Kosan: Improving on Nature

04/22/2005 12:00 am EST

Focus:

Scott Gottlieb

Editor, Forbes/Gottlieb Medical Technology Investor

 I am also particularly excited about attending a workshop from Dr. Scott Gottlieb. He will be making his first appearance at a Money Show, in this case, following the recent launch of the Forbes/Gottlieb Medical Technology letter. Here are some of his insights on the biotech arena.

"Several cancer companies are developing drugs based on completely new scientific concepts, and aiming them—in many cases—at completely novel biological targets. But there is one standout that I believe is on the verge of reporting significant data with its lead drug.  Kosan Biosciences (KOSN NASDAQ)  has two first-in-class cancer drugs in phase I and phase II trials in multiple cancers. The company essentially improves upon nature; it uses its genomic technology to tweak the genetic sequences that code for the production of the proteins that underlie these medicines. By changing the genetic code, Kosan is able to design in all of the qualities that will make the polyketides better drugs, and design out those qualities that limit their usefulness.

"Its lead drug is KOS-862, which has a mechanism of action similar to the taxanes, which is a class of drugs used in a variety of cancers, but principally breast cancer. There is buzz in some cancer circles that the company could present strong data regarding KOS-862 at the upcoming conference of the American Society of Clinical Oncology in May 13-17. Kosan’s other discovery program encompasses a class of compounds known as Hsp90 inhibitors.  Kosan is trading at a valuation that most big pharmaceutical companies would pay for just one of the company’s drug development programs. Investors in Kosan are essentially getting two promising cancer programs for the price of one, and taking on less risk in the process. I recently spoke with one of Kosan’s senior science executives, and came away impressed by how passionate his team was about their science. Kosan could be on the verge of some big data announcements—hopefully positive news about its lead drug—and I like what I see going on at this small California biotech. I am currently rating Kosan a buy and adding it to my core portfolio."

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