As it continues to develop polyketide products for cancer, Kosan Biosciences Inc. completed a public offering of 4.5 million shares to raise $39.4 million.
The price of $8.75 per share represents a discount to the company's closing stock price of $9 Wednesday. The shares (NASDAQ:KOSN) dropped 35 cents Thursday to close at $8.95. Following the offering, Hayward, Calif.-based Kosan has about 33.7 million shares outstanding.
Kosan's management declined comment Thursday due to quiet-period rules, but the company's prospectus said net proceeds of $36.5 million will go toward research and development, and general corporate purposes. The company also may use a portion to acquire or invest in businesses, products and technologies.
Kosan focuses on cancer products and is developing two of its candidates with Basel, Switzerland-based F. Hoffmann-La Roche Ltd., including its lead product, KOS-862 (Epothilone D). Their potential $220 million agreement was signed in September 2002. (See BioWorld Today, Sept. 24, 2002.)
KOS-862 is in Phase II trials for metastatic breast cancer and hormone-refractory prostate cancer, as well as three Phase Ib trials testing it in combination with Gemzar (gemcitabine), Paraplatin (carboplatin) and Herceptin (trastuzumab).
In June 2004, Kosan and Roche changed gears with KOS-862, halting a Phase II trial in colorectal cancer in favor of focusing on a prostate cancer indication. The Phase II colorectal cancer trial brought to light some unanticipated cumulative drug toxicities in patients previously treated with oxaliplatin (Eloxatin, Sanofi-Synthelabo SA). Later in the year, Kosan terminated a Phase II non-small-cell lung cancer trial of KOS-862 when it yielded no tumor response. (See BioWorld Today, June 24, 2004, and Nov. 24, 2004.)
Kosan expects the product to do better in breast and prostate cancers because the epothilone class of drugs appears to work well in taxane-resistant tumors, the company has said. Nevertheless, it is developing a follow-on compound with Roche, KOS-1584, which is in a Phase I trial for solid tumors.
In collaboration with the National Cancer Institute, Kosan is working on another first-in-class cancer product, 17-AAG, a heat-shock protein 90 (Hsp90) inhibitor and geldanamycin analogue, as well as a second-generation product, KOS-1022. The first agent is in Phase II trials for melanoma, lymphoma, and breast, renal and thyroid cancers, as well as Phase Ib trials testing it in combination with gemcitabine and cisplatin, Taxotere, Gleevec and paclitaxel. KOS-1022 is in an NCI-sponsored Phase I study for advanced malignancies, and a Kosan-sponsored Phase I trial for hematologic malignancies.
Independently, Kosan is studying KOS-953, a formulation of 17-AAG, in a Phase I trial in multiple myeloma patients, and in Phase Ib trials in combination with Herceptin, Velcade and Gleevec. At the preclinical stage, the company is evaluating additional polyketide-based product candidates, including a number of orally active pro-kinetic gastrointestinal motility agents that could treat gastric paresis in diabetics and gastroesophageal reflux disease.
Kosan began its operations in 1996 and raised $70 million in its initial public offering conducted in October 2000, followed by a $28 million direct offering in December 2003. (See BioWorld Today, Oct. 10, 2000, and Dec. 11, 2003.)
As of June 30, the company had $69.3 million in cash, cash equivalents and investments.