Building value in a biotechnology company is both an internal and an external affair. Internal in the sense that all companies must create something of worth. External in the sense that, given the long-term nature of the biotech project and the reliance on outside funding, investors must be convinced that the company has, indeed, created value if they are to continue supporting the endeavor.

The clash between the timelines of companies and investors has led almost every company in the sector at one point or another to move faster than it should in order to please the investment community.

The old way of doing things was for companies to move as quickly as possible, making ambitious promises that were rewarded by bumps in the stock price and enthusiastic expectations. The failures that have attended that model have burned companies in the clinic and investors in the market.

The new way of doing things is for companies to make more modest promises, and to build value incrementally in a way that solidifies the company's worth while enabling it to show investors that there is more value and less risk at clearly defined points.

One company that has done it both ways is Cytel Corp. In an interview with BioCentury, President and CEO Jay Kranzler discussed why he believes that the strategy the company has devised in response to its experience increases the likelihood that it will be able to develop a strong platform technology, succeed in the clinic and reward investors with greater value.

"We're not in the same kind of hurry we used to be," he said. "We don't get the three-and-a-half point upticks in the stock price when we present at investor meetings. But we build credibility, and when we get upticks in the price they're not for a day but are building the base value of the stock."

The stock price leaves plenty of room for investors to realize a return. After an initial public offering at $13 in November 1991, a February 1993 follow-on was done at $7.50, and the stock closed Friday at $5.

CYTL is developing immunotherapeutics to treat chronic inflammatory diseases, infectious diseases and cancer. It has core research programs in antigen recognition and cell adhesion.

Optimizing core technology

The lead compound in the antigen recognition program is Theradigm-HBV (CY 1899), which has completed Phase I trials to show safety and the ability to induce specific cytotoxic T lymphocytes, and will begin Phase II studies for chronic hepatitis B in the second quarter. The company has filed an IND on its lead compound in the cell adhesion program, Cylexin (CY 1503). Cylexin, a carbohydrate-based small molecule selectin blocker, is being developed for the treatment of diseases involving reperfusion injury.