Document:

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                                  EXHIBIT 10.25

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KOSAN BIOSCIENCES, INC.
1450 ROLLINS RD.
BURLINGAME, CA 94010
(650) 343 8673

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July 20, 1998

Kevin R. Kaster
199 Port Royal Avenue
Foster City, CA 94404

Dear Kevin:

On behalf of Kosan Biosciences, Inc., I am pleased to offer you the position of
Vice President, Intellectual Property, reporting to me. Your primary
responsibilities will involve directing and implementing Kosan's intellectual
property strategy. In this capacity we expect that you will (i) assume
responsibility for building and managing a patent portfolio to protect our
technology and compounds, (ii) implement and manage policies and procedures to
identify and protect inventions and trade secrets, (iii) develop patent and
licensing strategies for each of our programs, (iv) negotiate and manage
compliance with agreements concerning Kosan's intellectual property and (v)
develop and administer budgets and other controls to maximize the cost
effectiveness of the intellectual property effort without compromising quality.
Also, we welcome your efforts in other areas of management consistent with
corporate objectives as your time, interests and talents permit.

You will receive a monthly salary of $15,000, paid semi-monthly, less federal
and state payroll withholding taxes. You will also be eligible to receive
performance bonuses in amounts and frequencies at the sole discretion of the
Board of Directors of Kosan. Within two months of your starting date, we will
agree on performance objectives for the first year of your employment. In
addition, you will be eligible for employee benefit programs provided by Kosan.
Should you and your family not be eligible for health insurance benefits under
the Kosan plan during your first three months of employment, Kosan would
reimburse you for such expenses.

I will recommend to the Board of Directors that you be granted an option to
purchase 60,000 shares of stock. This option will vest over four years and is
subject to the terms and conditions of the Company's 1997 Stock Option Plan; 25%
will vest after the first anniversary, and the remainder will vest monthly over
the next three years. The exercise price of the option will be the fair market
value of the stock as determined by the Board of Directors at the first regular
board meeting after you start work. I will also recommend to the Board that on
each of your first and second anniversaries at Kosan, you be granted options to
purchase an additional 12,500 shares of stock. These options will vest on the
fourth anniversary of each grant. The exercise price of the

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options will be the fair market value of the stock at the time of the grant.
If the Board approves a renewal option program for employees, you may at your
discretion choose to become part of that plan in lieu of the first and second
anniversary option grants.

In addition to the standard vacation benefits Kosan offers, the following
days will be considered paid vacation days: the days of August 17-21,
inclusive, the Monday, Tuesday and Wednesday of Thanksgiving week, the days
of December 21-24, inclusive and December 28, 1998.

This offer does not constitute a guarantee of employment for any specific
period of time, and either you or Kosan may terminate the employment
relationship at any time, with or without cause, by written notice. However,
in the event that Kosan terminates your employment without cause during the
three and one-half year period after your start of employment, then Kosan
will pay you an amount equal to six times your monthly base salary, and will
accelerate the vesting of the lesser of (a) 12.5% (six months) of your
original stock option grant and (b) the remainder of your original grant. As
used in this letter agreement, "cause" shall mean (i) any breach of this
agreement by you which is not cured within 30 days after notice of breach is
provided to you by the Company, (ii) your conviction of a felony, or
(iii) any action by you prior to or during your employment which in the
reasonable judgment of Kosan constitutes dishonesty, larceny, fraud, deceit
or gross negligence by you in the performance of your duties to Kosan, or
willful misrepresentation to shareholders, directors or officers of Kosan.

As a condition of your employment with Kosan, you will be required to sign
the Company's Employee Confidentiality Agreement and Proprietary Information
and Inventions Agreement, two originals of each, which are attached. Please
sign both sets of originals and return one of each to me with your acceptance
of this offer.

For purposes of Federal immigration law, you will be required to provide to
the Company documentary evidence of your identity and eligibility for
employment in the United States. Such documentation must be provided to us
within three (3) business days of your date of hire, or our employment
relationship with you may be terminated.

This offer is valid through July 22, 1998. As we discussed, your first day of
employment will be August 7, and we are willing to have you work on a
part-time basis for a short period of time in order to smooth your departure
from your current position. Enclosed are two originals of this letter. Please
sign and return one to me, to indicate your acceptance.

I, the entire Kosan staff, and our directors are very enthusiastic about your
joining the Kosan team. We believe that our relationship will be mutually
rewarding at the business, professional, and personal levels. Together we
hope to build a highly significant enterprise that will substantially improve
the process of drug

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discovery and development.

Sincerely,

/s/ Michael S. Ostrach

Michael S. Ostrach
Vice President, Corporate Development

I accept employment with Kosan Biosciences, Inc. subject to the terms and
conditions hereof. I understand that the terms set forth in this letter
supersede all oral discussions I may have had with anyone in the Company.

/s/ Kevin R. Kaster
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Kevin R. Kaster

Date: 21 July 1998

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                                                                   EXHIBIT 10.26

                              [LETTERHEAD]

October 11, 1999

By overnight and facsimile: 650-357-8355
Susan M. Kanaya
1421 Woodberry Avenue
San Mateo, CA 94403

Dear Susan:

On behalf of Kosan Biosciences, I am pleased to extend to you an offer for the
position of Vice President, Finance and Chief Financial Officer, reporting to
me. Your principal responsibilities will involve (1) directing and managing our
financial functions, including accounting, audit, budgeting, financial
reporting, financial analysis and planning, and risk and cash management, (2)
implementation and maintenance of appropriate accounting, cash management and
investment systems and policies, and an effective system of internal controls,
(3) coordination of the company's financing strategy, and (4) participation in
corporate partnering negotiations and preparation for a public offering, and (5)
participation as a member of the senior management team. Also, we welcome your
efforts in other areas of management consistent with corporate objectives as
your time, interests and talents permit.

The monthly salary for this position is $14,375. Payroll is distributed twice a
month, on the 15th and last day of each month. We also offer an attractive
benefits package, including life, medical, dental and disability insurance plans
and a 401k plan. Your start date will be as soon as practicable, but in no event
later than November 8, 1999. If you join us on or prior to that date, you will
receive a signing bonus of $20,000, payable with your first paycheck.

In addition, I am pleased to offer options to purchase 45,000 shares of Kosan
Biosciences Common Stock under the Kosan Stock Option Plan. The options will
vest over four years, with one-fourth of the options vesting after one year of
employment and the remainder vesting in equal monthly increments over the
remaining three years. You also would be granted an additional 5,000 options,
which would vest fully on completion of one full year of employment with Kosan
or upon termination of your employment other than for "cause" or upon your
voluntary termination of employment for "good reason." The exercisability of all
50,000 options will accelerate to the effective date of a change of control of
Kosan. These offers of options are subject to the approval of the Board of
Directors and your execution of our standard Stock Option Agreement. The
exercise price will be equal to the fair market value of the stock on the date
the Board or the Compensation Committee approves the stock options. We plan to
effectuate the grant by means of a Compensation Committee consent effective as
of the first day of your employment.

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Kosan would loan to you $50,000 to replace your existing loan arrangement, on
terms substantially similar to the terms of your current loan from your
employer, provided that the interest rate will be the rate necessary to avoid
imputed interest and the term for forgiveness will be three years from your
start date.

For the purposes of federal immigration law, you will be required to provide
Kosan documentary evidence of your identity and eligibility for employment in
the United States. Such documentation must be provided to us within three (3)
business days of your date of hire. Kosan also requires that you sign an
Employee Proprietary Information and Invention Assignment Agreement.

Your employment with the Company is for no specified period and constitutes at
will employment. As a result, you are free to resign at any time, for any reason
or for no reason. Similarly, the Company is free to conclude its employment
relationship with you at any time, with or without cause, and with or without
notice. However, in the event of the involuntary termination of your employment
for other than for "cause" or your voluntary termination of employment for "good
reason" during the two years following the start of your employment, you will
receive (a) separation pay in the form of a continuation of your base salary, in
regular payroll installments (less withholdings and deductions required by law)
for a period of six months following the effective date of the termination of
employment and (b) an additional six months of vesting on your original 45,000
share option grant. If such termination occurs following a change of control,
the period of separation pay will be twelve months. You will be required to sign
a general release in order to receive these payments. No separation pay or
additional vesting will be provided in the event of a termination of employment
for "cause" or if termination is due to death, disability, retirement or
voluntary resignation other than for "good reason."

As used in this letter agreement, "cause" shall mean (i) any breach of this
     agreement or your other obligations to the Company under the Employee
  Proprietary Information and Invention Assignment Agreement by
   you which is not cured within 30 days after notice of breach is provided to
  you by the Company, (ii) your conviction of a felony or crime involving moral
  turpitude, (iii) theft, dishonesty or willful misconduct or misrepresentation
  in connection with, or in the course of, your duties arid responsibilities, or
  (iv) gross insubordination or gross refusal to perform reasonable and lawful
  directives from your superiors, which you fail to correct within 30 day after
  written notice. "Good reason" shall mean that, without your consent, (i)
 your rate of annual base pay is materially reduced, (ii) there is a material
  diminution in your duties, or the assignment to you of duties that are
  materially inconsistent with your duties or that materially impair your
 ability to perform your duties, (iii) there is a material breach of this letter
    agreement by Kosan that is not remedied in a reasonable period of time after
    Kosan's receipt of written notice from you specifying such
 breach, (iv) failure of a successor to Kosan to assume Kosan's obligations
      under this letter agreement or (v) you are required to relocate your
      business location more than fifty miles from our current location.

In the event of any dispute or claim relating to or arising out of our
employment relationship, you and the Company agree that all such disputes shall
be fully and finally resolved by binding arbitration conducted by the American
Arbitation Association in San Francisco, California. However, this arbitration
provision shall not apply to any disputes

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or claims relating to or arising out of the misuse or misappropriation of the
Company's trade secrets or proprietary information.

You agree that while you are an employee you will not engage in any activities
that conflict with your obligations to the Company and that you will abide by
company rules and regulations.

To indicate your acceptance of our offer, please sign and date one copy of this
letter in the space provided below and return it to me in the enclosed envelope
at your earliest convenience. This letter, along with any agreements relating to
proprietary rights or stock purchase between you and Kosan, set forth the terms
of your employment with Kosan and supersede any prior representations or
agreements, whether written or oral. This letter may not be modified or amended
except by a written agreement, signed by Kosan and by you.

We are very excited at the prospect of your joining Kosan Biosciences and
becoming a key contributor to our efforts. Please do not hesitate to contact me
if you have any questions. This offer will remain open until October 15, 1999 at
which time it will expire if not previously accepted in writing.

Sincerely,

Kosan Biosciences, Inc.
By:      /s/ Michael S. Ostrach                   AGREED AND ACCEPTED:

                  MSO                             /s/ Susan Kanaya
         -------------------------                -------------------
         Michael S. Ostrach                       Susan M. Kanaya
         Chief Operating Officer                  Date: 10/13/99

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