By Jim Shrine

The failure of Cytel Corp.¿s Cylexin to demonstrate efficacy for the second time spelled the end for the company¿s cell-adhesion program, and also for Cytel.

The carbohydrate-based small molecule proved no better than placebo in a 138-patient Phase II/III trial assessing its ability to treat reperfusion injury in infants undergoing cardiopulmonary bypass to help surgical repair of heart defects. Cylexin had failed in a Phase II trial nearly two years ago as a treatment to reduce cardiac reperfusion injury in heart attack patients.

¿We really got unequivocal results,¿ Virgil Thompson, Cytel¿s president and CEO, told BioWorld Today. ¿There was just no difference statistically between placebo and the treated group across all the different endpoints. The trial was well designed and well carried out. We just got an unequivocally negative finding.

¿There¿s no need to agonize over whether we should do additional work. We clearly should not do additional work in reperfusion injury. We thought this was the ideal model of reperfusion injury.¿

Thompson said the dosing appeared correct and patients were getting drug at the proper levels, and the likelihood was that there was selectin blockage. So apparently selectin blockade is not the answer for reperfusion injury, he said.

¿Based on the history we can¿t justify doing any more work with Cylexin,¿ he said. ¿It was the foundation of our cell-adhesion program and, basically, our foundation crumbled yesterday. The remaining cell-adhesion assets are modest and not the basis for building a company. Most investors and employees had been aware the fate of the program depended on the fate of this trial.¿

Cytel, of San Diego, had sold much of its carbohydrate manufacturing technology to Neose Technologies Inc., of Horsham, Pa., on Monday and other assets have been turned over to the Nextran unit of Baxter Healthcare Corp., of Deerfield, Ill.

Attention Turns To Vaccines Business

The remaining asset is Cytel¿s 75 percent ownership of Epimmune Inc., which is 5 miles away in San Diego and focuses on vaccines. Epimmune has a deal worth up to $100 million with G.D. Searle & Co., of Skokie, Ill., in the area of cancer vaccines, and has in-house infectious diseases vaccine programs it intends to partner.

Searle, through a $15 million investment, owns about 12 percent of Epimmune. Employees hold the remaining 13 percent, said Epimmune President Deborah Schueren.

She said now it¿s as if Cytel is a holding company for Epimmune, which is not traded publicly. One possible scenario is that the companies would be combined and the name changed to Epimmune, which then would be the publicly traded company. But it is too early to say just how that will work out, she said.

Epimmune has about 40 employees. Cytel is reducing its 54-person staff to about 12, who will stay on a few weeks or months to wind down operations at the company, Thompson said. Sixteen employees working in the manufacturing end of the business became Nextran employees. Senior management¿s fate is being considered by the board, he said.

Cytel had collaborations related to Cylexin and other selectin blockers with Schwarz Pharma AG, of Monheim, Germany, and Sumitomo Pharmaceuticals Co. Ltd., of Osaka, Japan. Schwarz opted out after the heart attack trial. Sumitomo still has rights in the Far East, though never had much interest in the pediatric indication anyway, Thompson said.

Cytel¿s stock (NASDAQ:CYTL) fell $1.53, or 32 percent, Tuesday to close at $3.25. It has nearly 5 million shares outstanding. The company reported having about $1.4 million in cash at the end of January. That, together with new money from divestiture of other assets, should give Cytel enough to close its operations without leaving any debt to Epimmune, and in fact it might be able to leave it a ¿modest amount of cash,¿ Thompson said.

Epimmune was established in October 1997 and operates under separate management and financing than Cytel. The focus is on developing vaccines. It has an Epitope Identification System for identifying, from the sequences of tumor-associated antigens and infectious agents, the epitopes (antigen fragments) capable of eliciting an immune response.

The work with Searle, a wholly owned Monsanto Co. subsidiary, is focused initially on a vaccine targeting breast, lung and colon cancer. Epimmune can earn up to $100 million in pre-launch milestones in the multiple-product collaboration, Schueren said. Some of the milestones are related to preclinical work, she said, and would be expected to be achieved in the near term.

Separately, Epimmune is developing prophylactic vaccines for hepatitis C, HIV and malaria, and therapeutic vaccines for hepatitis B, hepatitis C and HIV.

¿In each of those fields we have made promising advances over the course of the past year,¿ Schueren said. ¿Each represents partnering opportunities and significant near-term development opportunities.¿

She said if partnerships are secured products could enter the clinic in the next 18 months. Initiation of the first trial with Searle, she said, should happen in about a year.

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