Document:

<PAGE>

                                                                   EXHIBIT 10.18

                                                    [LOGO]

TECHNOLOGY FINANCE

January 6, 2000                                       [LETTERHEAD]

Ms. Susan M. Kanaya
Chief Financial Officer
Kosan Biosciences, Incorporated
3832 Bay Center Place
Hayward, CA 94545

Dear Ms. Kanaya:

FINOVA Capital Corporation ("we" or "Lender") is pleased to enter into the
following transaction with Kosan Biosciences, Incorporated ("you" or "Borrower")
on the terms and conditions hereinafter set forth.

The outline of this Commitment is as follows:

BORROWER:                           Kosan Biosciences, Incorporated

LENDER:                             FINOVA Capital Corporation

TERM OF LOANS:                      Each Loan shall have a term until payment in
                                    full of forty-three (43) consecutive
                                    months from the thirtieth day of the
                                    month coincident with or (as the case may
                                    be) the month next following the making
                                    of the Loan.

FACILITY:                           A $2,000,000 line of credit. Subject to the
                                    terms of the Loan Documents (as hereinafter
                                    defined), we will from time to time make
                                    loans to you under the Facility (each, a
                                    "Loan" and collectively, the "Loans"). Once
                                    a Loan is made, it cannot be reborrowed.
                                    Each Loan shall be evidenced by a separate
                                    promissory note in form and substance
                                    satisfactory to Lender.

PURPOSE OF LOANS:                   For the acquisition of Equipment on Schedule
                                    A and new laboratory, office, production,
                                    research and development and additional
                                    equipment. Lender at its sole option may
                                    finance used equipment and/or equipment
                                    older than 90 days from the date of
                                    supplier's invoice. Lender will finance soft
                                    costs in amounts not in excess of
                                    twenty-five percent (25%) of each Loan, but
                                    shall not exceed a maximum of $500,000 in
                                    total. Notwithstanding the foregoing, the
                                    soft costs on the first Loan may be a
                                    maximum of 55% of that Loan, but in no case
                                    exceed the maximum. Such soft costs to
                                    include leasehold improvements, delivery,
                                    installation, sales tax and software. All
                                    items financed with the proceeds of the Loan
                                    are subject to final review and acceptance
                                    by the Lender.

COLLATERAL:                         The due payment and performance of all of
                                    Borrower's present and future obligations to
                                    Lender shall be secured by a first and only
                                    perfected lien on and security interest in
                                    and to all items financed with the proceeds
                                    of a Loan, and all replacements,
                                    substitutions, accessions and additions
                                    thereto, and all proceeds thereof
                                    (including, without limitation, proceeds of
                                    insurance). Each Loan shall be cross
                                    collateralized.

                                       1
<PAGE>

COLLATERAL LOCATION:                3832 Bay Center Place, Hayward, CA 94545

ANTICIPATED DELIVERY:               Through December 31, 2000.

CLOSING DATE:                       The date on which all conditions to a Loan
                                    are satisfied by the Borrower and the Loan
                                    proceeds are disbursed to the Borrower or to
                                    other Persons at the Borrower's direction.
                                    Each Loan shall have a principal amount of
                                    not less than $250,000 secured by all
                                    Collateral. No Closing Dates shall occur
                                    after December 31, 2000.

MONTHLY PAYMENTS:                   Each Loan shall be paid in forty-three (43)
                                    consecutive installments of principal and
                                    interest. Each of the first forty-two (42)
                                    Monthly Payments shall be in an amount equal
                                    to 2.745% of the principal amount of the
                                    Loan and the final forty-third (43rd)
                                    Monthly Payment shall be in an amount equal
                                    to ten (10%) percent of the principal amount
                                    of the Loan. All payments are payable in
                                    advance and the first (1st) and forty-second
                                    (42nd) Monthly Payments applicable to a Loan
                                    shall be payable on the Closing Date of such
                                    Loan and shall be withheld by the Lender
                                    from the Loan proceeds disbursed by the
                                    Lender.

ADJUSTMENT TO
MONTHLY PAYMENTS:                   If, on the second business day preceding the
                                    Closing Date for each Loan the highest yield
                                    for four-year U. S. Treasury Notes as
                                    published in THE WALL STREET JOURNAL on
                                    such date is greater than the yield as
                                    published on December 3, 1999, the Monthly
                                    Payments shall be increased (point for
                                    point) to reflect such increase in the
                                    yield. The yield as of December 3, 1999 was
                                    6.29%. As of the Closing Date, the Monthly
                                    Payments with respect to the applicable Loan
                                    being made shall be fixed for the entire
                                    Term.

INTERIM PAYMENTS:                   If the date we make the Loan to you is not
                                    the thirtieth (30th) or the thirty-first
                                    (31st) day of the month, you will pay, on
                                    the thirtieth (30th) day of the month in
                                    which we make the Loan to you, interest
                                    only, at the applicable adjusted interest
                                    rate, from the date we make the Loan to you
                                    to the twenty-ninth (29th) day of the same
                                    month. If the date we make the Loan to you
                                    is the thirty-first (31st), you will pay
                                    interest at the applicable adjusted interest
                                    rate, from the date we make the Loan to you
                                    to the twenty-ninth (29th) day of the next
                                    following month. The interim payment (as
                                    well as the first (1st) and forty-second
                                    (42nd) Monthly Payments) shall be payable on
                                    the Closing Date and shall be withheld by
                                    the Lender from the Loan proceeds disbursed
                                    by the Lender.

INSURANCE:                          Borrower shall, at its own expense, maintain
                                    and deliver evidence to Lender of such
                                    insurance required by Lender, written by
                                    insurers and in amounts satisfactory to
                                    Lender.

                                       2
<PAGE>

LOAN PROVISIONS
AND COVENANTS:                      All documentation shall be prepared and
                                    reviewed by us or our counsel and shall be
                                    in form and substance satisfactory to us and
                                    our counsel in our and our counsel's sole
                                    and absolute discretion, and shall include,
                                    without limitation, a promissory note (and
                                    related schedule) for each Loan, a master
                                    loan and security agreement, environmental
                                    certificate and indemnity agreement, opinion
                                    of outside counsel, financing statements,
                                    releases, waivers and consents (including,
                                    but not limited to, landlord's and
                                    mortgagee's waivers), corporate resolutions
                                    and incumbencies, insurance letter,
                                    insurance certificates and copies of
                                    insurance policies, and such other documents
                                    as we and our counsel deem appropriate in
                                    our or their sole discretion (collectively,
                                    the "Loan Documents"). The Loan Documents
                                    contemplated hereby shall contain such
                                    conditions, representations, warranties,
                                    covenants, events of default (including,
                                    without limitation, cross default
                                    provisions), remedies, and other terms and
                                    provisions as are customarily required by
                                    lenders in transactions of this type or as
                                    the parties shall agree.

ADDITIONAL COVENANTS:               There shall be no actual or threatened
                                    conflict with, or violation of, any
                                    regulatory statute, standard or rule
                                    relating to the Borrower, its present or
                                    future operations, or the Collateral.

                                    All information supplied by the Borrower
                                    shall be correct and shall not omit any
                                    statement necessary to make the information
                                    supplied not be misleading. There shall be
                                    no material breach of the representations
                                    and warranties of the Borrower in the Loan
                                    Agreement. The representations shall include
                                    that the Cost of each item of the Collateral
                                    does not exceed the fair and usual price for
                                    like quantity purchases of such item. The
                                    master loan and security agreement shall
                                    also contain the following covenant.

                                    FINANCIAL REPORTING. During the period of
                                    the Commitment and while any Loan is
                                    outstanding, Borrower shall deliver to
                                    Lender or cause to be delivered to Lender
                                    the Borrower's quarterly financial
                                    statements within 45 days following the end
                                    of each respective fiscal quarter and annual
                                    financial statements within 90 days
                                    following the end of each respective fiscal
                                    year. All annual financial statements shall
                                    be prepared in accordance with generally
                                    accepted accounting principles ("GAAP") and
                                    be audited by a reputable firm of certified
                                    public accountants acceptable to Lender, and
                                    shall be accompanied by a certificate
                                    executed by such certified public
                                    accountants to the effect that the Borrower
                                    has complied with all covenants contained in
                                    the Loan Documents and there are no events
                                    of default thereunder ("Compliance
                                    Certificate"). All quarterly financial
                                    statements may be internally prepared in
                                    accordance with GAAP, and accompanied by a
                                    Compliance Certificate executed by the
                                    Borrower's Chief Financial Officer.

                                       3
<PAGE>

FEES AND EXPENSES:                  The Borrower shall be responsible for the
                                    Lender's reasonable fees and expenses in
                                    connection with the transaction, including
                                    the fees and expenses of counsel to prepare
                                    and review the documentation, not to exceed
                                    $2,500.

COMMITMENT FEE:                     With the acceptance of this Commitment by
                                    the Borrower, a Commitment Fee of $20,000
                                    shall be then due the Lender. The
                                    Application Fee of $10,000 previously paid
                                    by the Borrower shall be applied to the
                                    Commitment Fee. The Commitment Fee, less any
                                    fees and expenses, shall be applied, on a
                                    pro rata basis based on the amount of each
                                    Loan in proportion to the total Facility to
                                    the second Monthly Loan Payment of each
                                    Loan.

SURVIVAL:                           This Commitment Letter shall survive
                                    closing. However, if there is any conflict
                                    between the terms and conditions of the
                                    master loan and security agreement (or
                                    schedules) and those of this Commitment
                                    Letter, the master loan and security
                                    Agreement (or schedules) shall control.

This Commitment and the Closing of each Loan contemplated herein are subject,
amongst other things, to receipt by us, in form and substance satisfactory to us
and our counsel, at or prior to Closing, of:

         (i)      all documentation and other requirements set forth herein
                  including but not limited to the Loan Documents and other
                  requirements set forth herein and as may be required by our
                  counsel; and

         (ii)     our receipt, in form and substance satisfactory to us, of all
                  financial and credit information requested by us, which
                  reflects no material adverse change in your condition,
                  business, financial or otherwise; and

         (iii)    evidence that the Collateral is owned by you, free and clear
                  of all liens and encumbrances; and

         (iv)     evidence of such insurance required by us, written by insurers
                  and in amounts satisfactory to us; and

         (v)      such opinions of your outside counsel, certificates, waivers,
                  releases, Uniform Commercial Code Financing Statements, due
                  diligence searches, and further documents as may be required
                  by us or our counsel; and

         (vi)     evidence that no payment is past due to the Lender from the
                  Borrower, whether as a borrower, a lessee, a guarantor or in
                  some other capacity and that there be no default under any
                  agreement, instrument or document between the Lender and the
                  Borrower (including, without limitation, the Loan Documents);
                  and

         (vii)    evidence that the Borrower is in compliance with the
                  provisions of this Commitment; and

                                       4
<PAGE>

         (viii)   our receipt of evidence satisfactory to us, in our sole
                  discretion that the subject transaction is environmentally
                  acceptable. We shall have the right to require you to retain
                  the services of a firm acceptable to us and knowledgeable in
                  environmental matters to perform environmental investigations
                  of the Collateral and real property owned, operated or
                  occupied by you (including, without limitation, the Collateral
                  Location) and the surrounding areas. Such investigation may
                  include, but not be limited to, soil and ground water testing
                  to fully identify the scope of any environmental issues
                  impacting the transaction (including Phase I and/or Phase II
                  environmental reports). The scope and results of such
                  investigations must be satisfactory to us, in our sole
                  discretion.

In addition to all other conditions and requirements set forth herein, this
Commitment and the closing of each Loan contemplated hereunder shall be subject,
in our sole judgment, that there be no material adverse change in your
financial, business or other condition. This Commitment is not assignable
without our prior written consent. We reserve the right to cancel this
Commitment in the event you or any of your officers, employees, agents or
representatives has made any misrepresentation to us or has withheld any
information from us with regard to the transaction contemplated hereby.

As used in this Commitment, the terms "satisfactory to us" or "acceptable to us"
or "satisfactory to our counsel" or "acceptable to our counsel" or terms of
similar import mean satisfactory or acceptable to us or our counsel in our or
its sole judgment and discretion.

This Commitment and the Loan Documents shall be governed by the laws of the
State of Arizona. Any dispute arising under this Commitment shall be litigated
by you only in any federal or state court located in the State of Arizona, or
any state court located in Maricopa County, Arizona; and you hereby irrevocably
submit to the personal jurisdiction of such courts and waive any objection that
may exist as to venue or convenience of such forums. Nothing contained herein
shall preclude us from commencing any action in any court having jurisdiction
thereof.

In the event that the Loans do not close prior to January 1, 2001 because of
your failure to satisfy the conditions for the closing, or because of a
material adverse change in your financial, business or other condition, this
Commitment shall terminate and we shall have no liability to you and we shall
retain, as earned, the Commitment Fee.

In the event we fail to complete this transaction and such failure is not
because of your inability to satisfy all the conditions for closing or a
material adverse change in your financial, business or other condition, our
liability shall be limited to a return of the Commitment Fee, less Fees and
Expenses due hereunder.

                                       5
<PAGE>

Please execute the copy of this letter acknowledging your acceptance of the
terms hereof and return it to us along with a check for $10,000 representing the
balance of the Commitment Fee. If a copy of this Commitment is not executed and
returned by you on or before January 11, 2000, this Commitment shall be deemed
withdrawn.

                                                     Sincerely,

                                                     FINOVA CAPITAL CORPORATION

                                                     By   /s/ Dannion C. McGary
                                                          ----------------------
                                                              Dannion C. McGary
                                                              Vice President
Accepted this 7 day of JANUARY 2000

KOSAN BIOSCIENCES, INCORPORATED

By:  /s/ Susan Kanaya
   ------------------------

                                       6
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                             Description/Vendor                         Invoice #                    Invoice Date             Price
-----------------------------------------------------------------------------------------------------------------------------------

             LABORATORY EQUIPMENT
                                    1999
<S>     <C>  <C>                                                     <C>                     <C>                    <C>
06/04/99   1 Gear drive variable speed mixer - Lightnin -
             process                                                         S01/99016522                05/28/99          1,328.00
06/07/99   1 Winchlift & Stand - Inaco - Process                                   105504                05/03/99            912.00
06/07/99   1 Centrifuge - Alfa Laval - Process                                     130582                05/20/99          1,271.00
06/10/99   1 Foxy 200 fraction collector - Isco, Inc. - Process                 026862-00                06/04/99          3,795.00
06/23/99   1 Vacuubrand MZ2C - Vacuubrand - Process                                   906                06/07/99          2,071.75
06/30/99   1 IDG400-58 Probe- Nalorac - Chemistry                                -2802835                06/28/99         21,000.00
07/01/99   1 Biostat MD Triple - B.Braun biotech- Process                   34144 & 34785     /21/1999  & 8/27/99         79,385.00
07/01/99   1 NMR Sample Changer & Gradiant Amplifier - Bruker -
             Process                                                      034954 & 035148       5/27/99 & 7/19/99         42,990.00
07/02/99   1 5L Glass fermentation vessel MD - 5 - B.Braun -
             Process                                                                34214                06/28/99          1,218.00
07/06/99   1 New Shaft for 150L - B. Metal fabrication                              13267                07/06/99          1,976.00
07/14/99     Installation Consolidated Autoclave - Labworks
             Equip Svc. - Process                                                    1784                07/13/99
07/20/99   2 New Brunswick Series 25 Incubator Shakers - New
             Brunswick - New Technology                                            100072                07/14/99          8,800.00
07/31/99   1 Hitachi HPLC System - Shaman -- Process                                  N/A                07/16/99         16,000.00
08/02/99   1 Hand Nut Tool - Alfa Laval - Process                                  135647                07/28/99          1,044.00
08/06/99   1 SS 34 Rotor - Kendro Laboratories - Process &
             Biological Sciences                                             SLS/99012265                07/30/99          3,150.00
08/10/99     New Brunswick Shaker upper & lower bearings -
             Labworks Equipment - Process                                            1815                08/10/99            405.00
08/15/99   1 Eight position multicell transport - Hewlett
             Packard -                                                          100128894                08/10/99          4,080.00
08/20/99   1 Consolidated Autoclave Model SR24C - Laboratory
             Equipment Company - Process                                       156 & 1565        7/13/99 & 7/9/99         32,245.00
08/20/99   1 Vacuum pump assembly on house vacuum system -
             Labworks Equipment - Process                                     1829 & 1836       8/20/99 & 8/26/99          4,200.00
08/25/99   1 Vacuum Pump 1.8CFM - Fisher Scientific - Chemistry                   9632318                08/19/99            930.00
09/01/99   4 Piece baffles & (1) piece mixer to 150L fermentor
             - B. Metal Fabrication - Process                                       13332                08/18/99          1,030.00
09/03/99   1 Circ Refg Htg Digt 13L 115V (water bath) - Fisher
             - Lab support                                                        9892860                09/03/99          1,772.00
09/23/00   1 IHR 2106 Seal assembly kit for 150L - LSL
           1 Biotafitte, Inc - Process Science                                       2708                09/01/99          1,210.51
09/29/99   1 Freezer Storage Flame - Sussman - Process                            9987566                09/10/99          1,680.26
09/30/99     Steam generator - Sussman - Process                                    42894                08/31/99         17,266.00
10/06/99   1 General Electric Refrigerator - University
             Electric company - biological Sciences                            0091858-IN                09/30/99          1,180.00
10/11/99   1 Dissolved Oxygen Probe - Metier Toledo - Process
             Development                                                            57800                10/07/99          1,000.00
10/18/99   1 Dissolved Oxygen Probe - Metier Toledo - Process
             Development                                                            57912                10/13/99          1,135.00
11/05/99   1 Circulating Water Flow bath - VWR Scientific                         1897571                10/25/99          1,450.00
11/09/99   1 Pollyscience chiller model 6105 - VWR Scientific -
             New Technology                                                       1850528                10/21/99          1,985.00
11/01/09   1 Economy Oven - VWR Scientific Products - Chemistry                   1864117                10/22/99          1,190.00
11/14/99   1 Microfuge R - Beckman Brand - VWR Scientific -
             Process Development                                                  2227236                11/29/99          4,600.00
11/15/99   1 Water Bath - Fisher Scientific - Process                              977228                11/09/99          1,772.60
11/27/99   1 GE Refrigerator - University Electric Company -
             Biological Sciences                                               0094028-IN                11/29/99          1,180.00
12/06/99   1 Evaporative Light Scattering Detector                                 572737                11/11/99         13,950.00
12/06/99   1 Industrial Scale / Top loading - VWR Scientific -
 Process                                                              2216307                11/24/99            976.50
                                   subtotal Laboratory equipment

             LEASEHOLD IMPROVEMENTS
                                                            1999
06/01/99     New facility build out - Scales construction -
             Science                                                             99016-02                06/22/99         14,004.00
06/15/99     New facility build out - Scales construction -
             Process                                                             99007-02                06/09/99            868.00
07/01/99     Architectual blueprints for New Fac. Buildout -
             Dowler Gruman Architect - Whole Co.                         815702 & 9815703        2/16/99 & 3/9/99         15,972.50
07/01/99     Data Cable installation - RC Communication - Whole
             Co.                                                                     2756                06/28/99            243.60
08/01/99     Electrical Install 32 Dedicated Circuits - Graham
             Electrical Contractors - Whole facility                                32729                07/12/99         21,970.00
08/01/99     Construct Wood Platforms - Scales Construction -
             Whole Company                                                       99016-03                07/28/99          2,105.00
09/01/99     Engineering for the 1000 litre fermentation suite
             - LEM Construction Inc. - Process                                      99176                08/31/99         18,213.00
10/01/99     Heat exchange system - Cal Air Inc. - whole company                   Jul-32                09/23/99          6,083.00
10/19/99     Install 21 data cables - R.C. Communications -
             Whole company                                                           2914                10/24/99          1,407.30
10/27/99     Construction of new process development lab -
             Concrete shell structures                                                                                   268,021.00
                                 subtotal Leasehold improvements
</TABLE>

<TABLE>
<CAPTION>

                                   Description/Vendor                               Shipping  Sales Tax        Labor          Total
              LABORATORY EQUIPMENT
                                          1999
<S>      <C>  <C>                                                                 <C>         <C>           <C>         <C>
 06/04/99   1 Gear drive variable speed mixer - Lightnin - process                     34.17     109.56            -       1,471.73
 06/07/99   1 Winchlift & Stand - Inaco - Process                                      30.00          -            -         942.00
 06/07/99   1 Centrifuge - Alfa Laval - Process                                        10.49          -     2,491.39       3,773.58
 06/10/99   1 Foxy 200 fraction collector - Isco, Inc. - Process                           -     313.09            -       4,108.09
 06/23/99   1 Vacuubrand MZ2C - Vacuubrand - Process                                   26.57          -            -       2,098.32
 06/30/99   1 IDG400-58 Probe- Nalorac - Chemistry                                     60.00   1,732.50            -      22,792.50
 07/01/99   1 Biostat MD Triple - B.Braun biotech- Process                            628.55          -            -      80,013.55
 07/01/99   1 NMR Sample Changer & Gradiant Amplifier - Bruker - Process               41.00   3,546.68     2,540.00      49,117.68
 07/02/99   1 5L Glass fermentation vessel MD - 5 - B.Braun - Process                  23.87     100.49            -       1,342.36
 07/06/99   1 New Shaft for 150L - B. Metal fabrication                                    -     163.02            -       2,139.02
              Installation Consolidated Autoclave - Labworks Equip Svc. -
 07/14/99     Process                                                                      -          -     1,800.00       1,800.00
              New Brunswick Series 25 Incubator Shakers - New Brunswick -
 07/20/99   2 New Technology                                                               -     726.00            -       9,526.00
 07/31/99   1 Hitachi HPLC System - Shaman -- Process                                      -          -            -      16,000.00
 08/02/99   1 Hand Nut Tool - Alfa Laval - Process                                      4.67          -            -       1,048.77
              SS 34 Rotor - Kendro Laboratories - Process & Biological
 08/06/99   1 Sciences                                                                 35.00     262.77            -       3,447.77
              New Brunswick Shaker upper & lower bearings - Labworks
 08/10/99     Equipment - Process                                                      20.00      33.41     1,385.00       1,843.41
 08/15/99   1 Eight position multicell transport - Hewlett Packard -                   14.00          -            -       4,094.00
              Consolidated Autoclave Model SR24C - Laboratory Equipment
 08/20/99   1 Company - Process                                                       865.00   2,911.01     3,774.99      39,797.00
              Vacuum pump assembly on house vacuum system - Labworks
 08/20/99   1 Equipment - Process                                                     120.00     346.50     1,000.00       5,666.50
 08/25/99   1 Vacuum Pump 1.8CFM - Fisher Scientific - Chemistry                       64.50      76.73            -       1,071.23
              Piece baffles & (1) piece mixer to 150L fermentor - B. Metal
 09/01/99   4 Fabrication - Process                                                        -      84.98            -       1,114.96
              Circ Refg Htg Digt 13L 115V (water bath) - Fisher - Lab
 09/03/99   1 support                                                                      -     153.92            -       1,926.52
              IHR 2106 Seal assembly kit for 150L - LSL Biotafitte, Inc -
 09/23/00   1 Process Science                                                              -          -       625.00       1,835.51
 09/29/99   1 Freezer Storage Flame - Sussman - Process                                    -     138.62            -       1,818.88
 09/30/99   1 Steam generator - Sussman - Process                                     218.84          -            - 17.484.84
              General Electric Refrigerator - University Electric company
 10/06/99   1 - biological Sciences                                                    30.00      99.83            -       1,309.83
 10/11/99   1 Dissolved Oxygen Probe - Metier Toledo - Process Development              8.49      73.12            -       1,081.61
 10/18/99   1 Dissolved Oxygen Probe - Metier Toledo - Process Development              6.42      82.75                    1,224.17
 11/05/99   1 Circulating Water Flow bath - VWR Scientific                                 -     119.63            -       1,569.63
              Pollyscience chiller model 6105 - VWR Scientific - New
 11/09/99   1 Technology                                                                   -     163.76            -       2,148.76
 11/01/09   1 Economy Oven - VWR Scientific Products - Chemistry                           -      98.18            -       1,288.16
              Microfuge R - Beckman Brand - VWR Scientific - Process
 11/14/99   1 Development                                                                  -     379.50            -       4,979.50
 11/15/99   1 Water Bath - Fisher Scientific - Process                                     -     146.25            -       1,918.85
              GE Refrigerator - University Electric Company - Biological
 11/27/99   1 Sciences                                                                 30.00      99.83            -       1,309.83
 12/06/99   1 Evaporative Light Scattering Detector                                   160.15   1,150.88            -      15,261.03
 12/06/99   1 Industrial Scale / Top loading - VWR Scientific - Process                24.32      80.57            -       1,081.39
                                                                                                                     ---------------
                                              subtotal Laboratory equipment                                              309,447.02
                                                                                                                     ---------------

              LEASEHOLD IMPROVEMENTS
                                          1999
 06/01/99     New facility build out - Scales construction - Science                       -          -            -      14,004.00
 06/15/99     New facility build out - Scales construction - Process                       -          -            -         868.00
 07/01/99     Architectual blueprints for New Fac. Buildout - Dowler
              Gruman Architect - Whole Co.                                                 -          -            -      15,972.50
 07/01/99     Data Cable installation - RC Communication - Whole Co.                       -          -       990.00       1,233.60
 08/01/99     Electrical Install 32 Dedicated Circuits - Graham Electrical
              Contractors - Whole facility                                                 -          -            -      21,970.00
 08/01/99     Construct Wood Platforms - Scales Construction - Whole
              Company                                                                      -          -            -       2,105.00
 09/01/99     Engineering for the 1000 litre fermentation suite - LEM
              Construction Inc. - Process                                                  -          -            -      18,213.00
 10/01/99     Heat exchange system - Cal Air Inc. - whole company                          -          -            -       6,083.00
 10/19/99     Install 21 data cables - R.C. Communications - Whole company                 -     116.10     2,655.00       4,178.40
 10/27/99     Construction of new process development lab - Concrete shell
              structures                                                                   -          -                  268,021.00
                                                                                                                     --------------
                                            subtotal Leasehold improvements                                              352.648.50
                                                                                                                     ---------------
</TABLE>

<TABLE>
<CAPTION>

                                              Description/Vendor                                         Serial Number
              LABORATORY EQUIPMENT
                                                                    1999
<S>      <C>  <C>                                                                             <C>
 06/04/99   1 Gear drive variable speed mixer - Lightnin - process                               R9972800000501
 06/07/99   1 Winchlift & Stand - Inaco - Process                                                SRNC-PSW-BT
 06/07/99   1 Centrifuge - Alfa Laval - Process                                                  SRNAC5229-3
 06/10/99   1 Foxy 200 fraction collector - Isco, Inc. - Process                                 SRN213032
 06/23/99   1 Vacuubrand MZ2C - Vacuubrand - Process                                             SRN21677710-99
 06/30/99   1 IDG400-58 Probe- Nalorac - Chemistry                                               SRN9906-5131
 07/01/99   1 Biostat MD Triple - B.Braun biotech- Process                                       SRN8842728Job1111
 07/01/99   1 NMR Sample Changer & Gradiant Amplifier - Bruker - Process                         SRN AH104,BF8006
 07/02/99   1 5L Glass fermentation vessel MD - 5 - B.Braun - Process                            SRN 3920425/1
 07/06/99   1 New Shaft for 150L - B. Metal fabrication                                          SRNFernshaft
 07/14/99     Installation Consolidated Autoclave - Labworks Equip Svc. - Process                SRN reference SR24C.061899
 07/20/99   2 New Brunswick Series 25 Incubator Shakers - New Brunswick - New Technology         SRN780603432 & 390132993
 07/31/99   1 Hitachi HPLC System - Shaman -- Process                                            SRN0818-033
 08/02/99   1 Hand Nut Tool - Alfa Laval - Process                                               SRNAC9306-2
 08/06/99   1 SS 34 Rotor - Kendro Laboratories - Process & Biological Sciences                  SRN9912065
 08/10/99     New Brunswick Shaker upper & lower bearings - Labworks Equipment - Process         SRNFSR-1121
 08/15/99   1 Eight position multicell transport - Hewlett Packard -                             SRNDE73300623
 08/20/99   1 Consolidated Autoclave Model SR24C - Laboratory Equipment Company - Process        SRN5500-97, SN 061899
 08/20/99   1 Vacuum pump assembly on house vacuum system - Labworks Equipment - Process         SRNF993
 08/25/99   1 Vacuum Pump 1.8CFM - Fisher Scientific - Chemistry                                 SRNFile # LR28889,MOD16030074
 09/01/99   4 Piece baffles & (1) piece mixer to 150L fermentor - B. Metal Fabrication - Process SRN9914
 09/03/99   1 Circ Refg Htg Digt 13L 115V (water bath) - Fisher - Lab support                    SRN13873113C
 09/23/00   1 IHR 2106 Seal assembly kit for 150L - LSL Biotafitte, Inc - Process Science        SRN1139.103.00
 09/29/99   1 Freezer Storage Flame - Sussman - Process                                          SRN83058958
 09/30/99   1 Steam generator - Sussman - Process                                                SRNISSB48F3
 10/06/99   1 General Electric Refrigerator - University Electric company - biological Sciences  SRNMV248386
 10/11/99   1 Dissolved Oxygen Probe - Metier Toledo - Process Development                       SRN52200102
 10/18/99   1 Dissolved Oxygen Probe - Metier Toledo - Process Development                       SRN341003058
 11/05/99   1 Circulating Water Flow bath - VWR Scientific                                       SRN13271-036
 11/09/99   1 Pollyscience chiller model 6105 - VWR Scientific - New Technology                  SRN13271-256
 11/01/09   1 Economy Oven - VWR Scientific Products - Chemistry                                 SRN699081412
 11/14/99   1 Microfuge R - Beckman Brand - VWR Scientific - Process Development                 SRNMRB99F12
 11/15/99   1 Water Bath - Fisher Scientific - Process                                           SRN115v60H
 11/27/99   1 GE Refrigerator - University Electric Company - Biological Sciences                SRNRV247820
 12/06/99   1 Evaporative Light Scattering Detector                                              SRN9908873A
 12/06/99   1 Industrial Scale / Top loading - VWR Scientific - Process                          SRN11302-866
                                       subtotal Laboratory equipment

              LEASEHOLD IMPROVEMENTS
                                               1999
 06/01/99     New facility build out - Scales construction - Science                             Leasehold improve SRN N/A
 06/15/99     New facility build out - Scales construction - Process                             Leasehold improve SRN N/A
 07/01/99     Architectual blueprints for New Fac. Buildout - Dowler Gruman Architect - Whole
              Co.                                                                                Leasehold improve SRN N/A
 07/01/99     Data Cable installation - RC Communication - Whole Co.                             Leasehold improve SRN N/A
 08/01/99     Electrical Install 32 Dedicated Circuits - Graham Electrical Contractors - Whole
              facility                                                                           Leasehold improve SRN N/A
 08/01/99     Construct Wood Platforms - Scales Construction - Whole Company                     Leasehold improve SRN N/A
 09/01/99     Engineering for the 1000 litre fermentation suite - LEM Construction Inc. -
              Process                                                                            Leasehold improve SRN N/A
 10/01/99     Heat exchange system - Cal Air Inc. - whole company                                Leasehold improve SRN N/A
 10/19/99     Install 21 data cables - R.C. Communications - Whole company                       Leasehold improve SRN N/A
 10/27/99     Construction of new process development lab - Concrete shell structures            Leasehold improve SRN N/A
                                      subtotal Leasehold improvements
</TABLE>

<TABLE>
<CAPTION>
                                       Description/Vendor                          Paid by check #
              LABORATORY EQUIPMENT
                                                                              1999
<S>      <C>  <C>                                                                            <C>
 06/04/99   1 Gear drive variable speed mixer - Lightnin - process                                               3001
 06/07/99   1 Winchlift & Stand - Inaco - Process                                                                3078
 06/07/99   1 Centrifuge - Alfa Laval - Process                                                                  3038
 06/10/99   1 Foxy 200 fraction collector - Isco, Inc. - Process                                                 3081
 06/23/99   1 Vacuubrand MZ2C - Vacuubrand - Process                                                             3124
 06/30/99   1 IDG400-58 Probe- Nalorac - Chemistry                                                        3154 & 2373
 07/01/99   1 Biostat MD Triple - B.Braun biotech- Process                                                3220 & 3567
 07/01/99   1 NMR Sample Changer & Gradiant Amplifier - Bruker - Process                                  3218 & 3566
 07/02/99   1 5L Glass fermentation vessel MD - 5 - B.Braun - Process                                            3135
 07/06/99   1 New Shaft for 150L - B. Metal fabrication                                                          3336
 07/14/99     Installation Consolidated Autoclave - Labworks Equip Svc. - Process                                3298
              New Brunswick Series 25 Incubator Shakers - New Brunswick - New
 07/20/99   2 Technology                                                                        wire transfer 7/16/99
 07/31/99   1 Hitachi HPLC System - Shaman -- Process                                                            3200
 08/02/99   1 Hand Nut Tool - Alfa Laval - Process                                                               3396
 08/06/99   1 SS 34 Rotor - Kendro Laboratories - Process & Biological Sciences                                  3417
              New Brunswick Shaker upper & lower bearings - Labworks Equipment -
 08/10/99     Process                                                                                            3492
 08/15/99   1 Eight position multicell transport - Hewlett Packard -                                             3480
              Consolidated Autoclave Model SR24C - Laboratory Equipment Company -
 08/20/99   1 Process                                                                                            3491
              Vacuum pump assembly on house vacuum system - Labworks Equipment -
 08/20/99   1 Process                                                                                            3582
 08/25/99   1 Vacuum Pump 1.8CFM - Fisher Scientific - Chemistry                                                 3578
              Piece baffles & (1) piece mixer to 150L fermentor - B. Metal
 09/01/99   4 Fabrication - Process                                                                              3646
 09/03/99   1 Circ Refg Htg Digt 13L 115V (water bath) - Fisher - Lab support                                    3764
              IHR 2106 Seal assembly kit for 150L - LSL Biotafitte, Inc - Process
 09/23/00   1 Science                                                                                            3780
 09/29/99   1 Freezer Storage Flame - Sussman - Process                                                          3764
 09/30/99   1 Steam generator - Sussman - Process                                                                3866
              General Electric Refrigerator - University Electric company -
 10/06/99   1 biological Sciences                                                                                4018
 10/11/99   1 Dissolved Oxygen Probe - Metier Toledo - Process Development                                       3924
 10/18/99   1 Dissolved Oxygen Probe - Metier Toledo - Process Development                                       3993
 11/05/99   1 Circulating Water Flow bath - VWR Scientific                                                       4173
 11/09/99   1 Pollyscience chiller model 6105 - VWR Scientific - New Technology                                  4023
 11/01/09   1 Economy Oven - VWR Scientific Products - Chemistry                                                 4173
 11/14/99   1 Microfuge R - Beckman Brand - VWR Scientific - Process Development                                 4222
 11/15/99   1 Water Bath - Fisher Scientific - Process                                                           4193
 11/27/99   1 GE Refrigerator - University Electric Company - Biological Sciences                                4221
 12/06/99   1 Evaporative Light Scattering Detector                                                              4073
 12/06/99   1 Industrial Scale / Top loading - VWR Scientific - Process                                          4222
                                                     subtotal Laboratory equipment

              LEASEHOLD IMPROVEMENTS
                                                                              1999
 06/01/99     New facility build out - Scales construction - Science                                             3164
 06/15/99     New facility build out - Scales construction - Process                                             3115
              Architectual blueprints for New Fac. Buildout - Dowler Gruman
 07/01/99     Architect - Whole Co.                                                                              3345
 07/01/99     Data Cable installation - RC Communication - Whole Co.                                             3262
              Electrical Install 32 Dedicated Circuits - Graham Electrical
 08/01/99     Contractors - Whole facility                                                                       3475
 08/01/99     Construct Wood Platforms - Scales Construction - Whole Company                                     3608
              Engineering for the 1000 litre fermentation suite - LEM
 09/01/99     Construction Inc. - Process                                                                        3540
 10/01/99     Heat exchange system - Cal Air Inc. - whole company                                                3968
 10/19/99     Install 21 data cables - R.C. Communications - Whole company                                       4009
              Construction of new process development lab - Concrete shell
 10/27/99     structures                                                                                  3953 & 4213
                                                   subtotal Leasehold improvements
</TABLE>

<TABLE>
<CAPTION>

                             Description/Vendor                     Cleared / Bank Stmt date     Check Date       Soft Costs
             Laboratory equipment
                                                            1999
             Gear drive variable speed mixer - Lightnin -
<C>     <C>  <C>                                                     <C>                         <C>           <C>
06/04/99   1 process                                                                 6/30/99         6/17/99            143.73
06/07/99   1 Winchlift & Stand - Inaco - Process                                     7/31/99          7/1/99             30.00
06/07/99   1 Centrifuge - Alfa Laval - Process                                       7/31/99          7/1/99          2,501.88
06/10/99   1 Foxy 200 fraction collector - Isco, Inc. - Process                      7/31/99          7/1/99            313.09
06/23/99   1 Vacuubrand MZ2C - Vacuubrand - Process                                  7/31/99          7/1/99             26.57
06/30/99   1 IDG400-58 Probe- Nalorac - Chemistry                          7/31/99 & 3/31/99          7/8/99          1,792.50
                                                                                           7/22/99 & 9/21/99
07/01/99   1 Biostat MD Triple - B.Braun biotech- Process               7/31/1999 &  9/30/99                            628.55
             NMR Sample Changer & Gradiant Amplifier - Bruker -                           7/22/99 &  9/21/99
07/01/99   1 Process                                                       8/31/99 & 9/30/99                          6,127.68
             5L Glass fermentation vessel MD - 5 - B.Braun -
07/02/99   1 Process                                                                 7/31/99          7/8/99            124.36
07/06/99   1 New Shaft for 150L - B. Metal fabrication                               8/31/99         8/11/99            163.02
             Installation Consolidated Autoclave - Labworks
07/14/99     Equip Svc. - Process                                                    8/31/98         7/29/99          1,800.00
             New Brunswick Series 25 Incubator Shakers - New
07/20/99   2 Brunswick - New Technology                                              7/31/99                            726.00
07/31/99   1 Hitachi HPLC System - Shaman -- Process                                 7/31/99         7/15/99         -
08/02/99   1 Hand Nut Tool - Alfa Laval - Process                                    8/31/99         8/19/99              4.67
             SS 34 Rotor - Kendro Laboratories - Process &
08/06/99   1 Biological Sciences                                                     8/31/99         8/19/99            297.77
             New Brunswick Shaker upper & lower bearings -
08/10/99     Labworks Equipment - Process                                            9/30/99         8/27/99          1,438.41
             Eight position multicell transport - Hewlett
08/15/99   1 Packard -                                                               9/30/99         8/27/99             14.00
             Consolidated Autoclave Model SR24C - Laboratory
08/20/99   1 Equipment Company - Process                                             9/30/99         8/27/99          7,552.00
             Vacuum pump assembly on house vacuum system -
08/20/99   1 Labworks Equipment - Process                                            9/30/99         9/21/99          1,466.50
08/25/99   1 Vacuum Pump 1.8CFM - Fisher Scientific - Chemistry                      9/30/99         9/21/99            141.23
             Piece baffles & (1) piece mixer to 150L fermentor
09/01/99   4 - B. Metal Fabrication - Process                                       10/31/99         9/24/99             84.98
             Circ Refg Htg Digt 13L 115V (water bath) - Fisher
09/03/99   1 - Lab support                                                          10/31/99        10/14/99            153.92
             IHR 2106 Seal assembly kit for 150L - LSL
09/23/00   1 Biotafitte, Inc - Process Science                                      10/31/99        10/14/99            625.00
09/29/99   1 Freezer Storage Flame - Sussman - Process                              10/31/99        10/14/99            138.62
09/30/99   1 Steam generator - Sussman - Process                                    11/30/99        10/22/99            218.84
             General Electric Refrigerator - University
10/06/99   1 Electric company - biological Sciences                                 11/30/99        11/11/99            129.83
             Dissolved Oxygen Probe - Metier Toledo - Process
10/11/99   1 Development                                                            11/30/99        10/27/99             81.61
             Dissolved Oxygen Probe - Metier Toledo - Process
10/18/99   1 Development                                                            11/30/99        11/11/99             89.17
11/05/99   1 Circulating Water Flow bath - VWR Scientific                        Call Vendor         12/2/99            119.63
             Pollyscience chiller model 6105 - VWR Scientific -
11/09/99   1 New Technology                                                         11/30/99        11/11/99            163.76
11/01/09   1 Economy Oven - VWR Scientific Products - Chemistry                  Call Vendor         12/2/99         98,318.00
             Microfuge R - Beckman Brand - VWR Scientific -
11/14/99   1 Process Development                                                 Call Vendor        11/11/99            379.50
11/15/99   1 Water Bath - Fisher Scientific - Process                            Call Vendor         12/2/99            146.25
             GE Refrigerator - University Electric Company -
11/27/99   1 Biological Sciences                                                 Call Vendor        12/16/99            129.83
12/06/99   1 Evaporative Light Scattering Detector                               Call Vendor         12/2/99          1,311.03
             Industrial Scale / Top loading - VWR Scientific -
12/06/99   1 Process                                                             Call Vendor          16-Dec            104.89
                                   subtotal Laboratory equipment                                                     29,257.00

             Leasehold Improvements
                                                            1999
             New facility build out - Scales construction -
06/01/99     Science                                                                 7/31/99          7/8/99         14,004.00
             New facility build out - Scales construction -
06/15/99     Process                                                                 7/31/99          7/1/99            868.00
             Architectual blueprints for New Fac. Buildout -
07/01/99     Dowler Gruman Architect - Whole Co.                                     8/31/99         8/11/99          1,597.50
             Data Cable installation - RC Communication - Whole
07/01/99     Co.                                                                     8/31/99         7/22/99          1,233.60
             Electrical Install 32 Dedicated Circuits - Graham
08/01/99     Electrical Contractors - Whole facility                                 9/30/99          Aug-99         21,970.00
             Construct Wood Platforms - Scales Construction -
08/01/99     Whole Company                                                          10/31/99         9/21/99          2,105.00
             Engineering for the 1000 litre fermentation suite
09/01/99     - LEM Construction Inc. - Process                                       9/30/99          9/3/99         18,213.00
10/01/99     Heat exchange system - Cal Air Inc. - whole company                    11/30/99        11/11/99          6,083.00
             Install 21 data cables - R.C. Communications -
10/19/99     Whole company                                                          11/30/99        11/11/99          4,178.40
             Construction of new process development lab -          1/30/99 & Call Vendor on       11/8/99 &
10/27/99     Concrete shell structures                                                S180.5        12/16/99        253,021.00
                                 subtotal Leasehold improvements                                                    352,648.50
---------------------------------------------------------------------------
              TOTALS                                                                                                390,805.52
---------------------------------------------------------------------------

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                 Description/Vendor                            Invoice #                Invoice Date
----------------------------------------------------------------------------------------------------------------------

        QTY  Computer Equipment
                                                                    1999

<C>     <C>  <C>                                                             <C>                   <C>
05/18/99   1 ID-7000 Mod Kit - Hitachi - Process                                          22709             05/26/99
05/11/99     O2 Visual Workstation, 2700MHZ. - Tnpos. Inc - New
             Technologies                                                                 16197             06/21/99
06/10/99   1 Cisco Pix Firewall - Langtech - whole company                          5332 & 5435    6/10/99 & 7/14/99
06/16/66   2 Superstack 1111 Dual Speed Hubs $ (1) Office Connect Hub -
             Macwarehouse - General                                                PO2872590101             06/09/99
06/15/99   2 256 MB KITs SGI O2 - Advanced enterprise solutions - New
             Technologies                                                                 42696             06/18/99
07/01/99   1 Dell Dimension XPS T500MHz - DELL - General                              246411672             06/14/99
07/01/99   1 IBM Monitor T550 - MacWarehouse - General                             PO2872590102             06/22/99
07/25/99   1 ACMA Pentium III 450 System - ACMA - Process                            88-0168939             07/28/99
08/11/99   1 IMAC G3/333 SRN9312LFGV1 - MicroWarehouse -                           P13477290103             08/05/99
08/11/99   1 IMAC G3/333 SRN9312LFGSN - MicroWarehouse -                           P13477290104             08/05/99
08/20/99   1 Phaser 740 Plus Color Laser Printer - Redwood Imaging,
             Inc. - G&A                                                                    1773             08/23/99
09/01/99   1 NMR Sample Changer software - Bruker Chemistry                              355372             08/25/99
09/16/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT
             Monitors - DELL - Process                                         2752 & 276752768    9/13/99 & 9/15/99
09/23/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT
             Monitors - DELL - Process                                         1965 & 279961973    9/24/99 & 9/24/99
10/20/99   1 IMAC - MacWarehouse - Biology                                         P19686900002             10/07/99
10/24/99   1 Exper Software - Stat-Ease - Process Development                             15744             10/19/99
11/01/99   1 Dell Dimension XPS T450MHz Pentium 3 Computer - DELL - G&A               292081270             10/25/99
12/06/99   1 Dell 455 Celeron GX 100/T base Computer -DELL - Process                  302837026             11/29/99
                                             subtotal Computer equipment

             Furniture and office equipment
                                                                    1999
06/01/99   1 Kosan Sign - Sign Classics - General                                        995307             05/21/99
07/01/99   1 Office Desk with Right Flush - BRG - General                              90000094             06/25/99
07/01/99     3 tables & 1 desk - OP Contract - Administration                             25926             07/01/99
07/01/99     Cherry Desk (4) with Files and Bookcases - BRG -
             Administration                                                               84589             05/28/99
</TABLE>

<TABLE>
<CAPTION>

                                     Description/Vendor                                 Price   Shipping     Sales Tax

          QTY Computer Equipment
                                                                           1999

<S>       <C> <C>                                                                <C>            <C>         <C>
 05/18/99   1 ID-7000 Mod Kit - Hitachi - Process                                           -          -         79.20
 05/11/99   1 O2 Visual Workstation, 2700MHZ. - Tnpos. Inc - New Technologies        8,744.00      70.00        721.38
 06/10/99   1 Cisco Pix Firewall - Langtech - whole company                         11,610.25      50.00        656.97
 06/16/66   2 Superstack 1111 Dual Speed Hubs $ (1) Office Connect Hub -
              Macwarehouse - General                                                 1,383.00      22.66             -
 06/15/99   2 256 MB KITs SGI O2 - Advanced enterprise solutions - New
              Technologies                                                             999.00      21.36         82.42
 07/01/99   1 Dell Dimension XPS T500MHz - DELL - General                            1,930.00          -        156.35
 07/01/99   1 IBM Monitor T550 - MacWarehouse - General                              1,199.95      22.69             -
 07/25/99   1 ACMA Pentium III 450 System - ACMA - Process                           1,473.00      10.00        121.52
 08/11/99   1 IMAC G3/333 SRN9312LFGV1 - MicroWarehouse -                            1,199.00      52.09             -
 08/11/99   1 IMAC G3/333 SRN9312LFGSN - MicroWarehouse -                            1,199.00      64.96             -
 08/20/99   1 Phaser 740 Plus Color Laser Printer - Redwood Imaging, Inc. -
              G&A                                                                    2,649.00          -        177.09
 09/01/99   1 NMR Sample Changer software - Bruker Chemistry                         1,300.00      29.75        107.25
 09/16/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors -
              DELL - Process                                                         2,787.90     194.58        246.09
 09/23/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors -
              DELL - Process                                                         2,787.90     194.58        246.09
 10/20/99   1 IMAC - MacWarehouse - Biology                                            899.00      50.09             -
 10/24/99   1 Exper Software - Stat-Ease - Process Development                         995.00      15.00         82.09
 11/01/99   1 Dell Dimension XPS T450MHz Pentium 3 Computer - DELL - G&A             1,419.00      80.00        123.69
 12/06/99   1 Dell 455 Celeron GX 100/T base Computer -DELL - Process                1,137.00      90.00        101.23
                                                    subtotal Computer equipment

              Furniture and office equipment
                                                                           1999
 06/01/99   1 Kosan Sign - Sign Classics - General                                   1,198.00          -         93.89
 07/01/99   1 Office Desk with Right Flush - BRG - General                             976.56     150.00         92.94
 07/01/99     3 tables & 1 desk - OP Contract - Administration                       1,656.11      38.48        278.95
 07/01/99     Cherry Desk (4) with Files and Bookcases - BRG - Administration        8,869.47          -        731.73
</TABLE>

<TABLE>
<CAPTION>

                                     Description/Vendor                          Labor      Total           Serial Number

          QTY Computer Equipment
                                                    1999

<S>       <C> <C>                                                             <C>       <C>       <C>
 05/18/99   1 ID-7000 Mod Kit - Hitachi - Process                               950.00   1,039.20 Installation - reference SN 100997
 05/11/99   1 O2 Visual Workstation, 2700MHZ. - Tnpos. Inc - New Technologies        -   9,535.38 W12-270S-9G128

 06/10/99   1 Cisco Pix Firewall - Langtech - whole company                          -  12,317.22 Software/firewall - No serial
 06/16/66   2 Superstack 1111 Dual Speed Hubs $ (1) Office Connect Hub -                          number
              Macwarehouse - General                                                 -   1,405.66 DEH3480,3562.3955
 06/15/99   2 256 MB KITs SGI O2 - Advanced enterprise solutions - New
              Technologies                                                           -   1,102.78 DRG02/256
 07/01/99   1 Dell Dimension XPS T500MHz - DELL - General                            -   2,086.35 220/1394
 07/01/99   1 IBM Monitor T550 - MacWarehouse - General                              -   1,222.64 1S9513DW05508007
 07/25/99   1 ACMA Pentium III 450 System - ACMA - Process                           -   1,604.52 907206639, B12921A03543
 08/11/99   1 IMAC G3/333 SRN9312LFGV1 - MicroWarehouse -                            -   1,251.09 SRN9312LFGV1
 08/11/99   1 IMAC G3/333 SRN9312LFGSN - MicroWarehouse -                            -   1,263.96 SSG9310HFGSN
 08/20/99   1 Phaser 740 Plus Color Laser Printer - Redwood Imaging, Inc. -
              G&A                                                                    -   2,826.09 SRN740P
 09/01/99   1 NMR Sample Changer software - Bruker Chemistry                         -   1,437.00 SRNH9397
 09/16/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors -
              DELL - Process                                                         -   3,228.57 SRN220-1393, SRN26911-00
 09/23/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors -
              DELL - Process                                                         -   3,228.57 SRN310-0050,SRNJC-1581VMW
 10/20/99   1 IMAC - MacWarehouse - Biology                                          -     951.09 SSG9395D0GSN
 10/24/99   1 Exper Software - Stat-Ease - Process Development                       -   1,092.09 SRNW5XR3352
 11/01/99   1 Dell Dimension XPS T450MHz Pentium 3 Computer - DELL - G&A             -   1,622.69 SRN310-3180
 12/06/99   1 Dell 455 Celeron GX 100/T base Computer -DELL - Process                -   1,328.23 SRN220-3220
                                                                                        ---------
                                                    subtotal Computer equipment         48,543.13
                                                                                        ---------
              Furniture and office equipment
                                                 1999
 06/01/99   1 Kosan Sign - Sign Classics - General                              378.00   1,669.89 SRN Kosan Bus. Sign
 07/01/99   1 Office Desk with Right Flush - BRG - General                           -   1,219.50 SRNEN-M3672L-C
 07/01/99     3 tables & 1 desk - OP Contract - Administration                       -   1,973.54 SRNHMI-DB25-.3048W.2230W.366
 07/01/99     Cherry Desk (4) with Files and Bookcases - BRG - Administration        -   9,601.20 SRN399535-539.39935-46
                                                                                        ---------
                                                                                        14,464.13
                                                                                        ---------
</TABLE>

<TABLE>
<CAPTION>

                                                                                 Paid by check
                                      Description/Vendor                         $\#              Cleared / Bank Stmt date

          QTY Computer Equipment
                                                                            1999

<S>      <C>  <C>                                                              <C>                <C>
 05/18/99   1 ID-7000 Mod Kit - Hitachi - Process                                            2995                  6/30/99
 05/11/99   1 O2 Visual Workstation, 2700MHZ. - Tnpos. Inc - New Technologies                3169                  7/31/99
 06/10/99   1 Cisco Pix Firewall - Langtech - whole company                          3147 &  3357        7/31/99 & 8/31/99
 06/16/66   2 Superstack 1111 Dual Speed Hubs $ (1) Office Connect Hub -
              Macwarehouse - General                                                         3091                  7/31/99
 06/15/99   2 256 MB KITs SGI O2 - Advanced enterprise solutions - New
              Technologies                                                                   3035                  7/31/99
 07/01/99   1 Dell Dimension XPS T500MHz - DELL - General                                    3064                  7/31/99
 07/01/99   1 IBM Monitor T550 - MacWarehouse - General                                      3091                  7/31/99
 07/25/99   1 ACMA Pentium III 450 System - ACMA - Process                                   3394                  8/31/99
 08/11/99   1 IMAC G3/333 SRN9312LFGV1 - MicroWarehouse -                                    3496                  9/30/99
 08/11/99   1 IMAC G3/333 SRN9312LFGSN - MicroWarehouse -                                    3496                  9/30/99
 08/20/99   1 Phaser 740 Plus Color Laser Printer - Redwood Imaging, Inc. - G&A              3603                  9/30/99
 09/01/99   1 NMR Sample Changer software - Bruker Chemistry                                 3643                 10/31/99
 09/16/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors -
              DELL - Process                                                                 3759                 10/31/99
 09/23/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors -
              DELL - Process                                                                 3759                 10/31/99
 10/20/99   1 IMAC - MacWarehouse - Biology                                                  3849                   30-Nov
 10/24/99   1 Exper Software - Stat-Ease - Process Development                               4076              Call Vendor
 11/01/99   1 Dell Dimension XPS T450MHz Pentium 3 Computer - DELL - G&A                     4105              Call Vendor
 12/06/99   1 Dell 455 Celeron GX 100/T base Computer -DELL - Process                        4215              Call Vendor

              Furniture and office equipment
                                                                            1999
 06/01/99   1 Kosan Sign - Sign Classics - General                                           3119                  7/31/99
 07/01/99   1 Office Desk with Right Flush - BRG - General                                   3335                  8/31/99
 07/01/99     3 tables & 1 desk - OP Contract - Administration                               3252                  7/31/99
 07/01/99     Cherry Desk (4) with Files and Bookcases - BRG - Administration                3335                  8/31/99
</TABLE>

<TABLE>
<CAPTION>

                                         Description/Vendor                              Check Date         Sch Costs

          QTY Computer Equipment
                                                                                  1999

<S>       <C> <C>                                                                     <C>                <C>
 05/18/99   1 ID-7000 Mod Kit - Hitachi - Process                                              6/17/99             1,039.20
 05/11/99   1 O2 Visual Workstation, 2700MHZ. - Tnpos. Inc - New Technologies                   7/8/99               791.35
                                                                                              7/8/99 &
 06/10/99   1 Cisco Pix Firewall - Langtech - whole company                                    8/11/99               706.97
 06/16/66   2 Superstack 1111 Dual Speed Hubs $ (1) Office Connect Hub - Macwarehouse
              - General                                                                         7/1/99                22.65
 06/15/99   2 256 MB KITs SGI O2 - Advanced enterprise solutions - New Technologies             7/1/99               103.75
 07/01/99   1 Dell Dimension XPS T500MHz - DELL - General                                       7/1/99               155.35
 07/01/99   1 IBM Monitor T550 - MacWarehouse - General                                         7/1/99                22.59
 07/25/99   1 ACMA Pentium III 450 System - ACMA - Process                                     8/19/99               131.52
 08/11/99   1 IMAC G3/333 SRN9312LFGV1 - MicroWarehouse -                                      8/27/99                52.09
 08/11/99   1 IMAC G3/333 SRN9312LFGSN - MicroWarehouse -                                      8/27/99                64.95
 08/20/99   1 Phaser 740 Plus Color Laser Printer - Redwood Imaging, Inc. - G&A                9/21/99               177.09
 09/01/99   1 NMR Sample Changer software - Bruker Chemistry                                         2             1,437.00
 09/16/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors - DELL -
              Process                                                                         10/14/99               440.67
 09/23/99   2 Dell Dimension XPS T450MHz plus shipping with (2) CRT Monitors - DELL -
              Process                                                                         10/14/99               440.67
 10/20/99   1 IMAC - MacWarehouse - Biology                                                   10/22/99                52.09
 10/24/99   1 Exper Software - Stat-Ease - Process Development                                11/11/99             1,092.09
 11/01/99   1 Dell Dimension XPS T450MHz Pentium 3 Computer - DELL - G&A                       12/2/99               203.59
 12/06/99   1 Dell 455 Celeron GX 100/T base Computer -DELL - Process                         12/16/99               191.23
                                                                                                                   7,126.13

              Furniture and office equipment
                                                                                  1999
 06/01/99   1 Kosan Sign - Sign Classics - General                                                                   471.89
 07/01/99   1 Office Desk with Right Flush - BRG - General                                                           242.94
 07/01/99     3 tables & 1 desk - OP Contract - Administration                                                       317.43
 07/01/99     Cherry Desk (4) with Files and Bookcases - BRG - Administration                                        731.73

                                                                                                                   1,763.99
</TABLE><PAGE>

                                                                   EXHIBIT 10.19

                                   EXHIBIT C-6

                            RESTATED PROMISSORY NOTE

$275,000.00                                                    San Francisco, CA

                                                               December 23, 1998

         FOR VALUE RECEIVED, Daniel V. Santi promises to pay to Kosan
Biosciences Incorporated (the "Company"), or order, the principal sum of Two
Hundred Seventy Five Thousand ($275,000.00), together with interest on the
unpaid principal hereof from the date hereof at the rate of 4.47% percent per
annum, compounded semiannually.

         Principal and interest shall be due and payable on December 23, 2001.
Should the undersigned fail to make full payment of principal or interest for a
period of 10 days or more after the due date thereof, the whole unpaid balance
on this Note of principal and interest shall become immediately due at the
option of the holder of this Note. Payments of principal and interest shall be
made in lawful money of the United States of America.

         The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.

         This Note is subject to the terms of the Option, dated as of October
23, 1998. This Note is secured in part by a pledge of the Company's Common Stock
under the terms of a Security Agreement of even date herewith and is subject to
all the provisions thereof.

         The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.

         In the event the undersigned shall cease to be an employee or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.

         Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.

                                                    /s/ Daniel V. Santi
                                                    ----------------------------
                                                    Signature

                                                    Daniel V. Santi
                                                    ----------------------------
                                                    Print Name

<PAGE>

                                   EXHIBIT C-7

                               SECURITY AGREEMENT

         This Security Agreement is made as of DEC. 23, 1998 between
Kosan Biosciences Incorporated ("Pledgee"), and Daniel V. Santi ("Pledgor").

                                    RECITALS

         Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated 10/1/98 (the "Option"), between Pledgor and Pledgee under
Pledgee's 1996 Stock Option Plan, and Pledgor's election under the terms of the
Option to pay for such shares with his promissory note (the "Note"), Pledgor has
purchased 250,000 shares of Pledgee's Common Stock (the "Shares") at a price
of $1.00 per share, for a total purchase price of $250,000.00. The Note and
the obligations thereunder are as set forth in Exhibit C-6 to the Option.

         NOW, THEREFORE, it is agreed as follows:

         1. CREATION AND DESCRIPTION OF SECURITY INTEREST. In consideration of
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number    , duly endorsed in blank or with executed stock powers, and herewith
delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who
shall hold said certificate subject to the terms and conditions of this Security
Agreement.

         The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.

         2. PLEDGOR'S REPRESENTATIONS AND COVENANTS. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:

                  a. PAYMENT OF INDEBTEDNESS. Pledgor will pay the principal sum
of the Note secured hereby, together with interest thereon, at the time and in
the manner provided in the Note.

                  b. ENCUMBRANCES. The Shares are free of all other
encumbrances, defenses and liens, and Pledgor will not further encumber the
Shares without the prior written consent of Pledgee.

                  c. MARGIN REGULATIONS. In the event that Pledgee's Common
Stock is now or later becomes margin-listed by the Federal Reserve Board and
Pledgee is classified as a "lender" within the meaning of the regulations under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"),
Pledgor agrees to cooperate with Pledgee in making any amendments to the Note or
providing any additional collateral as may be necessary to comply with such
regulations.

<PAGE>

         3. VOTING RIGHTS. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.

         4. STOCK ADJUSTMENTS. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

         5. OPTIONS AND RIGHTS. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.

         6. DEFAULT. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:

                  a.  Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or

                  b.  Pledgor fails to perform any of the covenants set forth in
the Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.

         In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the California
Commercial Code.

         7. RELEASE OF COLLATERAL. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.

         8. WITHDRAWAL OR SUBSTITUTION OF COLLATERAL. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.

         9. TERM. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, at which time the remaining pledged stock
shall be promptly delivered to Pledgor,

                                      -2-
<PAGE>

subject to the provisions for prior release of a portion of the Collateral as
provided in paragraph 7 above.

         10. INSOLVENCY. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.

         11. PLEDGEHOLDER LIABILITY. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.

         12. INVALIDITY OF PARTICULAR PROVISIONS. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.

         13. SUCCESSORS OR ASSIGNS. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.

         14. GOVERNING LAW. This Security Agreement shall be interpreted and
governed under the laws of the State of California.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

         "PLEDGOR"                       By:  /s/ Daniel V. Santi
                                            ------------------------------------

                                           Daniel V. Santi
                                         ---------------------------------------
                                         Print Name

                                         Address: 211 Belgrave Ave.
                                                  ------------------------------

                                                  SF CA 94117
                                                  ------------------------------

         "PLEDGEE"                       Kosan Biosciences Incorporated

                                         By:      /s/ [ILLEGIBLE]
                                            ------------------------------------

                                         Title:   Chief Operating Officer
                                                  ------------------------------

         "PLEDGEHOLDER"                  /s/ [ILLEGIBLE]
                                         ---------------------------------------
                                         Stock Option Administrator of
                                         Kosan Biosciences Incorporated

                                      -3-

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