By Mary Welch

Cistron Biotechnology Inc. may reap up to $31 million in milestone payments, plus royalties, if Pasteur Merieux Connaught exercises a three-year option for the exclusive license to use interleukin-1 beta (IL-1b) as a vaccine adjuvant.

The Pine Brook, N.J., company signed a letter of intent with Pasteur Merieux, of Lyon, France, to fund preclinical IL-1b adjuvant research and advance any products through clinical trials and regulatory approvals.

Pasteur Merieux made an up-front payment of $900,000. It also purchased 1.3 million Cistron common shares for $0.75 per share, for a total of $975,000.

Cistron's stock (OTC:CIST) closed Wednesday at $0.41, up $0.01.

In addition, Pasteur Merieux, a member of the Rhone-Poulenc Group, of Paris, obtained a three-year warrant to purchase additional shares. The number of shares has not yet been determined, nor the price. However, it is anticipated the price will be above Cistron's $0.48 per share as of March 31, 1998. Pasteur Merieux's U.S. headquarters is in Swiftwater, Pa.

"The project will involve working on a variety of therapeutic and prophylactic applications, meaning both preventative and treatment," said Hal Smith, a spokesman for Citron. "Flu will be a major part of the research, but there will be other uses as well."

Vaccines are treatments involving a form of a disease that prompts the body's immune system to gear up and fight it. An adjuvant helps make the vaccine even more potent and work better. IL-1, a cytokine, is an immune system regulator with potential applications in cancer and autoimmune diseases.

"Current influenza vaccines often fail to induce protective immunity," said Smith. "Plus, vaccines sometimes can't be manufactured in sufficient quantities. An adjuvant can induce protective immunity at a low antigen dose without side effects. It makes the vaccine last longer and do all that it should."

The deal should close on or before Oct. 1. *