By Jim Shrine

Neose Technologies Inc. acquired complementary technology in the area of carbohydrate manufacturing from Cytel Corp. for up to $6.6 million in cash.

Neose paid $3.5 million and put into escrow another $1.5 million, which will be released when all patent and license issues are secured. The remaining $1.6 million is tied to payments from certain collaborations. There are no royalty or other back-end obligations to the deal.

¿This really completes the technology circle around enzymatic synthesis of carbohydrates,¿ said Sherrill Neff, Neose¿s president and chief financial officer. ¿Most of the Neose technology focuses on the use of enzymes, called glycosyltransferases, to link specific carbohydrate subunits together. Cytel focused on the use of enzymes to build the high-energy sugar subunits, the things we then link together. When you put the two together, you have a seamless enzymatic synthesis system, which is much more efficient than either system separately.¿

Neose¿s acquisition of San Diego-based Cytel¿s Glytec business unit included 14 patents issued or pending in the U.S.; two provisional applications; and the corresponding foreign patents and applications. It also included license and option agreements with nine companies and institutions, covering more than 50 additional patents.

A main part of the acquisition centers around Cytel¿s Sugar Nucleotide Cycling (SNC) technology, a process to enzymatically synthesize complex carbohydrates, or oligosaccharides. It uses recombinant glycotransferase enzymes to link carbohydrate components in a way that allows for yields near 100 percent for certain carbohydrates.

That technology was described in the August 1998 issue of Nature Biotechnology. (See BioWorld Today, Aug. 18, 1998, p. 1.)

Another major plus from the deal, Neff said, is that the company has ¿built pretty good portfolios of specific enzymes that are used in the synthesis of different sugars. Together, the collection of enzymes we have under patent is probably without parallel.¿

James Paulson, former chief scientific officer and vice president at Cytel, as well as general manager at Glytec, has become a consultant at Neose, and member of its scientific advisory board. He is widely acknowledged as a leader in the carbohydrate field.

For Cytel, the deal ¿successfully accomplishes our previously announced goal of divesting our carbohydrate manufacturing technology, and enables us to focus on our core therapeutic programs,¿ Virgil Thompson, Cytel¿s president and CEO, said in a news release.

Unaffected in the deal are Cytel¿s rights to develop Cylexin ¿ a carbohydrate drug that inhibits cell adhesion to prevent damage from inflammation ¿ and its carbohydrate synthesis and manufacturing technology deal with Deerfield, Ill.-based Baxter Healthcare Corp.¿s Nextran unit, for use in transplantation.

Cytel, excluding its majority owned subsidiary, Epimmune Inc., had $1.4 million in cash at the end of January. Epimmune is developing vaccines that stimulate the body¿s immune system to treat and prevent infectious diseases and cancer. It had about $11.1 million in cash at the end of the year. Cylexin is in registration studies for preventing reperfusion injury in infants.

Cytel¿s decision to get out of the carbohydrate manufacturing business was fortunate for Neose, Neff said.

¿This means we are in a much better position to work with anyone, whether it¿s the large pharmaceutical companies or the large chemical and industrial companies that have specific carbohydrate synthesis problems,¿ he said. ¿We have technology solutions that can be useful to them at a commercial scale. It opens many business opportunities to us.¿

Neose uses technology it calls Multi-Transferase Reaction (MTR) to produce naturally occurring oligosaccharides quickly and inexpensively. ¿MTR plus SNC equals complete enzymatic synthesis,¿ Neff said.

He said Neose probably would be able to recoup its investment in Cytel¿s technology through one major collaboration.

Neose¿s stock (NASDAQ:NTEC) gained 37.5 cents Monday, to close at $13.25. Cytel (NASDAQ:CYTL) closed unchanged, at $4.781.

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