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Thursday, 05/29/2008 8:43:45 AM

Thursday, May 29, 2008 8:43:45 AM

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Bristol-Myers Squibb to Acquire Kosan Biosciences
Thursday May 29, 8:39 am ET
Bristol-Myers Squibb Advances Company Strategy with Latest Acquisition

PRINCETON, N.J. and HAYWARD, Calif.--(BUSINESS WIRE)--Bristol-Myers Squibb Company (NYSE: BMY - News) and Kosan Biosciences Inc. (NASDAQ: KOSN - News) announced today that the companies have signed a definitive merger agreement providing for the acquisition of Kosan, a cancer therapeutics company, by Bristol-Myers Squibb, for $5.50 per share in cash. The transaction, with a net aggregate purchase price of approximately $190 million after deducting Kosan’s projected net cash balance at June 30, 2008, has been unanimously approved by the boards of directors of both companies. The acquisition of Kosan will enhance Bristol-Myers Squibb’s pipeline with compounds in two important classes of anticancer agents: novel Hsp90 (heat shock protein 90) inhibitors and epothilones.

“Helping patients prevail against serious disease is paramount at Bristol-Myers Squibb,” said Jim Cornelius, chairman and chief executive officer. “We pursue innovative science, both internally and externally, that can accelerate the discovery and development of new medicines. Kosan’s technology, coupled with our development and commercialization capabilities, will result in new treatment options for patients, and represents another important milestone in the execution of our strategy to become a next-generation BioPharma leader.”

“We believe that this combination with Bristol-Myers Squibb, a global leader in oncology, provides an excellent opportunity for the potential of Kosan’s development portfolio to be realized through a transaction which also provides our stockholders with attractive financial terms,” said Helen S. Kim, Kosan’s president and chief executive officer. “Kosan has evolved from a research platform to a development company, and we have reached a turning point in our growth as an independent company. We believe that this transaction represents a timely opportunity to place our clinical programs and technology assets in the hands of a world-class company with the experience and expertise to bring innovative cancer treatment options to patients in need.”

“Kosan has done great work advancing two classes of novel anticancer medicines: epothilones and Hsp90 inhibitors,” said Elliott Sigal, M.D., Ph.D., executive vice president and chief scientific officer, Bristol-Myers Squibb. “Epothilones are microtubule stabilizers with multiple therapeutic applications in various cancers and potentially in neurodegenerative diseases. The Hsp90 program includes a Phase III compound for the treatment of patients with multiple myeloma, an area of high unmet medical need.”

Under the terms of the definitive merger agreement, Bristol-Myers Squibb will commence a cash tender offer on or about May 29, 2008 to purchase all of the outstanding shares of Kosan common stock for $5.50 per share in cash. The closing of the tender offer is subject to customary terms and conditions, including the tender of a number of shares that constitutes at least a majority of Kosan’s outstanding shares of common stock (on a fully diluted basis) and expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvement Act. The agreement also provides for the parties to effect, subject to customary conditions, a merger to be completed following the completion of the tender offer which would result in all shares not tendered in the tender offer being converted into the right to received $5.50 per share in cash. The directors and executive officers of Kosan have entered into agreements with Bristol-Myers Squibb pursuant to which they have agreed to tender their shares in connection with the tender offer contemplated by the merger agreement, subject to securities law limitations. The merger agreement contains a provision under which Kosan has agreed not to solicit any competing offers for the company. Bristol-Myers Squibb will finance the acquisition from its existing cash resources. The companies expect the tender offer to close in approximately thirty (30) days.

Bristol-Myers Squibb and Kosan also announced today that they have entered into a separate license agreement under which Kosan has granted to Bristol-Myers Squibb an exclusive worldwide license to Kosan’s epothilone compounds and related intellectual property and data and will assign to Bristol-Myers Squibb its epothilone investigational new drug (IND) applications. Under the license agreement, Kosan will receive an initial payment of $25 million and is entitled to milestone payments in connection with the development of epothilone product candidates and royalty payments on net sales of such products. The license agreement will remain in effect between the parties in the event that the acquisition is not completed, unless the merger agreement is terminated due to an intentional breach by Bristol-Myers Squibb of its covenants under that agreement.

Credit Suisse Securities (USA) LLC is serving as financial advisor to Bristol-Myers Squibb in connection with the acquisition, and Bristol-Myers Squibb is represented by Cravath, Swaine & Moore LLP, New York, New York. Lazard Frères & Co. LLC is serving as financial advisor to Kosan in connection with the acquisition, and Kosan is represented by Cooley Godward Kronish LLP, Palo Alto, California.

Kosan Conference Call and Webcast Today

Kosan will hold a conference call to discuss the planned acquisition of Kosan by Bristol-Myers Squibb today at 7:00 a.m. Pacific / 10:00 a.m. Eastern. To access the live call, please dial 800.591.6942 (U.S.) or 617.614.4909 (International), access code 40535858. Interested parties may listen to the webcast live at http://www.kosan.com by clicking on the “Webcasts” tab under the heading “Investors/Press.” The webcast is also being distributed over Thomson’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson’s individual investor center at http://www.earnings.com or by visiting any of the investor sites in Thomson’s Individual Investor Network. Institutional investors can access the call via Thomson’s password-protected event management site, StreetEvents, at http://www.streetevents.com. A telephonic replay will be available through June 5, 2008 by dialing 888.286.8010, access code 53056563. International callers can dial 617.801.6888, access code 53056563.


surf's up......crikey