<PAGE>   1

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


                                   FORM 10-Q


(Mark One)
[ X ]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
             Exchange Act of 1934 for the quarterly period ended September 30,
             1996 or

[     ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the Transition Period From _____ to
         _____.


                         Commission file number 0-19591

                               CYTEL CORPORATION
             (Exact name of Registrant as specified in its charter)


             Delaware                                 33-0245076
    ------------------------                    ------------------------

                            3525 John Hopkins Court
                          San Diego, California 92121
                    (Address of principal executive offices)



                                 (619) 552-3000    
                        (Registrant's telephone number)



Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                               Yes__X__   No_____


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                              Common Stock:  $.01 par value, 25,071,019 shares
outstanding as of September 30, 1996
<PAGE>   2
                               CYTEL CORPORATION

                               TABLE OF CONTENTS



                                                                            Page

PART I.  FINANCIAL INFORMATION

         Item 1.    Financial Statements

                    Condensed Consolidated Balance Sheets as of
                    September 30, 1996 and December 31, 1995  . . . . . . . .  1

                    Condensed Consolidated Statements of Operations for the
                    Three and Nine Months Ended September 30, 1996 and 1995 .  2

                    Condensed Consolidated Statements of Cash Flows for the
                    Nine Months Ended September 30, 1996 and 1995 . . . . . .  3

                    Notes to Condensed Consolidated
                    Financial Statements  . . . . . . . . . . . . . . . . . .  4

         Item 2.    Management's Discussion and Analysis
                    of Financial Condition and Results of
                    Operations  . . . . . . . . . . . . . . . . . . . . . . .  7

PART II. OTHER INFORMATION

         Items 1 to 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

         Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10



<PAGE>   3
PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                               CYTEL CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                      September 30,          December 31,
                                                                          1996                   1995
                                                                     --------------        -------------- 
                                                                      (Unaudited)              (Note)
<S>                                                                <C>                   <C>
                   ASSETS
Current assets:
   Cash and cash equivalents                                           10,088,000         $   10,543,000
   Short-term investments                                              18,014,000             27,896,000
   Prepaids and other current assets                                    1,828,000              3,557,000
                                                                   --------------         -------------- 
Total current assets                                                   29,930,000             41,996,000
 Property and equipment, net                                            2,928,000              2,488,000
 Deposits and other assets                                              4,307,000              3,628,000
                                                                   --------------         -------------- 
Total assets                                                       $   37,165,000         $   48,112,000
                                                                   ==============         ============== 


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities                        $    2,189,000         $    1,620,000
   Accrued payroll and related expenses                                   576,000                657,000
   Deferred contract revenues                                             622,000              2,757,000
   Current portion of obligations under capital 
     leases and equipment note payable                                  1,978,000              2,342,000
                                                                   --------------         -------------- 
Total current liabilities                                               5,365,000              7,376,000
 Deferred rent payable                                                  1,688,000              1,832,000
 Obligations under capital leases and equipment note payable               81,000                380,000
Stockholders' equity:
    Preferred stock, $.01 par value, 10,000,000 shares
     authorized, none issued or outstanding                                     -                     -
    Common stock, $.01 par value, 50,000,000 shares
     authorized, 25,071,019 and 24,556,399 shares issued 
      and outstanding at September 30, 1996 and 
      December 31, 1995, respectively                                     251,000                246,000
    Additional paid-in capital                                        120,064,000            118,749,000
    Accumulated deficit                                               (90,142,000)           (80,341,000)
    Deferred compensation                                                  (4,000)              (161,000)
    Unrealized gains (losses) on available-for-sale securities           (138,000)                31,000
                                                                   --------------         -------------- 
Total stockholders' equity                                             30,031,000             38,524,000
                                                                   ==============         ============== 
Total liabilities and stockholders' equity                         $   37,165,000         $   48,112,000
                                                                   ==============         ============== 
</TABLE>

Note: The balance sheet at December 31, 1995 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.

See notes to condensed consolidated financial statements.













                                       1
<PAGE>   4
PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                               CYTEL CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                  Three months ended September 30,       Nine months ended September 30.
                                                      1996              1995                   1996            1995
                                                ---------------   ---------------       ---------------   ---------------
                                                               (Unaudited)                             (Unaudited)
<S>                                             <C>                <C>                    <C>             <C>
REVENUES
Research and development                        $    1,611,000     $       1,645,000      $  6,031,000     $  11,133,000
Research grants and other income                       574,000               416,000         1,701,000           917,000
                                                --------------        --------------    --------------    --------------
                                                     2,185,000             2,061,000         7,732,000        12,050,000

OPERATING EXPENSES
Research and development                             4,568,000             4,006,000        16,032,000        11,794,000
General and administrative                             906,000             1,108,000         2,661,000         2,868,000
Acquired in-process research and development                 -             1,732,000                 -         1,732,000
                                                --------------        --------------    --------------    --------------
                                                     5,474,000             6,846,000        18,693,000        16,394,000

Interest income, net                                   323,000               537,000         1,160,000         1,402,000
                                                --------------        --------------    --------------    --------------

Net loss                                        $   (2,966,000)       $   (4,248,000)   $   (9,801,000)   $   (2,942,000)
                                                ==============        ==============    ==============    ==============

Net loss per share                              $        (0.12)       $        (0.19)   $        (0.40)   $        (0.13)
                                                ==============        ==============    ==============    ==============

Shares used in computing net loss per share         24,893,972            22,593,406        24,795,598        21,934,812
                                                ==============        ==============    ==============    ==============
</TABLE>

See notes to condensed consolidated financial statements.









                                       2


<PAGE>   5
PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                               CYTEL CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                         Nine months ended September 30,
                                                                                           1996                   1995
                                                                                     --------------          -------------- 
                                                                                                  (Unaudited)
<S>                                                                                  <C>                     <C>
OPERATING ACTIVITIES
Net loss                                                                             $   (9,801,000)         $   (2,942,000)
Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization                                                         1,163,000               1,055,000
    Deferred rent expense                                                                  (144,000)                (97,000)
    Amortization of deferred compensation                                                   140,000                 243,000
    Deferred revenue                                                                     (2,135,000)             (2,500,000)
    Receivable under collaborative agreement                                              2,000,000                       -
    Change in operating assets and liabilities:
      Prepaids and other current assets                                                    (271,000)               (977,000)
      Accounts payable and accrued liabilities                                              569,000                (775,000)
      Accrued payroll and related expenses                                                  (81,000)               (199,000)
                                                                                     --------------          -------------- 
Net cash used in operating activities                                                    (8,560,000)             (6,192,000)

INVESTING ACTIVITIES
Purchases of available-for-sale securities                                              (91,712,000)           (171,484,000)
Maturities of available-for-sale securities                                              57,332,000              98,228,000
Sales of available-for-sale securities                                                   44,093,000              75,081,000
Purchases of property and equipment                                                      (1,603,000)               (223,000)
Deposits and other assets                                                                  (679,000)               (360,000)
                                                                                     --------------          -------------- 
Net cash provided by investing activities                                                 7,431,000               1,242,000

FINANCING ACTIVITIES
Principal payments on capital lease obligations and equipment note payable                 (663,000)               (602,000)
Net proceeds from issuance of common stock                                                1,337,000               4,981,000
                                                                                     --------------          -------------- 
Net cash provided by financing activities                                                   674,000               4,379,000

Decrease in cash and cash equivalents                                                      (455,000)               (571,000)
Cash and cash equivalents at beginning of period                                         10,543,000              11,440,000
                                                                                     --------------          -------------- 
Cash and cash equivalents at end of period                                           $   10,088,000          $   10,869,000
                                                                                     ==============          ============== 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                                                        $      166,000          $      147,000
                                                                                     ==============          ============== 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Unrealized gains (losses) on available-for-sale securities                           $     (169,000)         $      446,000
                                                                                     ==============          ============== 
</TABLE>


See notes to condensed consolidated financial statements.
<PAGE>   6
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                               CYTEL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       Basis of Presentation

         The interim unaudited condensed consolidated financial statements
contained herein have been prepared in accordance with generally accepted
accounting principles for interim financial information.  Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.  In management's
opinion, the unaudited information includes all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation of the financial
position, results of operations and cash flows for the periods presented.
Interim results are not necessarily indicative of results to be expected for
the full year.  The financial statements should be read in conjunction with the
audited consolidated financial statements and footnotes thereto included in the
Registrant's Form 10-K for the year ended December 31, 1995.

         The condensed consolidated financial statements include the accounts
of Cytel Corporation and its subsidiaries ("Cytel" or the "Company").  All
significant intercompany accounts and transactions have been eliminated.

         Net loss per share is computed using the weighted average number of
common shares outstanding during the period.

2.       Research and Development Agreements

SCHWARZ

         In May 1995, the Company entered into a collaboration agreement with
Schwarz Pharma AG ("Schwarz") for the development and marketing of carbohydrate
selectin blockers, including Cylexin(TM). Schwarz and the Company will share the
marketing responsibility in North America for any products developed pursuant to
the collaboration, while Schwarz will have sole responsibility for marketing
those products in Europe.  Under the terms of the agreement, Schwarz made an
upfront license payment and purchased 241,546 shares of the Company's Common
Stock at $8.28 per share.  Schwarz will also make payments if certain milestones
are met, and will fund 75% of clinical development costs to commercialize
products in Europe and North America.  Additionally, the Company will receive
manufacturing profits and royalties on any product sales in Europe, and Schwarz
and the Company will evenly share any profits in North America.  In December
1995, the Company reached a milestone under the collaboration agreement
triggering a $2.0 million equity investment at $8.28 per share.

         In June 1996, the Company terminated a Phase II clinical study with its
cell adhesion blocker, Cylexin, which was being conducted as part of its
collaboration with Schwarz.  The study was designed to evaluate the effect of
the drug on myocardial salvage in patients with acute myocardial infarction
treated with primary angioplasty.  The Company terminated this study upon
recommendation by an independent safety and data monitoring panel.  Following a
scheduled interim analysis, the panel determined that the drug was safe but,
based upon the primary endpoint, there was no benefit in patients treated with
Cylexin over those patients in the placebo control group.  In April 1996, the
Company announced favorable results from a preliminary analysis of a Phase II
clinical trial with Cylexin evaluating its ability to reduce reperfusion injury
following the surgical removal of chronic blood clots from the lungs in an
orphan drug indication, pulmonary thromboendarterectomy (PTE).  The Company is
currently conducting discussions with Schwarz





                                      -4-
<PAGE>   7
regarding its possible participation in a potential pediatric cardiopulmonary
bypass trial with Cylexin.

SUMITOMO

         In October 1991, the Company entered into a technology development
agreement with Sumitomo Pharmaceuticals, Co., Ltd. ("Sumitomo") to develop
drugs based on Cytel's selectin technology for the treatment of white blood
cell-mediated diseases.  Under the agreement, Sumitomo undertook to provide
research and development support to the Company of $15.0 million over five
years in exchange for an option to license products emerging from the
collaboration for Pacific Rim markets.  Upon exercise of its option to license
a product, Sumitomo is obligated to pay Cytel an option fee, make payments if
certain milestones are met and pay royalties to Cytel on sales of such
products.  These milestone payments and royalties will depend on Sumitomo's
efforts in discharging its obligations in the Pacific Rim to complete product
research and development, conduct clinical trials, obtain regulatory approvals
and market any products.  Total option fees and milestone payments to the
Company will not exceed $25.0 million.  Sumitomo has also granted to the
Company a royalty-free license covering any technology arising from the
collaboration within the field either jointly owned or owned solely by Sumitomo
for use by Cytel in territories outside of the Pacific Rim.  In addition,
Sumitomo agreed to make an equity investment of $5.0 million in the Company.

         In October 1994, Sumitomo completed the $5.0 million equity investment
in Cytel, purchasing 1,408,450 shares of Common Stock at $3.55 per share.  In
October 1992 and December 1994, Sumitomo exercised its option to license
candidate compounds and made milestone payments of $0.5 million and $1.0
million, respectively.  In February 1995, Sumitomo exercised its option on all
additional compounds to be generated within the collaboration and committed to
making an additional $1.0 million milestone payment to the Company, which was
received in July 1995.  In December 1995, the Company received payment for the
final year of research funding covering the period December 1995 through
November 1, 1996.

         In October 1996, Sumitomo and the Company extended by six months,
cancellable after three months, the technology development agreement for an
additional payment of $0.8 million.

ABBOTT

        In December 1995, the Company signed an agreement with Abbott
Laboratories, Inc. ("Abbott") under which the companies will collaborate to
develop manufacturing processes for the production of certain carbohydrates for
use in nutritional products.  Abbott paid the Company $2.0 million for an
option to obtain a worldwide license for limited applications under the
Company's patents and know-how in the area of carbohydrate synthesis.  Abbott
is obligated to make milestone payments to the Company upon achievement of
production and commercial milestones and royalties based on the volume of
product sold.

TAKARA

        Under agreements with Takara Shuzo Co., Ltd. Biomedical Group
("Takara") , Cytel's Theradigm technology is being applied to fungal disease
targets and ex vivo cellular therapy for the treatment of cancer.  The
collaboration between Takara and Cytel in both the anti-fungal and anti-cancer
areas continues to generate potential therapeutic drug candidates.  Project
teams from both companies are jointly conducting preclinical evaluation of
these candidates to identify compounds for clinical testing.  Under the
anti-fungal collaboration, Takara agreed to provide research funding and to pay
royalties in exchange for rights to develop, manufacture and market in Japan
pharmaceuticals resulting from the collaboration. The Company has reciprocal
rights in North America covering any technology arising from the collaboration.
The companies share rights in the rest of the world.  Under the ex vivo
cellular therapy collaboration, Takara agreed to pay royalties on sales in
Japan.  Cytel retains all rights to ex vivo cellular therapy outside Japan.





                                      -5-
<PAGE>   8
PHARMACIA AND UPJOHN

        In 1995, the Company also signed an exclusive licensing agreement with
Pharmacia and Upjohn, Inc. ("Pharmacia and Upjohn"), to make, use and sell
Cytel's P-selectin monoclonal antibody, CY 1748, in all markets outside of the
Pacific Rim.  Pharmacia and Upjohn is obligated to make certain milestone
payments and royalty payments on sales of products under the agreement and has
indicated they will focus on the use of CY 1748 for treatment of deep vein
thrombosis (blood clots).

NEXTRAN

        In September 1996, the Company signed an agreement with Baxter
Healthcare Corporation's Nextran unit ("Nextran") under which the companies
will collaborate to develop a carbohydrate product for use in
xenotransplantation.  Under the agreement, Cytel will manufacture and sell a
carbohydrate, which Nextran will incorporate into a xenotransplant product.
Nextran purchased 158,228 shares of the Company's Common Stock at $6.32 per
share and, in October 1996, made an upfront payment of $0.5 million for the
right to enter into an exclusive supply agreement.  The agreement also provides
for product development milestone payments to Cytel.








                                      -6-
<PAGE>   9
PART I - FINANCIAL INFORMATION
ITEM 2.


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

         Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties.  The Company's actual results could differ materially from those
discussed here.  Factors that could cause or contribute to such differences
include, without limitation, those discussed in this section and those discussed
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.

         Since its inception in July 1987, Cytel has devoted substantially all
of its resources to the discovery and development of its potential
immunotherapeutic products.  To date, Cytel has not received any revenues from
the sale of products.  The Company has funded its research and development
primarily from equity-derived working capital and through strategic alliances
with other companies.  The Company has been unprofitable since its inception and
expects to incur substantial operating losses for the next several years. As of
September 30, 1996, the Company's accumulated deficit was $90.1 million.

RESULTS OF OPERATIONS

         Revenues for the three month period ended September 30, 1996 increased
slightly from the comparable period in 1995.  Revenue for the nine month period
ended September 30, 1996 decreased $4.4 million from the comparable period in
1995.  Research and development revenues for 1995 were significantly higher as a
result of upfront payments received in conjunction with collaboration and
licensing agreements signed in that period.  Research grant revenues for the
three and nine month periods ended September 30, 1996 increased from the
comparable periods in 1995 as a result of the award of additional research
grants.

         Research and development expenses for the three and nine month periods
ended September 30, 1996 increased $0.6 million and $4.2 million, respectively,
from the comparable periods in 1995.  The increases reflect the increased costs
associated with the Company's clinical trials.

         General and administrative expenses for the three and nine month
periods ended September 30, 1996 decreased slightly compared to the same period
in 1995.

         The Company expects to incur substantial operating losses over the next
several years due to continuing expenses associated with its research and
development programs, including preclinical testing and clinical trials.
Operating losses may fluctuate from quarter to quarter as a result of
differences in the timing of revenues and expenses and such fluctuations may be
substantial.

LIQUIDITY AND CAPITAL RESOURCES

         The Company had net working capital of $24.6 million as of September
30, 1996 compared to $34.6 million at December 31, 1995.  Cash, cash equivalents
and short-term investments decreased to $28.1 million as of September 30, 1996
as compared to $38.4 million at December 31, 1995.  Net cash used in operating
activities was $8.6 million and $6.2 million, respectively, for the nine month
periods ended September 30, 1996 and 1995.  The increase in net cash used in
operating activities was due primarily to the increase in costs associated with
the clinical trials combined with the lower research and development revenues.
For the nine month period ended September 30, 1996, the Company acquired an
aggregate of $1.6 million in capital equipment.

         The Company's cash, cash equivalents and short-term investments are
expected to decline primarily due to the continued clinical development of its
immunotherapeutic product candidates





                                      -7-
<PAGE>   10

and the conduct of its research programs.  While the Company's investments may
periodically reflect unrealized losses, management attempts to schedule the
maturities of the Company's investments to coincide with the Company's expected
cash requirements to minimize the amount of realized losses.

         The Company expects to incur substantial additional research and
development expenditures, including costs related to preclinical testing,
clinical trials and manufacturing.  It is the Company's intention to seek
additional collaborative research and development relationships with suitable
corporate partners. There can be no assurance that any agreements that may
result from these discussions will successfully reduce the Company's funding
requirements. Additional equity or debt financing will be required, and there
can be no assurance that these funds will be available on favorable terms, if
at all.  If adequate funds are not available, the Company may be required to
delay, scale back or eliminate one or more of its drug discovery or development
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would not
otherwise relinquish.

         If additional financing is not available, Cytel anticipates its
existing available cash, cash equivalents and short-term investments,
investment income and research and development funding from collaborative
agreements and research grants will be adequate to satisfy its capital
requirements and fund operating losses through at least the beginning of 1998.
The Company's future capital requirements depend on many factors, including
progress in its drug discovery programs, the magnitude of these programs,
progress with preclinical testing and clinical trials, the time and costs
involved in obtaining regulatory approvals, the costs involved in filing,
prosecuting and enforcing patent claims, competing technological and market
developments, changes in the existing collaborative research relationships, the
ability of the Company to establish development arrangements, the cost of
manufacturing scale-up and effective commercialization activities and
arrangements.

         As is typical in the biotechnology industry, the commercial success of
the Company will depend in part on the Company neither infringing patents
issued to competitors nor breaching the technology licenses upon which the
Company's products might be based.  The Company is aware of third party patent
applications and issued patents that may require the Company to alter products
or processes, obtain licenses or cease certain activities.  Based on
preliminary investigation, the Company believes that its compound Cylexin may
infringe one or more claims of a patent which has recently been issued to a
third party.  The Company is continuing to investigate the validity and scope
of the patent.  Subject to this further investigation, the Company believes
that it may be required to either obtain a license from the third party in
order to manufacture and market Cylexin or, alternatively, to shift its
development effort to another compound with attendant delay.  There can be no
assurance the Company will be able to obtain any necessary license at a
reasonable cost or that it can successfully develop an alternative compound and
obtain FDA approval for it.  Failure by the Company to obtain a license to any
technology that it requires to commercialize its products, or to develop an
alternative compound and obtain FDA approval within an acceptable period of
time if required to do so, would have a material adverse effect on the Company.

         The Company's business is also subject to other significant risks,
including the uncertainties associated with the lengthy regulatory approval
process and with potential competition from other products.  Even if the
Company's products appear promising at an early stage of development, they may
not reach the market for a number of reasons. Such reasons include, but are not
limited to, the possibilities that the potential products will be found
ineffective during clinical trials, fail to receive necessary regulatory
approvals, be difficult to manufacture on a large scale, or be uneconomical to
market.





                                      -8-
<PAGE>   11
PART II - OTHER INFORMATION

Item 1           Legal Proceedings.

                 The Company is not a party to any legal proceedings.

Item 2           Change in Securities.    None

Item 3           Defaults Upon Senior Securities.   None

Item 4           Submission of Matters to a Vote of Security Holders. None.


Item 5           Other Information.   None

Item 6           Exhibits and Reports on Form 8-K.

                 (a)  Exhibits.  None.

                 (b)  Reports on Form 8-K.  None.





                                      -9-
<PAGE>   12
                               CYTEL CORPORATION



                                   SIGNATURES





         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                               CYTEL CORPORATION



Date:  November 13, 1996       By:  /s/ Karin Eastham
                                   ------------------------------------------
                                     Karin Eastham
                                     Vice President, Finance and
                                     Administration and Chief Financial Officer
                                     (Duly Authorized Officer and Principal
                                     Financial Officer)








                                      -10-