Kosan says 2005 revenue down $9.5 million to $13.4 million, cuts workforce

By Lisa Kerner

Erie, Pa., March 2 - Kosan Biosciences Inc. attributed its $9.5 million drop in 2005 revenue in part to lower expense reimbursement by Roche. The company also announced a corporate restructuring that reduced its workforce to 80 from 119, according to a company news release.

Revenue was $4.0 million and $13.4 million for the quarter and year ended Dec. 31, respectively, compared to $3.8 million and $22.9 million in the same periods in 2004.

Kosan reported a $6.8 million net loss, or $0.23 per share, for the fourth quarter of 2005. Net loss for 2005 was $29.6 million, or $1.01 per share, according to the release.

Net loss for the fourth quarter and the year ending Dec. 31, 2004 were $6.9 million, or $0.24 per share, and $22.1 million, or $0.77 per share, respectively.

Kosan said the corporate restructuring reflects a realignment of research priorities and corporate operations to support its clinical products and pipeline opportunities. The staff cuts affect primarily the company's research, administration and general personnel.

"This restructuring reflects our commitment to the clinical development of our Hsp90 (heat shock protein 90) inhibitor program as we anticipate moving into late-stage clinical trials and our continued dedication to the clinical development of our epothilone program together with our partner, Roche," Kosan chief executive officer Robert G. Johnson, Jr. said in the release.

"We also intend to continue to strategically invest in our in-house proprietary drug discovery efforts with the goal of advancing high-quality lead candidates into preclinical and clinical development."

Kosan advanced five drug product candidates into phase 1 and/or phase 2 clinical trials in 2005. The company's focus for 2006 will be to advance its compounds toward registration, officials said.

At Dec. 31, cash, cash equivalents and marketable securities totaled $55.1 million, compared to $83.4 million at Dec. 31, 2004.

The company said it anticipates 2006 revenue to fall between $7 million and $9 million and to consist primarily of reimbursement by Roche for clinical expenses associated with Kosan's epothilone program.

Kosan, located in Hayward, Calif., is advancing two new classes of anticancer agents through clinical development and has developed a pipeline of product candidates for gastrointestinal motility.

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