By Karen Pihl-Carey

Plans put in place last May to sell Cistron Biotechnology Inc. may finally be realized as the Pine Brook, N.J.-based company said it signed a letter of intent with a major biopharmaceutical company.

The proposed acquisition would involve the exchange of common stock, and it is initially valued at between $15 million and $20 million. Cistron has about 20.8 million shares outstanding. The company's stock (OTC:CIST) closed Wednesday at 75 cents, up 28 cents.

The letter is non-binding and a definitive agreement must be signed before Cistron's board will bring something to shareholders. The biopharmaceutical company, the name of which will not be disclosed unless a definitive agreement is reached, has a market capitalization of about $4 billion.

"Cistron's board decided last May that it would sell the company, that that would be in the best interest of shareholders," said company spokesman Hal Smith, of Hal Smith Associates in Palm City, Fla. "In doing that, the company has no product they have developed. They have a very strong patent position in interleukin-1. They have $10 million in [assets] as a result of a litigation settlement. So financially, they're sound."

The company settled for $21 million in 1996 with Immunex Corp., of Seattle, on an alleged patent infringement lawsuit. Cistron alleged that Immunex misappropriated the DNA sequence encoding interleukin 1-beta (IL-1b) from Cistron. Under terms of the settlement, Immunex admitted no wrongdoing and assigned certain IL-1b patents to Cistron. (See BioWorld Today, Nov. 4, 1996, p. 1.)

Smith said Cistron only has $400,000 in liabilities. "That's total. That's everything," he said. "So that puts them in good shape."

In July 1998, the company formed a $31 million collaboration with Pasteur Merieux Connaught, of Lyon, France, which is now called Aventis Pasteur. The collaboration involves the license to use IL-1b as a vaccine adjuvant. Pasteur Merieux funds preclinical IL-1b adjuvant research and will advance any products through clinical trials and regulatory approvals. (See BioWorld Today, July 9, 1998, p. 2.)

The project involves the development of therapeutic and prophylactic applications for the flu and other illnesses. IL-1, a cytokine, is an immune system regulator with potential applications in cancer and autoimmune diseases.

"So they have those things going for them," Smith told BioWorld Today. "So the board decided the best way to optimize the value, as you will, would be to sell the company."