8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 24, 2003

KOSAN BIOSCIENCES INCORPORATED

(Exact name of registrant specified in its charter)

DELAWARE	000-31633	94-3217016
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3832 BAY CENTER PLACE HAYWARD, CA	94545
(Address of principal executive offices)	(Zip Code)

(510) 732-8400

REGISTRANT’S TELEPHONE, INCLUDING AREA CODE:

Item 9. REGULATION FD DISCLOSURE.

In accordance with SEC Release No. 33-8216, the information in this Current Report on Form 8-K and in the accompanying exhibit is being furnished to the Securities and Exchange Commission solely under Item 12 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On July 24, 2003, Kosan Biosciences Incorporated (the “Company”) announced via a press release its financial results for the three and six months ended June 30, 2003. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KOSAN BIOSCIENCES INCORPORATED (Registrant)
By:	/s/    DANIEL V. SANTI, M.D., PH.D.
	Daniel V. Santi, M.D., Ph.D. Chairman and Chief Executive Officer

Dated: July 24, 2003

EXHIBIT INDEX

Exhibit	Description
99.1	Press Release dated July 24, 2003, relating to the Company’s financial results for the three and six months ended June 30, 2003.

EX-99.1

Exhibit 99.1

Contact:
Kosan Biosciences	Vida, LLC
Susan M. Kanaya	Stephanie Diaz (investors)
Chief Financial Officer	415-885-2298
510-732-8400 ext. 5227	Tim Brons (media)
	646-319-8981

FOR IMMEDIATE RELEASE

Kosan Reports Second Quarter and Six Month Financial Results

4.5x Increase in Year-to-Date Revenue Over Prior Year

HAYWARD, CA. July 24, 2003 – Kosan Biosciences Incorporated (Nasdaq: KOSN) today reported financial results for the quarter and six months ended June 30, 2003. Kosan reported revenues of $9.3 million and $14.5 million in the three and six months ended June 30, 2003, compared to $1.5 million and $3.2 million in the same periods in 2002, representing an $11.3 million increase year-to-date over the same period last year. This increase primarily reflects contract revenue associated with Kosan’s partnership with Roche to jointly develop and commercialize KOS-862, including a $2.0 million milestone payment in the second quarter.

Kosan reported a quarterly net loss of $0.5 million, or $0.02 per share, compared to $6.4 million, or $0.26 per share, in the same period last year. For the six months ended June 30, 2003, Kosan reported a net loss of $3.1 million, or $0.12 per share, compared to $10.3 million, or $0.42 per share in the same period in 2002. At June 30, 2003, cash, cash equivalents and marketable securities totaled $75.6 million compared to $80.5 million at December 31, 2002.

Total operating expenses were $10.0 million and $18.1 million for the three and six months ended June 30, 2003, compared to $8.4 million and $15.6 million in the same periods last year. These increases were primarily attributable to the production and clinical testing of KOS-862 and further investment in Kosan’s geldanamycin analog program. Phase II clinical trials are planned to be initiated for both KOS-862 and 17-AAG, Kosan’s lead geldanamycin analog, in the second half of 2003.

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Q2 Earnings – Page 2

Kosan Biosciences Incorporated is a biotechnology company that has proprietary genetic engineering technologies to develop drug candidates from polyketides, a rich source of pharmaceuticals. Kosan is currently focused on the creation of new polyketides and the improvement of existing drugs for the treatment of cancer and infectious disease.

This press release contains “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. There are a number of important factors that could cause the results of Kosan to differ materially from those indicated by these forward-looking statements, including, among others, risks detailed from time to time in the Company’s SEC reports, including its Annual Report on Form 10-K for the year ended December 31, 2002, its Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and other periodic filings with the SEC. Kosan does not undertake any obligation to update forward-looking statements.

FINANCIAL TABLE FOLLOWS

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Q2 Earnings – Page 3

Selected Financial Information

Condensed Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
Revenues:
Contract revenue	$	8,588		$	925		$	12,935		$	1,850
Grant revenue		671			590			1,582			1,327
Total revenues		9,259			1,515			14,517			3,177
Operating expenses:
Research and development		8,716			7,159			15,597			13,106
General and administrative		1,277			1,242			2,525			2,502
Total operating expenses		9,993			8,401			18,122			15,608
Loss from operations		(734	)		(6,886	)		(3,605	)		(12,431	)
Net interest income		213			496			502			1,117
Realized gain on investment		—			—						990
Net loss	$	(521	)	$	(6,390	)	$	(3,103	)	$	(10,324	)
Basic and diluted net loss per common share	$	(0.02	)	$	(0.26	)	$	(0.12	)	$	(0.42	)
Shares used in computing basic and diluted net loss per common share		25,416			24,851			25,366			24,742

Condensed Balance Sheets

(in thousands)

	June 30, 2003		December 31, 2002
	(unaudited)
Cash, cash equivalents and marketable securities	$	75,564	$	80,538
Total assets	$	89,601	$	91,590
Deferred revenue	$	10,621	$	11,771
Total liabilities	$	21,435	$	20,750
Total liabilities and stockholders’ equity	$	89,601	$	91,590
Shares issued and outstanding		25,548		25,392

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