SAN DIEGO -- Cytel Corp. said Thursday that it formed a newcompany, Sequel Therapeutics, as a joint venture with theScripps Research Institute to develop therapeutic vaccines forviral diseases and cancer.

Sequel, which initially will be headquartered under Cytel's roofand draw on both Cytel and Scripps staffs, inherits an in vivovaccine project from Cytel and an ex vivo treatment fromScripps.

Sequel is developing therapies for chronic diseases, designed todirectly enhance a patient's ability to produce T cells, whichtrigger the body's immune response to antigens. Sequel'sstrategy is to produce a stronger response from a class of Tcells known as cytotoxic T cells (CTLs), which can destroy cellsafter they become chronically infected.

Sequel's compound that is furthest along in development, CY1899, should enter clinical trials as an injectable vaccine totreat hepatitis B by early next year, said Jay D. Kranzler, Cytel'spresident and chief executive officer, who holds the same titlesat Sequel. Other initial product targets include vaccines to treathuman immunodeficiency virus (HIV), hepatitis C virus,melanoma and prostate cancer.

An ex vivo treatment of melanoma, developed by Scripps,might also enter clinical trials in 1993, Kranzler said.

Based on their initial individual contributions of rights andaccumulated research -- but no cash -- Cytel has a 53 percentstake in Sequel, leaving Scripps a 47 percent share. BothScripps and Cytel will provide funds and assistance to Sequel,whose ownership will be regularly adjusted to reflect the valueof each side's contributions, Kranzler said.

The company is expected to eventually chart a courseindependent of both parents, he said. "Sequel will get its ownpeople -- business people at first." In the meantime, Sequel willdraw on its line of credit with Scripps and Cytel.

Under the agreement with Scripps, Cytel receives rights of firstrefusal for exclusive worldwide marketing rights to all in vivoand ex vivo therapies developed by Sequel. The technologycontributed by Scripps to the joint venture was developedunder a research funding agreement with Pharmacia Inc.

San Diego neighbors Cytel and Scripps decided to throw intogether on Sequel after both started work on two differentplans that were based on similar research. "The remarkablesimilarities in the therapeutic approaches for chronic disordersbeing pursued by Scripps and Cytel was the key," said WilliamH. Beers, senior vice president of Scripps Research Institute.

The goal of stimulating CTLs at Sequel rests on increasing thenumber of available cell surface receptors, called majorhistocompatibility complex (MHC), with which the CTLs react.MHCs help to present the peptide component of an antigen tothe T cell. Because the MHC receptor sites are typicallyoccupied by other peptides, the objective is create more MHCswith open sites and thereby produce a stronger immuneresponse.

To create MHCs with more open sites, Sequel has manipulatedinvertebrate cells (of a Drosophila fly), which do not normallyproduce MHC receptors, to produce empty receptors. Sequelresearchers then inserted portions of a specific foreign disease-causing organism into the cell receptors, incubated them withanimal cells in an ex vivo system, and produced a CTLresponse, according to the company.

"It's complicated, but it's very neat," Kranzler said. "We like tobelieve that Sequel is the first company to focus on therapeuticvaccines that will induce a CTL response to help rid the body ofviral-infected and cancer cell."


Sequel Therapeutics proved the winning tag to the new jointventure company formed by Cytel Corp. and the ScrippsResearch Institute, but only after considerable thought.

"We went through literally hundreds of names," said Jay D.Kranzler, president and chief executive officer of both Sequeland its parent, Cytel.

Aegis enjoyed a following among the name-pickers until it waslearned that the name was already taken by another healthcare products company, a condom manufacturer. Sequel hasbeen tagged to many companies, but apparently not in healthcare.

Kranzler liked the triple word play offered by Excyte: thecompany's planned products stimulate the immune system, it'sa handy misspelling of excite, and it's founded with people who-- given some success at the new company -- may somedaybecome ex-Cytel employees.

Of course, Sequel, which is working on a method that usesinsect fly cells to ultimately incite a stronger human immuneresponse, was given a working name by Cytel staff. Theysimply altered the name of a prior Cytel spinoff called Glytec.

Although it's perhaps not as appealing an appellation as Sequel,"it'll always be Flytec to us," Kranzler said.

-- RP

-- Ray Potter Senior Editor

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