GENZYME CORP, 424B4, 1995-09-25

GENZYME CORP
424B4, 1995-09-25
PHARMACEUTICAL PREPARATIONS

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<PAGE> 1
Registration No. 33-61871
Rule 424(b)(4) Prospectus

3,000,000 Shares
GENZYME
Tissue Repair Division Common Stock
($.01 par value)
------------------

All of the shares of Genzyme Tissue Repair Division Common Stock ("TR Stock")
offered hereby are being sold by Genzyme Corporation (the "Company" or
"Genzyme"). The TR Stock is listed on the Nasdaq National Market under the
symbol "GENZL." On September 21, 1995, the reported last sale price of the TR
Stock on the Nasdaq National Market was $15.625 per share.

The TR Stock is common stock of the Company and is intended to reflect the
value and track the performance of the Genzyme Tissue Repair Division ("GTR"),
which is engaged in the field of tissue repair through the development,
production and marketing of technologically advanced products and services for
the treatment and prevention of serious tissue damage. The TR Stock is one of
two classes of the Company's common stock, the other being Genzyme General
Division Common Stock ("General Division Stock"). The relative voting power of
one share of TR Stock and one share of General Division Stock will fluctuate
based upon the relative Fair Market Values (as defined herein) of one share of
TR Stock and one share of General Division Stock as set forth herein. Subject
to certain conditions, the TR Stock may be exchanged, at the Company's option,
for cash, General Division Stock, or a combination thereof, at a 30% premium
over the then current Fair Market Value of the TR Stock. In the event of a
disposition by the Company of all or substantially all of the assets attributed
to GTR, the Company must exchange the TR Stock for cash, General Division
Stock, or a combination thereof, at a 30% premium over the then current Fair
Market Value of the TR Stock. Dividends on the TR Stock will be payable when,
as and if declared by the Board of Directors of the Company out of the lesser
of funds of the Company legally available therefor and the Available Tissue
Repair Dividend Amount. Genzyme has never paid a cash dividend on any class of
its capital stock and currently intends to retain all earnings for use in its
business. Upon a liquidation of Genzyme (other than in connection with a
merger, business combination or sale of substantially all assets), holders of
outstanding General Division Stock and TR Stock are entitled to receive the
assets, if any, remaining for distribution to common stockholders on a per
share basis in proportion to the respective per share liquidation units of such
class, which are presently one liquidation unit for each share of General
Division Stock and .29 liquidation units for each share of TR Stock. The
liquidation unit amounts will not be adjusted except to avoid dilution in the
aggregate liquidation rights of either class in the event of a stock split or
combination, stock dividend or the like. See "Description of Genzyme Capital
Stock."
------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE TR STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 5 HEREIN.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company(1)
------------ ------------- ------------
<S> <C> <C> <C>
Per Share...................................... $15.00 $.88 $14.12
Total (2)...................................... $45,000,000 $2,640,000 $42,360,000
</TABLE>

(1) Before deduction of expenses payable by the Company estimated at $300,000.
(2) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase a maximum of 450,000
additional shares to cover over-allotments of shares. If the option is
exercised in full, the total Price to Public will be $51,750,000,
Underwriting Discounts and Commissions will be $3,036,000 and Proceeds to
Company will be $48,714,000.
------------------
The Shares are offered by the several Underwriters when, as and if issued
by the Company, delivered to and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that the Shares
will be ready for delivery on or about September 27, 1995.

CS First Boston
Cowen & Company
PaineWebber Incorporated
The date of this Prospectus is September 22, 1995.
<PAGE> 2

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE TR STOCK AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IN CONNECTION WITH
THIS OFFERING CERTAIN UNDERWRITERS AND THEIR AFFILIATES HAVE ENGAGED IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE TR STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. (SEE
"UNDERWRITING.")

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance with the Exchange Act files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
The Company has filed a registration statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with the Commission with respect to the TR Stock offered hereby. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and
reference is made to the Registration Statement and the exhibits thereto for
further information with respect to the Company and the TR Stock. Such
reports, proxy statements, Registration Statement and exhibits and other
information omitted from this Prospectus can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington D.C. 20549 and at the Commission's Regional
Offices located at Seven World Trade Center, Suite 1300, New York, NY 10048
and 500 West Madison Street, Suite 1400, Chicago, IL 60661-2511. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company hereby incorporates in this Prospectus by reference the
following documents heretofore filed with the Commission pursuant to the
Exchange Act: (i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, as amended by Amendment Nos. 1 and 2 thereto on Form 10-K/A,
filed with the Commission on June 15, 1995 and September 13, 1995,
respectively; (ii) the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1995 and June 30, 1995, each as amended by Amendment
No. 1 thereto on Form 10-Q/A, filed with the Commission on September 13, 1995;
(iii) the Company's Current Report on Form 8-K, filed with the Commission on
September 21, 1995; (iv) the description of TR Stock contained in the Company's
Registration Statement on Form 8-A, filed with the Commission on September 9,
1994, as amended by Form 8-A/A, filed with Commission on December 14, 1994; (v)
the description of Tissue Repair Division Common Stock Purchase Rights
contained in the Company's Registration Statement on Form 8-A, filed with the
Commission on November 28, 1994; (vi) the financial statements appearing at
pages III-19 to III-42 of Annex III, pages IV-38 to IV-41 of Annex IV, pages
V-37 to V-41 of Annex V and pages VI-2 to VI-6 of Annex VI to the
Prospectus/Joint Proxy Statement included in Genzyme's Registration Statement
on Form S-4 (File No. 33-83346), which became effective on November 9, 1994;
and (vii) the Quarterly Report of BioSurface Technology, Inc. ("BioSurface") on
Form 10-Q for the quarter ended September 30, 1994, filed with the Commission
on November 12, 1994.

All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to termination of the offering made hereby shall be deemed to be
incorporated in this Prospectus by reference and to be a part hereof from the
respective dates of the filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute part of this Prospectus.

The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated
by reference into such documents. Requests for such copies should be directed
to the executive offices of the Company, One Kendall Square, Cambridge,
Massachusetts 02139, Attention: Shareholder Services, telephone (617)
252-7526.
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more
detailed information and the financial statements appearing elsewhere in this
Prospectus and in the documents incorporated into this Prospectus by reference.
Unless otherwise indicated or the context otherwise requires, (i) information
in this Prospectus assumes that the Underwriters' over-allotment option will
not be exercised and (ii) all references herein to shares of Genzyme Tissue
Repair Division Common Stock ("TR Stock") and Genzyme General Division Common
Stock ("General Division Stock") also include the associated Preferred Stock
Purchase Rights represented by the same certificates. See "Description of
Genzyme Capital Stock." The shares of TR Stock offered hereby involve a high
degree of risk. Investors should carefully consider the information set forth
under the heading "Risk Factors."

THE TISSUE REPAIR DIVISION

Genzyme's Tissue Repair Division ("GTR") focuses on developing,
producing and marketing technologically advanced products and services for the
treatment and prevention of serious tissue damage. GTR's strategy is to create
the leading business in the field of tissue repair by bringing a comprehensive
approach to the treatment of the complex medical problems associated with
serious tissue injury. Genzyme created GTR in December 1994 by acquiring
BioSurface and combining BioSurface's programs with several of Genzyme's
programs in the field of tissue repair. As a result of the combination of
programs from BioSurface and Genzyme, GTR has strong capabilities in three core
technologies -- autologous cell processing, therapeutic protein development,
and biomaterials engineering -- which it is using to develop and market a
portfolio of novel products and services to apply to unmet medical needs in the
field of tissue repair. In March 1995, GTR introduced the CARTICEL(SM)
Autologous Chondrocyte Service (the "CARTICEL(SM) Service"), which provides
orthopedic surgeons with the cell culturing services and other support
necessary to utilize a patient's own (autologous) articular cartilage cells
(chondrocytes) to repair articular cartilage defects in that patient's knee.
GTR plans to focus a substantial portion of its resources in the near term on
further developing and marketing the CARTICEL(SM) Service. GTR also markets
the Epicel(SM) Service, which involves the culturing of autologous skin cells
to provide burn victims with a lifesaving alternative form of permanent skin
replacement, and is developing Vianain(R) Debriding Product for the treatment
of burns and skin ulcers and TGF-B2, a recombinant protein, for the treatment
of chronic skin ulcers and multiple sclerosis.

The CARTICEL(SM) Service has attracted significant interest from the
orthopedic community since publication of the results of GTR's academic
collaborators' innovative work on knee cartilage repair in the October 6, 1994
issue of the New England Journal of Medicine. As reported in this article, 19
of 23 patients had restored or improved joint function after implantation with
cultured autologous articular cartilage cells. Based on this data and GTR's
ongoing analysis of results obtained in approximately 130 additional patients
treated in Sweden, GTR has concluded that this treatment can provide long term
repair of damaged knee cartilage tissue. GTR believes that its CARTICEL(SM)
Service is the only such therapy currently available. GTR estimates that each
year between 200,000 and 300,000 individuals in the United States and Europe
may be candidates for treatment using the CARTICEL(SM) Service.

GTR is building the infrastructure required to make the CARTICEL(SM)
Service widely available to orthopedic surgeons in the United States and
Europe. Although the CARTICEL(SM) Service is not currently regulated by the
United States Food and Drug Administration ("FDA"), GTR has developed a quality
systems approach to the delivery of this service. Drawing on its seven years
of experience with the Epicel(SM) Service, GTR has validated a commercial scale
cartilage cell processing facility, developed a rigorous surgeon training
program, established standards for patient outcomes data collection, and
assembled an experienced sales and marketing staff. Since the introduction of
the service in March 1995, GTR has trained 55 orthopedic surgeons, has provided
cultured cartilage cells for the treatment of 15 patients, and is processing
cartilage cells for 60 additional patients.

3
<PAGE> 4

in the application of biotechnology to the orthopedic market, support future
research and development efforts, and enable GTR to finance acquisitions of
complementary technologies. GTR will continue to build its product portfolio
through development of the Vianain(R) Debriding Product for burns and skin
ulcers, TGF-B2 for chronic skin ulcers and multiple sclerosis, and alternate
versions of the CARTICEL(SM) and Epicel(SM) Services for cartilage resurfacing
and permanent skin replacement, respectively. GTR believes this family of
diverse tissue repair products will offer a comprehensive treatment portfolio
in the currently fragmented field of tissue repair.

THE OFFERING

<TABLE>
<S> <C>
TR Stock offered by the Company . . . . . . . . . . . . . . . . . 3,000,000 shares
TR Stock to be outstanding after the offering . . . . . . . . . . 11,818,362 shares(1)
Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . To accelerate the market introduction of the
CARTICEL(SM) Service, including for related
capital expenditures and working capital,
and to fund other research and development
activities of GTR
Nasdaq National Market symbol . . . . . . . . . . . . . . . . . . GENZL
</TABLE>

- -----------------------

(1) Based on shares outstanding on June 30, 1995. Excludes 1,287,599
shares of TR Stock reserved for issuance upon exercise of outstanding
options with a weighted average exercise price of $5.0828 per share,
and 1,305,077 TR Designated Shares, 1,295,228 of which are reserved
for issuance upon the exercise or conversion of outstanding General
Division stock options, warrants and convertible notes. See
"Description of Genzyme Capital Stock - TR Designated Shares and
General Designated Shares."

4
<PAGE> 5

RISK FACTORS

RISKS RELATED TO TWO CLASSES OF COMMON STOCK:

Genzyme currently has two classes of common stock outstanding: General
Division Stock and TR Stock. TR Stock and General Division Stock are intended
to reflect the value and track the performance of GTR and all of Genzyme's
business other than the business of GTR, respectively. Prospective investors
in TR Stock should carefully consider the following factors in evaluating such
an investment.

STOCKHOLDERS OF ONE COMPANY; FINANCIAL IMPACTS ON ONE DIVISION COULD AFFECT THE
OTHER. Genzyme continues to hold title to all of its assets and is responsible
for all of its liabilities, and the holders of the General Division Stock and
the TR Stock have no specific claim against the assets attributed for financial
statement presentation purposes to the division whose performance is associated
with the class of stock they hold. Liabilities or contingencies of either
division that affect Genzyme's resources or financial condition could affect
the financial condition or results of operations of both divisions.
Prospective investors in TR Stock should, therefore, read Genzyme's
consolidated financial statements in conjunction with the financial statements
of GTR, which have each been incorporated herein by reference. See also
"Genzyme Tissue Repair Division Selected Financial Data" and "Additional
Financial Data."

NO RIGHTS OR ADDITIONAL DUTIES WITH RESPECT TO THE DIVISIONS; POTENTIAL
CONFLICTS. Holders of General Division Stock and TR Stock have only the rights
of stockholders of Genzyme, and, except in limited circumstances, do not have
any rights specifically related to the General Division or GTR, respectively.

The existence of separate classes of common stock may give rise to
occasions when the interests of holders of General Division Stock and holders
of TR Stock may diverge or appear to diverge. Although Genzyme is aware of no
precedent concerning the manner in which Massachusetts law would be applied to
the duties of a board of directors in the context of two classes of common
stock with divergent interests, Genzyme believes that a Massachusetts court
would hold that a board of directors owes an equal duty to all stockholders
regardless of class and does not have separate or additional duties to any
group of stockholders. That duty is the fiduciary duty to act in good faith
and in a manner it reasonably believes to be in the best interests of the
corporation. Genzyme believes that, under Massachusetts law, a good faith
determination by a disinterested and adequately informed board of directors
that an action is in the best interests of the corporation should represent an
appropriate defense to any challenge by or on behalf of the holders of any
class of stock that such action could have a disparate effect on different
classes of common stock.

Disproportionate ownership interests of members of the Board of
Directors of Genzyme (the "Board") in either class of common stock or
disparities in the value of such stock could create or appear to create
potential conflicts of interest when directors are faced with decisions that
could have different implications for each class of stock. Nevertheless,
Genzyme believes that a director would be able to discharge his or her
fiduciary responsibilities even if his or her interests in shares of such
classes were disproportionate or had disparate values. The Board may also from
time to time establish one or more committees to review matters presented to it
that raise conflict issues, which committee(s) would report to the full Board
on such matters.

NO ADDITIONAL SEPARATE VOTING RIGHTS. Holders of General Division Stock and
holders of TR Stock vote together as a single class on all matters as to which
common stockholders generally are entitled to vote. Except in certain limited
circumstances provided under Massachusetts law, in Genzyme's Articles of
Organization, as amended, and in the management and accounting policies adopted
by the Board, holders of each class of common stock have no rights to vote on
matters as a separate class. Accordingly, except in limited circumstances,
holders of shares of one class of common stock could not bring a proposal to a
vote of the holders of that class of common stock only, but would be required
to bring any proposal to a vote of both classes of common stock.

On all matters as to which common stockholders generally are entitled
to vote, each share of General Division Stock has one vote, and each share of
TR Stock will, through December 31, 1996, have .29 votes. On January 1, 1997

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<PAGE> 6

and on January 1 every two years thereafter, the number of votes to which each
share of TR Stock is entitled will be adjusted to equal the ratio of the Fair
Market Value of one share of TR Stock to the Fair Market Value of one share of
General Division Stock as of such date. The term Fair Market Value is defined
in Genzyme's Articles of Organization and under the heading "Description of
Genzyme Capital Stock - Exchange of TR Stock" herein.

Certain matters as to which the holders of common stock are entitled
to vote may involve a divergence or the appearance of a divergence in the
interests of holders of General Division Stock and holders of TR Stock. If,
when a stockholder vote is taken on any matter as to which a separate vote by
either class is not required and the holders of either class of common stock
would have more than the number of votes required to approve any such matter,
the holders of that class would control the outcome of the vote on such matter.
Holders of General Division Stock and holders of TR Stock currently have
approximately 91% and 9%, respectively, of the total voting power of Genzyme.
The percentages of the total voting power of Genzyme held by the holders of the
General Division Stock and the TR Stock, upon completion of this offering, will
be approximately 89% and 11%, respectively, and, after consummation of both
this offering and the pending offering by the Company of 2,500,000 shares of
General Division Stock to the public (the "General Division Offering"), will be
approximately 89.5% and 10.5%, respectively, assuming the over-allotment option
granted to the underwriters in connection with the General Division Offering is
not exercised. As a result, on matters which are submitted to a vote of the
holders of both classes of common stock, the preferences of the holders of
General Division Stock are likely to dominate and determine the outcome of such
vote unless and until the relative number of shares outstanding and/or the
market value of General Division Stock and TR Stock materially changes. The
holders of TR Stock are likely to have significant influence on the outcome of
a matter submitted to the holders of both classes of common stock only if the
holders of General Division Stock are approximately equally divided with
respect to the matter.

EXCHANGE OF TR STOCK. The Board can, in its sole discretion, determine to
exchange shares of TR Stock for cash or shares of General Division Stock (or
any combination thereof) at a 30% premium over Fair Market Value of the TR
Stock at any time after the later of (i) December 31, 1995 and (ii) the date on
which equity investments in TR Stock by third-party investors or the
allocation of cash or cash equivalents from the General Division to GTR, or any
combination of the two, equal an aggregate of at least $10 million. Thus, upon
successful completion of this offering, the Board could elect to make such an
exchange after December 31, 1995. In addition, following a disposition of all
or substantially all assets of GTR, the shares of TR Stock are subject to
mandatory exchange by Genzyme for cash and/or shares of General Division Stock
at a 30% premium over Fair Market Value of the TR Stock as determined by the
trading prices during a specified period prior to public announcement of the
disposition. Consequently, holders of TR Stock may receive a greater or lesser
premium for their shares than any premium paid by a third party buyer of all or
substantially all of the assets of GTR. In addition, any such exchange of
shares of General Division Stock could be made at a time when General Division
may be considered to be undervalued and would dilute the interests of the
holders of General Division Stock. See "Description of Genzyme Capital Stock -
Exchange of TR Stock" and "Management and Accounting Policies Governing the
Relationship of Genzyme Divisions - Open Market Purchases of Shares of any
Class."

NO ADJUSTMENT TO LIQUIDATING DISTRIBUTIONS. In the event of a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of Genzyme
(other than pursuant to a merger, business combination or sale of substantially
all assets), holders of outstanding shares of General Division Stock and TR
Stock would receive the assets, if any, remaining for distribution to common
stockholders on a per share basis in proportion to the respective per share
liquidation units of such class. Currently, each share of General Division
Stock has one liquidation unit and each share of TR Stock has .29 liquidation
units. Because the liquidation units will not be adjusted to reflect changes
in the relative market value or performance of the General Division and GTR,
the per share liquidating distribution to a holder of TR Stock or General
Division Stock is not likely to correspond to the value of the assets of GTR or
the General Division, respectively, at the time of a dissolution, liquidation
or winding up of Genzyme.

6
<PAGE> 7

MANAGEMENT AND ACCOUNTING POLICIES SUBJECT TO CHANGE. The Board has adopted
certain management and accounting policies applicable to the preparation of the
financial statements of both divisions, the allocation of corporate expenses,
assets and liabilities and other accounting matters, the reallocation of assets
between divisions and other matters. These policies may, except as stated
therein, be modified or rescinded in the sole discretion of the Board without
the approval of Genzyme's stockholders, subject to the Board's fiduciary duty
to all holders of Genzyme's capital stock, although there is no present
intention to do so. The Board may also adopt additional policies depending
upon the circumstances. See "Management and Accounting Policies Governing the
Relationship of Genzyme Divisions."

LIMITED TRADING HISTORY. As discussed above, the General Division Stock and
the TR Stock are intended to reflect the value and track the performance of the
General Division and GTR, respectively. Since the General Division Stock and
the TR Stock have only a limited trading history, there can be no assurance as
to the degree to which the market price of such classes of common stock will
reflect the value and track the performance of the General Division and GTR as
reflected in their respective financial statements. In addition, Genzyme
cannot predict the impact that certain terms of the securities, such as the
ability of Genzyme to exchange each share of TR Stock for cash and/or shares of
General Division Stock, will have on the market prices of each class of common
stock.

RISKS RELATED TO GTR:

An investment in TR Stock involves a high degree of risk. Prospective
investors should carefully consider the following factors in evaluating such an
investment.

EARLY STAGE OF COMMERCIALIZATION OF THE CARTICEL(SM) SERVICE. The proceeds of
this offering will be used primarily to accelerate the market introduction of
the CARTICEL(SM) Service. GTR anticipates that the revenues generated from
sales of the CARTICEL(SM) Service will be used to fund the development of other
products and services. See "Use of Proceeds." Consequently, GTR's future
success depends in large part on the successful commercialization of the
CARTICEL(SM) Service. GTR is engaged in the process of gathering data
concerning the efficacy of the CARTICEL(SM) Service, and GTR plans to continue
gathering such data as the CARTICEL(SM) Service is being marketed. The
commercialization of the CARTICEL(SM) Service could be materially adversely
affected if such data were to raise questions concerning the efficacy, or the
duration of the efficacy, of the CARTICEL(SM) Service.

The commercialization of the CARTICEL(SM) Service by GTR is in its
early stages, and GTR has not yet grown cartilage cell cultures in the
quantities that will be necessary to meet the demands of the market that GTR
expects will develop for the CARTICEL(SM) Service. In order to produce such
quantities of cartilage cells, GTR will need to make substantial expenditures
for production facilities and will need to hire and train additional production
and support staff. Any significant delays encountered in these activities may
delay the commercialization of the CARTICEL(SM) Service and have a material
adverse effect on GTR's results of operations.

GTR is marketing the CARTICEL(SM) Service to orthopedic surgeons. In
order to commercialize the CARTICEL(SM) Service successfully, GTR will need to
hire and train additional sales personnel, which will market the CARTICEL(SM)
Service to surgeons and hospitals directly. The success of the CARTICEL(SM)
Service depends on the success of such sales force in creating demand for the
CARTICEL(SM) Service and the extent to which sufficient numbers of orthopedic
surgeons who are trained by GTR incorporate the CARTICEL(SM) Service into their
existing practices. There can be no assurance that GTR will be successful in
marketing the CARTICEL(SM) Service to such surgeons or that such surgeons will
use the CARTICEL(SM) Service to the extent anticipated by GTR.

UNCERTAINTY REGARDING PATENTS AND PROPRIETARY TECHNOLOGY. GTR has devoted
significant time and resources to develop proprietary know-how related to the
growth of cartilage cells. GTR does not yet have any patent protection
covering the methodologies used in providing the CARTICEL(SM) Service.
Consequently, GTR is unable to prevent a competitor from developing the ability
to grow cartilage cell cultures and from offering a service that is similar or
superior to the CARTICEL(SM) Service. GTR's results of operations could be
materially and adversely affected if a competitor were to develop such
know-how. Moreover, even if GTR were to obtain patent protection for aspects
of its CARTICEL(SM)

<PAGE> 8

Service, there can be no assurance that such protection would prevent others
from selling a similar but noninfringing service.

Proprietary rights relating to GTR's other products and services are
protected from unauthorized use by third parties only to the extent that they
are covered by patents or are maintained in confidence as trade secrets.
Genzyme has filed for patents and has rights to numerous patents and patent
applications worldwide relating to GTR products and services. While certain of
Genzyme's patents have been allowed or issued, there can be no assurance that
any additional patents will be allowed or will issue or that, to the extent
issued, such patents will effectively protect the proprietary technology of
GTR. GTR has also relied upon trade secrets, proprietary know-how and
continuing technological innovation to develop and maintain its competitive
position with respect to its other products and services. There can be no
assurance that others will not independently develop such know-how or otherwise
obtain access to GTR's technology. While GTR's employees, consultants and
corporate partners with access to proprietary information are generally
required to enter into confidentiality agreements, there can be no assurance
that these agreements will be honored. Certain of GTR's consultants have
developed portions of GTR's proprietary technology at their respective
universities or in government laboratories. There can be no assurance that
such universities or governmental authorities will not assert rights to
intellectual property arising out of university or government based research
conducted by such consultants. In addition, patent litigation is widespread in
the biotechnology industry and it is not possible to predict how any such
litigation will affect GTR.

Parties not affiliated with Genzyme may hold pending or issued patents
relating to the technology utilized by GTR in its products or services. GTR
may, depending on the final formulation of such products or services, need to
acquire licenses to, or contest the validity of, such patents or any other
similar patents that may be issued. The extent to which GTR may need to
license such rights or contest the validity of such patents depends on the
scope and validity of such patents and on the design or formulation of GTR's
products or services. The cost and ability to license any such rights and the
likelihood of successfully contesting the validity of such patents are
uncertain.

NEED FOR ADDITIONAL FUNDS. Genzyme anticipates that the net proceeds from this
offering, together with existing cash balances and revenues generated from the
CARTICEL(SM) Service and the Epicel(SM) Service, will be sufficient to fund
GTR's operations through 1996. GTR may require additional funds sooner if
demand for the CARTICEL(SM) Service grows more rapidly than anticipated.
Significant additional funds will be required to expand further the
CARTICEL(SM) Service, including for working capital and additional processing
capacity, and to fund the development, clinical testing, and commercialization
of GTR's other products and services. Subject to certain conditions, Genzyme
is obligated to allocate up to $30 million in cash from the General Division to
GTR in the period through June 1998 (the "Funding Commitment"). Upon
consummation of this offering, Genzyme's obligations under the Funding
Commitment will be eliminated. See "Business - Relationship with Genzyme
General Division."

In addition, GTR's cash requirements may vary materially from those
now planned as a result of revenue fluctuations, results of research and
development and clinical testing by GTR and its collaborators, competitive
advances and other factors. There can be no assurance that additional funding
will be available on terms that are acceptable to GTR, if at all. Insufficient
funds may require GTR to delay, scale back or eliminate certain of its programs
or to license third parties to commercialize technologies or products that GTR
would otherwise undertake itself. Such actions may adversely affect the market
price of the TR Stock.

GOVERNMENT REGULATION OF TISSUE REPAIR PRODUCTS. The production and sale of
health care products, including many of the products and services to be
developed by GTR, are highly regulated at the state and federal levels.
Federal or state regulation could result in significant expense to GTR, limit
GTR's reimbursement for its services and otherwise materially adversely affect
the results of operations of GTR. See "Business - Government Regulation."

As a matter of policy and discretion, the CARTICEL(SM) and Epicel(SM)
Services are not being actively regulated by the FDA at this time. However,
the FDA has regulated the use of autologous patient tissues in other areas and
will be conducting a public hearing in the fall of 1995 to solicit information
on autologous cell implants for structural repair

8
<PAGE> 9

and reconstruction and to consider various regulatory approaches in this area.
The FDA has indicated that it will provide GTR with sufficient time to comply
with any new regulations that it may promulgate relating to autologous cells.

A federal criminal statute prohibits the transfer of any human organ
for valuable consideration for use in human transplantation but permits
recovery of reasonable costs associated with such activities. This statute has
not been applied to the CARTICEL(SM) or Epicel(SM) Services to date. In
addition, certain states have laws requiring the licensure of tissue and organ
banks and laws governing the sale of human organs and the safety and efficacy
of drugs, devices and biologics, including skin, all of which could be
interpreted to apply to GTR's production and distribution of cultured tissue
products. Provisions in certain states' statutes prohibit the receipt of
valuable consideration in connection with the sale of human tissue by a tissue
bank but permit licensed tissue banks, including companies, to recover their
reasonable costs associated with such sales. One state's Department of Health
has notified GTR that it believes GTR must obtain a license under that state's
tissue bank licensure statute with respect to distribution of the Epicel(SM)
Service. The Company is in the process of applying for such a license.

RELIANCE ON AGREEMENTS WITH KEY COLLABORATORS. GTR's CARTICEL(SM) Service has
been developed based on the work of a group of Swedish physicians, the two
leaders of which are exclusively involved with GTR in the commercialization and
further development of the CARTICEL(SM) Service. These two physicians are
parties to research and development consulting agreements with GTR (the
"Consulting Agreements") which prohibit them from performing consulting
services for others related to cartilage and bone repair without GTR's consent.
In addition, pursuant to the Consulting Agreements, each physician (i) is
prohibited from engaging in any business activity that is in competition with
the products or services being developed, manufactured or sold by GTR during
the term of the Consulting Agreements (currently through 1998) and for a period
of one year after termination thereof, (ii) is subject to non-disclosure
obligations, and (iii) has assigned to GTR all rights to inventions resulting
from work performed by each physician as a consultant to GTR, subject to
royalties payable to the inventing physician. There can be no assurance that
the two physicians will honor their obligations under the Consulting
Agreements. In addition, there can be no assurance that individuals who are
familiar with the know-how underlying GTR's CARTICEL(SM) Service through their
association with these physicians will not disclose such information to GTR's
competitors. The occurrence of either of these events could have a material
adverse effect on GTR's results of operations.

GTR is conducting additional research in connection with its
CARTICEL(SM) Service pursuant to a sponsored research agreement with the
University of Gotenburg in Sweden and certain physicians, including the two
referred to above. The sponsored research agreement requires that all members
of the investigative team maintain the confidentiality of all information
pertaining to GTR and its business that may become known to them in connection
with their work under the agreement. The agreement also states that all
inventions conceived or reduced to practice during the course of the research
program will be the property of GTR, subject to royalties payable to the
inventing physician. There can be no assurance that the sponsored research
agreement will be honored by the individuals performing services thereunder.

GTR OPERATING LOSSES. GTR is expected to experience significant operating
losses at least through the first half of 1997 as the market introduction of
its CARTICEL(SM) Service continues and its research and development and
clinical trial programs progress. There can be no assurance that GTR will ever
achieve a profitable level of operations or that profitability, if achieved,
can be sustained on an ongoing basis. In addition, the management and
accounting policies adopted by the Board provide that to the extent GTR is
unable to utilize its operating losses to reduce its allocated current or
deferred income tax expense, such losses will be reallocated to the General
Division on a quarterly basis. Accordingly, although the actual payment of
taxes is a corporate liability of Genzyme as a whole, separate financial
statements are prepared for each division and any losses on GTR's financial
statements that cannot be utilized currently by GTR will not be carried forward
to reduce the taxes allocable to GTR's earnings in the future. This will
result in GTR recognizing a larger tax expense and reporting lower earnings
after taxes in the future than would have been the case if GTR had retained its
losses in the form of a net operating loss carryforward.

9
<PAGE> 10

UNCERTAINTY OF PRODUCT DEVELOPMENT; COMPETITION IN THE TISSUE REPAIR FIELD.
GTR's future success is likely to be dependent upon its ability to develop,
produce and market additional products and services, in addition to completing
the market introduction of the CARTICEL(SM) Service and continuing to sell the
Epicel(SM) Service. Several of GTR's products and services are in an early
stage of development.

Competition is intense in the development of health care products,
particularly in the development of products through the application of
biotechnology. GTR's products and services will compete in fields
characterized by rapid technological progress. New developments in technology
may have a material adverse effect on the sales potential of GTR's products and
services or render them obsolete. Other companies, many of which have
substantially greater capital resources, marketing experience, research and
development staffs and facilities than Genzyme are currently engaged in the
development of products and services which may be competitive with GTR's
products and services. These companies may succeed in developing products and
services that are more effective than any that have been or may be developed by
GTR and may also be more successful than GTR in marketing these products and
services. Genzyme is aware of numerous companies developing competing products
for cartilage repair and the treatment of burns, chronic wounds and multiple
sclerosis. See "Business - Competition."

UNCERTAINTY REGARDING SUCCESS OF CLINICAL TRIALS. Several of GTR's products,
including TGF-B2 and Vianain(R) Debriding Product, are currently in clinical
trials to test safety and efficacy in humans for various conditions. There can
be no assurance that GTR will not encounter problems in clinical trials that
will cause it to delay or suspend clinical trials. In addition, there can be
no assurance that such clinical testing, if completed, will ultimately show
these products to be safe and efficacious.

THIRD-PARTY REIMBURSEMENT AND HEALTH CARE COST CONTAINMENT INITIATIVES. GTR
expects that a majority of its revenues will be attributable directly or
indirectly to payments received from third-party payors. GTR's revenues and
profitability may be affected by ongoing efforts of third-party payors to
contain such costs. In addition, during 1994, the Clinton administration and
Congress proposed the implementation of broad based health care cost
containment measures. While these proposals were not implemented, it is likely
that health care measures will again be proposed in the present or future
Congressional sessions. Accordingly, the effects on GTR of any such measures
that are ultimately adopted cannot be assessed at this time.

FLUCTUATION IN QUARTERLY RESULTS. The commercialization of the CARTICEL(SM)
Service is in its early stages. Revenues generated from the CARTICEL(SM)
Service are expected to fluctuate as GTR's sales force enrolls orthopedic
surgeons for training, such surgeons are trained by GTR, and the CARTICEL(SM)
Service gains market acceptance. GTR's management is unable to predict the
timing or magnitude of such fluctuations. In addition, GTR's revenues to date
have derived primarily from sales of the Epicel(SM) Service for the treatment
of severe burns. Revenues realized from the Epicel(SM) Service fluctuate from
quarter to quarter due to the dependency of such revenues on many unpredictable
factors, including the number and survival rate of patients for which the
Epicel(SM) Service is the indicated treatment. Since production of the
Epicel(SM) Service requires GTR to maintain extensive tissue culture facilities
and a staff of trained personnel, a significant portion of GTR's costs are
fixed and, therefore, fluctuations in demand can have a material adverse effect
on GTR's results of operations.

PRODUCT LIABILITY AND LIMITATIONS OF INSURANCE. GTR may be subject to product
liability claims in connection with the commercial application of its products
and services. While GTR will take what it believes to be appropriate
precautions, there can be no assurance that GTR will avoid significant
liability exposure. Genzyme has only limited amounts of product liability
insurance. If Genzyme attempts to obtain additional insurance in the future,
there can be no assurance that it will be able to do so on acceptable terms, or
that such insurance will provide adequate coverage against claims asserted.

10
<PAGE> 11

POSSIBLE VOLATILITY OF SHARE PRICE AND ABSENCE OF DIVIDENDS. The market prices
for securities of biotechnology companies have been volatile. Factors such as
announcements of technological innovations or new commercial products by
Genzyme or its competitors, governmental regulation, patent or proprietary
rights developments, public concern as to the safety or other implications of
biotechnology products and market conditions in general may have a significant
impact on the market price of TR Stock. In addition, the limited number of
shares of TR Stock outstanding may subject the price of the TR Stock to
additional volatility. No cash dividends have been paid to date on the TR
Stock, nor does Genzyme anticipate paying cash dividends on the TR Stock in the
foreseeable future.

CHANGE IN CONTROL. Certain provisions of Genzyme's charter and by-laws and the
terms of Genzyme's stockholder rights plan may have the effect of delaying,
deferring or preventing a change in control of Genzyme, thereby possibly having
the effect of depriving stockholders of the opportunity to receive a premium
for their shares. Certain provisions of Massachusetts law may have a similar
effect. See "Description of Genzyme Capital Stock - "Anti-Takeover"
Provisions."

POTENTIAL DILUTION FROM PURCHASE OPTION. Upon consummation of this offering,
the Funding Commitment will be eliminated. Notwithstanding the elimination of
the Funding Commitment, Genzyme still has an option to allocate to GTR, at $10
per TR Designated Share, up to $30,000,000 from the General Division (the
"Purchase Option"). Consequently, a maximum of 3,000,000 TR Designated Shares
may be issued in connection with the exercise of the Purchase Option. Genzyme
may issue the TR Designated Shares as a stock dividend to the holders of
General Division Stock or issue the TR Designated Shares in a public or private
sale of TR Stock without any allocation of proceeds to GTR. See "Business -
Relationship with Genzyme General Division."

RISKS RELATED TO THE GENZYME GENERAL DIVISION:

Holders of TR Stock are stockholders of Genzyme, which owns all of the
assets and is responsible for all of the liabilities of GTR. Liabilities or
contingencies of the General Division that affect Genzyme's resources or
financial condition could affect the financial condition or results of
operations of GTR. Accordingly, the following risk factors should be
considered carefully in contemplating an investment in TR Stock.

DEPENDENCE ON CEREDASE(R) AND CEREZYME(TM) ENZYME SALES. The General
Division's results of operations and cash flows are highly dependent upon sales
of its Ceredase(R) enzyme, a biotherapeutic product for the treatment of
Gaucher disease, and Cerezyme(TM) enzyme, a recombinant form of the enzyme.
Commercial sales of Ceredase(R) and Cerezyme(TM) began in April 1991 and June
1994, respectively, following receipt of FDA marketing approval. During 1994,
sales from these two products totalled $172.0 million, or 72% of the General
Division's product sales.

The Ceredase(R) and Cerezyme(TM) products have each been given orphan
drug status by the FDA, which entitles Genzyme to market exclusivity for these
products until April 1998 and May 2001, respectively. Legislation has been
periodically introduced in recent years to amend the Orphan Drug Act to limit
market exclusivity in certain situations.

LIMITED SUPPLY OF KEY RAW MATERIAL; NECESSITY OF APPROVALS FOR PRODUCTION OF
CEREZYME(TM). Genzyme produces Ceredase(R) enzyme from raw material extracted
from human placental tissue. Pasteur Merieux, located in France, is the only
significant source of this material. Under its agreement with Genzyme, Pasteur
Merieux is obligated to process at least 50% of its placental tissue and supply
all of its output to Genzyme. Currently, it is processing all of its available
material and supplying the output to Genzyme. If this agreement were
terminated prior to the scheduled expiration in 2001 due to Pasteur Merieux's
inability or failure to perform its obligations thereunder, or if Pasteur
Merieux were to reduce the amount of material it processes, Genzyme might not
be able to obtain alternative sources of the raw material at a commercially
reasonable cost, if at all.

The supply of starting material available for the production of
Ceredase(R) enzyme effectively limits the amount of product that can be
produced. During 1994, Genzyme and its supplier were successful in improving
the yield of enzyme obtained from the starting material, thereby increasing the
amount of product that could be produced. However,

11
<PAGE> 12

there can be no assurance that further improvements in yield will occur. Any
disruption in the supply or manufacturing process of Ceredase(R) enzyme may
have a material adverse effect on revenue in any period. To address supply
constraints, Genzyme has developed Cerezyme(TM) enzyme, a recombinant form of
the enzyme that is not derived from human placental tissue. In 1994, Genzyme
received approval to market this product in the U.S. and Israel and currently
is working to expedite the foreign approvals needed to market Cerezyme(TM)
enzyme elsewhere abroad. Manufacturing constraints on Cerezyme(TM) enzyme,
presently produced in Genzyme's small scale cell culture plant, will limit the
availability of the product for new patients until receipt of regulatory
approval to use Genzyme's large scale mammalian cell culture manufacturing
plant in Allston, Massachusetts for production of Cerezyme(TM) enzyme.

FUTURE CAPITAL NEEDS. Although the General Division currently has substantial
cash resources, it has committed to utilize a portion of such funds for certain
purposes, such as making certain payments to third parties in connection with
strategic collaborations and acquisitions. In addition, should Genzyme
exercise its option to acquire Neozyme II Corporation callable common stock or
its option to acquire the partnership interests in Genzyme Development
Partners, L.P. using cash to pay some or all the exercise prices, its cash
resources will be diminished and, as a result, Genzyme's obligation to allocate
assets to GTR pursuant to the Funding Commitment may be suspended or relieved.
See "Business - Relationship with Genzyme General Division."

USE OF PROCEEDS

The net proceeds to be received from the sale of the shares of TR
Stock offered hereby are estimated to be $42,060,000 ($48,414,000 if the
Underwriters' over-allotment option is exercised in full) and will be allocated
in full to GTR. While GTR currently has no commitments for use of the net
proceeds of the offering, GTR's management anticipates that the net proceeds,
including interest thereon, will be used to accelerate the market introduction
of GTR's CARTICEL(SM) Service, including for related capital expenditures and
working capital, and to fund other research and development activities of GTR.
Until applied to any of the foregoing uses, the net proceeds of this offering
will be invested in high-quality, short-term interest bearing investments or
deposit accounts.

Genzyme anticipates that the net proceeds from this offering, together
with existing cash balances and revenues generated from the CARTICEL(SM) and
Epicel(SM) Services, will be sufficient to fund GTR's operations through 1996.
GTR may require additional funds sooner if demand for the CARTICEL(SM) Service
grows more rapidly than anticipated. Significant additional funds will be
required to expand further its CARTICEL(SM) Service, including for working
capital and additional processing capacity, and to fund the development,
clinical testing, and commercialization of GTR's other products and services.

12
<PAGE> 13

CAPITALIZATION

The following table sets forth the capitalization of GTR as of June
30, 1995 and as adjusted to reflect the issuance of the shares of TR Stock
offered hereby:

<TABLE>
<CAPTION>
JUNE 30, 1995
---------------------------------------------
(DOLLARS IN THOUSANDS)
AS
ACTUAL ADJUSTED(1)
------ --------
<S> <C> <C>
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . $ 19 $ 19
Division equity (2) . . . . . . . . . . . . . . . . . . . . . 14,922 56,982
------- -------

Total capitalization . . . . . . . . . . . . . . . . . . . . $ 14,941 $ 57,001
========= =========
</TABLE>

- -----------------------
(1) As adjusted to reflect the application of the net proceeds of the
offering, estimated to be $42,060,000.

(2) Excludes 1,287,599 shares of TR Stock reserved for issuance upon
exercise of outstanding options with a weighted average exercise price
of $5.0828 per share, and 1,305,077 TR Designated Shares, 1,295,228 of
which are reserved for issuance upon the exercise or conversion of
outstanding General Division stock options, warrants and convertible
notes.

PRICE RANGE OF TR STOCK
AND DIVIDEND POLICY

The TR Stock is traded in the over-the-counter market and prices are
quoted on the Nasdaq National Market under the symbol GENZL. The following
table sets forth, for the periods indicated, the high and low sale prices for
the TR Stock as reported by Nasdaq.

<TABLE>
<CAPTION>
HIGH LOW
---- ---

<S> <C> <C> <C>
1994:
Fourth Quarter (commencing December 16, 1994)(1) . . . . . . . . $ 5 3/8 $3 5/8

1995:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 7 3/4 3 1/2
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 7 5/8 5 1/8
Third Quarter (through September 21, 1995) . . . . . . . . . . . 16 5/8 6 1/2

</TABLE>

- -----------------------
(1) GTR was formed, and the TR Stock commenced trading, on December 16,
1994.

On September 21, 1995, the closing sale price of TR Stock as reported
by Nasdaq was $15.625 per share. There were approximately 2,719 holders of
record of TR Stock as of August 1, 1995.

Genzyme has never paid a cash dividend on any class of its capital
stock and currently intends to retain all earnings for use in its business.

13
<PAGE> 14

GENZYME TISSUE REPAIR DIVISION
SELECTED FINANCIAL DATA

The following table represents selected historical combined statement of
operations and balance sheet data of GTR. The balance sheet data presented
below as of December 31, 1992, 1993 and 1994 and the statement of operations
data presented below for each of the years in the four-year period ended
December 31, 1994 are derived from GTR's financial statements, which have been
audited by Coopers & Lybrand L.L.P., independent accountants. The financial
statements as of December 31, 1993 and 1994 and for each of the years in the
three-year period ended December 31, 1994 and the report of Coopers & Lybrand
L.L.P. relating thereto are incorporated by reference in this Prospectus and
the selected financial data presented below are qualified in their entirety by
reference thereto. The balance sheet data presented below as of December 31,
1990 and 1991 and the statement of operations data presented below for the year
ended December 31, 1990 are derived from GTR's unaudited financial statements.
The balance sheet data presented below as of June 30, 1995 and statement of
operations data presented below for the six-month periods ended June 30, 1994
and 1995 are derived from GTR's unaudited financial statements which are also
incorporated herein by reference. In the opinion of management, the unaudited
financial statements have been prepared on a basis consistent with the audited
financial statements and include all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the financial position
and results of operations for these periods. The operating results for the six
months ended June 30, 1994 or 1995 are not necessarily indicative of the
results that may be expected for the entire fiscal year. The data should be
read in conjunction with the historical financial statements and notes thereto
and related Management's Discussion and Analysis of Financial Condition and
Results of Operations of GTR presented herein. See also "Incorporation of
Certain Documents by Reference." Amounts are in thousands, except for per
share amounts.
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- -------------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED STATEMENT OF OPERATIONS DATA:

Product revenues . . . . . . . . $ - $ - $ - $ - $ 324 $ - $ 2,277
Revenues from research and
development contracts (1) . . . 861 2,291 2,666 4,684 - - -
Operating costs and expenses . . 467 2,552 3,174 3,506 4,889 1,944 11,827
Purchase of in-process research and
development (2) . . . . . . . . - - - 25,000 11,215 - -
Net income (loss) attributable
to TR Stock (3) . . . . . . . . $ 394 $ (211) $ (508) $(24,115) $(15,751) $(1,944) $(8,969)

GTR Common Share Data (3):

Net income (loss) per common
and common equivalent share . $ 0.17 $(0.08) $(0.17) $ (7.43) $ (4.40) $ (0.59) $ (1.03)
Average shares outstanding . . 2,282 2,739
3,019 3,245 3,578 3,287 8,721
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
--------------------------------------------- ------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
COMBINED BALANCE SHEET DATA:

Cash and investments . . . . . . $ - $ - $ - $ - $24,808 $16,240
Working capital . . . . . . . . . - - (149) - 20,557 12,076
Total assets . . . . . . . . . . - - - - 28,435 19,152
Division equity (4) . . . . . . . - - (149) - 23,313 14,922
</TABLE>

There were no cash dividends paid.

- ------------------------------

(1) In July 1993, Genzyme received a technology license fee of $2 million from
Neozyme Corporation related to expansion of the field of the Vianain(R)
Debriding Product.

(2) In December 1993, Genzyme exercised its option to purchase the rights to
the Vianain(R) Debriding Product research program funded by Neozyme
Corporation. The transaction was accounted for as a purchase of in-process
research and development and, accordingly, Genzyme charged the $25 million
acquisition cost to GTR's operations in 1993. In December 1994, GTR
acquired BioSurface in a transaction accounted for as a purchase. The
excess of the purchase price over the fair market value of the net assets
acquired, $11.2 million, was charged to in-process research and
development.

(3) Net income (loss) attributable to TR Stock and net income (loss) per common
and common equivalent share for the years ended December 31, 1990, 1991,
1992, 1993 and 1994 and for the six months ended June 30, 1994 give effect
to the provisions of the Management and Accounting Policies adopted by the
Board in connection with the creation of GTR and, accordingly, are pro
forma presentations.

(4) In December 1994, Genzyme issued 5,000,000 shares of TR Stock valued at
$25.3 million in connection with the acquisition of BioSurface.

14
<PAGE> 15

GTR MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Genzyme created GTR in December 1994 by acquiring BioSurface and
combining it with several Genzyme programs and collaborations in the area of
tissue repair. In December 1994, the stockholders of Genzyme approved a
reclassification of Genzyme's common stock in which the authorized shares of
Genzyme common stock were redesignated as General Division Stock on a
share-for-share basis and a second class of common stock, TR Stock, was
created. The General Division Stock and the TR Stock are intended to reflect
the value and track the performance of the General Division and GTR,
respectively, without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting either division.

Genzyme continues to hold title to all of its assets and be
responsible for all of its liabilities and the holders of the General Division
Stock and the TR Stock have no specific claim against the assets attributed for
financial statement presentation purposes to the division whose performance is
associated with the class of stock they hold. Liabilities or contingencies of
either division that affect Genzyme's resources or financial condition could
affect the financial condition or results of operations of both divisions.
Accordingly, Genzyme's consolidated financial statements, which are
incorporated herein by reference, should be read in conjunction with the
financial statements of the General Division or GTR, as appropriate.

Genzyme issued 5,000,000 shares of TR Stock, valued at approximately
$25.3 million and representing 50% of the initial equity of GTR, to the
stockholders of BioSurface to effect the acquisition. A total of 5,000,000
additional shares of TR Stock were either distributed to the holders of General
Division Stock on the basis of .135 of one share of TR Stock for each share of
General Division Stock held on December 16, 1994 or reserved for issuance upon
the exercise or conversion of General Division stock options, warrants and
convertible notes outstanding on December 16, 1994.

The acquisition of BioSurface was accounted for as a purchase.
Accordingly, the associated net assets and operations of BioSurface have been
included in GTR's financial statements and in Genzyme's consolidated financial
statements since the acquisition date.

RESULTS OF OPERATIONS

FIRST SIX MONTHS OF 1995 AS COMPARED TO THE FIRST SIX MONTHS OF 1994

Product revenues for the three and six months ended June 30, 1995 were
$1.2 million and $2.3 million, respectively. GTR had no revenues for the
comparable periods in 1994 because prior to Genzyme's acquisition of BioSurface
in December 1994, GTR had no products or services on the market. Revenues in
1995 consisted primarily of sales of the Epicel(SM) Service which are dependent
upon numerous factors, many of which are not in GTR's control. As a result,
GTR expects Epicel(SM) Service sales to fluctuate from period to period.
Product revenues also included $30,000 and $40,000 for the three and six months
ended June 30, 1995 from sales of the CARTICEL(SM) Service, which commenced in
the first quarter of 1995.

Gross margins for the three and six months ended June 30, 1995 were
29% and 30%, respectively. GTR incurs direct selling, general and
administrative expenses as well as a selling, general and administrative
charge, based on actual amounts incurred, from the General Division for
selling, general and administrative work performed by the General Division on
behalf of GTR. Selling, general and administrative expenses for the three and
six months ended June 30, 1995 were $2.5 million and $4.3 million,
respectively, compared to $226,000 and $389,000, respectively, for the
corresponding periods in 1994. The increase was due to increased support of
GTR research and development by the General Division and to the acquisition of
BioSurface in the fourth quarter of 1994.

15
<PAGE> 16

GTR incurs direct research and development expenses as well as a
charge for research and development work performed by the General Division on
behalf of GTR. Research and development expenses for the three and six months
ended June 30, 1995 were $3.1 million and $5.9 million, respectively, compared
to $903,000 and $1.6 million, respectively, for the corresponding periods in
1994. Solely for purposes of comparison, research and development expenses
related solely to the operations acquired from BioSurface by Genzyme were $1.7
million and $3.5 million, respectively, for the three and six months ended June
30, 1995. Excluding research and development expenses related to BioSurface,
research and development expenses increased 53% and 57%, respectively, for the
three and six months ended June 30, 1995, due primarily to increased outside
clinical trials and manufacturing support related to the Vianain(R) Debriding
Product.

1994 AS COMPARED TO 1993

Product revenues, which consisted solely of revenues from sales of the
Epicel(SM) Service for the period from December 16, 1994, the acquisition date
of BioSurface, through December 31, 1994, were $324,000.

GTR earned no revenues from research and development contracts in 1994
as compared to $4.7 million in 1993. Neozyme Corporation funded the
development of the Vianain(R) Debriding Product from 1990 through the end of
1993 when GTR acquired the development program from Neozyme Corporation.
Revenues from research and development in 1993 also included a $2.0 million
technology license fee related to expansion of the field of the Vianain(R)
Debriding Product to include both burns and ulcers.

General and administrative expenses are borne across Genzyme's entire
activity base and charges to a specific activity, such as research and
development, are a function of total spending within that activity as well as
the size of the overall activity base. GTR also incurs direct selling, general
and administrative charges as a result of the acquisition of BioSurface.
Selling, general and administrative expenses for 1994 increased 38% to
$964,000. Of this increase, 18% corresponds to the increase in spending on
research and development for the same period with the remaining increase
resulting from the operations of BioSurface.

Research and development expenses for 1994 increased 30% to $3.6
million including $306,000 related to the operations of BioSurface. Excluding
the effect of BioSurface, research and development expenses increased 19% due
primarily to increased outside clinical trials related to the Vianain(R)
Debriding Product and increased manufacturing support.

The excess of the purchase price over the fair market value of the net
assets acquired in the acquisition of BioSurface, $11.2 million, was allocated
to in-process research and development and charged to operations.

1993 AS COMPARED TO 1992

GTR's revenues from research and development contracts for 1993 were
$4.7 million, as compared to $2.7 million in 1992, an increase of 76%, due
primarily to a technology license fee of $2.0 million from Neozyme Corporation
related to expansion of the field of the Vianain(R) Debriding Product to
include the treatment of ulcers.

General and administrative expenses decreased 15% to $701,000 in 1993
due to a lower percentage charge resulting from an increase in Genzyme's
overall activity base.

Research and development expenses for 1993 increased 19% to $2.8
million. The increase in spending was due primarily to increased outside
clinical trials related to the Vianain(R) Debriding Product and increased
manufacturing support.

16
<PAGE> 17

In December 1993, GTR completed the purchase of the rights to the
Vianain(R) Debriding Product technology from Neozyme Corporation and charged
the $25.0 million purchase price to operations as in-process research and
development.

LIQUIDITY AND FINANCIAL RESOURCES

As of June 30, 1995, GTR had approximately $16.2 million of cash, cash
equivalents and investments in marketable securities, a decrease of $8.6
million from December 31, 1994. The decrease was due to GTR's net loss and an
increase in working capital requirements, net of the portion funded by
additional amounts payable to the General Division and proceeds from the
issuance of stock under stock option and stock purchase plans.

GTR anticipates that, excluding the proceeds from this offering,
currently available funds plus revenues generated from the CARTICEL(SM) and
Epicel(SM) Services will be sufficient to fund GTR's operations through the end
of 1995. Significant additional funds will be required to complete clinical
testing and commercialization of GTR's products and services.

Upon consummation of this offering, Genzyme's obligation to allocate
funds from the General Division to GTR pursuant to the Funding Commitment will
be eliminated. See "Business - Relationship with Genzyme General Division."

17
<PAGE> 18

ADDITIONAL FINANCIAL DATA

Genzyme holds title to all of its assets and is responsible for all of
its liabilities, and the holders of the TR Stock have no specific claim against
the assets attributed for financial statement presentation purposes to GTR.
Liabilities or contingencies of either division that affect Genzyme's resources
or financial condition could affect the financial condition or results of
operations of both divisions. Therefore, the following consolidated balance
sheet data of Genzyme and statement of operations data of the General Division
are presented as additional information due to the nature of Genzyme's
financial reporting structure.

The following table represents summary historical consolidated balance
sheet data of Genzyme as derived from the Company's financial statements and
summary historical combined statement of operations data of the General
Division as derived from the General Division's financial statements. The
General Division operating results for the six months ended June 30, 1995 are
not necessarily indicative of the results that may be expected for the entire
fiscal year. The data should be read in conjunction with the historical
financial statements and notes thereto, and related Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Company and
the General Division, respectively, incorporated by reference in this
Prospectus. See "Incorporation of Certain Documents by Reference." Amounts are
in thousands, except for per share amounts.

<TABLE>
<CAPTION>
GENZYME CORPORATION: AT DECEMBER 31, AT JUNE 30,
- ------------------- --------------------------------------------- ------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and investments . . . . . . . . . . . . $ 47,059 $283,473 $248,325 $168,953 $153,460 $102,608
Working capital . . . . . . . . . . . . . . . 62,252 147,007 166,324 99,605 103,871 134,896
Total assets . . . . . . . . . . . . . . . . 129,625 403,643 481,896 542,052 658,408 638,880
Long-term debt and capital lease
obligations excluding current portion
(1) . . . . . . . . . . . . . . . . . . . . 5,694 104,609 105,369 144,674 126,729 128,321
Stockholders' equity (2) . . . . . . . . . . 103,300 268,333 322,613 334,072 418,964 451,308
</TABLE>

<TABLE>
<CAPTION>
GENZYME GENERAL DIVISION: FOR THE SIX
- ------------------------ MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- ---------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED STATEMENT OF OPERATIONS DATA(3):
Revenues . . . . . . . . . . . . . . . . . . $ 60,688 $119,624 $216,413 $265,687 $310,727 $148,660 $179,517
Operating income (loss) (4) . . . . . . . . . (37,582) 8,494 (27,565) (7,633) 49,922 23,824 32,974
Net income (loss) . . . . . . . . . . . . . . (26,382) 20,938 (30,012) 8,456 30,194 18,702 21,303
Net income (loss) attributable
to General Division Stock (5) . . . . . . . (26,382) 20,938 (29,809) 18,020 32,054 19,499 24,965

General Division Common Share Data (5):

Net income (loss) per common and
common equivalent share . . . . . . . . . $ (1.56) $ 0.89 $ (1.33) $ 0.69 $ 1.22 $ 0.75 $ 0.89
Average shares outstanding . . . . . . . . 16,910 23,554 22,370 26,250 26,169 25,988 28,105
</TABLE>

There were no cash dividends paid.

- ----------------------------------

(1) In October 1991, Genzyme issued $100.0 million of its 6 3/4%
convertible subordinated notes due October 2001 and received net
proceeds of $97.3 million.

(2) In April 1991, Genzyme completed the sale to the public of 4,025,000
shares of Genzyme Common Stock for net proceeds of $136.4 million. In
December 1994, Genzyme issued 5,000,000 shares of TR Stock valued at
$25.3 million in connection with the acquisition of BioSurface.

(3) In October 1992, Genzyme acquired all the outstanding common shares of
Vivigen, Inc. in a transaction accounted for as a pooling of
interests. Accordingly, the General Division's financial data has
been restated to include Vivigen for all periods presented.

(4) Operating income (loss) includes the purchase of in-process research
and development totaling $20.8 million, $51.1 million and $24.0
million, respectively, for the years ended December 31, 1990, 1992 and
1993; goodwill impairment and restructuring costs totaling $26.5
million for the year ended December 31, 1993; and charges for purchase
options and financing expenses totaling $9.0 million and $16.9
million, respectively, for the years ended December 31, 1990 and 1992.

(5) Net income (loss) attributable to General Division Stock and net
income (loss) per common and common equivalent share for the years
ended December 31, 1990, 1991, 1992, 1993 and 1994 and for the six
months ended June 30, 1994 give effect to the provisions of the
Management and Accounting Policies adopted by the Board in connection
with the creation of GTR and, accordingly, are pro forma
presentations. The tax benefit generated by GTR retroactively
allocated to the General Division is $0, $0, $0.2 million, $9.6
million, $1.9 million and $0.8 million for the years ended December
31, 1990, 1991, 1992, 1993 and 1994 and the six months ended June 30,
1994, respectively. For the six months ended June 30, 1995, the tax
benefit generated by GTR allocated to the General Division is $3.7
million.

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<PAGE> 19

BUSINESS

OVERVIEW

GTR focuses on developing, producing and marketing technologically
advanced products and services for the treatment and prevention of serious
tissue damage. GTR's strategy is to create the leading business in the field
of tissue repair by bringing a comprehensive approach to the treatment of the
complex medical problems associated with serious tissue injury. Genzyme
created GTR in December 1994 by acquiring BioSurface and combining BioSurface's
programs with several of Genzyme's programs in the field of tissue repair. As
a result of the combination of programs from BioSurface and Genzyme, GTR has
strong capabilities in three core technologies -- autologous cell processing,
therapeutic protein development, and biomaterials engineering -- which it is
using to develop and market a portfolio of novel products and services to apply
to unmet medical needs in the field of tissue repair. In March 1995, GTR
introduced the CARTICEL(SM) Service, which provides orthopedic surgeons with
the cell culturing services and other support necessary to utilize a patient's
own articular chondrocytes to repair articular cartilage defects in that
patient's knee. GTR plans to focus a substantial portion of its resources in
the near term on further developing and marketing the CARTICEL(SM) Service.
GTR also markets the Epicel(SM) Service, which involves the culturing of
autologous skin cells to provide burn victims with a lifesaving alternative
form of permanent skin replacement, and is developing Vianain(R) Debriding
Product for the treatment of burns and skin ulcers and TGF-B2, a recombinant
protein, for the treatment of chronic skin ulcers and multiple sclerosis.

GTR is building the infrastructure required to make the CARTICEL(SM)
Service widely available to orthopedic surgeons in the United States and
Europe. Although the CARTICEL(SM) Service is not currently regulated by the
FDA, GTR has developed a quality systems approach to the delivery of this
service. Drawing on its seven years of experience with the Epicel(SM) Service,
GTR has validated a commercial scale cartilage cell processing facility,
developed a rigorous surgeon training program, established standards for
patient outcomes data collection, and assembled an experienced sales and
marketing staff. Since the introduction of the service in March 1995, GTR has
trained 55 orthopedic surgeons, has provided cultured cartilage cells for the
treatment of 15 patients, and is processing cartilage cells for 60 additional
patients.

GTR's near term strategy is to concentrate its efforts on building a
substantial business based on the CARTICEL(SM) Service. This will require
significant investments in processing capacity, working capital and market
development. GTR believes that the creation of a substantial business based on
the CARTICEL(SM) Service would establish GTR as a leader in the application of
biotechnology to the orthopedic market, support future research and development
efforts, and enable GTR to finance acquisitions of complementary technologies.
GTR will continue to build its product portfolio through development of the
Vianain(R) Debriding Product for burns and skin ulcers, TGF-B2 for chronic skin
ulcers and multiple sclerosis, and alternate versions of the CARTICEL(SM) and
Epicel(SM) Services for cartilage resurfacing and permanent skin replacement,
respectively. GTR believes this family of diverse tissue repair products will
offer a comprehensive treatment portfolio in the currently fragmented field of
tissue repair.

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<PAGE> 20

PRODUCTS AND SERVICES

GTR's activities can be divided into three main areas: cartilage
repair, consisting of the CARTICEL(SM) Service and CARTICEL II; skin repair,
including the Epicel(SM) Service and the TGF-B2 and Vianain(R) Debriding
Product programs; and other tissue repair opportunities in the areas of
multiple sclerosis and bone repair.

CARTILAGE REPAIR - CARTICEL(SM) SERVICE

Scientific Background

Cartilage tissue consists of cartilage cells called chondrocytes,
which secrete and are embedded in a protein and carbohydrate based matrix.
Cartilage tissue can be found in several parts of the body and serves several
different purposes. Articular (hyaline) cartilage is a thin layer of tough
opaque tissue that lines the opposing bone surfaces of all moving joints in the
body to provide almost frictionless movement of the joint. Another type of
cartilage (fibrocartilage) serves a shock-absorbing function in the knee and in
the spine between the vertebrae. Cartilage is also the tissue which gives
shape to the ear and the nose.

Damage to cartilage causes significant medical problems. When
articular cartilage tissue in a joint suffers more than superficial damage, it
does not regenerate and may further deteriorate over time. Even damage which
creates a small defect in articular cartilage can impair joint movement,
restrict patient mobility and cause pain and joint locking. There were an
estimated 1.3 million procedures performed in the United States in 1994 to
treat soft tissue damage in the knee. A substantial number of these procedures
involved articular cartilage damage.

Arthroscopic techniques are currently used to relieve patients' pain
and lessen the chances of further tissue damage, but they do not repair the
defect or stop the degenerative process. One technique involves shaving the
margins of the damaged cartilage and irrigating the joint cavity. Another is
to drill holes through the underlying bone, allowing cells from the bone marrow
to migrate into the defect. These bone marrow cells produce fibrocartilage
scar tissue that can fill the defect but is mechanically inferior to normal
articular cartilage and wears poorly over time. Over a period of several
years, this scar tissue may deteriorate, leading to osteoarthritis, a
degenerative joint disease. Patients with osteoarthritis may require a total
joint replacement, which carries a significant risk of long- term failure.
Therefore, joint replacement is generally not recommended for patients under
the age of fifty, who would likely outlive the prosthesis.

GTR's CARTICEL(SM) Service has been developed based on seven years of
pioneering work by a group of Swedish physicians (the "Swedish Group"). The
Swedish Group, which was the first group in the world to report the use of
cultured autologous cartilage cells to treat cartilage damage, has treated 165
patients with knee cartilage defects. A retrospective review of safety data on
the initial 150 patients treated by the Swedish Group, which was conducted by
an independent data management organization hired by GTR and covered seven
years of data for the earliest patients, indicated no serious adverse events or
post-implantation infection. An ongoing retrospective review by GTR presently
covering 60 of these patients has yielded encouraging data on the efficacy of
the treatment, as measured by joint functionality and arthroscopic and
histological evaluation. In the October 6, 1994 issue of the New England
Journal of Medicine, the Swedish Group published data on the first 23 patients
to reach a two year follow-up evaluation. As reported in this article, 19 of 23
patients had restored or improved joint function after treatment with cultured
autologous chondrocytes.

Market Opportunity

GTR has estimated the market opportunity for the CARTICEL(SM) Service
by examining the number of surgical procedures used to treat knee injuries. In
the United States in 1994, there were an estimated 1.3 million procedures
performed to treat soft tissue damage in the knee, including ligaments, menisci
and articular cartilage. Approximately 500,000 of these procedures were
performed specifically to treat articular cartilage damage of traumatic origin.
GTR estimates that roughly 200,000 of these procedures were performed on
clinically significant injuries that would be

20
<PAGE> 21

suitable for intervention with the CARTICEL(SM) Service.

Data concerning numbers of injuries or surgical procedures in Europe
are generally not available, and accordingly it is difficult to estimate the
size of the European market for the CARTICEL(SM) Service. A GTR commissioned
survey of the European market, which was based on 1993 data, suggests that the
CARTICEL(SM) Service is applicable to at least 56,000 patients in Europe
annually.

The potential market opportunity for the CARTICEL(SM) Service also
encompasses the treatment of other joints. In the United States, there are
currently more than 400,000 arthroscopies performed each year on the shoulder,
ankle, elbow, wrist, hip and spine, some portion of which involve articular
cartilage defects. The Swedish Group has already begun treating patients with
articular cartilage defects in some of these other joints. In addition, GTR is
working to expand the use of the CARTICEL(SM) Service for the management of end
stage degenerative diseases (such as osteoarthritis) and cartilage damage that
are beyond treatment with current techniques, such as shaving the cartilage or
drilling the bone, or the existing CARTICEL(SM) Service. Cartilage diseases,
such as chondromalacia patellae and osteochondritis dessicans, affect an
estimated 200,000 patients in the United States per year, and GTR estimates
that 16 million people in the United States suffer from osteoarthritis. In
order to take advantage of these market opportunities, GTR will need to conduct
additional development activities and clinical studies on the use of autologous
chondrocytes for these and other indications. See "Business - Products and
Services - CARTICEL(SM) Development Programs."

GTR believes that the CARTICEL(SM) Service offers an attractive
alternative to existing procedures used to treat severe articular cartilage
damage. Existing treatments do not repair the damage to the cartilage, and
consequently, many patients need to undergo more than one treatment for their
injury, and often never achieve lasting relief from pain. The CARTICEL(SM)
Service is designed to address cartilage damage by repairing the defect and
stopping the degenerative process. GTR believes that the benefits from the
CARTICEL(SM) Service will be long lasting and that a patient may not need to
repeat treatment with the CARTICEL(SM) Service.

GTR believes that the total costs associated with the CARTICEL(SM)
Service are less than the costs of a typical course of treatment ending with
knee replacement surgery. The list price of the CARTICEL(SM) Service is
currently $10,000 per patient. GTR has estimated that the additional costs of
the surgical procedures required to perform a biopsy and implant autologous
cartilage cells will range from $8,000 to $25,000 depending upon the complexity
of the repair required. Although prices may vary depending on the geographic
location, GTR estimates that the average total cost of a knee replacement
procedure is $26,000. However, before undergoing a knee replacement, many
patients will have received therapy and other procedures over the course of
several years, adding substantially to the overall cost of care.

Description of CARTICEL(SM) Service

The CARTICEL(SM) Service is an integrated program of surgeon training,
standardized cartilage cell processing, and rigorous collection and analysis of
outcomes data, which is aimed at providing broad surgeon access and achieving
and maintaining high quality patient outcomes. Although the CARTICEL(SM)
Service is not currently regulated by the FDA, GTR has developed a quality
systems approach to the delivery of this service. Each of the components of
the CARTICEL(SM) Service is described below.

Surgeon Training

The successful commercialization of the CARTICEL(SM) Service is
dependent on it being accepted by and incorporated into routine use by a large
number of orthopedic surgeons. The orthopedic marketplace in the United States
is comprised of approximately 17,000 board certified surgeons. Within major
European countries, there are approximately 18,000 orthopedic surgeons.

In order to gain access to GTR's cartilage cell processing services,
surgeons must complete comprehensive training in the surgical procedure for
autologous cartilage cell implantation. This training program currently is
composed

21
<PAGE> 22

of clinical, technical and practical orientation modules, providing a minimum
of 16 hours of concentrated exposure to autologous implantation technology.
The three-day training includes lecture presentations, a hands on bioskills
session involving practice of the surgical technique, and an on-site training
session in Sweden for observation of the surgical procedures (biopsy
harvesting, implantation and surgical follow-up) as performed by surgeons well
experienced in this technique. GTR believes that its exclusive ability to
provide surgeons with the opportunity to observe and interact with the Swedish
Group is a significant competitive advantage.

GTR has trained 55 surgeons to date and anticipates training 100
surgeons by the end of 1995. In order to accommodate the surgeons' limited
time availability, GTR plans to expand training capacity with the addition of a
training site in Cambridge, Massachusetts in the fourth quarter of 1995 and to
modify the training curriculum to concentrate the program into a day and a
half. Upon the completion of this facility and by intensifying the training
program, GTR will have the capacity to train more than 500 surgeons per year.
In order to maintain the high quality standards of the CARTICEL(SM) Service
training program, GTR plans to utilize videotapes of the surgical biopsy and
implantation procedures performed by the Swedish Group and video
teleconferencing links to Sweden to facilitate interaction with members of the
Swedish group.

Standardized Cartilage Cell Processing

To initiate the CARTICEL(SM) Service, a small sample of each patient's
healthy knee cartilage tissue is harvested by the surgeon via a minimally
invasive arthroscopic procedure. This cartilage biopsy is then shipped to
GTR's Cambridge processing facility in a specialized container provided by GTR.
The biopsy is processed, under rigorous quality control conditions, to yield a
suspension of the cartilage cells called chondrocytes. When placed in GTR's
proprietary cell culture system these chondrocytes gain the ability to rapidly
propagate. Each patient's cells are typically cultivated for a period of
approximately three weeks, yielding enough cartilage cells to fill the volume
of the cartilage defect diagnosed by the patient's surgeon. After quality
control testing and release, each patients cell's are packaged in a vial and
returned to the surgeon for implantation in a procedure described below. GTR's
proprietary technology allows a patient's cells to be stored indefinitely
during the cultivation process. Delivery of the patient's cells can then be
coordinated with the scheduled implantation procedure which may occur several
months after the biopsy. See "Business - Production."

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<PAGE> 23

The following figure indicates the steps required to implant
autologous cartilage cells:

[The graphic image that appears here consists of four numbered
illustrations. The first illustration shows the structure of
the human knee and an articular cartilage defect depicted with
a dark circle labeled "defect". It is captioned "Healthy
cartilage biopsy taken from patient." There is a line leading
from this caption to the area in the knee from which the
cartilage biopsy is taken. The second illustration, captioned
"Biopsy sent to Genzyme Tissue Repair for processing,"
portrays a technician examining a biopsy through a microscope.
The next segment is an image of cells in a test tube with a
caption "Cultured cells sent to surgeon." The final segment
shows an illustration of a knee with a periosteal flap sutured
on top of the defect and a syringe inserted underneath the
periosteal flap from the perimeter. This illustration is
captioned "Cultured cartilage cells injected under periosteal
flap." There is also a caption to this illustration which says
"periosteal flap, taken from lower leg bone and sutured on top
of defect" and a line indicating the flap sutured over the
area of the defect.]

STEP 1: ARTHROSCOPIC BIOPSY PROCEDURE. The initial surgical procedure
is an arthroscopy. If the physician diagnoses an articular cartilage
defect, he or she will perform a biopsy procedure to retrieve a tiny
sample of healthy cartilage tissue.
STEP 2: BIOPSY PROCESSING AND CELL CULTURING. The biopsy tissue is then
sent to the specialized processing facility at GTR. Under strict aseptic
conditions, the cartilage cells from the biopsy are nourished and grown
in culture. Cell culturing usually requires approximately three weeks,
during which time the cartilage cells will grow to many times their
original number. Following culturing, the cells will be ready for return
to the physician for a scheduled surgical implantation.
STEPS 3 & 4: SURGICAL IMPLANTATION. To complete the implantation
process, a second surgical procedure is performed. An incision is made
in the knee and the joint is opened. Damaged cartilage tissue is
removed, and the area of the defect is prepared to receive the cultured
cells. Another small incision is then made over the tibia (shin bone) to
remove a piece of periosteum, the thin tissue which covers the bone. The
periosteum is sutured over the cartilage defect to serve as a protective
cover for the cells which are implanted beneath it.

Collection and Analysis of Outcomes Data

The implantation of cultured autologous chondrocytes is an innovative
surgical approach for the repair and treatment of cartilage defects. GTR
believes that clinical data collection for analysis of surgical outcomes will
be critical to document and expand the use of the CARTICEL(SM) Service.
Therefore, GTR has established a registry of patients who receive cartilage
cells from the CARTICEL(SM) Service and requires that each surgeon obtain
consent from the surgeon's institutional review board ("IRB") to collect
outcomes data according to GTR's protocol. In addition, GTR will identify
surgeons who perform more specific long term follow-up data collection and cost
effectiveness studies, and GTR will fund these activities. GTR believes that
this registry will be a valuable resource for ongoing product performance
feedback to individual surgeons and for evaluating new surgical techniques.
GTR will encourage publication and presentation of individual case studies or
groups of patients by individual physicians or collaborators taking part in the
registry.

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<PAGE> 24

GTR has access to the clinical outcomes data from implantation procedures
performed by the Swedish Group over the last eight years. In addition, in
order to support further development of autologous chondrocyte implantation,
GTR will support a controlled multi-center, randomized study with the Swedish
Group. The study is scheduled to begin in the second half of 1995 and will
include 60 patients, 40 of whom will be treated with GTR's CARTICEL(SM) Service
and 20 of whom will receive conventional bone drilling as a control procedure.
These patients will be followed for three years, at which time an arthroscopy
and biopsy will be performed.

Sales and Marketing

GTR markets the CARTICEL(SM) Service directly to orthopedic surgeons in
the United States and Europe. Since the launch of the CARTICEL(SM) Service,
GTR has built its United States and European sales and marketing organization
to a total of 24 sales people. GTR intends to expand its existing sales force
to 50 by the end of 1996 with sales people experienced in the orthopedic
market. GTR's sales force promotes the CARTICEL(SM) Service by contacting and
educating orthopedic surgeons about the CARTICEL(SM) Service and maintaining an
ongoing relationship with each surgeon who receives training from GTR;
assisting physicians with administrative, clinical and reimbursement issues
involved in arranging to perform the biopsy and implantation procedures at
hospitals; and assisting physicians in obtaining the necessary approval from
the hospital's IRB to collect outcomes data in accordance with GTR's protocol.
GTR further supports its sales and marketing efforts by attendance at and
participation in orthopedic congresses and symposia.

CARTICEL(SM) Development Programs

GTR currently has a number of ongoing development programs relating to
its CARTICEL(SM) Service, including work on arthroscopic implantation
procedures and development of the CARTICEL(SM) Service for other applications
(referred to as "CARTICEL II"). The primary objectives of these programs are
to: (i) improve GTR's general knowledge of cartilage repair, (ii) improve the
regenerative ability of the implanted, autologous chondrocytes and (iii) expand
the application of the CARTICEL(SM) Service to the repair of large surface area
defects such as those seen in osteoarthritic joints. The CARTICEL(SM) Service
is currently effective only for the repair of small area defects (less than two
centimeters in diameter).

In response to interest by many of the orthopedic surgeons contacted by
GTR, GTR is refining the CARTICEL(SM) Service to allow the use of arthroscopic
procedures for implanting the cultured cartilage cells. GTR has commenced
discussions with manufacturers of arthroscopic equipment regarding the
development of equipment specifically designed for arthroscopic implantation.
To facilitate arthroscopic implantation, GTR is developing a synthetic
biomaterial-based periosteal patch. GTR believes that such refinements of the
CARTICEL(SM) Service for arthroscopic procedures would be a significant
enhancement of the CARTICEL(SM) Service and would broaden its appeal for many
orthopedic surgeons.

GTR is working to develop CARTICEL II for the management of end stage
degenerative diseases (e.g., osteoarthritis), and cartilage damage which has
progressed beyond treatment with other measures. In addition, CARTICEL II is
being developed to regenerate cartilage in large defects in which preexisting
arthritic conditions are present. Specifically, GTR anticipates that CARTICEL
II will improve the regenerating capacity of autologous chondrocytes implanted
in arthritic joints and reduce healing time through agents that actively
stimulate cartilage regeneration. Additionally, GTR has access to the General
Division's hyaluronic acid technology and will be evaluating its application in
the treatment of osteoarthritis in conjunction with the CARTICEL(SM) Service.

SKIN REPAIR

Scientific Background

Human skin is comprised of two distinct layers which together protect the
body from the surrounding environment. The epidermis is the body's outermost
protective barrier. It consists predominantly of keratinocytes, epithelial
cells

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<PAGE> 25

organized in overlapping layers to form a continuous, smooth sheet. Beneath
the epidermis lies the dermis, a vascularized layer whose principal cell type,
fibroblasts, produce a matrix composed of collagen and other extracellular
proteins. Accidents or diseases which affect the skin may cause
partial-thickness wounds, in which the epidermis is destroyed but a portion of
the dermis remains intact, and full-thickness wounds, in which both the
epidermis and the dermis are destroyed. Partial-thickness wounds may heal
without the use of skin grafts because keratinocytes which surround the hair
follicles and sebaceous glands are capable of dividing and migrating toward the
surface, regenerating the epidermis. In full-thickness wounds, the hair
follicles and sebaceous glands are destroyed, leaving no source of
keratinocytes in the injured area. Although small full-thickness wounds can
heal from the edges, larger full-thickness wounds must be treated with skin
grafts. The figure below represents the structure of human skin and indicates
the depth of wounds in the skin:

NORMAL SKIN STRUCTURE

[The graphic image that appears here is a drawing of a
cross-section of skin. The illustration shows the epidermis,
dermis, subcutaneous tissue, capillaries, hair follicle and
sebaceous gland. The illustration also indicates the depth of
partial- thickness and full-thickness wounds.]

Burns

When a patient suffers a severe full-thickness burn injury that
completely destroys the epidermis and the dermis over a large body surface
area, the surgeon must replace the missing skin to enable the patient to
survive. At present, treatment for large full-thickness burns typically
involves the use of temporary dressings to limit infection, reduce pain and
prevent loss of body fluids, followed by grafting a portion of the patient's
own undamaged skin onto the burned area. In conventional skin grafting,
surgeons first debride the burn wound (i.e., remove the necrotic tissue so that
the body's normal healing process can occur) and then remove a sheet of skin
containing the entire epidermis and a portion of the dermis from an unburned
donor site on the patient, and transplant it onto the debrided burn wound.

The use of conventional skin grafts in burn treatment entails certain
disadvantages. Most importantly, in patients with extensive full-thickness
burn injuries, there is a limited amount of undamaged skin available for use as
donor sites for skin grafts. This shortage prevents rapid closure of the burn
wound and is, therefore, life- threatening. In addition, the harvesting of
skin grafts from a donor site produces a new wound, with attendant
complications including pain, blood loss, scarring and the creation of new
sites for potential infection.

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<PAGE> 26

Each year approximately 2,000,000 people in the United States suffer
burn injuries. According to the National Center for Health Statistics,
approximately 70,000 of these patients are admitted to hospitals for serious
burn injuries. GTR estimates that approximately 25,000 of the most severely
burned patients in the United States are admitted to one of the 140 specialized
burn centers. Industry analysts estimate that approximately $1 billion is
spent in the United States annually for the treatment of burns.

Chronic Skin Ulcers

Chronic skin ulcers are open, often painful wounds found predominantly
on the lower extremities of elderly patients. Skin ulcers are divided into
three main categories: pressure ulcers, which are common in chronic care
hospitals and nursing homes, afflict approximately 1,500,000 patients per year;
venous ulcers afflict approximately 500,000 patients per year; and diabetic
ulcers afflict approximately 1,000,000 patients per year. Pressure ulcers form
in the skin of immobilized patients who are unable to shift position to relieve
the pressure caused by the body's own weight. Venous ulcers occur in patients
with damaged valves in the veins in their legs which leads to a pooling of
blood in the lower extremities and subsequent breakdown of the skin. Diabetic
ulcers result from circulatory deficiencies and nerve damage associated with
diabetes. These wounds frequently remain unhealed for months or years and may
lead to amputation of the limb.

The treatment of chronic skin ulcers can involve three stages: wound
debridement, tissue growth promotion and re-epithelialization or closure of the
wound. Wound debridement is necessary for the treatment of almost all serious
chronic skin ulcers and is accomplished through a variety of mechanical,
surgical and enzymatic methods. Mechanical debridement is a painful, labor
intensive process that can take many weeks to complete and slows the healing
process by removing viable tissue along with necrotic tissue. Surgical
debridement is a costly process that results in loss of viable tissue and is
complicated by the additional risks of anesthesia. Enzymatic debridement is
used infrequently because currently available enzymatic debridement products
are slow-acting and of limited efficacy. After debridement, traditional
approaches to treatment of chronic skin ulcers usually follow one of two
courses. The most common course of treatment for less advanced ulcers is to
clean the wound and to treat it with protective, but passive, dressings and
topical medications to prevent infection while allowing normal healing to
occur. Even when conventional therapy is successful, it still may require 12
to 20 weeks of repeated treatments. The second approach utilizes conventional
skin grafts and is typically used for more advanced chronic skin ulcers.
However, the difficulty of healing donor sites created in the grafting process
and the risks associated with general anesthesia in the elderly often prevent
the use of conventional skin grafts in these patients. In addition, both
treatment approaches are expensive and have a high failure rate.

GTR estimates that approximately 2,600,000 cases of chronic or slow
healing skin ulcers are treated in the United States each year at a cost of
more than $7 billion, with individual treatment costing up to $40,000 per year.

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<PAGE> 27

GTR Skin Product Portfolio

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION INDICATION STATUS
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------
Epicel(SM) Service Autologous cultured Burns -- Permanent skin Burns -- Marketed since
epidermal skin graft replacement 1988

Ulcers -- Tissue growth Ulcers -- Marketed since
promotion and re- third quarter, 1994
epithelialization
------------------------------------------------------------------------------------------------------------------
TGF-B2 Recombinant growth factor Tissue growth promotion Completed initial Phase
II trial; expanded Phase
II trial scheduled to
begin third quarter, 1995
------------------------------------------------------------------------------------------------------------------
Vianain(R) Debriding Enzyme preparation from Burns -- Wound Burns -- Phase I/II
Product plant extract debridement clinical trials
completed; Phase II
clinical trial in
progress

Ulcers -- Wound Ulcers -- Completed
debridement pilot trial; Phase I/II
trial to begin in early
1996

</TABLE>

Epicel(SM) Service

Service Description

Skin grafts produced using the Epicel(SM) Service are a life-saving
product indicated for patients who suffer severe, full-thickness burns and need
permanent skin replacement. These epidermal grafts are grown from a patient's
own skin cells and, therefore, are not rejected by the patient's immune system.
Starting with a patient biopsy about the size of a postage stamp, GTR can grow
enough skin grafts in three to four weeks to cover a patient's entire body
surface area. Each skin graft consists of a sheet of cultured skin cells,
approximately 25 square centimeters in size and ranging from two to eight cell
layers thick, attached to a piece of surgical dressing material. A 48 hour
shelf life allows these grafts to be delivered anywhere in the United States,
Europe or Japan from GTR's production laboratories in Cambridge, Massachusetts.

Development Status

Skin grafts produced using the Epicel(SM) Service were first
introduced in 1988 and remain the only commercially available laboratory grown
skin grafts shown to provide permanent skin replacement. Most burn wounds
involving less than 60% body surface area are covered with conventional skin
grafts within the three to four weeks it currently takes to grow skin grafts
produced using the Epicel(SM) Service. Therefore, GTR believes that the
primary candidates for the Epicel(SM) Service are the approximately four
hundred patients each year in the United States who survive burn injuries
covering more than 60% of their body surface area. GTR markets the Epicel(SM)
Service to burn centers throughout the United States and in parts of Europe
through its own direct sales force. GTR began marketing the Epicel(SM) Service
in Japan in 1995 through its distributor, Toho Pharmaceuticals Co., Ltd.

GTR introduced the Epicel(SM) Service for the treatment of ulcers in
the third quarter of 1994 in response to physicians purchasing the burn product
for several years for use in the treatment of ulcers. However, GTR is not
actively promoting the Epicel(SM) Service for treating chronic ulcers because
it believes that the Epicel(SM) Service is not likely to be economical for this
indication.

Scientists postulate that autologous epidermal skin grafts stimulate
wound healing, including promotion of granulation tissue, attraction of
inflammatory cells, and re-epithelialization, or closure, of chronic wounds.
These scientists have reported

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<PAGE> 28

that keratinocytes, which are the primary component of Epicel(SM) skin grafts,
produce over twenty cytokines and matrix proteins, many of which are known to
participate in the wound healing process. In addition, several investigators
have reported actual Epicel(SM) graft take in large chronic wounds.

Epicel(SM) II

GTR is currently evaluating alternative approaches for use of the
Epicel(SM) Service which will represent an improvement over the clinical
utility and production methods of the Epicel(SM) Service. While treatment with
the Epicel(SM) Service is often a life saving procedure, several limitations in
its clinical utility and production methods have been identified. These
limitations include graft fragility, suboptimal graft cosmesis, variability in
graft acceptance, patient morbidity and mortality as a consequence of the
length of time before the graft is available following skin biopsy, difficult
handling characteristics of grafts, and cost of graft production. GTR is
evaluating several methods to address these limitations, including use of
synthetic membranes and composite skin grafts.

GTR believes that advances in the field of autologous keratinocyte
grafting coupled with one or both of the technologies described above may allow
the expanded use of autologous keratinocyte grafting for the treatment of
smaller burns (burn wounds involving 30-60% body surface area) as well as for
treatment of cutaneous ulcers which involve large surface areas of the skin.
In the latter case, GTR believes an improved autologous keratinocyte graft
could effectively and economically provide final wound closure following
effective debridement and induction of granulation tissue deposition at the
wound site.

Transforming Growth Factor Beta 2 ("TGF-B2")

Product Description

TGF-B2 is one of a family of proteins that play an important role in
the body's ability to promote normal wound healing by stimulating the growth of
connective tissue. GTR has licensed recombinant TGF-B2 from Celtrix
Pharmaceuticals, Inc. ("Celtrix") and is collaborating with Celtrix on the use
of TGF-B2 to promote the healing of chronic skin ulcers by supplementing the
body's own production of TGF-B2. The product will consist of an easy-to-use
collagen sponge which serves as a delivery vehicle permitting the release of a
consistent dose of TGF-B2 to the wound surface over time.

Development Status

In January 1994, Celtrix announced the results of the Phase II
clinical trials of the TGF-B2 wound healing product in the treatment of venous
ulcers. The results of the clinical trials were consistent with previous
findings which indicated a positive trend in wound healing. These results also
allowed Celtrix to reach the following important conclusions: (i) topically
applied TGF-B2 is safe at the doses tested; (ii) the delivery vehicle is well
tolerated and (iii) the ease of treatment enables patients to apply TGF-B2
therapy themselves. However, due to variability in patient response in the
placebo groups, combined with a greater-than-expected placebo effect,
statistical significance was not achieved in this study.

GTR plans to begin a 12 center, double-blinded, randomized Phase II
clinical trial in September 1995. The study will group 200 diabetic patients
suffering from neurotrophic diabetic foot ulcers into one of three TGF-B2
coated collagen sponge dose groups, a placebo group or a standard of care
control group.

During the first half of 1995, GTR concentrated its efforts on
refining the formulation and manufacturing process for the TGF-B2 collagen
sponges for Phase II clinical trials at Genzyme's Allston, Massachusetts
facility. Genzyme successfully produced 10,000 sponges using bulk TGF-B2 from
Celtrix and collagen slurry from an outside source. Genzyme plans to
manufacture TGF-B2 for Phase III clinical trials in its own facilities. Upon
commercialization, GTR will make royalty payments to Celtrix based on
cumulative product sales. GTR is also obligated to make milestone payments to
Celtrix for product development related achievements.

GTR's rights with respect to TGF-B2 derive from a license and
development agreement which Genzyme and Celtrix entered into in June 1994 (the
"Celtrix Agreement"). The agreement provides for a collaboration between the
parties to

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<PAGE> 29

develop and commercialize TGF-B2 for any therapeutic uses for any clinical
indication (excluding soft tissue augmentation, vascular prostheses and all
ophthalmic and mucositis indications). Genzyme's rights and obligations under
the Celtrix Agreement have been allocated to GTR. Pursuant to the Celtrix
Agreement, GTR has worldwide commercialization rights, excluding Asia, for all
systemic indications and select other indications of TGF-B2. Celtrix may
reacquire rights to indications not pursued by GTR.

Vianain(R) Debriding Product

Product Description

The Vianain(R) Debriding Product is a proprietary enzyme preparation
designed to remove necrotic tissue from the wound site. The Vianain(R)
Debriding Product is formulated in a hydrophilic cream delivery vehicle so that
it is highly viscous and easy to apply and cleanse from the wound site. Since
the Vianain(R) Debriding Product is designed to be applied at the bedside by a
nurse or technician, GTR believes that it may also be more cost effective than
currently available debridement methods. GTR intends to use the same
proprietary preparation of the Vianain(R) Debriding Product to remove necrotic
tissue from both burns and skin ulcers.

Development Status

Genzyme completed an initial Phase I/II study involving twenty-five
patients in August 1993. This study was designed to evaluate the safety of
escalating doses of Vianain(R) Debriding Product in burn patients and to
develop preliminary effectiveness parameters. In this Phase I/II safety study,
all patients had moderate to major burn injuries and received a maximum of
eight hours of treatment (i.e., either four, two-hour applications or two,
four-hour applications of Vianain(R) Debriding Product at various enzyme
concentrations). The wounds treated ranged in size from one to ten percent of
total body surface area. The following conclusions were drawn from the Phase
I/II study: (i) topically applied Vianain(R) Debriding Product is safe at the
doses tested; (ii) there is a dose response relationship between Vianain(R)
Debriding Product concentration and debridement results; (iii) the optimal
dosing regimen (the number and length of applications required to achieve
satisfactory debridement) requires further investigation; and (iv) the ability
to place skin grafts on Vianain(R) Debriding Product treated wounds should also
be studied.

GTR is nearing completion of a Phase II trial for the burn indication.
The trial is a multi-center debridement/dosing regimen study evaluating 60
patients with wounds requiring debridement, but not necessarily skin grafting,
for wound closure. The primary objectives of this study are to evaluate the
safety and efficacy of the Vianain(R) Debriding Product as compared to its
delivery vehicle in the removal of necrotic tissue, to determine the number of
applications of Vianain(R) Debriding Product needed to achieve debridement, and
to evaluate whether prompt treatment with Vianain(R) Debriding Product
following burn injury can speed the determination of early burn depth.

A second Phase II single-center study evaluated the ability to
transplant skin grafts to full thickness burn injuries directly following
Vianain(R) Debriding Product treatment in ten patients. Data analysis is
ongoing. Preliminary clinical results indicate that the use of Vianain(R)
Debriding Product does not yield an immediately graftable bed in full thickness
burns. However, it appears to be an efficient debulking agent.

Phase I clinical studies for the Vianain(R) Debriding Product for the
treatment of chronic skin ulcers were completed in June 1995. A total of 15
chronic ulcer patients (8 venous, 5 diabetic, 2 pressure) were treated.
Preliminary results indicate that Vianain(R) Debriding Product is a safe and
effective debriding agent. The product appears to be most effective in venous
ulcers; six out of eight patients experienced at least 90% debridement (the
remaining 2 patients showed 50-89% debridement) and seven patients showed a
significant increase in the amount of healthy granulation tissue present. A
Phase II study is planned for 1996.

Acticel(SM) Wound Dressings

Acticel(SM) wound dressings are "living bandages" composed of
three-dimensional sheets of living epidermal tissue grown in the laboratory
from donor cells and attached to synthetic dressing materials. Acticel(SM)
wound dressings provide

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<PAGE> 30

a covering to the wound and act as a barrier to infectious agents and prevent
desiccation of the tissue. In August 1995, GTR completed an interim analysis
of data obtained from the first 77 patients in its clinical trial of
Acticel(SM) wound dressings as a treatment for partial thickness burns.
Although the results from treatment of the second half of this patient group,
which followed a clinical investigators' meeting to discuss patient selection
and use of the product, were at a level sufficient to meet the stated trial
objectives, it did not appear that data for the entire trial would be
sufficient to support a filing of an application for marketing approval.

Based on this analysis, together with GTR's concerns as to the
commercial potential of the current product concept, and in order to focus
GTR's near term efforts on the introduction of the CARTICEL(SM) Service, GTR
has elected to discontinue patient enrollment in the trial. GTR has also
determined that it will undertake a review of the product design and commercial
potential of Acticel(SM) wound dressings prior to initiation of future clinical
studies.

OTHER TISSUE REPAIR OPPORTUNITIES

Multiple Sclerosis

Scientific Background

Although the cause of multiple sclerosis ("MS") remains unknown, the
disease is thought to result from a patient's immune system mounting an
inflammatory response and thereby damaging the myelin sheath that forms the
protective covering of nerve tissue. Damage to this sheath, with the
subsequent development of scar tissue or "sclerosis", is believed to disrupt
the transmission of nerve signals and may cause a range of debilitating
symptoms, including fatigue, numbness, pain, slurred speech, blurred vision
and, ultimately, muscle spasm and paralysis. Although patients vary, there are
four typical patterns of the disease: benign (about 20% of cases),
exacerbating/remitting (20-30%), remitting/progressive (about 40%) and
progressive (about 10-20%). MS is rarely fatal. While most patients are
ambulatory, at least between flares, some patients may eventually become
paralyzed and confined to a wheelchair.

Current therapy for MS remains inadequate. Steroids can be used for
temporary, symptomatic relief in mild cases of the disease, but toxicity and
lack of effectiveness limit their usefulness. More recently, a beta
interferon-based immunomodulator for the treatment of MS has been approved by
the FDA based on data showing a modest reduction in the number and severity of
exacerbations in exacerbating/remitting MS patients. However, the
effectiveness of this product in slowing disease progression has not been
demonstrated and it is known to have significant adverse side effects. The
Company is aware of two other products for which NDAs have been filed, one of
which is beta interferon-based. Other therapies (such as cyclosporines,
antimetabolites, gold and radiation) appear to benefit some patients but are
also associated with treatment-limiting side effects.

Scientific evidence strongly suggests that TGF-B2 is a critical factor
in mechanisms that normally control such processes as inflammation and immune
system activation. These control mechanisms are not yet fully understood.
Researchers have observed that MS patients experience a decline in TGF-# levels
just prior to an exacerbation and an increase in TGF-# levels as they begin to
recover from an attack. Researchers have also observed that beta interferon
therapy is accompanied by an increase in the patient's own TGF-# level. This
close tracking of disease activity with TGF-# levels has suggested to
researchers at GTR and Celtrix that patients' recovery might be hastened and
exacerbations avoided by supplementing the patients' own TGF-B2 with injections
of a recombinant TGF-B2 product. Evidence to support this hypothesis is derived
from the reports of several investigators who have observed potent effects of
TGF-B2 on reducing the frequency and/or intensity of exacerbations in an animal
model of MS.

Product Description

Recombinant TGF-B2 will be formulated as an intravenous injectable for
administration to MS patients for the prevention of autoimmune damage of nerve
tissue.

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<PAGE> 31

Development Status

GTR is continuing the work begun by Celtrix on TGF-B2 in people
suffering from multiple sclerosis. In April 1994, Celtrix initiated a Phase I
clinical study with recombinant TGF-B2 in individuals with multiple sclerosis.
The study is being conducted by the National Institute of Neurological Disorders
and Stroke. The initial clinical evaluation of TGF-B2 in patients with MS is an
open-label, ascending-dose safety study involving nine patients with the
progressive form of the disease. It is anticipated that this initial study,
along with on-going preclinical safety and efficacy testing of TGF-B2 in MS
animal models, will provide the basis for expanded clinical studies. GTR will
begin toxicity studies of TGF-B2 in the second half of 1995 to support future
Phase II clinical trials. GTR anticipates results from the on-going Phase I
trial in 1996. GTR has not committed to a development and commercialization
strategy for TGF-B2 for MS and may in the future grant a license to a
third-party for this indication.

Bone Repair

Scientific Background

Approximately two million bone fractures occur in the United States
every year, and 500,000 of these experience problems with repair. In these
cases, repair may be inhibited by age or disease. When there is substantial
bone loss, current methods such as autologous bone grafts, cadaver bone grafts
and electrical stimulation vary in efficacy and side-effects. In the United
States, bone augmentation is used in nearly all of the 170,000 spinal fusion
procedures and in about 15% of the 1.3 million trauma fractures. The most
recent alternatives for repair have been hydroxyapatite or collagen-based
porous bone graft substitutes. However, these grafts are osteoconductive,
meaning that they provide a matrix for bone growth but do not contain growth
promoting agents. Current research is focusing on the development of
osteoinductive or bone growth promoting agents.

Product Description

TGF-B2 has been shown to promote wound healing in animal models of
hard tissue repair. GTR has been approached by a number of companies in the
orthopedic implant market to evaluate the use of TGF-B2 in conjunction with
accelerating the healing process in segmental defect repair and the general use
of implants. GTR is currently collaborating with one orthopedic implant
company to evaluate the use of TGF-B2 coated implants in a canine model for the
repair of an induced segmental defect in the humerus. GTR may grant a license
for use of TGF-B2 for this indication to a third party.

PRODUCTION

GTR has developed and validated a commercial scale, proprietary
chondrocyte processing system as part of the preparations for the market launch
of the CARTICEL(SM) Service. A total of 54 validation studies were conducted
as part of this process. In addition, GTR has developed hundreds of standard
operating procedures to ensure the safety and quality of its CARTICEL(SM)
Service. These procedures incorporate GTR's quality assurance program,
consisting of facility controls, process controls, and final product testing.
Furthermore, each technician undergoes three months of training prior to
handling patient cells. All production and quality control procedures are
intended to ensure traceability of operations.

The capacity of GTR's cell processing facility is determined by the
number of trained employees, the amount of cell culture equipment available,
and the availability of appropriate infrastructure to support operations under
GTR's quality systems approach. GTR's specialized cell processing facility for
both the Epicel(SM) and CARTICEL(SM) Services in Cambridge, Massachusetts
currently has significant excess capacity in terms of available cell culture
equipment. GTR plans to upgrade this facility during the second half of 1995
to accommodate additional production and infrastructure staff to support higher
processing volumes. GTR estimates that these modifications will cost
approximately $2 million and, when completed in 1996, will increase capacity to
enable GTR to provide the CARTICEL(SM) Service to approximately 5,000 patients
per year. In addition, GTR is conducting preliminary engineering studies to
build additional processing capacity in one of Genzyme's Framingham,
Massachusetts facilities. GTR is currently evaluating potential processing
facilities in Europe.

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<PAGE> 32

GTR's process development efforts are directed toward expanding
autologous chondrocyte culture capacity, streamlining processing, improving
quality at lower production costs, and strengthening GTR's proprietary
position. This work includes improving yields, reducing labor associated with
harvesting chondrocytes from cartilage biopsies, developing methods for
extending the viability of both biopsy specimens and final product cell
suspensions, and identifying cell culture systems that will enable GTR to
automate much of the production process for the CARTICEL(SM) Service.

To ensure the safety and quality of the CARTICEL(SM) and Epicel(SM)
Services, GTR has developed a quality assurance program, facility and
environmental controls, process controls and product stability monitoring. GTR
believes that this quality systems approach will facilitate meeting the new
regulatory requirements expected to be imposed by the FDA. See "Government
Regulation."

GTR expects that the Vianain(R) Debriding Product and TGF-B2 will be
manufactured for GTR by the General Division of Genzyme, with the costs of such
manufacturing being allocated to GTR.

REIMBURSEMENT

Third-party payors are increasingly attempting to contain health care
costs by limiting both coverage and the level of reimbursement for new
therapeutic products and services. Accordingly, the successful
commercialization of the CARTICEL(SM) Service is dependent upon the ability of
GTR's hospital and surgery center customers to obtain coverage and
reimbursement for the costs of the CARTICEL(SM) Service and associated surgical
procedures from these third-party payors. In order to support the efforts of
its CARTICEL(SM) Service customers to obtain reimbursement, GTR has established
a dedicated unit staffed with professionals experienced with reimbursement and
case management issues. To date, this unit has been successful in obtaining
reimbursement approval for 30 proposed or completed implantation procedures
from a total of 29 third-party payors, and is seeking, at various stages of the
administrative process, to obtain reimbursement for the remaining 36 proposed
implantation procedures.

GTR sells the Epicel(SM) Service to burn centers. GTR believes that
the cost of the Epicel(SM) Service is a small portion of the total cost of
treatment for severely burned individuals. In most cases, GTR has been
successful in obtaining insurance coverage for the Epicel(SM) Service from
private insurers, workers compensation programs, and managed care
organizations. Although reimbursement for the Epicel(SM) Service is not
currently provided by most state Medicaid programs, a number of states have
approved payment for the Epicel(SM) Service.

GOVERNMENT REGULATION

Prior to launching the CARTICEL(SM) Service, GTR made a determination
that this service did not fit within any existing FDA regulatory
classification. In the absence of specific regulatory guidance, GTR has
voluntarily formulated its own standards for the processing of autologous
chondrocytes in its specialized facility and has developed policies governing
surgeon training, patient data collection and labeling. GTR believes that its
quality systems program is equivalent to the FDA's current Good Manufacturing
Practices ("GMP").

In April 1995, the FDA contacted GTR and asked for more information
regarding the regulatory status of the CARTICEL(SM) Service. In order to
clarify the situation, GTR filed a formal request in May 1995 with the FDA
Commissioner's office to review the situation and determine appropriate
regulatory jurisdiction. The FDA was provided with information regarding GTR's
quality standards and the policies that GTR established for the CARTICEL(SM)
Service, as well as answers to specific technical questions. The FDA responded
to GTR's request for designation in July 1995, confirming in its response GTR's
belief that a formal regulatory framework appropriate to the CARTICEL(SM)
Service had not yet been established. Furthermore, the FDA informed GTR that
it intended to hold a public hearing to explore the public health impact of and
consider appropriate regulatory controls for autologous cell implants. The FDA
also informed GTR that it would not regulate the provision of the CARTICEL(SM)
and Epicel(SM) Services prior to the hearing and development of regulations,
and would allow GTR sufficient time to comply with any new regulations that may
be promulgated. The FDA has subsequently announced that the public hearing
will take place in November 1995 on the subject of autologous cells for
structural and reconstructive purposes as a starting point for the development
of new regulations.

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GTR has advocated that appropriate standards for autologous therapies
such as the CARTICEL(SM) and Epicel(SM) Services be instituted. It also has
actively participated in committees with other organizations in the field of
autologous cell production in the United States and Europe to develop industry
standards. GTR's experience in this field has provided it with the opportunity
to take an active role in developing such standards.

A federal criminal statute that prohibits the transfer of any human
organ for valuable consideration for use in human transplantation, but which
permits recovery of reasonable costs associated with such activities, has not
been applied to the CARTICEL(SM) or Epicel(SM) Services. Certain states have
laws requiring the licensure of tissue and organ banks and laws governing the
sale of human organs and the safety and efficacy of drugs, devices and
biologics, including skin, all of which could be interpreted to apply to GTR's
production and distribution of cultured tissue products. Provisions in certain
states' statutes prohibit the receipt of valuable consideration in connection
with the sale of human tissue by a tissue bank but permit licensed tissue
banks, including companies, to recover their reasonable costs associated with
such sales. GTR has received notice from one state's Department of Health
requiring compliance with its tissue bank licensure statute with respect to
distribution of the Epicel(SM) Service. Genzyme is in the process of applying
for such a license.

Federal or state regulation could result in significant expense to
GTR, limit GTR's reimbursement for its services, and otherwise materially
adversely affect GTR's results of operations.

Autologous products are specifically exempt from the European Device
Directive and Pharmaceutical Directive promulgated by the European Union.
Therefore, each European country is free to impose its own regulations on the
marketing of such products. To date, GTR has not encountered any local
registration requirements for market introduction of the CARTICEL(SM) Service.
GTR is currently assessing the regulatory requirements for commercialization of
the CARTICEL(SM) Service in Japan.

GTR is also subject to various federal, state and local laws,
regulations and recommendations relating to safe working conditions, laboratory
and manufacturing practices and the use and disposal of hazardous or
potentially hazardous substances used in connection with GTR's research work
and manufacturing operations. Although GTR believes that its safety procedures
comply with the standards prescribed by federal, state and local regulations,
the risk of contamination, injury or other accidental harm cannot be completely
eliminated. In the event of such an accident, GTR could be held liable for any
damages that result and any liabilities could exceed GTR's resources.

PATENTS AND PROPRIETARY RIGHTS

GTR pursues a policy of obtaining patent protection both in the United
States and in selected foreign countries for subject matter considered
patentable and important to its business. In addition, a portion of GTR's
proprietary position is based upon patents that GTR has licensed. These
license agreements generally require GTR to pay royalties upon
commercialization of products covered by the licensed technology.

GTR has filed and is preparing several patent applications covering
its work in cartilage repair, but does not yet have any patent protection
covering the CARTICEL(SM) Service. See "Risk Factors - Risks Related to GTR -
Uncertainty Regarding Patents and Proprietary Position." GTR possesses
substantial know-how in the field of autologous cell development generally, and
for the CARTICEL(SM) Service in particular. Such know-how includes the
production of biopsy kits and packaging materials, procedures for quality
control, sterility, segregation and manufacturing, and product delivery, and
the method by which GTR validates assays for future development. GTR believes
that this significant technological know-how places it in a competitively
advantageous position.

Biotechnology is a rapidly developing field. Many patent applications
have been filed and the scope the courts will give to the claims of patents
issued from such applications and the nature of these claims are unknown. It
is premature to predict what general trend, if any, will emerge as to the
breadth of allowed claims for biotechnology products and related uses. The
allowance of broader claims will increase the incidence and cost of
interference proceedings in the United States and the risk of infringement
litigation in the United States and abroad. A policy of allowing narrower
claims, conversely, would limit the value of GTR's proprietary rights under
patents or licenses it holds or for which it has applied. It is possible that
interference proceedings will occur with respect to GTR's patent applications.
It is also likely that subject matter

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patented by others will be required by GTR to commercialize at least some of
GTR's products. No assurance can be given that licenses under any such patent
rights of others will be available on acceptable terms, if at all.

GTR's proprietary position in the culturing of epidermal tissues was
originally exclusively licensed from Harvard University and has been augmented
by recently obtained additional patents covering cool storage technology and
packaging of skin grafts produced using the Epicel(SM) Service. GTR has also
exclusively licensed, on a worldwide basis except for Italy, recent patents
covering cryopreservation of such skin grafts. GTR has extended this basic
cryopreservation technology by patenting additional developments and
improvements in the United States.

GTR also possesses know-how relating to the large scale production of
cultured epidermal grafts, the growth of other types of mammalian cells
including fibroblasts and epithelial cells, and the formulation of various
types of biomaterials, including hyaluronic acid ("HA"), a naturally-occurring
biopolymer, for use in forming dermal matrices. In addition to HA know-how,
GTR has rights to a series of issued United States patents in tissue repair
covering modified forms of HA.

GTR has pending and issued patents in the United States and other
countries covering the enzymatic formulation of the Vianain(R) Debriding
Product and the hydrophilic cream delivery vehicle for the product.

Celtrix has obtained patents and filed patent applications in the
United States and foreign countries on the composition of TGF-B2, its
formulation and its therapeutic applications in wound healing, cancer, immune
therapy and bone therapy. Genzyme allocated the rights under its license with
Celtrix to GTR at the time of GTR's creation in December 1994.

There can be no assurance that patents issued or licensed to GTR will
remain free of challenge by third parties, that GTR may not unintentionally
infringe patents of third parties, or that GTR may not have to alter its
product development methods or procedures to take into account patents issued
to others, causing unexpected costs and delays. There can be no assurance that
the pending applications owned or licensed by GTR will issue in any country or
that the issued patents will provide a material commercial benefit for GTR.
See "Risk Factors - Risks Related to GTR - Uncertainty Regarding Patents and
Proprietary Position."

While GTR seeks a strong patent position, it believes that its
competitive position will also depend on its ability to maintain its trade
secrets and proprietary know-how, to achieve market leadership in key product
areas and to obtain successful clinical results. GTR's employees, advisors and
consultants who have access to GTR proprietary information are required to sign
confidentiality agreements.

COMPETITION

Competition is intense in the development of health care products,
particularly in the development of biotechnology products. Significant
long-term competition may come from major diversified health care and
biotechnology companies and academic research institutions which may have
greater research, development, manufacturing, marketing and financial resources
than GTR. GTR expects its products to compete primarily on the basis of
product efficacy, safety, reliability and price. In addition, GTR believes
that the first biotherapeutic product to reach the market benefits from a
competitive advantage over later entrants in the market. GTR's competitive
position will also depend on its ability to secure regulatory approval for its
products, implement production and marketing plans, obtain patent protection
and secure adequate capital resources.

GTR is aware that three companies, Integra LifeSciences Corp.,
LifeCell Corp., and Advanced Tissue Sciences, Inc., in conjunction with Smith &
Nephew PLC, are engaged in research on cultured cartilage products. GTR
believes that none of these firms is developing autologous cartilage products
and that, while none has progressed to clinical trials, each has applied for or
acquired patents in this field.

GTR is the only commercial provider of cultured skin grafts shown to
provide permanent skin replacement for burn patients in the United States. The
principal competition for skin grafts developed using the Epicel(SM) Service is
conventional skin grafts. However, GTR may face additional competition from
companies using other approaches to cultured skin tissue.

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<PAGE> 35

Two companies, Organogenesis, Inc. and Advanced Tissue Sciences, have been
granted expedited FDA review for their skin substitutes, Graftskin and
Dermagraft respectively. Graftskin is tissue composed of donor human epidermal
cells, fibroblasts, bovine collagen and other ingredients. Dermagraft is an
artificial mesh with cultured human fibroblasts which can be used as a dressing
until a graft of the patient's own skin can be used.

Since Dermagraft will still require a skin graft from the patient or
Epicel(SM) to close a full-thickness wound, it will not be competitive with
GTR's Epicel(SM) Service. Integra LifeSciences Corp. has submitted its
collagen based dermal replacement product to the FDA for Pre-Market Approval.
LifeCell Corp. currently has a freeze-dried, enzymatically processed human
cadaver dermis on the market.

The use of growth factors is emerging as a treatment for
partial-thickness or very small full-thickness wounds. A number of companies
are currently conducting or planning to conduct clinical trials with growth
factors, although to date, no recombinant growth factor product has received
FDA approval. Potential competitors include Chiron Corp., in collaboration
with the Ethicon division of Johnson & Johnson, Curative Technologies, Inc.,
and Scios Novo, Inc. Curative Technologies, Inc., also has one product on the
market which does not require FDA approval. Such growth factors may prove to
be complementary to, as well as competitive with, TGF-B2. However, GTR does
not believe that growth factors can provide permanent skin replacement to
compete with the Epicel(SM) Service. Additionally, TGF-B2 will compete with
interferon-based immunomodulators produced by Chiron Corp. and under
development by Biogen Inc. for the treatment of multiple sclerosis.

Vianain(R) Debriding Product will compete primarily with surgical
debridement of necrotic tissue or mechanical debridement using hydrotherapy and
daily dressing changes to remove necrotic tissue and, to a lesser extent, with
currently available enzymatic debridement products. Surgical and mechanical
debridement procedures are painful, labor intensive and remove viable tissue
along with necrotic tissue while the enzymatic debridement products on the
market are slow-acting and of limited efficacy. Currently commercially
available enzymatic debridement products are manufactured by Knoll
Pharmaceuticals, Parke-Davis, Boots-Flinte, Inc., Lederle Laboratories and
Rystan.

RELATIONSHIP WITH GENZYME GENERAL DIVISION

As a division of Genzyme, GTR has access to the resources and
expertise of Genzyme, including those allocated to the General Division. This
collaborative relationship augments GTR's internal capabilities in several
areas including clinical and regulatory development, manufacturing, sales and
marketing, reimbursement, and access to capital markets. The General Division
has developed extensive worldwide capabilities in these areas and GTR believes
that its access to these resources will allow it to more rapidly develop its
products while reducing the risks inherent in product development. This
relationship has allowed GTR to accelerate its commercialization of its
CARTICEL(SM) Service.

The General Division's clinical and regulatory group has successfully
achieved approval of each of its two New Drug Applications within one year of
filing. The group consists of 60 people and is currently monitoring 20
clinical trial protocols at 118 sites.

The General Division has extensive manufacturing facilities and
process development expertise that will be available to GTR on a cost
reimbursement basis. These facilities include over 575,000 square feet of
manufacturing, research and development and administrative space in the United
States and over 144,000 square feet of facilities in Europe. The General
Division has a wide range of GMP mammalian cell production capabilities and
extensive facilities for the microbial fermentation of proteins and the
production of biomaterials. With its access to these facilities, GTR expects
to be able to avoid some of the capital expense necessary to commercialize its
products under development.

The General Division has worldwide sales and marketing capabilities
and markets the Ceredase(R) and Cerezyme(TM) products directly to physicians,
hospitals and treatment centers in the United States and 37 other countries.

Genzyme has developed a sophisticated reimbursement operation with
experience in case management, resource information, relationships with payor
groups and government reporting requirements. The reimbursement group has
successfully obtained coverage for over 95% of the patients being treated with
Ceredase(R) for Gaucher disease in the United

35
<PAGE> 36

States. It has established relationships with insurance companies and the
managed care industry and has an extensive case management program. Its
national reimbursement capability includes state-by-state resource information
and national distributor relationships.

In addition, Genzyme has demonstrated its ability to access capital
markets by raising over $500 million during the past eight years for investment
in its businesses. These financings have included stock offerings, research
and development limited partnerships, special purpose accelerated research and
development corporation financings, a convertible subordinated debt offering
and public offerings in two majority-owned subsidiaries. GTR has ready access
to Genzyme's financing infrastructure.

Upon consummation of this offering, the Funding Commitment will be
eliminated. Notwithstanding the elimination of the Funding Commitment, Genzyme
still has an option to allocate to GTR, at $10 per TR Designated Share, up to
$30,000,000 from the General Division (the "Purchase Option"). Consequently, a
maximum of 3,000,000 TR Designated Shares may be issued in connection with the
exercise of the Purchase Option.

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<PAGE> 37

MANAGEMENT

MANAGEMENT OF GENZYME

The current officers and directors of Genzyme are as follows:

<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- ------
<S> <C> <C>
Henri A. Termeer 49 Chairman of the Board, President and Chief Executive Officer
Geoffrey F. Cox, Ph.D. 51 Senior Vice President, Operations
David D. Fleming 47 Senior Vice President; President, Diagnostics Division
John V. Heffernan 57 Senior Vice President, Human Resources
Elliott D. Hillback, Jr. 51 Senior Vice President; President and CEO of IG Laboratories, Inc.
Mark A. Hofer 42 Senior Vice President and General Counsel
David J. McLachlan 57 Senior Vice President, Finance and Chief Financial Officer
Gregory D. Phelps 46 Senior Vice President; President, Tissue Repair Division
James R. Rasmussen, Ph.D. 48 Senior Vice President, Research
Alan E. Smith, Ph.D. 49 Senior Vice President, Research
Evan M. Lebson 52 Vice President, Treasurer
John M. McPherson, Ph.D. 47 Vice President, Protein Development; Vice President, Research and
Development, Tissue Repair Division
Richard A. Moscicki, M.D. 43 Vice President, Clinical, Medical and Regulatory Affairs
G. Jan van Heek 46 Vice President; President, Therapeutics Division
Constantine E. Anagnostopoulos, Ph.D. 72 Director
Douglas A. Berthiaume 46 Director
Henry E. Blair 52 Director
Robert J. Carpenter 50 Director
Charles L. Cooney 50 Director
Henry R. Lewis 69 Director
</TABLE>

Each officer's term of office extends until the meeting of the Board
of Directors following the next annual meeting of stockholders and until a
successor is elected and qualified or until his or her earlier resignation or
removal.

MR. TERMEER has served as President and a Director of the Company
since October 1983, as Chief Executive Officer since December 1985 and as
Chairman of the Board since May 1988. For ten years prior to joining the
Company, Mr. Termeer worked for Baxter Travenol Laboratories, Inc., a
manufacturer of human health care products. Mr. Termeer is Chairman of the
Board of Directors of IG Laboratories, Inc. ("IG Labs"), Genzyme Transgenics
Corporation ("GTC") and Neozyme II Corporation ("Neozyme II"). Mr. Termeer is
also a director of Abiomed, Inc. and AutoImmune Inc. and is a trustee of
Hambrecht & Quist Healthcare Investors and Hambrecht & Quist Life Sciences
Investors.

DR. COX joined the Company in June 1984 and has served as Senior Vice
President, Operations of the Company since May 1988. Dr. Cox also is
responsible for the Company's pharmaceutical division. For 11 years prior to
joining the Company, Dr. Cox worked for the manufacturing division of British
Fermentation Products, Ltd., a division of Gist- Brocades N.V.

MR. FLEMING joined the Company in April 1984. He has been President
of the Company's diagnostics division since January 1989 and a Senior Vice
President of the Company since August 1989. For 11 years prior to joining the
Company, he worked for Baxter Travenol Laboratories, Inc. Mr. Fleming is also
a director of IG Labs.

MR. HEFFERNAN joined the Company as Vice President, Human Resources in
October 1989 and has served as Senior Vice President, Human Resources since May
1992. Prior to joining the Company, he served for more than five years as
Vice President, Human Resources Corporate Staff of GTE Corporation, a
diversified communications and electronics company.

37
<PAGE> 38

MR. HILLBACK has served as Senior Vice President since July 1990.
Since July 1991, he has served as President and Chief Executive Officer of IG
Labs and, since January 1991, as a director of IG Labs. For one year before
joining the Company, he was President and Chief Executive Officer of Cellcor
Therapies, Inc., a biotechnology company. Prior to that, Mr. Hillback was
employed for six years in the human health care products business of The BOC
Group, Inc., most recently as President of its Glasrock Home Health Care
subsidiary. For eleven years prior to joining The BOC Group, Inc., he served
in varying capacities at Baxter Travenol Laboratories, Inc. Mr. Hillback is
also a director of IVF America, Inc., an in vitro fertilization services
company in which IG Labs holds a minority interest.

MR. HOFER joined the Company in August 1989 as Vice President and
General Counsel and has served as Senior Vice President and General Counsel
since May 1992. Prior to joining the Company, he served as Chief Patent
Counsel for Integrated Genetics, Inc. from July 1987 until its acquisition by
the Company in August 1989. From March 1981 until July 1987, he served as
Patent Counsel for Johnson & Johnson specializing in biotechnology.

MR. MCLACHLAN joined the Company in December 1989 and has served as
Senior Vice President, Finance and Chief Financial Officer since that time.
Prior to joining the Company, he served for more than five years as Vice
President of Finance for Adams-Russell Electronics Inc., a defense electronics
manufacturer, and Adams-Russell Co., Inc., a cable television company. Mr.
McLachlan also serves as a director and Chief Financial Officer of IG Labs and
as a director of HearX, Ltd., a company providing products and services to the
hearing impaired.

MR. PHELPS joined the Company as Senior Vice President in November
1991. Since December 16, 1994, he has also served as President of GTR. Prior
to joining the Company, Mr. Phelps served as President and Chief Executive
Officer of Viagene, Inc. from October 1988 to June 1990 and of ZymoGenetics,
Inc. from May 1986 to August 1988, and held various positions at Baxter
Travenol Laboratories, Inc. from 1975 to 1986. Mr. Phelps is also a director
of Neozyme II.

DR. RASMUSSEN joined the Company in June 1984 and served as Senior
Vice President, Research since August 1989. Prior to joining the Company, he
was an Assistant Professor of Chemistry at Cornell University.

DR. SMITH joined the Company in August 1989 as Senior Vice President,
Research. Prior to joining the Company, he served as Vice President-Scientific
Director of Integrated Genetics, Inc. from November 1984 until its acquisition
by the Company in August 1989. From October 1980 to October 1984, Dr. Smith
was head of the Biochemistry Division of the National Institute for Medical
Research, Mill Hill, London, England. Dr. Smith also serves as a director of
GTC.

MR. LEBSON joined the Company in August 1989 as Executive Assistant to
the President and served as Vice President, Financial Operations from April
1990 to August 1991 and as Vice President and Treasurer since then. Prior to
joining the Company, he served as Treasurer and Chief Financial Officer of
Integrated Genetics, Inc. from 1983 until its acquisition by the Company in
August 1989. Mr. Lebson is also Vice President and Treasurer of GTC.

DR. MCPHERSON joined the Company in August 1989 and has served as Vice
President, Therapeutic Protein Development from August 1989 to the present, and
was named an officer in that position in May 1993. Since December 16, 1994, he
has also served as Vice President, Research and Development of the Company's
Tissue Repair Division. Prior to joining the Company, he was, since April
1988, Director, Protein Chemistry of Integrated Genetics, Inc.

DR. MOSCICKI joined the Company in March 1992 as Medical Director,
became Vice President, Medical Affairs in early 1993 and was named Vice
President, Clinical, Medical and Regulatory Affairs in December 1993. Since
1979, he has also been a physician staff member at the Massachusetts General
Hospital and a faculty member at the Harvard Medical School.

MR. VAN HEEK joined the Company in September 1991 as General Manager
of its wholly-owned subsidiary, Genzyme, B.V., and became a Genzyme Vice
President and the President of Genzyme Therapeutics Division in December 1993.
Prior to joining the Company, he was, since 1988, Vice President/General
Manager of the Fenwal Division of Baxter Healthcare Corporation. Mr. van Heek
also has served as President and Treasurer of Neozyme II since March 1992.

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<PAGE> 39

DR. ANAGNOSTOPOULOS is Managing General Partner of Gateway Associates,
which is the general partner of Gateway Venture Partners III, L.P., a venture
capital partnership. From January 1986 to April 1987, Dr. Anagnostopoulos was
a consultant to Monsanto Company, a producer of pharmaceuticals, chemicals,
plastics and textiles, and to Alafi Capital, a venture capital firm. From 1982
through 1985, he served as Corporate Vice President of Monsanto Company.

MR. BERTHIAUME is a director, President, and Chief Executive Officer
of Waters Corporation, a high technology manufacturer of products used for
analysis and purification, formerly a division of Millipore Corporation. From
May 1991 to August 1994, he was President of the Waters Division of Millipore
Corporation and from 1988 to 1991, he was Chief Financial Officer of Millipore
Corporation.

MR. BLAIR is a consultant to several companies, including Genzyme.
Prior to January 1990, Mr. Blair was Senior Vice President, Scientific Affairs
of Genzyme. Before joining Genzyme in 1981, he was Associate Director of the
New England Enzyme Center at Tufts University School of Medicine. Mr. Blair is
also a director of Genzyme Transgenics Corporation, Dynagen, Inc. and Celtrix
Pharmaceuticals, Inc.

MR. CARPENTER is Chairman of the Board of GelTex Pharmaceuticals,
Inc., a privately held pharmaceutical development company which he co-founded
in November 1991 and where he served as President and Chief Executive Officer
until May 1993. Mr. Carpenter was Chairman of the Board, President, and Chief
Executive Officer of Integrated Genetics, Inc., a biotechnology company that
merged with Genzyme in 1989, and Chairman of the Board of BioSurface from
December 1992 until its acquisition by Genzyme in December 1994. Following the
merger and until 1991, Mr. Carpenter was Executive Vice President of Genzyme,
and Chief Executive Officer and Chairman of the Board of IG Labs. Mr.
Carpenter is presently a director of Apex BioSciences, Inc., Neozyme II
Corporation and IG Labs.

DR. COONEY is a Professor of Chemical and Biochemical Engineering and
Co-Director of the Program on the Pharmaceutical Industry at Massachusetts
Institute of Technology. Dr. Cooney joined the MIT faculty as an Assistant
Professor in 1970 and became a Professor in 1982. Dr. Cooney is also a
principal of BioInformation Associates, Inc., a consulting company.

MR. LEWIS is a consultant to several companies and Chairman of the
Board of Delphax Systems, a manufacturer of high speed non-impact printers, and
a member of the Board of Protein Engineering Corporation, a pharmaceutical
discovery and development company. From 1986 to February 1991, Mr. Lewis was
the Vice Chairman of the Board of Dennison Manufacturing Company, a
manufacturer and distributor of products for the stationery, technical paper,
and industrial and retail systems markets. From 1982 to 1986, Mr. Lewis was a
Senior Vice President of Dennison.

SENIOR MANAGEMENT OF GTR

The senior management of GTR consists of the following individuals:

<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- ------
<S> <C> <C>
Gregory D. Phelps 46 President
John M. McPherson, Ph.D. 47 Vice President, Research and Development
Timothy R. Surgenor 35 Executive Vice President
John McCambridge 46 Senior Vice President, Sales and Marketing
</TABLE>

MR. SURGENOR joined the Company in December 1994 when the Company
acquired BioSurface. Mr. Surgenor joined BioSurface in May 1987 and served as
Executive Vice President from November 1992 until December 1994. He served as
Vice President, Finance, and Treasurer of BioSurface from 1990 to 1993.

MR. MCCAMBRIDGE served as Senior Vice President, Sales and Marketing
of BioSurface from December 1987 until joining the Company in December 1994.
From 1985 until December 1987, he served in various marketing capacities at
Empire Blue Cross Blue Shield, an insurance company, most recently as Vice
President, Experience Related Groups.

See "Management of Genzyme" for biographical information for Mr.
Phelps and Dr. McPherson.
39
<PAGE> 40

DESCRIPTION OF GENZYME CAPITAL STOCK

The following descriptions are qualified in their entirety by
reference to the Articles of Organization of Genzyme Corporation.

GENERAL

Genzyme is authorized to issue 150 million shares of capital stock,
consisting of 100 million shares of General Division Stock, 40 million shares
of TR Stock and 10 million shares of Preferred Stock. Each class of common
stock has the voting powers, qualifications and rights described below.

DIVIDENDS

Genzyme's Articles of Organization provide that dividends on the
General Division Stock may be declared and paid only out of the lesser of (a)
funds of Genzyme legally available therefor and (b) the Available General
Dividend Amount, as defined below, and that dividends on the TR Stock may be
paid out of the lesser of (a) funds of Genzyme legally available therefor and
(b) the Available Tissue Repair Dividend Amount, as defined below. Under the
Massachusetts Business Corporations Law (the "MBCL"), the payment of dividends
is permitted if the corporation is not insolvent, the dividend payment does not
render the corporation insolvent, and the dividend payment does not violate the
corporation's Articles of Organization. Subject to such limitations, the Board
may, in its sole discretion, declare and pay dividends exclusively on either
class of common stock, or both, in equal or unequal amounts, notwithstanding
the amounts available for the payment of dividends on each class, the
respective voting and liquidation rights of each class, the amounts of prior
dividends declared on each class or any other factor. Genzyme has never paid a
cash dividend on any class of its capital stock and currently intends to retain
all earnings for use in its business.

As stated above, in addition to the statutory limitations under the
MBCL, dividends on the General Division Stock and TR Stock would be limited to
an amount not in excess of the Available General Dividend Amount or the
Available Tissue Repair Dividend Amount, respectively. The "available dividend
amount" for each of the General Division Stock and the TR Stock is defined to
mean generally the greater of (A) the excess of (1) the greater of (a) the fair
value of the net assets allocated to the division represented by such class of
common stock and (b) an amount equal to stockholders' equity allocated to such
division as of June 30, 1994, increased or decreased, as appropriate, to
reflect, after June 30, 1994, (i) the net income or loss of such division, (ii)
any dividends or other distributions (including by reclassification or
exchange) declared or paid with respect to, or repurchases or issuances of, any
shares of capital stock attributed to such division, but excluding dividends or
other distributions paid in shares of capital stock attributed to such division
to the holders thereof, and (iii) any other adjustments to the stockholders'
equity of such division made in accordance with generally accepted accounting
principles, over (2) the aggregate par value of all outstanding shares of
capital stock attributed to such division or (B) the amount legally available
for the payment of dividends determined in accordance with the MBCL applied as
if such division were a separate corporation.

EXCHANGE OF TR STOCK

Genzyme's Articles of Organization do not provide for either mandatory
or optional exchange or redemption of the General Division Stock, but do
provide that TR Stock may be exchanged for any combination of cash and/or
General Division Stock upon the terms described below. Genzyme cannot predict
the impact of its ability to effect such exchanges on the market prices of the
General Division Stock and TR Stock.

OPTIONAL EXCHANGE. At any time after the later of (A) December 31, 1995 or (B)
the date on which equity investments in TR Stock by third-party investors or
the allocation of cash or cash equivalents from the General Division to GTR, or
any combination of such equity investments and allocations, equals an aggregate
of at least $10 million, the Board may determine to exchange all outstanding
shares of TR Stock for any combination of cash and/or General Division Stock
having a Fair Market Value equal to 130% of the Fair Market Value of TR Stock
as determined by the trading prices during a specified period prior to the
first public announcement by Genzyme of such exchange. Thus, upon such
completion of this offering, the Board could elect to make such an exchange
after December 31, 1995.

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<PAGE> 41

The foregoing provision allows Genzyme the flexibility to redeem all
outstanding shares of TR Stock and leave outstanding one class of common stock
that would represent the residual equity interest in all of Genzyme's
businesses. Subject to the limitations described above, the optional exchange
could be exercised at any future time if the Board determined that, under the
facts and circumstances then existing, an equity structure consisting of two
classes of common stock was no longer in the best interests of all of Genzyme's
stockholders (including holders of General Division Stock and holders of TR
Stock). Such exchange may be consummated, however, at a time that is
disadvantageous to the holders of either General Division Stock or the holders
of TR Stock. See "Risk Factors - Risks Related to Two Classes of Common Stock
- - No Rights or Additional Duties With Respect to the Divisions; Potential
Conflicts."

MANDATORY EXCHANGE. In the event of the Disposition, in one transaction or a
series of related transactions, by Genzyme of all or substantially all of the
properties and assets allocated to GTR (other than in connection with the
Disposition by Genzyme of all or substantially all of its properties and assets
in one transaction or a series of related transactions) to any person, entity
or group (other than (A) any entity in which Genzyme, directly or indirectly,
owns all of the equity interest or (B) certain entities formed in connection
with obtaining financing for the programs or products of GTR), Genzyme is
required, on or prior to the first business day following the 90th day
following the consummation of such Disposition, to exchange each outstanding
share of TR Stock for any combination of cash and/or General Division Stock
having a Fair Market Value equal to 130% of the Fair Market Value of TR Stock
as determined by the trading prices during a specified period prior to the
first public announcement by Genzyme of such disposition. Consequently,
holders of TR Stock may receive a greater or lesser premium for their shares
than any premium paid by a third-party buyer of the assets of GTR. In
addition, any such exchange for shares of General Division Stock could be made
at a time that is disadvantageous to the holders of either General Division
Stock or the holders of TR Stock.

CERTAIN OTHER EXCHANGE TERMS. "Fair Market Value" as of any date means the
average of the daily closing prices as reported by the Nasdaq National Market
(or the appropriate exchange on which such shares are then traded) for the 20
consecutive days commencing on the 30th trading day prior to such date. In the
event such closing prices are unavailable, Fair Market Value will be determined
by the Board. Genzyme's Articles of Organization contain the definitions of
"Disposition" and "Substantially all of the properties and assets of GTR," as
well as certain provisions with regard to required notices of exchanges of TR
Stock, treatment of fractional shares, rights to dividends, surrender and
exchange of stock certificates, payment of issue and transfer taxes and the
treatment of Convertible Securities.

VOTING RIGHTS

Genzyme's Articles of Organization provide that holders of shares of
General Division Stock and TR Stock vote together as a single class on all
matters as to which common stockholders generally are entitled to vote. On all
such matters, each share of General Division Stock has one vote, and through
December 31, 1996 each share of TR Stock has .29 votes. Holders of outstanding
General Division Stock and TR Stock currently have approximately 91% and 9%,
respectively, of the total voting power of Genzyme. The percentages of the
total voting power of Genzyme held by the holders of the General Division Stock
and the TR Stock, upon completion of this offering, will be 89% and 11%,
respectively, and, after consummation of both this offering and the General
Division Offering, will be approximately 89.5% and 10.5%, respectively,
assuming the over-allotment option granted to the underwriters in connection
with the General Division Offering is not exercised. On January 1, 1997 and on
January 1 every two years thereafter, the number of votes to which each share
of TR Stock is entitled would be adjusted to equal the ratio of the Fair Market
Value of one share of TR Stock to the Fair Market Value of one share of General
Division Stock as of such date. The voting rights of TR Stock will also be
appropriately adjusted so as to avoid dilution in the aggregate voting rights
of either class in the event the outstanding shares of either class are
subdivided (by stock split, reclassification or otherwise) or combined (by
reverse stock split, reclassification or otherwise), or in the event of the
issuance of shares of either class as a dividend or a distribution to holders
of shares of that class. If shares of only one class of common stock are
outstanding, or if shares of any class of common stock are entitled to vote
separately as a class, each share of that class would have one vote.

The relative voting rights of General Division Stock and TR Stock are
adjusted from time to time as described above so that a holder's voting rights
may more closely reflect the market value of such holder's equity investment in
Genzyme. Adjustments in the relative voting rights of General Division Stock
and TR Stock may influence an investor interested in acquiring and maintaining
a fixed percentage of Genzyme's voting power to acquire such percentage of both
classes of

41
<PAGE> 42

common stock, and will limit the ability of investors in one class to acquire
for the same consideration relatively greater or lesser voting power per share
than investors in the other class. To the extent the relative market values of
General Division Stock and TR Stock change prior to the first scheduled
adjustment or in between any scheduled adjustments, however, an investor in one
class of common stock may acquire relatively more or less voting power for the
same consideration when compared with investors in the other class of common
stock.

In addition to matters on which the holders of the General Division
Stock and the TR Stock vote together as a single class of stock, Genzyme's
Articles of Organization require the approval by the holders of the affected
class of common stock at a meeting at which a quorum is present and the votes
cast in favor of the proposal exceed those cast against to:

(1) allow any proceeds from the disposition of the properties
or assets allocated to either division to be used in the business of
the other division without fair compensation;

(2) allow any properties or assets allocated to either
division to be used in the business of the other division or for the
declaration or payment of any dividend or distribution on any class of
common stock not attributed to such division without fair
compensation;

(3) issue shares of either class of common stock without
allocating the proceeds of such issuance to the division represented
by such class of common stock (provided, however, that Genzyme may
without such approval issue General Designated Shares and TR
Designated Shares, as each such term is defined below under the
heading "TR Designated Shares and General Designated Shares");

(4) change the rights or preferences of any class of common
stock so as to affect the class adversely; or

(5) effect any merger or business combination involving
Genzyme as a result of which (a) the holders of all classes of common
stock of Genzyme shall no longer own, directly or indirectly, at least
fifty percent (50%) of the voting power of the surviving corporation
and (b) the holders of all classes of common stock of Genzyme do not
receive the same form of consideration, distributed among such holders
in proportion to the market capitalization of each class of common
stock as of the date of the first public announcement of such merger
or business combination.

In addition to the voting rights provided in Genzyme's Articles of
Organization, the approval of the holders of a majority of the outstanding
shares of each class of common stock, voting separately as a class, is required
under the current MBCL to approve any amendment to the Articles of Organization
that would alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely. The MBCL does not
currently provide for any other separate voting rights for a class of common
stock. Consequently, because most matters brought to a stockholder vote will
only require the approval of a majority of all of Genzyme's outstanding capital
stock entitled to vote on such matters (including both classes of common stock)
voting together as a single class and because the holders of General Division
Stock currently have more than the number of votes required to approve any such
matter, such holders would be in a position to control the outcome of the vote
on such a matter. See "Risk Factors - Risks Related to Two Classes of Common
Stock - No Additional Separate Voting Rights."

LIQUIDATION RIGHTS

Genzyme's Articles of Organization provide that holders of outstanding
shares of General Division Stock and TR Stock will receive the assets, if any,
remaining for distribution to common stockholders on a per share basis in
proportion to the respective per share liquidation units of each class and such
holders will have no direct claim against any particular assets of Genzyme or
any of its subsidiaries. Each share of General Division Stock will have one
liquidation unit and each share of TR Stock will have .29 liquidation units
(equal to the number of votes to which each share of TR Stock was entitled on
December 16, 1994). The liquidation units of TR Stock will be appropriately
adjusted so as to avoid dilution in the aggregate liquidation rights of either
class in the event the outstanding shares of either class are subdivided (by
stock split, reclassification or otherwise) or combined (by reverse stock
split, reclassification or otherwise), or in the event of the issuance of
shares of either class as a dividend or a distribution to holders of shares of
that class, but will not otherwise be adjusted.

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<PAGE> 43

A merger or business combination involving Genzyme or a sale of all or
substantially all of the assets of Genzyme will not be treated as a
liquidation. However, Genzyme may not, without approval by the holders of the
affected class of Common Stock at a meeting at which a quorum is present and
the votes cast in favor of the action exceed those cast against, effect any
merger or business combination involving Genzyme as a result of which (a) the
holders of all classes of common stock of Genzyme shall no longer own, directly
or indirectly, at least fifty percent of the voting power of the surviving
corporation, and (b) the holders of all classes of common stock of Genzyme do
not receive the same form of consideration, distributed among such holders in
proportion to the market capitalization of each class of common stock as of the
date of the first public announcement of such merger or business combination.

TR DESIGNATED SHARES AND GENERAL DESIGNATED SHARES

Prior to the formation of GTR in December 1994, the Board determined
that the initial pro forma equity interest in GTR would be represented by 10
million shares of TR Stock. This number of shares of TR Stock was established
based on the desired initial trading range of TR Stock, prevailing market
conditions, financial and operating information of GTR and the price-earnings
ratios, market prices of securities and certain financial and operating
information of companies engaged in activities similar to those of GTR. Five
million shares of TR Stock, representing 50% of the initial pro forma equity
interest in GTR, were issued to holders of BioSurface Common Stock in
connection with Genzyme's acquisition of BioSurface. The other 50% of the
initial pro forma equity interest in GTR was represented by five million "TR
Designated Shares." TR Designated Shares are authorized shares of TR Stock
which are not issued and outstanding, but which the Board may from time to time
issue, sell or otherwise distribute without allocating the proceeds or other
benefits of such issuance, sale or distribution to GTR. Genzyme issued
approximately 3,400,000 of such TR Designated Shares as a stock dividend to
holders of General Division Stock of record on December 16, 1994, the date of
the acquisition of BioSurface. The remaining initial TR Designated Shares were
reserved for issuance upon the exercise of General Division stock options and
warrants and the conversion of convertible notes outstanding on December 16,
1994. As of August 1, 1995, there were 1,285,763 TR Designated Shares,
1,275,914 of which were reserved for issuance upon the exercise or conversion
of outstanding stock options, warrants and notes that are exercisable or
convertible into General Division Stock. The shares of TR Stock that are
issuable with respect to the TR Designated Shares are not outstanding shares of
TR Stock, are not eligible to receive dividends, and cannot be voted by
Genzyme.

The number of TR Designated Shares is subject to adjustment. The
number will be (A) adjusted as appropriate to reflect subdivisions (by stock
split or otherwise) and combinations (by reverse stock split or otherwise) of
TR Stock and dividends or distributions of shares of TR Stock to holders of TR
Stock and other reclassifications of TR Stock, (B) decreased by (1) the number
of shares of TR Stock issued by Genzyme, the proceeds of which are allocated to
the General Division, (2) the number of shares of TR Stock issued upon the
exercise or conversion of options, warrants and other securities attributed to
the General Division, and (3) the number of any shares of TR Stock issued by
Genzyme as a dividend or distribution or by reclassification, exchange or
otherwise to holders of General Division Stock (including the 3,400,000 shares
of TR Stock distributed to holders of General Division Stock in December 1994
as described above), and (C) increased by (1) the number of any outstanding
shares of TR Stock repurchased by Genzyme, the consideration for which was
allocated to the General Division, (2) one for each $10.00 reallocated from the
General Division to GTR from time to time in satisfaction of the Funding
Commitment or the Purchase Option of the General Division, up to a maximum $30
million, and (3) the number equal to the fair value (as determined by the
Board) of assets or properties allocated to the General Division that are
reallocated to GTR (other than reallocations that represent sales at fair value
between such divisions or reallocations described in the foregoing clause
(C)(2)) divided by the Fair Market Value of one share of TR Stock as of the
date of the reallocation; Genzyme is prohibited by the Articles of Organization
from taking any action which would have the effect of reducing the number of TR
Designated Shares to a number which is less than zero.

Genzyme's Articles of Organization also contain provisions for
"General Designated Shares," which are authorized shares of General Division
Stock that Genzyme may issue without allocating any consideration to the
General Division. Currently, there are no General Designated Shares. However,
General Designated Shares may be created if, for example, the Board determines
that programs or other assets reallocated from GTR to the General Division will
be accounted for as an increase in General Designated Shares rather than as a
transfer of cash or other assets of the General Division having a fair value
equal to GTR assets reallocated. Notwithstanding the foregoing, by agreement
with BioSurface, Genzyme adopted a policy that no Key TR Program (as defined in
"Management and Accounting Policies Covering the Relationship of

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<PAGE> 44

Genzyme Divisions - Inter-Division Asset Transfers") may be transferred out of
GTR without a class vote of the holders of TR Stock except in certain limited
circumstances, and no reallocation of other programs or assets of GTR may be
accounted for as an increase in General Designated Shares without a class vote
of the holders of TR Stock. Genzyme has also agreed that this policy will not
be changed without a class vote of the holders of TR Stock. Consequently, any
decision by the Board to account for a reallocation of any programs or assets
of GTR as an increase in General Designated Shares would require a class vote
of the holders of TR Stock.

The number of General Designated Shares will be subject to adjustment
in a manner substantially similar to adjustments to the number of TR Designated
Shares.

Whenever additional shares of any class of common stock are issued and
sold by Genzyme, Genzyme will identify (i) the number of such shares issued and
sold for the account of the division to which they relate, the proceeds of
which will be allocated to and reflected in the financial statements of such
division and (ii) the number of such shares issued and sold from the TR
Designated Shares or the General Designated Shares, which shall reduce the
number of TR Designated Shares or General Designated Shares, as the case may
be, and the proceeds of which may be used for any proper corporate purpose. In
the event Genzyme repurchases outstanding shares of any class of common stock,
it will identify the number of shares that are repurchased for consideration
that was allocated to the General Division and the number of shares that are
repurchased for consideration that was allocated to GTR and the number of TR
Designated Shares or General Designated Shares may increase accordingly.

"ANTI-TAKEOVER" PROVISIONS

CONTRACTUAL MEASURES. The Articles of Organization and By-Laws of Genzyme
contain provisions that could discourage potential takeover attempts and
prevent stockholders from changing the Genzyme's management, including
authorization of the Board to issue shares of preferred stock in series,
enlarge the size of the Board and fill any vacancies on the Board, and
restrictions on the ability of stockholders to call a special meeting of
stockholders, bring business before an annual meeting and nominate candidates
for election as directors. Genzyme also has agreements with certain officers
containing change of control provisions.

In addition, Genzyme has a stockholder rights plan. Under this plan,
each outstanding share of General Division Stock and TR Stock also represents a
right that, under certain circumstances, may trade separately from the General
Division Stock and TR Stock, respectively. The rights, which are not currently
exercisable, under certain circumstances will permit their holders (other than
an acquiror) to purchase at a favorable price large amounts of General Division
Stock, TR Stock or securities of a successor to Genzyme with the result that an
acquiror's interest in Genzyme would be substantially diluted. The description
and terms of the rights are set forth in an Amended and Restated Rights
Agreement between Genzyme and American Stock Transfer and Trust Company as
Rights Agent.

BUSINESS COMBINATION STATUTE. Massachusetts' "Business Combination" statute
provides that, if a person acquires 5% or more of the stock of a Massachusetts
corporation without the approval of its board of directors (an "interested
stockholder"), he may not engage in certain transactions with the corporation
for a period of three years. There are certain exceptions to this prohibition;
for example, if the board of directors approves the acquisition of stock or the
transaction prior to the time that the person became an interested stockholder,
or if the interested stockholder acquires 90% of the voting stock of the
corporation (excluding voting stock owned by directors who are also officers
and certain employee stock plans) in one transaction, or if the transaction is
approved by the board of directors and by the affirmative vote of two-thirds of
the outstanding voting stock which is not owned by the interested stockholder,
the prohibition does not apply.

Genzyme is subject to the Massachusetts Business Combination statute
unless it elects not to be governed by the statute in its Articles of
Organization or By-laws. Genzyme has not made such election and does not
currently intend to make such an election.

CONTROL SHARE ACQUISITION STATUTE. The Massachusetts Control Share Acquisition
statute provides that a person (hereinafter, the "acquiror") who makes a bona
fide offer to acquire, or acquires, shares of stock of a corporation that when
combined with shares already owned, would increase the acquiror's ownership to
at least 20%, 33 1/3%, or a majority of the voting stock

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<PAGE> 45

of the corporation, must obtain the approval of a majority in interest of the
shares held by all stockholders, excluding shares held by the acquiror and the
officers and inside directors of the corporation, in order to vote the shares
acquired. The statute does not require the acquiror to consummate the purchase
before the stockholder vote is taken.

The Control Share Acquisition statute permits a Massachusetts
corporation to elect not to be governed by these provisions by including such
an election in its articles of organization or by-laws. The Genzyme By-Laws
contain a provision pursuant to which Genzyme elected not to be governed by the
Massachusetts Control Share Acquisition statute. However, if at a future date
the Board determines that it is in the best interests of Genzyme and its
stockholders that Genzyme be governed by the statute, Genzyme's By-Laws may be
amended to permit it to be governed by such statute. Any such amendment,
however, would apply only to acquisitions crossing the thresholds which occur
after the effective date of such amendment.

MANAGEMENT AND ACCOUNTING POLICIES GOVERNING
THE RELATIONSHIP OF GENZYME DIVISIONS

Genzyme has adopted the following policies to govern the management of
GTR and its relationship to the General Division. Except as otherwise stated
below, the policies may be modified or rescinded in the sole discretion of the
Board without approval of Genzyme stockholders, subject only to the Board's
fiduciary duty to Genzyme's stockholders. The Board may also adopt additional
policies depending upon the circumstances. Any determination of the Board to
modify or rescind such policies, or to adopt additional policies, including any
such decision that would have disparate impacts upon holders of the two classes
of common stock, would be governed by the principles of Massachusetts law
discussed under "Risk Factors - Risks Related to Two Classes of Common Stock -
No Rights or Additional Duties with Respect to the Divisions; Potential
Conflicts." In addition, generally accepted accounting principles require that
any change in policy be preferable (in accordance with such principles) to the
previous policy.

PURPOSE OF GTR. The purpose of GTR is to create a business with a
comprehensive approach to the field of tissue repair by developing and
commercializing a portfolio of novel products for the treatment and prevention
of serious tissue injury (excluding products developed on behalf of Genzyme
Development Partners, L.P.). In addition to the programs initially assigned to
GTR, it is expected that the GTR portfolio will expand through the addition of
complementary products and programs developed either internally or externally
to the division, including acquiring or in-licensing from outside of Genzyme.
Other than the method of financing, GTR is operated and managed similarly to
other Genzyme divisions.

REVENUE ALLOCATION. Revenues from the sale of a division's products are
credited to that division. The cost of research done by one division for the
benefit of another division is charged to the division for which the work is
done in the manner described in the following paragraph. The division
performing the research does not recognize revenue as a result of such
research.

EXPENSE ALLOCATION. All direct expenses are charged to the division for the
benefit of which they are incurred. Corporate and general and administrative
expenses and other shared services or other indirect costs are allocated to
each division in a reasonable and consistent manner based on utilization by the
division of the services to which such costs relate. To the extent borrowings
are deemed to occur between divisions, inter-division accounts will be
established with interest imputed at the rate then available to Genzyme for
short-term borrowings.

TAX ALLOCATIONS. Income taxes are allocated to each division based upon the
financial statement income, taxable income, credits and other amounts properly
allocable to such division under generally accepted accounting principles as if
each division were a separate taxpayer; provided, however, that as of the end
of any fiscal quarter of Genzyme, any projected tax benefit attributable to any
division that cannot be utilized by such division to offset or reduce its
current or deferred income tax expense may be allocated to any other division
without any compensating payment or allocation.

ACQUISITIONS OF PROGRAMS, PRODUCTS OR ASSETS. Upon the acquisition by Genzyme
from a third party of any additional programs, products or assets (whether by
acquisition of assets or stock, merger, consolidation or otherwise), the
aggregate cost of the acquisition and the programs, products or assets acquired
will be allocated among the divisions to which such programs, products or
assets are assigned. Such assignment and allocation will be made by the Board
taking into account

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such matters as the Board and its financial advisors, if any, deem relevant.
Any such determination by the Board will be final and binding on all holders of
all classes of common stock.

DISPOSITION OF PROGRAMS, PRODUCTS OR ASSETS. Upon any sale, transfer,
assignment or other disposition by Genzyme of any product, program or asset not
consisting of all or substantially all of the assets of a division, all
proceeds from such disposition will be allocated to the division to which the
program, product or asset had been allocated, and such proceeds will be used
for the benefit of such division. If a program, product or asset is allocated
to more than one division, the proceeds of the disposition will be allocated
among such divisions based on their respective interests in such program,
product or asset. Such allocation will be made by the Board taking into
account such matters that the Board and its financial advisors, if any, deem
relevant. Any such determination by the Board will be final and binding on all
holders of all classes of common stock.

INTER-DIVISION ASSET TRANSFERS. The Board may at any time and from time to
time reallocate any program, product or other asset from one division to any
other division. All such reallocations will be done at fair market value,
determined by the Board, taking into account, in the case of a program under
development, the commercial potential of such program, the phase of clinical
development of such program, the expenses associated with realizing any income
from such program, the likelihood and timing of any such realization and other
matters that the Board and its financial advisors deem relevant. The
consideration for such reallocation may be paid by one division to another in
cash or, in lieu of cash or other consideration, the Board may elect to account
for a reallocation of assets from GTR to the General Division as an increase in
the number of General Designated Shares and a reallocation of assets from the
General Division to GTR as either an increase in the number of TR Designated
Shares or a reduction in the General Designated Shares, if any, except that a
reallocation of assets from GTR to the General Division may not be accounted
for as an increase in General Designated Shares without a class vote of the
holders of the TR Stock.

Notwithstanding the foregoing, no Key TR Program, as defined below,
may be transferred out of GTR without a class vote of the holders of TR Stock
unless the Board determines that such Key TR Program has application outside of
the field of tissue repair (in which case it may be transferred out only for
the non-tissue repair applications). A "Key TR Program" is any of the
following: (i) Vianain(R) Debriding Product for debridement of necrotic or
damaged tissue; (ii) TGF-B2 for all indications licensed from Celtrix
Pharmaceuticals, Inc. as of December 16, 1994; (iii) Epicel(SM) cultured
epithelial cell autografts for tissue replacement or repair; (iv) Acticel(SM)
cultured epithelial cell allografts for tissue replacement or repair; (v)
CARTICEL(SM) Autologous Chondrocyte Service; and (vi) any additional tissue
repair program or product being developed from time to time in GTR which (a)
constituted 20% or more of the research and development budget of GTR in any of
three most recently completed fiscal years or (b) has had a cumulative
investment of $8 million or more in research and development expenses by GTR.

The foregoing policies regarding transfers of assets between divisions
may not be changed by the Board without a class vote of the holders of TR
Stock.

ACCESS TO TECHNOLOGY AND KNOW-HOW. GTR and the General Division each have free
access to all technology and know-how of Genzyme that may be useful in such
division's business, subject to any obligations or limitations applicable to
Genzyme.

DISPOSITION OF TR DESIGNATED SHARES. The TR Designated Shares may be (i)
issued upon the exercise of outstanding stock options and warrants and the
conversion of outstanding convertible notes allocated to the General Division,
(ii) subject to the restrictions set forth in the following paragraph, sold for
any valid business purpose, or (iii) distributed as a dividend to the holders
of shares of General Division Stock, all as determined from time to time by the
Board in its sole discretion. Genzyme distributed approximately 3.4 million of
the initial 5.0 million TR Designated Shares as a stock dividend to holders of
Genzyme Common Stock of record on December 16, 1994, and reserved the remaining
1.6 million initial TR Designated Shares for issuance upon the exercise or
conversion of stock options, warrants and convertible notes outstanding as of
December 15, 1994. To the extent that any such remaining initial TR Designated
Shares are not used for such purposes, the Board may issue them for any other
valid business purposes without crediting any proceeds to GTR.

ISSUANCE OF ADDITIONAL SHARES OF ANY CLASS OF GENERAL DIVISION STOCK. If
additional shares of any class of common stock are issued and sold by Genzyme,
Genzyme will identify (i) the number of such shares issued and sold for the
account of the

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<PAGE> 47

division to which they relate, the proceeds of which will be allocated to and
reflected in the financial statements of such division and (ii) the number of
such shares issued and sold that will reduce the number of Designated Shares
from such division and the proceeds of which may be used for any valid business
purpose. Notwithstanding the foregoing, Genzyme will not sell any shares of TR
Stock without allocating the proceeds to GTR (except upon exercise or
conversion of options, warrants or convertible notes outstanding as of December
16, 1994) unless (i) the Board determines that GTR has cash sufficient to fund
its operations for at least the next 12 months or (ii) shares of TR Stock
concurrently being sold for the account of GTR will produce proceeds sufficient
to fund GTR's cash needs for the next 12 months.

RESERVATION OF SHARES OF TR STOCK. Genzyme has reserved approximately
2,000,000 shares of TR Stock for issuance to Genzyme employees pursuant to
grants made after December 15, 1994 under one or more employee incentive plans.

OPEN MARKET PURCHASES OF SHARES OF ANY CLASS. Genzyme may make open market
purchases of any class of its common stock in accordance with applicable
securities law requirements; provided, however, that such purchases of TR Stock
may not be made if as an immediate result thereof the number of TR Designated
Shares would represent more than 60% of the number of TR Designated Shares plus
the number of outstanding shares of TR Stock. Such restriction is intended to
prevent Genzyme from using open market purchases to effect a redemption of the
TR Stock without paying the 30% premium required for a complete redemption of
TR Stock under the terms of Genzyme's Articles of Organization. See
"Description of Genzyme Capital Stock- Exchange of TR Stock." In addition,
within 90 days of any open market purchase of any class of common stock,
Genzyme may not exchange shares of such class for cash or shares of any other
class of common stock.

CLASS VOTING. In addition to any shareholder approval required by
Massachusetts law, whenever the approval of the holders of a class of common
stock is required to take any action pursuant to these policies or Genzyme's
Articles of Organization, such requirement will be satisfied if a meeting of
the holders of such class is held at which a quorum is present and the votes
cast in favor of the proposed action exceed the votes cast against.

NON-COMPETE. Genzyme will not develop products outside of GTR that compete or
would compete in the market with products being developed or sold by GTR.

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UNDERWRITING

Under the terms and subject to the conditions contained in an
Underwriting Agreement dated September 22, 1995 (the "Underwriting Agreement"),
the Underwriters named below (the "Underwriters"), for whom CS First Boston
Corporation, Cowen & Company and PaineWebber Incorporated are acting as
representatives (the "Representatives"), have severally but not jointly agreed
to purchase from the Company the following respective numbers of shares of TR
Stock:

<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ----------
<S> <C>
CS First Boston Corporation . . . . . . . . . . . . . . . . . . . . . . 670,000
Cowen & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . . 670,000
Arnhold and S. Bleichroeder, Inc. . . . . . . . . . . . . . . . . . . . 30,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Dillon, Read & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . 60,000
Gruntal & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . . 30,000
Hambrecht & Quist LLC . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Hoefer & Arnett Incorporated . . . . . . . . . . . . . . . . . . . . . . 30,000
Invemed Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Janney Montgomery Scott Inc. . . . . . . . . . . . . . . . . . . . . . . 30,000
Josephthal Lyon & Ross Incorporated . . . . . . . . . . . . . . . . . . 30,000
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Montgomery Securities . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . . . . 60,000
Needham & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Raymond James & Associates, Inc. . . . . . . . . . . . . . . . . . . . . 60,000
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Sutro & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Tucker Anthony Incorporated . . . . . . . . . . . . . . . . . . . . . . 30,000
Van Kasper & Company . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Vector Securities International, Inc. . . . . . . . . . . . . . . . . . 60,000
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the shares of TR Stock
offered hereby (other than those shares covered by the over-allotment option
described below) if any are purchased. The Underwriting Agreement provides
that, in the event of a default by an Underwriter, in certain circumstances the
purchase commitments of non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.

The Company has granted to the Underwriters an option, expiring at the
close of business on the 30th day after the date of this Prospectus, to
purchase up to 450,000 additional shares at the initial public offering price
less the underwriting discounts and commissions, all as set forth on the cover
page of this Prospectus. Such option may be exercised only to cover
over-allotments in the sale of the shares of TR Stock. To the extent such
option is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares of TR Stock as it was obligated to purchase pursuant to the Underwriting
Agreement.

The Company has been advised by the Representatives that the
Underwriters propose to offer the shares of TR Stock to the public initially at
the public offering price set forth on the cover page of this Prospectus and,
through the Representatives, to certain dealers at such price less a concession
of $.15 per share, and the Underwriters and such dealers

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<PAGE> 49

may allow a discount of $.10 per share on sales to certain other dealers.
After the initial public offering, the public offering price and concession and
discount to dealers may be changed by the Representatives.

In connection with this offering, CS First Boston Corporation and
certain of the Underwriters and selling group members (if any) and their
respective affiliates may engage in passive market making transactions on the
Nasdaq National Market in accordance with Rule 10b-6A under the Exchange Act
during a period before commencement of offers or sales of the shares of TR
Stock offered hereby. The passive market making transactions must comply with
the applicable volume and price limits and be identified as such.

The Company has agreed that it will not offer, sell, contract to sell,
announce its intention to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under the
Securities Act relating to, any shares of TR Stock or securities convertible
into or exchangeable or exercisable for any shares of TR Stock, other than
pursuant to employee benefit plans and upon the exercise or conversion of
outstanding warrants and convertible notes, without the prior written consent
of CS First Boston Corporation for a period of 90 days after the effective date
of the Registration Statement. In addition, certain holders of an aggregate of
approximately 700,000 shares of TR Stock have agreed not to sell, exchange,
transfer, pledge or otherwise dispose of their TR Stock for 90 days after the
effective date of the Registration Statement without the prior consent of the
Company, and the Company has agreed not to give its consent without the prior
written consent of CS First Boston.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or
contribute to payments which the Underwriters may be required to make in
respect thereof.

CS First Boston Corporation and PaineWebber Incorporated provided
financial advisory services to Genzyme and BioSurface, respectively, in
connection with BioSurface's merger with and into a wholly-owned subsidiary of
Genzyme in December 1994. In addition, the Representatives and certain other
Underwriters have from time to time provided other investment banking services
to the Company for customary fees and may continue to do so in the future. It
is anticipated that the Representatives and certain other Underwriters will
participate in the General Division Offering.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the TR Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of TR Stock are effected. Accordingly, any resale of the
TR Stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the TR Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of TR Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from
whom such purchase confirmation is received that (i) such purchaser is entitled
under applicable provincial securities laws to purchase such TR Stock without
the benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."

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<PAGE> 50

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

All of the issuer's directors and officers as well as the experts
named herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada upon
the issuer or such persons. All or a substantial portion of the assets of the
issuer and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such persons in
Canada or to enforce a judgment obtained in Canadian courts against such issuer
or persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of TR Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any TR
Stock acquired by such purchaser pursuant to this offering. Such report must
be in the form attached to British Columbia Securities Commission Blanket Order
BOR #88/5, a copy of which may be obtained from the Company. Only one such
report must be filed in respect of the TR Stock acquired on the same date and
under the same prospectus exemption.

LEGAL OPINIONS

The validity of the TR Stock offered hereby will be passed upon for
the Company by Palmer & Dodge, Boston, Massachusetts. Peter Wirth, a partner
of Palmer & Dodge, is Clerk of the Company. Certain legal matters will be
passed upon for the Company by Mark A. Hofer, Esq., Senior Vice President and
General Counsel of the Company. As of August 1, 1995, Mr. Hofer beneficially
owned 75,738 and 15,468 shares of General Division Stock and TR Stock,
respectively, including shares subject to options exercisable within 60 days,
and 5,000 shares of common stock of IG Labs. Certain legal matters will be
passed upon for the Underwriters by Cahill Gordon & Reindel (a partnership
including a professional corporation), New York, New York.

EXPERTS

The consolidated financial statements and financial statement schedule
of Genzyme Corporation, the combined financial statements of Genzyme General
Division and the combined financial statements of Genzyme Tissue Repair
Division as of December 31, 1993 and 1994 and for each of the three years in
the period ended December 31, 1994 included in Genzyme's Annual Report on Form
10-K, as amended by Amendments Nos. 1 and 2 thereto on Form 10-K/A, that have
been incorporated by reference into this Prospectus, have been incorporated
herein in reliance on the reports of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.

The financial statements and financial statement schedules of
BioSurface Technology, Inc. as of December 31, 1992 and 1993 and for each of
the three years in the period ended December 31, 1993 appearing at pages III-19
to III-42 of Annex III to the Company's Registration Statement on Form S-4
(File No. 33-83346) that have been incorporated by reference into this
Prospectus have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of that firm as
experts in accounting and auditing.

50
<PAGE> 51

PALMER & DODGE
ONE BEACON STREET
BOSTON, MASSACHUSETTS 02108

<TABLE>
<S> <C>
Gerald E. Quirk Telephone: (617) 573-0100
(617) 573-0498 Facsimile: (617) 227-4420
</TABLE>

September 22, 1995

BY ELECTRONIC FILING

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

RE: GENZYME CORPORATION - RULE 424(B)(4) PROSPECTUS
(COMMISSION FILE NO. 33-61871)

Dear Sir or Madam:

On behalf of Genzyme Corporation (the "Company"), we hereby transmit
for filing pursuant to Rule 424(b)(4) under the Securities Act of 1933, as
amended, a prospectus relating to the offering of up to 3,450,000 shares of the
Company's Tissue Repair Division Common Stock.

By copy of this letter, the Company is delivering three copies of the
Prospectus to the Nasdaq National Market.

If you have any questions or comments regarding the foregoing, please
call me at the number listed above or Maureen Manning of this firm at (617)
573-0210.

Very truly yours,

/s/ Gerald E. Quirk

Enclosures
cc: Nasdaq
David J. McLachlan
Evan M. Lebson
Maureen P. Manning, Esq.
<PAGE> 52

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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 12
Capitalization........................ 13
Price Range of TR Stock and Dividend
Policy.............................. 13
Genzyme Tissue Repair Division
Selected Financial Data............. 14
GTR Management's Discussion and
Analysis of Financial Condition and
Results of Operations............... 15
Additional Financial Data............. 18
Business.............................. 19
Management............................ 37
Description of Genzyme Capital
Stock............................... 40
Management and Accounting Policies
Governing the Relationship of
Genzyme Divisions................... 45
Underwriting.......................... 48
Notice to Canadian Residents.......... 49
Legal Opinions........................ 50
Experts............................... 50
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------

GENZYME

3,000,000 Shares
Tissue Repair Division
Common Stock
($.01 par value)

PROSPECTUS

CS First Boston

Cowen & Company

PaineWebber Incorporated

- ------------------------------------------------------