                                                                             -----------       -----------

              Net cash used in operating activities                           (2,782,691)       (2,303,340)
                                                                             -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Decrease (increase) in short-term investments                              5,199,818        (6,330,713)
    Purchases of property and equipment, net                                     (22,452)          (79,112)
    Increase in long-term investments                                         (2,138,435)       (8,854,138)
    Investment in joint venture                                               (1,803,950)       (1,501,243)
    Return of capital for services provided on behalf of joint venture           796,508           545,583
                                                                             -----------       -----------

              Net cash provided by (used in) investing activities              2,031,489       (16,219,623)
                                                                             -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from sale of common stock                                        43,622        37,151,466
    Principal payments on long-term debt                                        (231,755)         (110,850)
                                                                             -----------       -----------

              Net cash (used in) provided by financing activities               (188,133)       37,040,616
                                                                             -----------       -----------
NET (DECREASE) INCREASE IN CASH
    AND CASH EQUIVALENTS                                                        (939,335)       18,517,653

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

CASH AND CASH EQUIVALENTS, end of period                                   $   4,055,719    $   20,711,654
                                                                           =============    ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid for interest during the period                             $        36,931 $          23,260
                                                                         =============== =================



                 See Accompanying Notes to Financial Statements

</TABLE>

                                      -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 or any future  periods.  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 4,001,438 at September  30, 1999 and 4,036,001 at
September 30, 2000 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  fair
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  September  30,  2000  consisted  of the
following:
<TABLE>
<CAPTION>

                                                                            December 31,           September 30,
                                                                                1999                    2000
                                                                         --------------------    -------------------
<S>                                                                       <C>                     <C>
Cash and cash equivalents-
    Cash                                                                 $               738     $              759
    Money market mutual fund                                                       2,193,263             16,231,329
    Commercial paper                                                              -                       4,479,566
                                                                         --------------------    -------------------

                                                                          $        2,194,001     $       20,711,654
                                                                         ====================    ===================
Short-term investments-
    Corporate notes (remaining avg. mat. of 7 mos. at Sep. 30, 2000)
                                                                         $        16,582,252     $       22,912,965
                                                                         ====================    ===================
Long-term investments-
    Corporate notes (remaining avg. mat. of 16 mos. at Sep. 30, 2000)
                                                                         $         2,644,084     $       11,498,222
                                                                         ====================    ===================


</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 September 30, 2000,
we had an accumulated deficit of $47.1 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 September 30, 2000,  approximately $28.4
million had been  contributed to the joint venture by Genzyme and  approximately
$6.1 million had been contributed by us. We expect that the joint venture's 2001
product  development  plans,  together with our  continued  funding of the joint
venture,  will increase our cash and  investments  used in 2001 as compared with
2000.

          We record as research and development expense all costs related to the
joint venture  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 September 30, 2000 Versus Three Months Ended
September 30, 1999

                  Research and development  revenues of  approximately  $594,000
for the three months ended  September 30, 2000 and $712,000 for the three months
ended September 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 for  NeuroCell(TM)-PD  in
1999.

                                      -9-

<PAGE>

         Interest  income was  $949,000  and $319,000 for the three months ended
September 30, 2000 and 1999, respectively.  The 197% 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 $1.7 million and $1.5 million
for the three months ended  September 30, 2000 and 1999,  respectively.  The 14%
increase was  primarily  due to increased  contract  research  costs  related to
several of the Company's product candidates.

         General and  administrative  expenses of $347,000  and $300,000 for the
three  months  ended  September  30,  2000  and  1999,  respectively,   remained
relatively unchanged between the periods.

         For the three months  ended  September  30, 2000 and 1999,  the Company
recorded  an expense of  $358,000  and  $442,000,  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 $820,000 for the three
months ended September 30, 2000 versus  approximately $1.2 million for the three
months ended September 30, 1999.

Nine Months Ended September 30, 2000 Versus Nine Months Ended September 30, 1999

                  Research and  development  revenues  were  approximately  $1.6
million for the nine months ended September 30, 2000 versus $2.4 million for the
nine months ended September 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 for
NeuroCell(TM)-PD in 1999.

         Interest  income was $2.2  million and $1.0 million for the nine months
ended September 30, 2000 and 1999,  respectively.  The 115% 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 $4.6 million for the nine months
ended  September  30, 2000 and $4.7 million for the nine months ended  September
30, 1999 remained relatively unchanged between the periods.

         General and administrative expenses of $1.0 million for the nine months
ended September 30, 2000 and 1999,  remained  relatively  unchanged  between the
periods.

         For the nine months  ended  September  30,  2000 and 1999,  the Company
recorded an expense of $1.0 million and $1.3 million,  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  $2.9 million for the
nine months ended September 30, 2000 versus  approximately  $3.5 million for the
nine months ended September 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  $102  million and with the
interest  earned  thereon.  In addition,  we have recorded  approximately  $14.0
million in revenue from our joint venture since it commenced on October 1, 1996.
At September 30, 2000, we had cash and cash equivalents,  short-term investments
and long-term investments aggregating approximately $55.1 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  warrant.  At  September  30,  2000  there  were  2,872,005  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 September 30, 2000) under an unsecured  five-year  term loan with a bank
to finance our biomedical animal facility acquired during 1997. At September 30,
2000  we had  $281,667  outstanding  under  the  borrowing.  We had no  material
commitments for capital expenditures as of September 30, 2000.

         In accordance with the joint venture agreement,  Genzyme agreed to make
available to us an unsecured,  subordinated line of credit of up to $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 would be available  through the date five years
after the date we first draw on the facility,  and all outstanding principal and
interest   would  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
September  30,  2000,  and do not  anticipate  drawing  on the  facility  in 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 of 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 September 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 September
30,  2000,  the  Company  has used  approximately  $17,700,000  of the total net
proceeds from its initial public  offering of  $20,911,755.  Of the  $17,700,000
used,  approximately  $370,000  was  used  for the  purchase  of  machinery  and
equipment;  approximately  $973,000 was used for repayment of indebtedness;  and
approximately  $16,357,000 was used for working capital.  The unused proceeds of
approximately  $3,212,000 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 6.  Exhibits and Reports on Form 8-K

         (b) On September 15, 2000,  the Company filed a current  Report on Form
8-K  incorporating  by  reference  under  Item 5 a press  release  issued by the
Diacrin/Genzyme  LLC related to the joint  venture's  ongoing Phase 2/3 clinical
trial of NeuroCell(TM)-PD.




                                      -13-


<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.



November 13, 2000                                  /s/  Thomas H. Fraser
                                                  --------------------------
                                                        Thomas H. Fraser
                                                        President and
                                                        Chief Executive Officer



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



                                      -14-