Cytel Signs Technology Agreements for Novel Carbohydrate Enzymes.

SAN DIEGO--(BW HealthWire)--October 15, 1998--Cytel Corporation (NASDAQ: CYTL) today announced that it has signed technology agreements with Japan Tobacco, Inc. and Marukin Shoyu, Co., Ltd. for exclusive rights to two unique enzymes for use in Cytel's proprietary carbohydrate synthesis technology.

The Company believes these enzymes will enable it to produce carbohydrates in a more time and cost efficient manner for the nutritional, cosmetic and other consumer product markets, according to Virgil Thompson, Cytel's president and chief executive officer.

"With these unique enzymes, we continue to strengthen our carbohydrate synthesis technology for the benefit of our corporate partners," said Jim Paulson, Cytel's chief scientific officer and general manager of its Glytec carbohydrate manufacturing unit. "We are focusing our research efforts on improving sialic acid carbohydrate production, sialyl lactose in particular, typically a very difficult and expensive process using currently available methods. With our aggressive technology licensing efforts and our internal research programs in this area, we are creating a more efficient and affordable method for the large-scale manufacture of these and other difficult to produce carbohydrates."

Sialyl lactose is a human breast milk carbohydrate, under development by Cytel, which has potential applications in nutritional, cosmetic and oral hygiene product markets. The Japan Tobacco and Marukin Shoyu technologies will be used to enhance Cytel's Sugar Nucleotide Cycling Technology (SNC(tm) Technology) for the efficient manufacture of the two naturally occurring forms (6'sialyl lactose and 3'sialyl lactose). The Japan Tobacco enzyme will be useful for generating 6'sialyl lactose, whereas the Marukin Shoyu enzyme will be useful in reducing costs for preparation of both forms. The Marukin Shoyu enzyme is of added interest to Cytel because it would be useful not only for sialyl lactose production, but for the production of a variety of carbohydrate compounds.

Under terms of the Japan Tobacco agreement, the Company will supply Cytel with the technology required to produce a novel bacterial enzyme, (beta)-galactoside (alpha)2,6-sialytransferase. During a three year option period, Cytel will evaluate the use of the enzyme in generating sialic acid containing carbohydrates and at any time may execute its option to obtain an exclusive worldwide license to use the enzyme for the manufacture and sale of carbohydrate products. Japan Tobacco will retain the right to use the enzyme for its own purposes. Financial terms of the agreement were not disclosed.

Under the agreement with Marukin Shoyu, Cytel receives the exclusive worldwide rights to make and use "GlcNAc 2" epimerase in combination with its SNC Technology. The enzyme stands to reduce the cost of producing sialic acid containing carbohydrates by eliminating the need to use sialic acid itself, an expensive starting material. Marukin will receive undisclosed fees and royalty payments on worldwide sales of carbohydrate products produced by Cytel using this enzyme.

Cytel's SNC Technology is used for the assembly of complex and specific bioactive carbohydrates on a commercial scale including Cylexin(tm), Cytel's lead therapeutic compound currently in Phase II/III clinical trials. It is also useful for synthetic remodeling of carbohydrates or recombinant glycoproteins. The technology imitates the natural carbohydrate synthesis process requiring a cascade of chemical reactions initiated by specialized enzymes. The method is more time and cost effective than other chemical synthesis technologies.

Japan Tobacco Inc. is headquartered in Tokyo and is primarily a manufacturer of tobacco products with divisions relating to pharmaceuticals, foods, real estate, agribusiness and engineering. The Company has forty eight consolidated subsidiaries; forty in Japan, two in the United States, three in the United Kingdom and one each in Hong Kong, Taiwan and Singapore.

Marukin Shoyu Co., Ltd., headquartered in Osaka, was established in 1907 to manufacture Shoyu (soy sauce) and similar seasonings. The Company is also engaged in the wholesale of food products including cooked beans and dried somen noodles, various biochemicals and the rental and leasing of real estate.

Cytel has discovered cell adhesion inhibitors for treatment of acute and chronic inflammation, and manufactures bioactive carbohydrates for use in medical and consumer products. Epimmune Inc., its subsidiary, is focused on the discovery and development of a new generation of safer, more potent vaccines for the prevention and treatment of cancer and infectious diseases.

This press release includes forward-looking statements that reflect management's current views of future events. Actual results may differ materially from the above forward-looking statements due to a number of important factors,including but not limited to the risks associated with being able to successfully produce carbohydrates in a more time and cost efficient manner and to successfully negotiate and complete definitive agreements for any corporate collaboration, the regulatory approval process, and the possibility that testing may reveal undesirable and unintended side effects or other characteristics that may prevent or limit the commercial use of proposed products.

These factors are more fully discussed in Cytel's most recent Forms 10-K and 10-Q.