Kosan Restructures Workforce to Focus Resources on Lead Clinical Programs

HAYWARD, Calif., March 18, 2008 /PRNewswire-FirstCall/ -- Kosan Biosciences Incorporated today announced that the company will reduce its workforce by approximately 37% in order to focus resources on supporting advancement of its lead clinical programs, tanespimycin in multiple myeloma and in metastatic breast cancer, and epothilone KOS-1584 in non-small lung cancer. The restructuring will primarily affect the company's research and administrative functions. As a result of the restructuring, most research programs will be placed on hold. The company may seek to partner these assets with companies looking for early-stage programs.

"Restructuring our workforce to focus resources on development of our lead clinical programs completes the strategic reprioritization of Kosan's development portfolio that we recently announced. This represents an important step in Kosan's evolution to a product-oriented company," said Helen S. Kim, Kosan's Chief Executive Officer. "We appreciate the efforts of all our employees as their contributions have helped to build our company's reputation as a leader in polyketide technology as well as Hsp90 and epothilone drug discovery. We believe that this restructuring will strengthen our ability to effectively manage our resources, execute on our development goals and advance our high-value, near-term commercial opportunities."

Kosan anticipates incurring restructuring charges of approximately $0.7 million in the first quarter of 2008, primarily associated with personnel-related termination costs. As a result of the restructuring, Kosan is reducing its 2008 guidance for cash used in operating activities by $3.0 million, from $40-$50 million to $37-$47 million.

About Kosan

Kosan Biosciences is a biotechnology company advancing two new classes of anticancer agents through clinical development -- a Hsp90 (heat shock protein 90) inhibitor and an epothilone. Hsp90 inhibitors have a novel mechanism of action targeting multiple pathways involved in cancer cell growth and survival. Tanespimycin (KOS-953) is being tested in combination with Velcade(R) (bortezomib) in patients with multiple myeloma in a clinical program called TIME. Tanespimycin is also being studied in HER2-positive metastatic breast cancer in combination with Herceptin(R) (trastuzumab). Epothilones inhibit cell division with a mechanism of action similar to taxanes, one of the most successful classes of anti-tumor agents. KOS-1584 is in Phase trials in solid tumors. Kosan's motilin agonist compound, KOS-2187, licensed to Pfizer, is in a Phase 1 trial in gastroesophageal reflux disease (GERD). For additional information on Kosan Biosciences, please visit the company's website at http://www.kosan.com.

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "Act"). Such forward-looking statements include but are not limited to statements regarding the further development and potential safety, efficacy, regulatory status, commercial potential and other characteristics of Kosan's product candidates; the continuation of current clinical trials; the initiation of additional clinical trials and the timing thereof and the use of Kosan's financial resources. Words such as "will," "expect," "believe," "may," "intend," "plan," "potential" and similar expressions are intended to identify forward-looking statements. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon Kosan's current expectations. Forward-looking statements involve risks and uncertainties. Kosan's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to the uncertain progress and results of Kosan's preclinical and clinical testing, including the risks that studies and trials may not demonstrate safety and efficacy sufficient to initiate clinical trials on the timing currently anticipated, or at all, continue clinical development, obtain the requisite regulatory approvals or result in a marketable product; the conduct of clinical trials; manufacturing; regulatory approval requirements and process; the effort and expense necessary for further development of Kosan's product candidates, including the costs of bortezomib; intellectual property matters, including Kosan's ability to obtain valid and enforceable patents covering its product candidates; Kosan's dependence on its collaboration with Pfizer for development of its motilin agonist product candidate; Kosan's need for additional financing and Kosan's strategy to enter into partnering or licensing arrangements. These and other risk factors are discussed under "Risk Factors" in Kosan's Annual Report on Form 10-K for the year ended December 31, 2007 and other periodic filings with the SEC. Kosan expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein.

Velcade(R) (bortezomib) is a registered trademark of Millennium Pharmaceuticals, Inc.

Herceptin(R) (trastuzumab) is a registered trademark of Genentech, Inc.

CONTACT: Jane Green, VP, Corporate Communications, +1-510-731-5335, cell,+1-415-652-4819, , or Helen S. Kim, Chief Executive Officer,+1-510-731-5270, cell, +1-510-853-1314, , both of KosanBiosciences Incorporated green@kosan.com kim@kosan.com

Web site: http://www.kosan.com/

Ticker Symbol: (NASDAQ-NMS:KOSN)

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Posted: March 2008


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