Can I edit my paper after submission if I discover additional literature?

From what you have written regarding the sequence name, it sounds like this it only a question of nomenclature and doesn't substantively affect either your results or the novelty of these results.

If this is indeed the case, then it can easily be amended at revision. Pretty much every meaningful peer review process on a significant article will end up requesting at least minor revisions, since reviewers will generally contribute useful perspective and few manuscripts are without at least some typos.

If there is a major impact (presumably on novelty), it is a whole different story. Depending on how large the impact, you might either still want to wait until revision (e.g., if it's going to replace a couple of paragraphs with a citation) or you might even want to withdraw and resubmit a new version of the manuscript (e.g., if it results in dropping an entire section). Even if you need to do something so extreme, however, I would not worry overmuch about consequences: any good editor will respect (and likely appreciate) such a decision.

I agree with the other two answers (by Buffy and jakebeal), but I would also add another possibility that I've seen people make use of. First, note that I don't understand how important this change is, so I'm not necessarily saying you should use this approach — just that it's a possibility.

You can contact the editors even while the paper is out for review to mention that you'll need to make this change. From what you say, it sounds like they'll probably just tell you to wait until you get the paper back to do revisions. It's also possible that they'll forward that information to the reviewer, which may preempt an issue the reviewer planned to raise.

Again, I can't judge whether or not this is the right approach for you, but it has happened to me that the editors of a journal contacted me while I was reviewing a paper to pass along important information from the authors, and it helped with the process. In any case, you really should correct this at some point before publication, for the sake of academic integrity.

Generally speaking the version submitted to a journal or conference is not the version published as it will go through review. However, the nature of the change can affect things. In the worst case, the paper has a predecessor that makes its publication moot, or even invalidates the conclusion. But in the usual case you can make such changes. However, the extent of the changes may make it necessary to have it reviewed again. That is easier for a journal to do than a conference, which has harder deadlines.