Cytel Corp. announced Tuesday two major restructuring effortsin the focus of its major research program on antigenrecognition and in its collaborative research plans with Swisspharmaceutical giant Sandoz AG.

Cytel (NASDAQ:CYTL) will now concentrate on developingtherapeutic vaccines, largely through Sequel Therapeutics, itsjoint venture with The Scripps Research Institute. Gone is thedrug CY727 for treating rheumatoid arthritis that Cytel andSandoz were developing, but the obligations of thatcollaboration remain.

Originally, the San Diego company had been researching bothimmune suppression for treating autoimmune diseases andimmune stimulation for therapy of chronic viral infections andcancer. But the preclinical data favored the latter approach.

"We have concluded that the immune stimulation approach hasa higher probability of near-term success," said Howard Grey,Cytel's vice president of research. "Therefore, we have decidedto cut back our autoimmune disease research."

The therapies for chronic diseases that Sequel is developing aredesigned to directly enhance a patient's ability to produce Tcells, which trigger the body's immune response to antigens.For a T cell to recognize an antigen, "both the MHC (majorhistocompatibility complex) receptor and the T cell receptor arerequired," explained Jay Kranzler, Cytel's president and chiefexecutive officer.

"In the Sandoz collaboration we attempted to design peptide orpeptide-like drugs to block those receptors for treatingautoimmune disease," Kranzler told BioWorld. "Our researchwith Sequel is the flip-side of that. We are identifying peptidesthat can bind both to the MHC and the T cell receptor andtherefore stimulate the immune response."

The first product out of Sequel should be CY1899, a therapeuticvaccine for treating patients with chronic hepatitis B infection.The vaccine works by stimulating killer T cells to attack thevirus. "It's not just a prophylactic (like the other hepatitis Bvaccines, which stimulate B cells to make antibodies)," Kranzlersaid. In fact, "it could be co-administered with current hepatitisB vaccines or with alpha interferon, the only approvedtherapeutic for treating the hepatitis B virus," he said. Thevaccine should be in the clinic early in 1993.

As for Cytel's collaboration with Sandoz, Kranzler said that"there is a mutual recognition that (dropping development ofCY727) is a good thing to do, both because of technical hurdleswith 727 and the relative attractiveness of the other areas(Sequel, for example)." But the two companies still have acontract, which they penned in 1989 to the tune of $30 million.

Kranzler said he is off to Zurich, where "we will come up with amutually satisfying arrangement."

Cytel's priority shifts are not as significant for the scientists,who will continue with their research albeit to a different end,as they are for the business, Kranzler told BioWorld.

"Before, we were looking at revenues from a royalty streammaybe 10 years down the road (for CY727), and now we have aproduct that's proprietary to Cytel," he said.

The company's stock gained $1.13 a share on Tuesday to closeat $10.88.

-- Jennifer Van Brunt Senior Editor

(c) 1997 American Health Consultants. All rights reserved.

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