By Lisa Seachrist

Washington Editor

Pharmacia & Upjohn Inc. has decided to drop development of Cytel Corp.'s drug candidate for treating deep vein thrombosis. The San Diego biotech company said Friday it is looking for a new partner to sponsor clinical development of CY1748.

Pharmacia & Upjohn made its decision after a review of its consolidated development pipeline. The company did not drop CY1748 development as a result of negative preclinical data.

"It is disappointing," said Karin Eastham, vice president and chief financial officer at Cytel. "But, it's not a shocking result of these types of mergers."

Pharmacia & Upjohn acquired the rights to CY1748 from Cytel in March 1995. Pharmacia & Upjohn paid Cytel $1 million to assess the drug's potential and $3 million for the exclusive rights.

"As far as hurting the company, we won't receive royalty payments from the development of CY1748," Eastham said. "That is why we are eager to find a new partner to develop the drug."

CY1748 is a humanized monoclonal antibody targeted against P-selectin -- an adhesion molecule found on platelets. The drug is designed to inhibit the interactions between platelets and neutrophils which can cause blood clots. Pharmacia & Upjohn was in the preclinical stage of developing the drug as a treatment for blood clots in veins.

Cytel's current partners, Sumitomo Pharmaceuticals Co. Ltd., of Osaka, Japan, and Schwarz Pharma AG, of Frankfurt, Germany, have first options to license CY1748 in their respective territories, the Far East and the U.S. and Europe.

"It is too early to predict whether our current partners will be interested," said Eastham. "We expect to receive the preclinical package from Pharmacia and Upjohn and use that information to attract interest in the drug."

Cytel's stock (NASDAQ:CYTL) lost $0.016 to close at $3.484 on the news. *