Kosan Biosciences Inc. and Hoffmann-La Roche Inc. are changing directions in their partnered cancer drug program.

Toxicity issues forced the halting of a Phase II trial of KOS-862 in colorectal cancer, but the polyketide drug's promise in another indication influenced the companies to begin a Phase II study in prostate cancer. Specifically, the decision to step away from colorectal cancer stems from unanticipated cumulative drug toxicities in patients who previously had been treated with oxaliplatin (Eloxatin, Sanofi-Synthelabo SA).

"We accumulated a sufficient number [of patients] to recognize that we were seeing some unacceptable severe peripheral sensory neuropathy," Michael Ostrach, Kosan's president and chief operating officer, told BioWorld Today. He declined to specify the number of patients in the open-label trial to date, but noted that the study was not expected to complete enrollment until the end of the year. Treatment began in November.

The partners selected prostate cancer for further clinical development because of high response rates recently reported for the epothilone class of drugs in the indication. The influential findings were reported earlier this month at the American Society of Clinical Oncology meeting in New Orleans by Bristol-Myers Squibb Co., of New York.

"They had a PSA decrease of greater than 50 percent in nine patients out of 22," Ostrach said. "They also had three actual responses in those 22 patients, and in a second study demonstrated a PSA reduction in 70 percent of patients and 44 percent with a measurable response."

Given the move away from colorectal cancer, the partners will not begin a Phase Ib combination trial of KOS-862 with Xeloda to support that indication.

The apparent setback for the program initially caused a slump in Hayward, Calif.-based Kosan's stock price in aftermarket trading Tuesday; the partners released the news just after the market closed. But shares already had lost nearly one-third of their value since the ASCO meeting, as speculation grew that Roche might walk away from the deal altogether, said Eric Schmidt, an analyst with SG Cowen & Co. in New York.

By Wednesday's close, the stock (NASDAQ:KOSN) stabilized, climbing 11 cents to close at $8. Investors might have stuck around because of the confidence in the program shown by Nutley, N.J.-based Roche.

"Although the news represents a significant setback for KOS-862," Schmidt wrote in a research note, "Roche's continued commitment to developing epothilones may provide support to an already-weak stock."

With the shift in development now in place, the partners continue to move forward in other areas of their alliance, which began nearly two years ago when Kosan and Roche agreed to co-develop KOS-862 and its backup compounds. The deal is potentially worth $220 million to Kosan. (See BioWorld Today, Sept. 24, 2002.)

KOS-862 also is in Phase II trials for non-small-cell lung and breast cancers, and Ostrach said the companies hope to avoid further toxicity problems.

"We have treated patients in Phase I who have seen platinum-containing regimens," he said, "and we are treating in Phase II lung cancer patients who have seen platinum. So we are hoping, believe and expect that it may be due to oxaliplatin just being more of a significant problem. It's well known that that drug does cause severe peripheral sensory neuropathy."

Still, Schmidt noted that KOS-862's further development would be an uphill climb.

"The revelation of increased neurotoxicity associated with KOS-862 does not bode well for that compound's chances of reaching the market in other tumor types," he wrote. "Given this blemish on KOS-862's record, we expect investors will require more convincing evidence of the drug's risk/benefit profile in other tumor types prior to assigning value to the compound."

Schmidt pointed to Kosan's earlier-stage programs as potential drivers of long-term stock value. To that end, the partners expect to file an investigational new drug application and begin a Phase I trial for a second epothilone compound later this year.

"Phase I will basically be in all solid tumors," Ostrach said.

They also are discussing plans to extend their relationship to generate and develop additional epothilone drug candidates.

Beyond KOS-862, Kosan's other clinical candidate is 17-AAG, which is being evaluated in multiple Phase I and Ib trials in collaboration with the National Cancer Institute in Bethesda, Md. Ostrach, who said use of the drug results in the inhibition of multiple pathways involved in cancer cell growth and survival by inhibiting the Hsp90 target, noted that by the end of the year more than 20 clinical trials would be under way to test the drug as monotherapy and in combination for various tumor types.

Three preclinical programs at Kosan continue to evaluate compounds in animal testing - a ketolide for infectious diseases, a motilide for gastrointestinal motility and discodermolide analogues for cancer. The company has all rights to the programs.

"We expect any clinical successes associated with these drug candidates," Schmidt wrote, "could over time drive a recovery in Kosan's stock."