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CYTEL RAISES $ 6 MIL. IN EQUITY FINANCING

Executive Summary

CYTEL RAISES $ 6 MIL. IN EQUITY FINANCING for the development of drug products to treat "immunologic disorders, including insulin dependent diabetes, rhematoid arthritis, allergies, certain cancers and latent infections such as AIDS," Cytel announced in a June 7 release. The San Diego, California-based start-up biotech company raised the equity from four venture capital firms: J. H. Whitney & Co., Hillman Ventures, Sutter Hill Ventures and Morganthaler Ventures. Started in October 1987 with $ 1 mil. in seed money from Biovest Partners, Cytel was co-founded by former Hybritech CEO Howard Greene, who serves as president of the new biotech company. Greene, who headed Hybritech from 1979 until Lily's acquisition in 1986, is also a general partner in the Biovest Partners venture capital firm. Cytel currently has a staff of 20, including 17 scientists (15 with PhDs or MDs). Approximately half of the scientists joined the firm from the National Jewish Center for Immunology and Respiratory Medicine in Denver, Colorado, where they had been part of the research team of Howard Grey, MD, also a co-founder of Cytel. Grey headed the Division of Basic Immunology of the Department of Medicine at National Jewish before joining Cytel as VP-R&D. Descriptive material on Cytel's development plans states that the firm will focus on both immune suppressants and immune stimulants based on research on the role of MHC molecules in immune response. The firm explained that "MHC molecules play the key role in activating an immune response [and], accordingly, manipulation of MHC molecules will play a central role in therapeutic strategies directed at sites of action associated with immune activation." Drug design focused at those sites, the company added, "should lead to direct intervention in immune responses rather than palliative suppression of inflammation symptoms." Cytel's "two earliest product development priorities" for immune supressant products are an antagonist for Type 1 diabetes and a "rhematoid arthritis and ankylosing spondylitis anti-inflammatory," the company said. The diabetes compound would "turn off the autoimmune response to pancreatic tissue at the onset of diabetes, thereby preventing further destruction of islet cells and obviating the need for insulin injections," Cytel said. For the arthritis product, the company plans to "design a compound which will block activation of pathogenic T-cells specific to the autoantigens associated with these diseases." Longer-term efforts for development of immune supressants include plans to work on development of allergy supressants and agents that prevent the rejection of transplanted tissues. The firm noted that "in each case, the product to be developed by Cytel differs from such non-specific agents as cyclosporine in one very important regard: Cytel's products will supress a specific subset of immune responses rather than all immunologic activity, thereby leaving the patient's immune system competent to respond to injurious agents, whether of microbial or tumor origin." In the immune stimulant area, Cytel plans to focus on three product categories: infection immunotherapeutics, for individuals with compromised immune systems, such as the elderly and individuals with AIDS; cancer immunotherapeutics; and, in the longer term, oral vaccines "for a wide variety of infectious diseases." Although Cytel has just started its research and development work during the last month, the firm's planned focus is based, in part, on Grey's previous research on MHC molecules. The firm is currently working out of a temporary lab at Scrips Clinic and Research Foundation, and will move to a newly constructed 13,000 square foot lab facility in La Jolla, California in September. Cytel's third co-founder is Richard Lerner, MD, who serves as a scientific advisor and sits on the board. Lerner is director of the Research Institute of Scrips Clinic.
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