The chemical was originally created by Hank McCoy while working at the Brand Corporation. It was designed to cure mutations and McCoy desperately wanted a cure so that he wouldn't be a freak. According to Herbert Landon the chemical almost killed him. However, the chemical had an unforeseen side effect. Instead of curing McCoy's mutation it accelerated it and caused Hank McCoy to grow blur fur all over his body.
Several years later Landon recreated the formula. However, Landon changed the chemical to where it destroyed mutant cells and planned on using it to destroy all mutants on Earth.
Landon was going to test the chemical on Beast. However, he was saved by Wolverine and Spider-Man. Landon then accidentally fell into the chemicals. At that moment Best, Wolverine, and Spider-Man learned that while the chemical killed mutants it turned normal humans into mutants.
As Landon emerged from the chemical he mutated into a giant reptilian monster.
Herbert Landon later used the chemical to mutate Alistair Smythe into a human Spider Slayer.
In the comics
In the comics the formula was known as the Mutant Growth Hormone.
While in Spider-Man: The Animated Series it is stated that Beast created the formula to cure himself of being a mutant, in the comics Hank McCoy created the Mutant Growth Hormone to activate latent mutations.
However, Hank was forced to consume the experimental version of his serum to protect his discovery from industrial spies. The drug made McCoy grow fur all over his body and change his ears, canine teeth and nails to more sharpened forms of the originals. It also provided him with enhanced senses and a greater healing factor.
When Herbert Landon recreated the formula he designed it to remove mutant powers. This was changed in Spider-Man: The Animated Series to where the formula killed mutants.