Roche and Kosan Biosciences Incorporated they have signed a collaboration agreement to globally co-develop and co-commercialize Kosan''s new generation anti-cancer drug candidate, KOS-862 (Epothilone D), currently in Phase I clinical studies for solid tumours. Epothilones are polyketide natural products that inhibit cancer cells by a mechanism similar to paclitaxel, and also are effective against paclitaxel-resistant tumours. The alliance will combine Roche''s strength in oncology development and marketing and Kosan''s proprietary technology for the design and production of polyketides.

Under the terms of the agreement, Roche will have the worldwide exclusive rights to market and sell KOS-862 and Kosan will co-develop and have the right to co-promote the product in the U.S. Roche will pay all future research and development costs. Kosan will receive payments of up to $220 million (U.S.), consisting of over $30 million in initial committed payments, which includes reimbursement of R&D expenditures and funding of a back up program, and additional contingent payments upon achievement of clinical, regulatory and commercial milestones, and for development activities. Kosan will receive a royalty stream on sales subject to potential offsets and credits. In addition, Kosan has the opportunity to further increase its equity by a buy-in at a later stage of clinical development and by co-promotion of products resulting from the collaboration.

Roche and Kosan will jointly conduct clinical development of KOS-862, and Roche will assume all related development costs. The principal focus of the collaboration will be the clinical development and marketing of KOS-862. Roche will also fund Kosan''s program for the identification of follow-up compounds and production improvements. Any such product candidates would also be co-developed and co-commercialized by Roche and Kosan for the treatment of cancer. Under the terms of the agreement, Kosan retains rights to epothilones for use in all other therapeutic areas.

Epothilones are polyketide natural products that inhibit cancer cells by a mechanism similar to paclitaxel, and also are effective against paclitaxel-resistant tumours. In 2001, Kosan initiated Phase I clinical testing of Epothilone D in patients with advanced solid tumours.