Cyclacel and Xcyte Therapies Combine to Form International Biopharmaceutical Company

The transaction is structured as an acquisition by Xcyte of all ofthe capital stock of Cyclacel Limited, a wholly-owned subsidiary ofCyclacel Group plc. The transaction is anticipated to close at the endof the first quarter of 2006 and is subject to satisfaction of certaincustomary closing conditions, including the approval of theshareholders of Cyclacel and Xcyte.

The new company, to be called Cyclacel Pharmaceuticals, Inc.(CPI), intends to build upon what it believes to be Cyclacel's leadingposition in the area of cell cycle biology, with a portfolio of threeorally-available, mechanism-targeted drugs that modulate the cancercell cycle. Cyclacel's drug pipeline includes seliciclib (CYC202), acyclin dependent kinase (CDK) inhibitor in Phase II clinical trialsfor the treatment of non-small cell lung cancer; sapacitabine(CYC682), a nucleoside analog in Phase I trials; CYC116, an Aurorakinase inhibitor in IND-directed preclinical development; and earlystage programs targeting important cell cycle mechanisms for thetreatment of cancer, type 2 diabetes, inflammatory kidney diseases andviral infections.

Potential Milestones for 2006 for CPI include:

-- Initiation of a multicenter Phase IIb randomized clinical trial of seliciclib (CYC202) in the United States for the treatment of patients with advanced non-small cell lung cancer, expected in the first half of 2006.

-- Initiation of a Phase Ib clinical trial of sapacitabine (CYC682) at a leading U.S. cancer center in patients with advanced leukemias and myelodysplastic syndrome, expected in the first half of 2006.

-- Filing of an Investigational New Drug application with FDA to begin Phase I clinical trials with CYC116, an Aurora kinase inhibitor, expected in the second half of 2006.

Sir John Banham, Chairman of Cyclacel, stated, "The transactionwill create an international public company with approximately $30million in cash, a franchise in one of the most exciting fields ofbiology and a development-stage portfolio of targeted oncology drugcandidates affecting the cancer cell cycle. We believe that cell cycletargeted drugs will become increasingly important in the moderntreatment of cancer as a chronic disease. Cyclacel is well positionedto benefit from the increasing adoption of orally-active therapeuticsfor the long-term management of cancer patients. Our drug discoverycapabilities are complemented by research into cancer disease pathwaysin the laboratories of our founding scientists Professors David Laneand David Glover. Our combined insights into cancer biology haveresulted in innovative biomarker technology that may help us identifysubgroups of patients that are more likely to benefit from ourtreatments."

Christopher Henney, PhD, Chairman of Xcyte, stated, "We areenthusiastic about the combination with Cyclacel because we believethat the strength and competitive position of the new company offerour shareholders the opportunity to participate in the development andexploitation of a portfolio of product candidates with significantmarket potential. When we announced earlier this year our intention topursue strategic alternatives, this was the type of transaction wehoped to be able to offer our shareholders. We have been impressed bythe quality and promise of Cyclacel's people and programs and I lookforward to participating in the company's progress as a member of theboard of directors."

Transaction Details

The terms of the agreement provide for Xcyte to issue shares ofits common stock to Cyclacel shareholders. Following closing, Cyclacelshareholders will own approximately 80 percent of the common stock ofthe combined company and Xcyte shareholders 20 percent, based onissued and outstanding common stock at the date of completion. Thestock purchase agreement has been approved by both boards of directorsand will need to be approved by the companies' shareholders.

CPI will be headquartered in Short Hills, New Jersey and willmaintain its research laboratories in Dundee, Scotland and Cambridge,England. The new company will be led by Spiro Rombotis, Cyclacel'scurrent Chief Executive Officer. In addition, Paul McBarron,Cyclacel's current Chief Financial Officer, will become CPI's ChiefOperating Officer. The combined company's board of directors willconsist of five Cyclacel directors and one Xcyte director with aseventh director to be appointed after closing. CPI will not retainany operations at Xcyte's facilities in Seattle, Washington.

Upon closing of the transaction, CPI's common stock is expected totrade on the Nasdaq National Market on which the company has reservedthe symbol "CYCC". Xcyte's current ticker symbol "XCYT" will becomeinactive after closing. SG Cowen & Company, LLC served as financialadvisor and Wilson Sonsini Goodrich & Rosati, ProfessionalCorporation, as legal advisor to Xcyte. Allen & Overy LLP served aslegal advisor to Cyclacel.

Additional Information

In connection with the proposed transaction, Xcyte will file anS-4 registration statement that contains a proxy statement/prospectuswith the Securities and Exchange Commission. Xcyte today separatelyannounced an agreement to sell its T cell expansion technology toInvitrogen Corporation. Xcyte will include in its proxy statement aresolution for stockholder approval of the sale of its T cellexpansion technology to Invitrogen Corporation. SHAREHOLDERS OF XCYTEAND OTHER INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE PROXYSTATEMENT/PROSPECTUS) REGARDING THE PROPOSED TRANSACTION WHEN ITBECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.Xcyte's shareholders will be able to obtain a free copy of the proxystatement/prospectus, as well as other filings containing informationabout Xcyte and Cyclacel, without charge, at the SEC's Internet site(http://www.sec.gov). Copies of the proxy statement/prospectus and thefilings with the SEC that will be incorporated by reference in theproxy statement/prospectus can also be obtained, without charge, bydirecting a request to Xcyte Therapies, Inc., 1124 Columbia Street,Suite 130, Seattle, WA 98104 Seattle, WA, Attention: InvestorRelations, Telephone: 206-262-6200.

Participants in the Solicitation

Xcyte and its directors and executive officers may be deemed to beparticipants in the solicitation of proxies from the shareholders ofXcyte in connection with the proposed transaction. Informationregarding the special interests of these directors and executiveofficers in the merger transaction will be included in the proxystatement/prospectus of Xcyte referred to above. Additionalinformation regarding the directors and executive officers of Xcyte isalso included in Xcyte's proxy statement for its 2005 Annual Meetingof Stockholders, which was filed with the SEC on April 29, 2005. Thesedocuments are available free of charge at the SEC's web site(http://www.sec.gov) and from Investor Relations at Xcyte at theaddress described above. This communication shall not constitute anoffer to sell or the solicitation of an offer to buy any securities,nor shall there be any sale of securities in any jurisdiction in whichsuch offer, solicitation or sale would be unlawful prior toregistration or qualification under the securities laws of any suchjurisdiction. No offering of securities shall be made except by meansof a prospectus meeting the requirements of Section 10 of theSecurities Act of 1933, as amended.

About Cyclacel

Cyclacel is a biopharmaceutical company dedicated to thediscovery, development and commercialization of novel,mechanism-targeted drugs to treat human cancers and other seriousdisorders. The company is currently evaluating seliciclib (CYC202), anorally-available cyclin dependent kinase inhibitor, in Phase IIclinical trials for the treatment of non-small cell lung cancer andB-cell hematological malignancies. Sapacitabine (CYC682) is anorally-available, cell cycle modulating nucleoside analog in Phase Iclinical trials for the treatment of cancer. CYC116 is anorally-available, Aurora kinase inhibitor in IND-directed preclinicaldevelopment. Several additional programs are at an earlier stage.

About Xcyte

From its inception in 1996 until early July 2005, Xcyte Therapiesdevoted substantially all of its efforts to the research anddevelopment of therapies that harness the power of the immune systemto treat cancer and other serious illnesses.

Risk Factors

This news release contains certain forward-looking statements thatinvolve risks and uncertainties that could cause actual results to bematerially different from historical results or from any futureresults expressed or implied by such forward-looking statements. Suchforward-looking statements include statements regarding the proposedtransaction, the efficacy, safety, and intended utilization of theCompanies' product candidates, the conduct and results of futureclinical trials, and plans regarding regulatory filings, futureresearch and clinical trials and plans regarding partneringactivities. Factors that may cause actual results to differ materiallyinclude the risk that Xcyte and Cyclacel may not complete the proposedtransaction, the risk that product candidates that appeared promisingin early research and clinical trials do not demonstrate safety and/orefficacy in larger-scale or later clinical trials, the risk thatCyclacel will not obtain approval to market its products, the risksassociated with reliance on outside financing to meet capitalrequirements, and the risks associated with reliance on collaborativepartners for further clinical trials, development andcommercialization of product candidates. You are urged to considerstatements that include the words "may," "will," "would," "could,""should," "believes," "estimates," "projects," "potential," "expects,""plans," "anticipates," "intends," "continues," "forecast,""designed," "goal," or the negative of those words or other comparablewords to be uncertain and forward-looking. The transaction is subjectto customary closing conditions, including approval of Xcyte'sshareholders. These factors and others are more fully discussed inXcyte's periodic reports and other filings with the SEC.

Note: The Cyclacel logo and Cyclacel(R) are trademarks of CyclacelGroup plc. Xcyte(R) and Xcyte Therapies (TM) are trademarks of XcyteTherapies, Inc.

Editor's Note: This release is also available on the Internet athttp://www.cyclacel.com and http://www.xcytetherapies.com.