<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
OCTOBER 15, 1998
------------------------
GENZYME CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MASSACHUSETTS 0-14680 06-1047163
(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
</TABLE>
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ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 252-7500
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ITEM 5. OTHER EVENTS.
On October 15, 1998 our Board of Directors declared a tax-free dividend of
0.10929 share of Genzyme Molecular Oncology Division Common Stock for each share
of Genzyme General Division Common Stock owned. We will distribute the shares on
November 16, 1998 to Genzyme General Division shareholders of record on November
2, 1998. We will pay cash for fractional shares at the rate of $7.00 per share.
In addition, on November 16, 1998 we will release from escrow approximately
3.9 million Genzyme Molecular Oncology shares that we issued to the former
shareholders of PharmaGenics, Inc. in June 1997 when we acquired PharmaGenics
and formed Genzyme Molecular Oncology.
Beginning on November 16, 1998, the Genzyme Molecular Oncology shares will
be listed on the Nasdaq National Market under the symbol "GZMO".
For more information regarding the dividend, please read our press release
filed as Exhibit 99.1 to this report.
For more information regarding the business of Genzyme Molecular Oncology,
please read the summary description filed as Exhibit 99.2 to this report.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 27, 1998
GENZYME CORPORATION
By: /s/ DAVID J. MCLACHLAN
------------------------------------
David J. McLachlan
Executive Vice President and Chief
Financial Officer
3
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EXHIBIT INDEX
SEQUENTIAL
EXHIBIT NO. DESCRIPTION
----------- -----------
99.1 Press Release dated October 20, 1998. Filed herewith.
99.2 Background information about Genzyme Molecular Oncology. Filed
herewith.
4
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE MEDIA CONTACT: INVESTOR CONTACT:
October 20, 1998 Bo Piela Kristen Nally
617-252-7785 617-252-7570
GENZYME DECLARES DIVIDEND OF GENZYME MOLECULAR ONCOLOGY STOCK
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GENZYME MOLECULAR ONCOLOGY STOCK TO BEGIN TRADING NOVEMBER 16
CAMBRIDGE, Mass.-- Genzyme Corp. announced today that its Board of Directors has
declared a tax-free dividend of 0.10929 share of Genzyme Molecular Oncology
common stock for each share of Genzyme General (Nasdaq:GENZ) owned. The Board
also authorized Genzyme Molecular Oncology common stock to begin trading on
November 16, 1998, on the Nasdaq National Market under the ticker symbol GZMO.
Genzyme Molecular Oncology is a division of Genzyme Corp. focused on
developing a new generation of cancer products. It has its own common stock
intended to reflect its economic value and performance.
The Genzyme Molecular Oncology shares will be distributed on November
16, 1998, to Genzyme General shareholders of record as of November 2, 1998. Cash
will be paid for fractional shares at $7.00 per share.
When the stock begins trading on November 16, Genzyme Molecular
Oncology will have approximately 12.65 million shares outstanding. The total
number of shares outstanding will consist of approximately 3.95 million Genzyme
Molecular Oncology
<PAGE> 2
Genzyme Molecular Oncology Stock to Begin Trading on November 16--Page 2
shares held by former PharmaGenics Inc. shareholders that will be released from
escrow, and approximately 8.7 million Genzyme Molecular Oncology shares being
distributed to Genzyme General shareholders as a dividend.
In addition, approximately 700,000 shares have been reserved for future
issuance upon conversion of the outstanding Genzyme General 5.25% convertible
debentures and the exercise of a small number of Genzyme General callable
warrants. These shares will not be distributed on November 16 and are not
included in the 12.65 million shares outstanding.
In total, 13.35 million Genzyme Molecular Oncology shares have been
created. PharmaGenics Inc. was acquired with 3.95 million Genzyme Molecular
Oncology shares at the time Genzyme Molecular Oncology was created in June 1997.
At the same time, Genzyme General transferred several oncology programs to
Genzyme Molecular Oncology in exchange for 6.0 million Genzyme Molecular
Oncology shares. An additional 3.4 million Genzyme Molecular Oncology shares
were created to repay Genzyme General for a Genzyme Molecular Oncology debenture
totaling $21.2 million in principal and interest that was exchanged for a
Genzyme General debenture in August 1998 and to repay an additional $2.7 million
debt.
Genzyme Molecular Oncology's strategy is to develop a new generation of
cancer products. The company's therapeutic product focus is on cancer vaccines
and inhibitors of angiogenesis. The division has completed two phase I cancer
vaccine trials in melanoma and plans to begin three additional clinical trials
in melanoma, ovarian cancer and breast cancer in the next year.
<PAGE> 3
Genzyme Molecular Oncology Stock to Begin Trading on November 16--Page 3
Currently, Genzyme Molecular Oncology receives revenue from
collaborative relationships which include agreements with several pharmaceutical
companies for use of its SAGE(TM) differential gene expression technology.
Genzyme Molecular Oncology had cash and short term investments of $8.1 million
as of September 30, 1998, and has access to a $30 million equity line of credit
from Genzyme General. Genzyme Molecular Oncology anticipates that these funds in
addition to revenues will cover operating costs over the next three years.
Genzyme Molecular Oncology is developing novel cancer therapeutics and
diagnostics using four gene-based technologies: gene discovery, gene therapy,
small-molecule drug discovery, and genetic diagnostics.
This press release contains forward-looking statements concerning the
commencement of clinical trials, the ability of Genzyme Molecular Oncology to
develop and commercialize cancer therapeutics and diagnostics, and the
division's future operating results. Actual results may differ materially
depending on, among other things, Genzyme Molecular Oncology's ability to
successfully complete preclinical and clinical development of its products on a
timely basis, the content and timing of decisions made by the U.S. Food and Drug
Administration regarding Genzyme Molecular Oncology's products, Genzyme's
ability to obtain and maintain patent and other proprietary rights protection of
its products and services, acceptance of such products and services by the
market and by third-party payers, the competitive environment for cancer
therapeutics and diagnostics, and other risks described under the heading
"Factors Affecting Future Operating Results" beginning on page 17 of the 1997
Genzyme Molecular Oncology Annual Report.
###
Genzyme's releases are on the World Wide Web at http://www.genzyme.com. They are
also available from Genzyme's fax-on-demand service at 1-800-436-1443 within the
United States or 1-201-521-1080 outside the United States.
<PAGE> 1
EXHIBIT 99.2
BACKGROUND INFORMATION ABOUT GENZYME MOLECULAR ONCOLOGY
OVERVIEW
Genzyme Molecular Oncology is dedicated to bringing a new generation of
cancer therapies to patients, utilizing advances in the genetic understanding of
the disease.
Genzyme Molecular Oncology is focused on the development of cancer
immunotherapies and anti-angiogenic therapeutic products. To support the
commercialization of these innovative products, Genzyme Molecular Oncology is
utilizing four gene-based technologies: gene discovery, gene therapy, small
molecule drug discovery, and molecular diagnostics.
Genzyme Molecular Oncology believes that a substantial opportunity
exists to improve cancer therapy through gene-based approaches. Genzyme
Molecular Oncology is well positioned to capitalize on this opportunity through
the integration of a select and powerful group of proprietary technologies and
capabilities that, when combined with Genzyme's development and manufacturing
infrastructure, give Genzyme Molecular Oncology the ability to move novel
product candidates to commercialization.
Genzyme Molecular Oncology has conducted two phase I trials of its gene
therapy products in melanoma, and within the next year expects to begin three
additional clinical trials in melanoma, ovarian cancer, and breast cancer.
Genzyme Molecular Oncology's integrated gene-based approach is
attractive to academic and commercial partners, exemplified by the formation of
more than two dozen collaborations with groups such as the National Cancer
Institute, Dana Farber Cancer Institute, Ludwig Cancer Research Institute,
Schering-Plough, Merck, and Bayer.
Genzyme Molecular Oncology believes that existing and new
collaborations established over the next few years are expected to generate
revenues that fund up to two-thirds of Genzyme Molecular Oncology's operating
expenses. Genzyme Molecular Oncology expects that this revenue, together with
short-term investments and an available line of credit from Genzyme General,
will be sufficient to fund its operations for the next three years.
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Background Information on Genzyme Molecular Oncology Page 2
HISTORICAL BACKGROUND
Genzyme Molecular Oncology was formed in June 1997 by combining certain
of Genzyme General's existing oncology programs and technology platforms with
the acquired assets of PharmaGenics Inc., a genomics company engaged in the
development of cancer therapeutics.
Genzyme General contributed two melanoma gene therapy research
programs, proprietary vector technologies for optimal gene transfer and
delivery, combinatorial chemistry drug discovery capabilities, and tools for
diagnostic testing. The assets acquired from the PharmaGenics acquisition
included SAGE(TM) (Serial Analysis of Gene Expression), a powerful gene
expression and identification technology; proprietary cancer genes, and a
broad-based collaboration with Drs. Bert Vogelstein and Kenneth Kinzler at The
Johns Hopkins University.
MARKET OPPORTUNITY
Cancer is second only to cardiovascular disease as the leading cause of
death in the United States today. According to the American Cancer Society,
approximately one of every four deaths this year, or approximately 564,000
deaths, are from cancer. Over 1.2 million people in the United States will be
diagnosed with cancer this year.
According to a 1998 Lehman Brothers report on cancer drugs, the current
U.S. market for therapeutic cancer drugs is approximately $5 billion, consisting
mainly of chemotherapeutic and related agents. This survey predicts that the
market will increase over the next ten years to approximately $19 billion, with
novel treatments such as cancer vaccines, gene therapies, monoclonal antibodies,
and antisense treatments accounting for the majority of the market expansion.
Due to the large market opportunity, the cancer therapeutic market is
highly competitive. Genzyme Molecular Oncology is uniquely positioned to capture
this market potential, with its diverse product line, its extensive experience
in gene-based technologies, and its access to Genzyme Corp's worldwide
commercialization infrastructure.
Several dynamics make cancer an attractive market. Since current
therapies do not fully satisfy medical needs, oncologists are willing to adopt
innovative therapies rapidly. In addition, combination therapy is standard
practice, with novel therapies likely to be added to existing therapeutic
regimens. The U.S. Food and Drug Administration has adopted policies designed to
speed the development and approval of therapies for life-threatening illnesses
such as cancer, allowing novel drugs to reach patients more quickly.
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Background Information on Genzyme Molecular Oncology Page 3
FOUR TECHNOLOGY PLATFORMS FOR PRODUCT DEVELOPMENT
GENOMICS
Genomics is the study of genes and their function. Genzyme Molecular
Oncology employs a variety of genomics tools to identify genes, proteins, and
pathways that may be appropriate targets for therapeutic intervention in cancer.
Genzyme Molecular Oncology's primary genomics tool is SAGE(TM), which
stands for Serial Analysis of Gene Expression. SAGE(TM) is a patented high
throughput, high efficiency method of simultaneously detecting and measuring the
levels at which genes are expressed in a cell at a given time. SAGE(TM) can
identify genes expressed at very low levels, and is capable of detecting novel
genes that have not been published in available genomic databases.
Genzyme Molecular Oncology's proprietary SAGE(TM) database contains
over two million tags (mRNA segments), including gene sequence information from
normal and diseased tissues of the colon, prostate, breast, lung, and pancreas.
Genzyme Molecular Oncology is utilizing SAGE(TM) to identify: 1.) novel tumor
antigens for cancer vaccine development; 2.) targets for small molecule drug
candidates; and 3.) targets for molecular diagnostics.
In fields that fall outside of its primary focus area, Genzyme
Molecular Oncology provides SAGE(TM) services to third parties, generating
revenues that help fund internal development programs. To date, Genzyme
Molecular Oncology has signed SAGE(TM) agreements with several pharmaceutical
and biotechnology companies, including Parke-Davis, Bayer, Reprogen, Hexagen,
and Ontogeny.
GENE THERAPY--IMMUNOTHERAPY AND TUMOR TARGETING
Gene therapy involves the delivery of a gene responsible for the
production of a specific protein into a patient's cells to create a therapeutic
response. A gene therapy product consists of a gene that produces a therapeutic
response and a vector used to deliver the gene to the intended target.
As a division of Genzyme, Genzyme Molecular Oncology has access to a
wealth of gene delivery technology derived from over seven years of research
emanating from its pioneering work in cystic fibrosis. Genzyme is a recognized
leader in gene therapy, with an extensive portfolio of viral and non-viral
vectors, clinical grade and scale manufacturing, and clinical and regulatory
experience gained from a number of gene therapy trials conducted in both the
United States and Europe.
Genzyme Molecular Oncology's gene therapy program focuses on two
approaches: gene immunotherapy, which is the delivery of genes to stimulate a
patient's own immune system to attack tumors; and tumor targeting, which seeks
to deliver genes selectively to a tumor via systemic (throughout the body)
administration without affecting normal tissue.
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Background Information on Genzyme Molecular Oncology Page 4
GENE IMMUNOTHERAPY
Genzyme Molecular Oncology applies three technological approaches to
gene immunotherapy: cancer vaccines, stress genes, and the use of
dendritic/cancer cell fusion technology. These approaches seek to stimulate the
patient's immune response to attack and kill cancerous cells.
Cancer vaccines combine a tumor antigen gene with a delivery vector.
Tumor antigens are proteins produced by tumors but not by normal cells. Genzyme
Molecular Oncology is focused on the discovery of tumor antigens that prompt a
potent cellular immune response against the tumor. Genzyme Molecular Oncology
uses SAGE(TM) and other proprietary technologies to identify and optimize tumor
antigens for the development of cancer vaccine products. These technologies may
allow Genzyme Molecular Oncology to discover novel antigens more quickly and in
much greater quantities than previously possible.
A second and complementary gene immunotherapy approach is the use of
stress genes to stimulate an immune response. Delivery of stress genes to tumor
cells appears to make these cells more recognizable by the immune system.
Genzyme Molecular Oncology and StressGen Biotechnologies Inc. have formed a
joint venture to develop stress genes for the treatment of ovarian and other
cancers.
Genzyme Molecular Oncology has an option to license technology from the
Dana Farber Cancer Institute that may be developed as a cell-based
immunotherapy. This technology combines dendritic cells, a type of
antigen-presenting cell, with tumor cells. The resulting "fusion" cell is
administered to the patient with the purpose of eliciting a strong immune
response against tumor cells that contain the same tumor antigens that are
present on the fusion cell. A Phase I trial in advanced breast cancer applying
fusion cell technology is scheduled to begin in the next several months.
TUMOR TARGETING
Tumor targeting is the selective delivery of a gene to tumor cells
without affecting normal tissue. Genzyme Molecular Oncology has shown that
certain of its cationic lipid vectors deliver genes preferentially to tumor
tissue, and is optimizing its lipid gene delivery vectors for use in systemic
administration. Systemic administration of tumor suppressor, "suicide," or
anti-angiogenic genes using lipid vectors could enable treatment of metastatic
disease as well as primary tumors. Systemic administration has not been possible
using other gene delivery vector systems.
In December 1997, Genzyme Molecular Oncology and Schering-Plough
entered into a collaboration to evaluate the use of Genzyme Molecular Oncology's
lipids to deliver a number of Schering-Plough's cancer-related genes. Genzyme
Molecular Oncology is currently conducting research regarding the delivery of
Schering's p53 tumor suppressor gene using Genzyme Molecular Oncology's
proprietary lipids.
<PAGE> 5
Background Information on Genzyme Molecular Oncology Page 5
The p53 gene encodes a protein that controls cell growth, and is
defective in over 50 percent of all cancers. If Schering chooses to exercise its
option to license the Genzyme Molecular Oncology lipid vector technology for the
p53 gene, Schering will have the option to license the vector technology
exclusively for five additional genes. If Schering exclusively licenses the
vector technology for each of the other five genes and successfully
commercializes the six product candidates, then Genzyme Molecular Oncology would
receive in excess of $80 million in up-front payments, research funding, and
milestone payments. In addition, Genzyme Molecular Oncology would receive
royalties on product sales.
In October 1998, Genzyme Molecular Oncology licensed its p53 gene
therapy patent rights to Schering-Plough. Under the terms of the license
agreement, Genzyme Molecular Oncology received a $5 million payment from
Schering. In addition to this up-front payment, Genzyme Molecular Oncology could
receive approximately $35 million in patent, product development and sales
milestone payments in addition to royalties on product sales associated with
Schering-Plough's development and commercialization of a therapeutic p53 gene
therapy product.
SMALL MOLECULE DRUG DISCOVERY
Small molecule drugs are therapeutic compounds designed to be
administered orally. Genzyme Molecular Oncology has access to all of Genzyme's
drug discovery capabilities, including high-throughput screening using automated
robotics technology and a diverse library of over 1,000,000 compounds.
Genzyme Molecular Oncology has 15 to 20 cancer screens in development
at a time. Primary targets include compounds that inhibit angiogenesis, prevent
metastasis, and alter the cell growth and cell death process. Several promising
compounds exhibiting biological activity against these targets have been
identified and are being evaluated in animal models.
Since the probability of successful identification of drug candidates
increases as more compounds are evaluated against a greater number of screens,
Genzyme Molecular Oncology has formed collaborations with a number of entities,
including the National Cancer Institute, Johns Hopkins University, Georgetown
University, Arcadia, ArQule and Novalon, to access a greater number of chemical
compound libraries and novel screens. In addition to its internal small molecule
drug discovery efforts, Genzyme Molecular Oncology has out-licensed a screen to
Merck and Co. for testing against Merck's compound library.
MOLECULAR DIAGNOSTICS
Genzyme Molecular Oncology has the diagnostic rights to a number of
cancer genes, and seeks to expand its portfolio using its internal gene
discovery capabilities. Genzyme Molecular Oncology may collaborate with Genzyme
Genetics to commercialize tests for diagnostic cancer genes. Genzyme Genetics is
the world's largest provider of genetic testing services.
PRODUCT PIPELINE
Genzyme Molecular Oncology has several programs under development for
the treatment of melanoma, the most deadly form of skin cancer; ovarian cancer;
breast cancer; and other cancers. In addition, Genzyme Molecular Oncology has
identified several small molecule drug targets for the inhibition of metastasis,
angiogenesis, and cell proliferation. Genzyme Molecular Oncology's pipeline
includes the following:
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Background Information on Genzyme Molecular Oncology Page 6
<TABLE>
<CAPTION>
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PRODUCT PIPELINE
DESCRIPTION INDICATION COLLABORATOR STATUS
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IMMUNOTHERAPY:
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<S> <C> <C> <C.
MART-1 and gp100 Melanoma None Phase I/II
tumor antigens
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Heat Shock Protein 65 Ovarian Cancer StressGen Preclinical
/Stress Genes Biotechnologies
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Dendritic cell/tumor Breast Cancer Dana Farber Cancer Preclinical
fusion Institute
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TUMOR TARGETING:
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Lipid Vectors Various None Research
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p53 Various Schering-Plough Preclinical
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SMALL MOLECULE TARGETS:
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Metastasis Inhibitors None Preclinical
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Angiogenesis Inhibitors None Preclinical
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Cell growth/death None Preclinical
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</TABLE>
CORPORATE STRUCTURE
Genzyme Molecular Oncology operates as a division of Genzyme Corp. with
its own dedicated personnel and financial resources. Genzyme Molecular Oncology
has access to the Corporation's extensive research and development capabilities,
manufacturing facilities, worldwide clinical development and regulatory affairs
staff, and marketing infrastructure.
Genzyme Molecular Oncology's stock will begin trading on the Nasdaq
National Market System on November 16 under the symbol "GZMO" and is intended to
reflect the value and track the performance of the division.
This press release contains forward-looking statements concerning the
ability of Genzyme Molecular Oncology to develop and commercialize cancer
therapeutics and diagnostics successfully, the commencement of clinical trials,
the ability to form and maintain research collaborations, the ability to meet
milestones under these collaborations and to generate revenues from those
collaborations, the size of the U.S. market for cancer therapeutics and the
growth of that market, the division's ability to compete successfully with other
companies developing and commercializing cancer therapeutics and diagnostics,
and the division's future operating results and cash resources.
Actual results may differ materially depending on, among other things,
Genzyme Molecular Oncology's ability to successfully complete preclinical and
clinical development of its products on a timely basis, the content and timing
of decisions made by the U.S. Food and Drug Administration regarding Genzyme
Molecular Oncology's
<PAGE> 7
Background Information on Genzyme Molecular Oncology Page 7
products, Genzyme's ability to obtain and maintain patent and other proprietary
rights protection of its products and services, acceptance of such products and
services by the market and by third-party payers, the competitive environment
for cancer therapeutics and diagnostics, Genzyme Molecular Oncology's ability to
access capital necessary to fund its programs, the division's ability to
identify strategic partners and the success of these partners in performing
research, preclinical, and clinical testing and marketing; and other risks
described under the heading "Factors Affecting Future Operating Results"
beginning on page 17 of the 1997 Genzyme Molecular Oncology Annual Report, which
has been filed with the Securities and Exchange Commission and is available upon
request.
# # #
October 1998
