Cytel Corp. issued 1.3 million restricted shares Tuesdayto Scripps Research Institute for its 13 percent interest intheir joint venture vaccine company, called SequelTherapeutics Inc.

Karin Eastham, San Diego-based Cytel vice president andchief financial officer, said the stock swap was worth$4.1 million. The value of the deal represented a discountto the shares' market price because of restrictions thatScripps holds the shares for two years. Cytel's stock(NASDAQ:CYTL) closed Friday $5.31, up 6 cents.

Scripps, of La Jolla, Calif., and Cytel formed Sequel threeyears ago to develop anti-viral and cancer vaccines. In theoriginal agreement Cytel owned 53 percent and Scripps47 percent. Eastham said Cytel's ownership increasedwith its investment in Sequel's technology, particularlyits Theradigm immune stimulation techniques, which aredesigned to activate cytotoxic T cells. Sequel, she added,now will be merged with Cytel.

Cytel's lead Theradigm product is a hepatitis B virusvaccine, called Theradigm-HBV, which is in two Phase IItrials for active hepatitis and carriers of the disease. TheTheradigm technology is also targeted for other viraldisorders, fungal diseases and cancer.

The company has a collaboration with Takara Shuzo Co.Ltd. Biomedical Group, of Shiga, Japan, for developmentof the vaccine for fungal diseases and ex vivo cellulartreatment of cancer. Cytel also is studying a Theradigmvaccine for AIDS under a $3.3 million grant from theNational Institutes of Health, of Bethesda, Md. _Charles Craig

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