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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998.
REGISTRATION NO. 333-
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GENZYME CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 06-1047163
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139 (617) 252-7500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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PETER WIRTH
EXECUTIVE VICE PRESIDENT AND CHIEF LEGAL OFFICER
Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
(617) 252-7500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
DAVID R. POKROSS, JR., ESQ.
PALMER & DODGE LLP
One Beacon Street
Boston, Massachusetts 02108
(617) 573-0100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Title of each class of securities Amount to be offering aggregate Amount of
to be registered registered(1) price per share(2) offering price(1)(2) registration fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Genzyme General Division Common Stock,
$0.01 par value per share(3)............... 787,060 shares $34.625 $27,251,953 $8,040
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated maximum number of shares issuable upon conversion of principal of,
and interest on, the Genzyme Convertible Debenture (the "Debenture")
described herein plus such additional indeterminate number of shares of
Genzyme General Division Common Stock as shall be required for issuance upon
conversion of the Debenture to prevent dilution resulting from stock splits,
stock dividends or similar events.
(2) Estimated solely for the purpose of determining the registration fee.
Proposed maximum offering price per share equals the last reported sale
price on September 25, 1998, as reported by the Nasdaq National Market.
(3) Includes associated purchase rights which currently are evidenced by
certificates for shares of Genzyme General Division Common Stock and
automatically trade with such shares.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 1998
[GENZYME CORP. LOGO]
787,060 SHARES
GENERAL DIVISION COMMON STOCK
All of the 787,060 shares (the "Shares") of Genzyme General Division Common
Stock, $0.01 par value ("GGD Stock"), offered hereby are being offered by
selling securityholders (the "Selling Securityholders"). The Shares are issuable
to the Selling Securityholders upon the conversion of principal, interest and
other amounts payable under a Convertible Debenture of Genzyme Corporation
("Genzyme" or the "Company") dated August 29, 1998 (the "GGD Debenture") in the
principal amount of $21,200,000.
The Shares may be offered and sold by the Selling Securityholders from time
to time in open market or privately-negotiated transactions at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Securityholders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular dealer might be in excess of customary
commissions). See "PLAN OF DISTRIBUTION."
None of the proceeds from the sale of the Shares by the Selling
Securityholders will be received by Genzyme.
GGD Stock is listed for quotation on the Nasdaq National Market ("Nasdaq")
under the symbol "GENZ." On September 25, 1998, the closing sale price of GGD
Stock as reported by Nasdaq was $34.625 per share.
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INVESTMENT IN GGD STOCK OF GENZYME IS SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 4 HEREOF.
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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 ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SECURITYHOLDERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, IN ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
THE DATE OF THIS PROSPECTUS IS , 1998
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TABLE OF CONTENTS
PAGE
----
Genzyme Corporation..................................................... 3
Risk Factors............................................................ 4
Selling Securityholders................................................. 11
Plan of Distribution.................................................... 12
Legal Matters........................................................... 13
Experts................................................................. 13
Available Information................................................... 13
Incorporation of Certain Documents by Reference......................... 14
2
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GENZYME CORPORATION
Genzyme Corporation is a biotechnology company that develops innovative
products and services for unmet medical needs. Genzyme has three divisions: (1)
Genzyme General Division ("Genzyme General"), which develops and markets
therapeutic and surgical products and diagnostic products and services; (2)
Genzyme Tissue Repair Division ("Genzyme Tissue Repair" or "GTR"), which
develops and markets biological products for the treatment of cartilage damage,
severe burns and neurodegenerative diseases; and (3) Genzyme Molecular Oncology
Division ("Genzyme Molecular Oncology" or "GMO"), which develops gene-based
approaches to cancer therapy and diagnosis through genomics, gene therapy, small
molecule drug discovery and genetic diagnostics. Genzyme has three outstanding
series of common stock, each of which is intended to reflect the value and track
the performance of one of Genzyme's three divisions: GGD Stock, Genzyme Tissue
Repair Division Common Stock ("GTR Stock") and Genzyme Molecular Oncology
Division Common Stock ("GMO Stock"). GGD Stock and GTR Stock are listed on
Nasdaq under the symbols "GENZ" and "GENZL," respectively. GMO Stock is not yet
publicly traded but is expected to be listed on Nasdaq under the symbol "GZMO"
on or before November 30, 1998.
For purposes of financial presentation, Genzyme allocates programs,
products, assets and liabilities among its divisions; however, Genzyme, the
corporation, continues to hold legal title to all such assets and is responsible
for all of such liabilities. Holders of GGD Stock, consequently, have no
specific claim against the assets attributed to Genzyme General.
The Company's principal executive offices are located at One Kendall
Square, Cambridge, Massachusetts 02139 and its telephone number is (617)
252-7500.
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RISK FACTORS
Statements made in this Prospectus relating to plans for sales and
marketing, product development, dividend policy, the timing of regulatory
approvals, or that otherwise relate to future periods, are forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934 (the "Exchange Act"). When used in
this Prospectus, the words "anticipates," "expects," "intends" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to a number of risks and uncertainties. Actual results could differ
materially from those anticipated in the forward-looking statements as a result
of certain risks described below or elsewhere in this Prospectus (including the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, as amended on Form 10-K/A (the "1997 Genzyme 10-K/A"), and other documents
incorporated herein by reference). Such risks should be considered carefully in
evaluating an investment in the GGD Stock.
RISKS RELATED TO GENZYME AND GENZYME GENERAL
Dependence on Cerezyme(R) Enzyme and Ceredase(R) Enzyme Sales
Genzyme General's results of operations are highly dependent upon the sales
of Cerezyme(R) enzyme and Ceredase(R) enzyme, both of which treat Gaucher's
disease. Sales of Cerezyme(R) enzyme and Ceredase(R) enzyme totaled $332.7
million for the year ended December 31, 1997 and $192.1 million for the six
months ended June 30, 1998, representing 63% and 66%, respectively, of Genzyme
General's product revenue for such periods.
In 1994, Genzyme introduced Cerezyme(R) enzyme, a recombinant form of the
enzyme, to replace Ceredase(R) enzyme, production of which is subject to supply
constraints. Genzyme, however, continued producing Ceredase(R) enzyme for
patients who had not yet converted to Cerezyme(R) enzyme. Genzyme ceased
manufacturing Ceredase(R) enzyme during 1998 because this patient conversion was
substantially complete. When the conversion of patients from Ceredase(R) enzyme
to Cerezyme(R) enzyme is finished, Genzyme General is likely to record a charge
to earnings for excess inventory of Ceredase(R) enzyme and related equipment.
This charge to earnings may be material.
Certain companies have initiated, and other companies in the future may
initiate, efforts to develop competitive products addressing Gaucher's disease.
Although the Company believes its regulatory position, manufacturing capability
and patient and physician relationships provide Cerezyme(R) enzyme with a strong
competitive position, there can be no assurance that any competitive products
which are developed will not gain market acceptance. A reduction in revenue from
sales of Cerezyme(R) enzyme would adversely affect Genzyme's results of
operations.
Risks Inherent in International Operations
Foreign operations of Genzyme accounted for 36% of consolidated net sales
in 1997 as compared to 35% in each of 1996 and 1995. In addition, Genzyme has
direct investments in a number of subsidiaries in foreign countries (primarily
in Europe and Japan). Financial results of Genzyme could be adversely affected
by fluctuations in foreign exchange rates. Fluctuations in the value of foreign
currencies affect the dollar value of Genzyme's net investment in foreign
subsidiaries, with these fluctuations being included in a separate component of
stockholders' equity. Operating results of foreign subsidiaries are translated
into U.S. dollars at average monthly exchange rates. For the year ended December
31, 1997, the impact of such transactions on operating results was not
significant; however, Genzyme reported a cumulative foreign currency translation
amount of $12.4 million in stockholders' equity as a result of foreign currency
adjustments, and there can be no assurance that the Company will not incur
additional adjustments in future periods. In addition, the U.S. dollar value of
transactions based in foreign currency (collections on foreign sales or payments
for foreign purchases) also fluctuates with exchange rates. The largest foreign
currency exposure results form activity in Dutch guilders, British pounds,
French francs, German marks, Spanish pesetas, Italian lira and Japanese yen.
Genzyme has not hedged net foreign investments in the past, although it may
engage in hedging transactions to manage and reduce its foreign exchange risk,
subject to certain restrictions imposed by the
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Genzyme Board. There can be no assurance that Genzyme's attempts to manage its
foreign currency exchange risk will be successful.
Uncertainty Regarding Patents and Protection of Proprietary Technology
Genzyme's success depends, to a large extent, on its ability to maintain a
competitive technological position in its product areas. Proprietary rights
relating to Genzyme's product 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. While certain of
Genzyme's patents have been allowed or issued, there can be no assurance that
these allowed and issued patents or additional patents allowed or issued to
Genzyme will effectively protect the proprietary technology of Genzyme. In
addition, patent litigation is widespread in the biotechnology industry and it
is not possible to predict how any such litigation will affect Genzyme.
No consistent policy has emerged from the U.S. Patent and Trademark Office
regarding the breadth of claims allowed in biotechnology patents and, therefore,
the degree of future protection for Genzyme's proprietary rights is uncertain.
The allowance of broader claims may increase the incidence and cost of patent
interference proceedings in the U.S. and the risk of infringement litigation in
the U.S. and abroad. Conversely, the allowance of narrower claims, while
reducing the risk of infringement, may limit the value of Genzyme's proprietary
rights under its patents, licenses and pending patent applications.
Genzyme attempts to monitor the patent filings of its competitors in an
effort to guide the design and development of its products to avoid
infringement. Notwithstanding these efforts, there can be no assurance that the
patents issued or licensed to Genzyme will remain free of challenge by third
parties. In addition, patent applications filed by third parties may, if issued,
cover the Company's products and services as ultimately developed, which could
have an adverse impact on the Company's results of operations in amounts that
cannot presently be determined. Genzyme may, depending on the final formulation
of such products and services, need to acquire licenses to, or contest the
validity of, such patents. For example, Genzyme may need to acquire patent
rights from third parties that cover particular diagnostic and/or therapeutic
gene sequences or that cover aspects of adjuvant therapies such as compositions
of matter or methods of use related to the administration of cytokines as
immunostimulants in combination with a cancer therapy. In gene therapy, Genzyme
may need to license a number of patents covering different elements of the
technique, such as those relating to a particular viral or non-viral vector or
methods for its delivery. The extent to which Genzyme may need to license such
rights or contest the validity of such patents depends on the scope and validity
of such patents and ultimately on the final design or formulation of its
products and services under development. The cost and ability to license any
such rights and the likelihood of successfully contesting the validity of such
patents are uncertain.
Genzyme has also relied upon trade secrets, proprietary know-how and
continuing technological innovation to develop and maintain its competitive
position. There can be no assurance that others will not independently develop
such know-how or otherwise obtain access to Genzyme's technology. While
Genzyme'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 Genzyme's consultants have developed portions of Genzyme's
proprietary technology at their respective universities or in governmental
laboratories. Thee 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.
Regulation by Government Agencies
The production and sale of health care products and provision of health
care services are highly regulated. In particular, human therapeutic and
diagnostic products are subject to pre-marketing approval by the U.S. Food and
Drug Administration (the "FDA") and comparable agencies in foreign countries.
The process of obtaining these approvals varies according to the nature and use
of the product and can involve lengthy and detailed laboratory and clinical
testing, sampling activities and other costly and time-consuming procedures.
Regulation of Genzyme General products and services could also limit Genzyme
General's reimbursement for
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its products and services and otherwise materially affect the results of
operations of Genzyme General. Additional regulatory regimes, in the U.S. and
internationally, affect the Company's work in gene therapy and the provision of
cancer diagnostic services. There can be no assurance that any of the required
regulatory approvals will be granted on a timely basis, if at all.
Certain of Genzyme's products, including Cerezyme(R) enzyme and Ceredase(R)
enzyme, have been designated as orphan drugs under the Orphan Drug Act, which
provides incentives to manufacturers to develop and market drugs for rare
diseases. The Orphan Drug Act generally entitles the first developer that
receives FDA marketing approval for an orphan drug to a seven-year exclusive
marketing period in the United States for that product. Legislation has been
periodically introduced in recent years, however, to amend the Orphan Drug Act.
Such legislation has generally been directed to shortening the period of
automatic market exclusivity and granting certain market rights to simultaneous
developers of a drug. The effect on Genzyme of any amendments ultimately adopted
cannot be assessed at this time.
No Assurance of Commercial Success of the Sepra Products
In August 1996, Genzyme received marketing approval from the FDA for
Seprafilm(R) bioresorbable membrane and commenced commercial sales of
Seprafilm(R) bioresorbable membrane in the U.S. on behalf of Genzyme Ventures
II. The successful commercialization of Seprafilm(R) bioresorbable membrane and
other Sepra Products will depend on many factors, including: (i) the content and
timing of decisions made by the FDA and other regulatory authorities, (ii)
market acceptance of the Sepra Products by surgeons and hospital administrators,
(iii) Genzyme General's ability to deploy its sales force to market the Sepra
Products, (iv) Genzyme General's ability to supply sufficient product to meet
market demand, (v) the number and relative efficacy of competitive products that
may subsequently enter the market and (vi) the degree to which third party
reimbursement is available for the Sepra Products. There can be no assurance
that Genzyme General will be successful in its efforts to commercialize the
Sepra Products and Genzyme General may cease development of one or more of the
Sepra Products at any time if demand proves inadequate. In January 1998, Genzyme
announced that it had discontinued development of Sepracoat(TM) coating solution
for the U.S. market.
Technology Transferred to Genzyme Development Partners, L.P. ("GDP")
Genzyme organized GDP, a special purpose research and development entity,
and transferred technology and commercial rights to the Sepra Products that
Genzyme previously had under development. Genzyme has an option to purchase the
limited partnership interests in GDP under certain circumstances. It is
uncertain at this time whether Genzyme will exercise this option. If Genzyme
does not exercise this option, it will have limited rights in revenues generated
from the sale of GDP's products. If Genzyme does exercise this option, it will
be required to make substantial cash payments or to issue shares of GGD Stock,
or both. Cash payments will diminish Genzyme's capital resources. Payments in
GGD Stock could result in dilution to holders of GGD Stock and could negatively
affect the market price of such stock.
Uncertainty Regarding Success of Clinical Trials and Other Risks in Product
Development
Several of Genzyme's products are currently in or will require clinical
trials to test safety and efficacy in humans for various conditions. There can
be no assurance that Genzyme will not encounter problems in clinical trials that
will cause it to delay or suspend these 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.
Product development involves a high degree of risk, and returns to
investors are dependent upon successful development of Genzyme's products. There
can be no assurance that development of any product will be successfully
completed or that FDA approval of any of Genzyme's products under development
will be obtained.
Rapid Technological Change
The field of biotechnology is expected to continue to undergo significant
and rapid technological change. Although Genzyme General will seek to expand its
technological capabilities in order to remain competitive,
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there can be no assurance that research and discoveries by others will not
render Genzyme General's products or services obsolete.
Future Capital Needs
Although Genzyme currently has substantial cash resources, it has committed
to utilize a portion of such funds for certain purposes, such as (i) continuing
the development and completing the market introduction in the U.S. and Europe of
its line of biomaterial products based on hyaluronic acid for use in limiting
the formation of post-operative adhesions (the "Sepra Products"), (ii) continued
marketing of Carticel(TM) autologous cultured chondrocytes and developing,
producing and marketing other products through GTR and (iii) making certain
payments to third parties in connection with strategic collaborations.
Genzyme had approximately $509.5 million in cash, cash equivalents and
short and long-term investments (excluding investments in equity securities) at
June 30, 1998. As of June 30, 1998, approximately $100 million was outstanding
under Genzyme's $225.0 million revolving credit facility with a group of
commercial banks, $82.0 million of which was allocated to Genzyme General and
$18.0 million of which was allocated to GTR. Amounts borrowed under this
facility are payable on November 15, 1999. Genzyme's cash resources will be
diminished upon repayment of amounts borrowed, plus accrued interest, under this
credit facility. In addition, in February 1997 Genzyme privately placed a note
with an aggregate principal amount of $13.0 million, which is convertible into
shares of GTR Stock (the "GTR Note"), to fund GTR's operations and in August
1997 Genzyme privately placed an aggregate principal amount of $20.0 million of
debentures convertible into GMO Stock (the "GMO Debentures") to fund GMO's
operations. percent of the GMO Debentures were converted into
million of debentures convertible into GGD Stock (the "GGD
Debentures'). In May 1998, Genzyme sold $250.0 million in notes convertible into
shares of GGD Stock (the "GGD Notes"). Pursuant to the terms of the GTR Note,
the GMO Debentures, the GGD Debentures and the GGD Notes, the holders will, in
some circumstances, receive cash from Genzyme. To the extent cash is used to pay
such principal and accrued interest, the Company's cash reserves will also be
diminished. As a result of these commitments and contingencies, Genzyme may have
to obtain additional financing. There can be no assurance that any such
additional financing will be available on favorable terms, if at all.
Third Party Reimbursement and Health Care Cost Containment Initiatives
A majority of Genzyme General's revenues are attributable directly or
indirectly to payments received from third party payers, including government
health administration authorities and private health insurers. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products, and third party payers are increasingly challenging the prices charged
for health care products and services. Third party payers are also increasingly
attempting to contain health care costs by limiting both coverage and the level
of reimbursement for new therapeutic products and by refusing in some cases to
provide coverage for uses of approved products for disease indications for which
the FDA has not granted marketing approval. There can be no assurance that third
party insurance coverage will be available for any new products or services
developed by Genzyme General. If adequate coverage and reimbursement are not
provided by government and other third party payers for Genzyme General's
products and services, its results of operations may be materially adversely
affected.
In addition, Congress has from time to time discussed the possible
implementation of broad based health care cost containment measures. While these
discussions have not led to the enactment of any specific health care cost
containment legislation, it is possible that health care measures will again be
proposed in Congress. The effects on Genzyme General of any such measures that
are ultimately adopted cannot be predicted at this time.
Product Liability and Limitations of Insurance
The Company may be subject to product liability claims in connection with
the use or misuse of its products during testing or after commercialization.
While the Company has taken, and continues to take, what it believes are
appropriate precautions, there can be no assurance that Genzyme General will
avoid significant
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liability exposure. Genzyme has only limited amounts of product liability
insurance and there can be no assurance that such insurance will provide
sufficient coverage against any or all potential product liability claims. 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, if at all, or that
such insurance will provide adequate coverage against claims asserted.
Year 2000
Many computer systems experience problems handling dates beyond the year
1999. Therefore, some computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. The Company is assessing
the internal readiness of its computer systems for handling the year 2000. The
Company expects to implement successfully the systems and programming changes
necessary to address year 2000 issues, and does not believe that the cost of
such actions will have a material adverse effect on the Company's results of
operations or financial condition. There can be no assurance, however, that
there will not be a delay in, or increased costs associated with, the
implementation of such changes, and the Company's inability to implement such
changes could have an adverse effect on future results of operations.
RISKS RELATED TO THE GGD STOCK
Volatility of Prices; Absence of Dividends
The market prices for Genzyme's securities 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 industry and market conditions in general may have a
significant impact on the market price of Genzyme's securities, including the
GGD Stock. No cash dividends have been paid to date on GGD Stock, nor does
Genzyme General anticipate paying cash dividends on such stock in the
foreseeable future.
Possible Adverse Effect of Anti-Takeover Provisions
Certain provisions of Massachusetts law, Genzyme's capital structure,
Genzyme's Restated Articles of Organization (the "Genzyme Charter"), Genzyme's
bylaws and the terms of Genzyme's stockholder rights plan may have the effect of
delaying, deferring or preventing a change in control of Genzyme or a change in
its management and thus deprive stockholders of an opportunity to realize a
premium for their shares. Tracking stock may also deprive Genzyme stockholders
of the opportunity to realize such a premium because, in order to obtain control
of a particular division, an acquiror would be required to obtain control of
Genzyme. In addition, Genzyme's authorized capital stock includes shares of
undesignated common and preferred stock that may be issued from time to time by
the Genzyme Board in one or more series. The issuance of additional series of
common or preferred stock could have the effect of discouraging attempts to
acquire control of Genzyme.
RISKS RELATED TO GENZYME TRACKING STOCK
Prior to June 18, 1997, Genzyme had outstanding two classes of common
stock, GGD Stock and GTR Stock. Effective June 18, 1997, the GGD Stock and GTR
Stock were redesignated as separate series of a single class of common stock and
a new series of the same class of common stock, GMO Stock, was issued. As a
result, Genzyme currently has three series of common stock outstanding: GGD
Stock, GTR Stock and GMO Stock, which are intended to reflect the value and
track the performance of Genzyme's three operating divisions: Genzyme General,
GTR and GMO.
Stockholders of One Company; Financial Impacts on One Division Could Affect
the Others
Genzyme General, GTR and GMO are each divisions of Genzyme. Notwithstanding
the allocation of Genzyme's products and programs among divisions for financial
statement presentation purposes and allocation of equity interests, Genzyme
continues to hold title to all of the assets and is responsible for all of the
liabilities allocated to each of its divisions. Holders of each series of
Genzyme common stock have no
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specific claim against the assets attributed for financial statement
presentation purposes to the division whose performance is associated with the
series of stock they hold. Liabilities or contingencies of any division that
affect Genzyme's resources or financial condition could affect the financial
condition or results of operations of the other divisions. Prospective
purchasers of the Shares should, therefore, read Genzyme's consolidated
financial statements in conjunction with the financial statements of Genzyme
General, which are included in the documents incorporated herein by reference.
See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
No Rights or Additional Duties With Respect to the Divisions; Potential
Conflicts
Holders of each series of Genzyme common stock have only the rights of
stockholders of Genzyme and, except in limited circumstances, do not have any
rights specifically related to the division to which such series of common stock
relates.
The existence of separate series of common stock may give rise to occasions
when the interests of holders of each series of Genzyme common 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 multiple series of common stock with divergent
interests, Genzyme believes, based on the advice of counsel, that a
Massachusetts court would hold that a board of directors owes an equal duty to
all stockholders regardless of class or series 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 has been advised 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, taking
into account the interests of the holders of each series of common stock and the
alternatives reasonably available, should represent an appropriate defense to
any challenge by or on behalf of the holders of any series of common stock that
such action could have a disparate effect on different series of common stock.
However, a Massachusetts court hearing a case involving such a challenge may
decide to apply principles of Massachusetts law other than those described
above, or may develop new principles of Massachusetts law, in order to decide
such a case.
Disproportionate ownership interests of members of the Genzyme Board in any
series 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 series of common
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 series were disproportionate or had disparate values. The Genzyme 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 Genzyme Board on such matters.
No Additional Separate Voting Rights
Holders of each series of Genzyme common stock vote together as a single
class on all matters as to which common stockholders generally are entitled to
vote (including the election of directors). Except in certain limited
circumstances provided under Massachusetts law, in Genzyme's Charter, and in the
management and accounting policies adopted by the Genzyme Board, holders of each
series of common stock have no right to vote on matters separately. Accordingly,
except in limited circumstances, holders of shares of one series of common stock
could not bring a proposal to a vote of the holders of that series of common
stock only, but would be required to bring any proposal to a vote of all common
stockholders.
On all matters as to which common stockholders generally are entitled to
vote, each share of GGD Stock has one vote, each share of GTR Stock has, through
December 31, 1998, .33 vote and each share of GMO Stock has, through December
31, 1998, .25 vote. On January 1, 1999 and on January 1 every two years
thereafter, the number of votes to which each share of GTR Stock and GMO Stock
is entitled will be adjusted to equal the ratio of the Fair Market Value (as
defined herein) of one share of GTR Stock and GMO Stock, respectively, to the
Fair Market Value of one share of GGD Stock as of such date. Fair Market Value
as of any date means the average of the daily closing prices as reported by
Nasdaq (or the appropriate exchange or other market on which such shares are
then traded) for the 20 consecutive trading days commencing on the
9
<PAGE> 11
30th trading day prior to such date. In the event such closing prices are
unavailable, Fair Market Value will be determined by the Genzyme Board.
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 each series of Genzyme common stock. If, when a stockholder vote
is taken on any matter as to which a separate vote by each series is not
required and the holders of any series of common stock would have more than the
number of votes required to approve any such matter, the holders of that series
would control the outcome of the vote on such matter. Holders of GGD Stock, GTR
Stock and GMO Stock currently have approximately 91.2%, 7.7% and 1.1%,
respectively, of the total voting power of Genzyme. As a result, on matters
which are submitted to a vote of common stockholders, the preferences of the
holders of GGD 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 each series of Genzyme common stock materially changes.
Exchange of GTR Stock and GMO Stock
The Genzyme Board can, in its sole discretion, determine to exchange shares
of GTR Stock and GMO Stock for cash or shares of GGD Stock (or any combination
thereof) at a 30% premium over Fair Market Value of the GTR Stock or GMO Stock
at any time. In addition, following a disposition of all or substantially all of
the assets of GTR or GMO, the shares of GTR Stock or GMO Stock, as the case may
be, are subject to mandatory exchange by Genzyme for cash and/or shares of GGD
Stock at a 30% premium over Fair Market Value of such series of common stock as
determined by the trading prices during a specified period prior to public
announcement of the disposition. Consequently, holders of GTR Stock and GMO
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 or
GMO. See "Management and Accounting Policies Governing the Relationship of
Genzyme Divisions" set forth in Exhibit 99.1 to the 1997 Genzyme 10-K/A.
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 each series of Genzyme common 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 series. On June
30, 1998, each share of GGD Stock had 100 liquidation units, each share of GTR
Stock had 58 liquidation units and each share of GMO Stock had 25 liquidation
units. Because the liquidation units will not be adjusted to reflect changes in
the relative market value or performance of each of the divisions of Genzyme,
the per share liquidating distribution to a holder of GGD Stock, GTR Stock or
GMO Stock is not likely to correspond to the value of the assets of Genzyme
General, GTR or GMO, respectively, at the time of a dissolution, liquidation or
winding up of Genzyme.
Management and Accounting Policies Subject to Change
The Genzyme Board has adopted certain management and accounting policies
applicable to the preparation of the financial statements of the divisions of
Genzyme, 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 Genzyme Board without the approval of Genzyme's
stockholders, subject to the Genzyme Board's fiduciary duty to all holders of
Genzyme's capital stock. The Genzyme Board may also adopt additional policies
depending upon the circumstances. See "Management and Accounting Policies
Governing the Relationship of Genzyme Divisions" set forth in Exhibit 99.1 to
the 1997 Genzyme 10-K/A.
Non-Compete Policy
The Genzyme Board has adopted a policy providing that the Company will not
develop products and services outside of GTR or GMO that compete with products
and services being developed or sold by GTR or GMO, other than through joint
ventures in which GTR or GMO participates. For a discussion of this and
10
<PAGE> 12
other matters regarding policies relating to the divisions, see "Management and
Accounting Policies Governing the Relationship of Genzyme Divisions" set forth
in Exhibit 99.1 to the 1997 Genzyme 10-K/A.
Use of Operating Losses by Other Genzyme Divisions
Genzyme's management and accounting policies provide that to the extent any
division of Genzyme is unable to utilize its operating losses or other projected
tax benefits to reduce its current or deferred income tax expense, such losses
or benefits may be reallocated to another division on a quarterly basis for
financial reporting purposes. Accordingly, although the actual payment of taxes
is a corporate liability of Genzyme as a whole, separate financial statements
will be prepared for each division and any losses that cannot be utilized by a
division will be allocated among the profitable divisions rather than carried
forward to reduce the future tax liability of the division generating the
losses. This could result in a division with losses (such as GTR and GMO
currently) being charged a greater portion of the total corporate tax liability
and reporting lower earnings after taxes in the future than would have been the
case if such division had retained its losses or other benefits in the form of a
net operating loss carryforward. See "Management and Accounting Policies
Governing the Relationship of Genzyme Divisions" set forth in Exhibit 99.1 to
the 1997 Genzyme 10-K/A.
SELLING SECURITYHOLDERS
The Company previously issued million of GGD Debentures due August
28, 2003. Pursuant to the terms of a Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of August 29, 1997, the Company is
obligated to register the shares of Genzyme General Division Common Stock
issuable upon conversion of the GGD Debentures. The Registration Rights
Agreement is included as an exhibit to the Registration Statement of which this
Prospectus forms a part and should be reviewed for a complete description of the
Company's obligations under the Registration Rights Agreement. The registration
of the Shares does not necessarily mean that the Selling Securityholders will
sell all or any of the Shares they hold.
The following table sets forth information concerning the aggregate
principal amount of GGD Debentures beneficially owned by each named Selling
Securityholder, the number of shares of GGD Stock issuable upon conversion of
the GGD Debentures held thereby and the number of other shares of GGD Stock held
by the Selling Securityholders. Other than their ownership of such securities,
none of the Selling Securityholders has had any material relationship with the
Company during the past three years. The table below has been prepared on the
basis of the information furnished to the Company by or on behalf of the Selling
Securityholders. Any or all of the Shares listed below may be offered for sale
by the Selling Securityholders from time to time pursuant to this Prospectus.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES
GENZYME GENERAL DIVISION OF GENZYME
PRINCIPAL AMOUNT OF COMMON STOCK INTO WHICH THE GENERAL DIVISION
GGD CONVERTIBLE DEBENTURES ARE CONVERTIBLE, COMMON STOCK
DEBENTURES ALL OF WHICH MAY BE OWNED PRIOR TO
BENEFICIALLY SOLD PURSUANT TO THIS CONVERSION OF
NAME OF SELLING SECURITYHOLDER OWNED(1) PROSPECTUS(1)(2) THE DEBENTURES(1)
- ---------------------------------- ------------------- --------------------------- -----------------
<S> <C> <C> <C>
</TABLE>
- ---------------
(1) All information is as of , 1998.
(2) Assumes conversion of the full amount of debentures held by such holder at
the initial rate of approximately 29.7 shares of Genzyme General Division
Common Stock per $1,000 in principal amount of debentures. The conversion
rate and the number of shares of Genzyme General Division Common Stock
issuable upon conversion of the debentures are subject to adjustment under
certain circumstances. On August 31, 1998, there were 79,135,204 shares of
GGD Stock outstanding.
Additionally, individuals and entities who, after the date of this
Prospectus, receive shares from a listed selling securityholder as a gift or in
connection with a pledge may sell up to 500 of such shares using this
Prospectus.
11
<PAGE> 13
PLAN OF DISTRIBUTION
Sales of the Shares may be effected by or for the account of the Selling
Securityholders from time to time in transactions (which may include block
transactions) on any exchange or market on which such securities are listed or
quoted, in negotiated transactions, through a combination of such methods of
sale, or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices,
or at negotiated prices. The Selling Securityholders may effect such
transactions by selling the Shares directly to purchasers, to or through
broker-dealers who may purchase Shares as principals and thereafter sell the
Shares, through a combination of such methods of sale, or otherwise.
Broker-dealers engaged by Selling Securityholders may receive compensation in
the form of discounts, concessions or commissions from the Selling
Securityholders, the purchasers of the Shares for whom such broker-dealers may
act as agents or to whom they may sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of customary
commissions).
The Selling Securityholders and any broker-dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act. Any commissions paid or any discounts or concessions allowed to any such
persons, and any profits received on the resale of the Shares offered hereby may
be deemed to be underwriting commissions or discounts under the Securities Act.
To the extent required, the Company will amend or supplement this
Prospectus to disclose material arrangements regarding the plan of distribution.
If, for example, the Selling Securityholders elect to sell Shares in an
underwritten offering, a Prospectus supplement accompanying this Prospectus will
set forth, to the extent required, the aggregate number of Shares being offered,
the name or names of the Selling Securityholders, and the terms of the offering,
including the name or names of the underwriters, any discounts, concessions or
commissions and other terms constituting compensation from the Selling
Securityholders, and any discounts, concessions or commissions allowed or
reallowed or paid to dealers. In such an underwritten offering, the Shares will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. The Shares may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. In connection with such a sale of Shares,
the underwriters may receive compensation from the Selling Securityholders in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of the Shares for whom they may act as agent.
Underwriters may sell the Shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Unless otherwise set forth in the Prospectus supplement relating
thereto, the obligations of any underwriters to purchase the Shares will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all such Shares if any are purchased. Underwriters may be entitled
under agreements with the Company to indemnification against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers or underwriters may be
required to make in respect thereof. Such underwriters may engage in
transactions with, or perform services for, the Company for customary
compensation.
Pursuant to the Registration Rights Agreement, the Company has agreed to
pay certain expenses incident to the offer and sale of the Shares offered by the
Selling Securityholders hereby. The Selling Securityholders, however, will pay
any underwriting discounts and selling commissions. The Company has agreed to
indemnify the Selling Securityholders against certain liabilities, including
liabilities under the Securities Act.
To comply with the securities laws of certain jurisdictions, the Shares
offered hereby may need to be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may be limited in its ability to engage
in market activities with respect to such Shares. Each Selling Securityholder,
for example, will be subject to applicable provisions of the Exchange Act and
the rules and
12
<PAGE> 14
regulations thereunder, which provisions may limit the timing of purchases and
sales of shares of GGD Stock by the Selling Securityholder. The foregoing may
affect the marketability of the Shares.
The Company's outstanding GGD Stock is included for quotation for trading
on Nasdaq, and application has been made to include for quotation the Shares on
Nasdaq.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Palmer & Dodge LLP, Boston, Massachusetts, counsel for the Company.
EXPERTS
The consolidated balance sheets of Genzyme as of December 31, 1996 and 1997
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1997
included in Genzyme's Annual Report on Form 10-K for the year ended December 31,
1997, as amended, and the financial statements schedule appearing therein,
incorporated by reference into this Prospectus, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The combined balance sheets of Genzyme General and GTR as of December 31,
1996 and 1997, and the related combined statements of operations and cash flow
for each group for each of the three years in the period ended December 31, 1997
included in Genzyme's Annual Report on Form 10-K for the year ended December 31,
1997, as amended, and the financial statement schedule appearing therein, have
also been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The combined balance sheets of GMO as of December 31, 1996 and 1997, and
the related combined statements of operations and cash flows for each of the
three years in the period ended December 31, 1997 included in Genzyme's Annual
Report on Form 10-K for the year ended December 31, 1997, as amended, have also
been incorporated herein in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
Genzyme is subject to the informational requirements of the Exchange Act,
and, in accordance therewith, files periodic reports, proxy statements and other
information with the Commission. Reports, proxy and information statements filed
pursuant to Sections 14(a) and 14(c) of the Exchange Act and other information
filed with the Commission, as well as copies of the Registration Statement, can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Midwest
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611;
and Northeast Regional Office, 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act. This Prospectus omits
certain of the information contained in the Registration Statement in accordance
with the rules and regulations of the Commission. Reference is hereby made to
the Registration Statement and related exhibits for further information with
respect to the Company and the Shares. Statements contained herein concerning
the provisions of any document are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
13
<PAGE> 15
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Genzyme incorporates herein by reference the following documents previously
filed with the Commission (File No. 0-14680) pursuant to the Exchange Act: (i)
its Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as
amended by Amendments on Form 10-K/A filed with the Commission on April 27, 1998
and June 30, 1998; (ii) its Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1998 and June 30, 1998; (iii) its Current Reports on
Form 8-K, dated January 6, 1998 and May 19, 1998; and (iv) the description of
GGD Stock and GGD Stock Purchase Rights contained in Genzyme's Registration
Statement on Form 8-A filed with the Commission on June 18, 1997.
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.
14
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be borne by Genzyme in connection with the registration of
the Genzyme General Division Common Stock are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 8,040
Printing and engraving expenses............................. $ 5,000
Accounting fees and expenses................................ $ 2,500
Legal fees and expenses..................................... $15,000
Miscellaneous expenses...................................... $ 460
-------
Total.................................................. $31,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 67 of chapter 156B of the Massachusetts Business Corporation Law
grants Genzyme the power to indemnify any director, officer, employee or agent
to whatever extent permitted by Genzyme's Amended and Restated Articles of
Organization, By-Laws or a vote adopted by the holders of a majority of the
shares entitled to vote thereon, unless the proposed indemnitee has been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that his or her actions were in the best interests of Genzyme or, to the
extent that the matter for which indemnification is sought relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan. Such
indemnification may include payment by Genzyme of expenses incurred in defending
a civil or criminal action or proceeding in advance of the final disposition of
such action or proceeding, upon receipt of an undertaking by the person
indemnified to repay such payment if he or she shall be adjudicated to be not
entitled to indemnification under the statute.
Article VI of Genzyme's By-Laws provides that Genzyme shall, to the extent
legally permissible, indemnify each person who may serve or who has served at
any time as a director or officer of Genzyme or of any of its subsidiaries, or
who at the request of Genzyme may serve or at any time has served as a director,
officer or trustee of, or in a similar capacity with, another organization or an
employee benefit plan, against all expenses and liabilities (including counsel
fees, judgments, fines, excise taxes, penalties and amounts payable in
settlements) reasonably incurred by or imposed upon such person in connection
with any threatened, pending or completed action, suit or other proceeding,
whether civil, criminal, administrative or investigative, in which he or she may
become involved by reason of his or her serving or having served in such
capacity (other than a proceeding voluntarily initiated by such person unless he
or she is successful on the merits, the proceeding was authorized by Genzyme or
the proceeding seeks a declaratory judgment regarding his or her own conduct).
Such indemnification shall include payment by Genzyme of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding, upon receipt of an undertaking by the
person indemnified to repay such payment if he or she shall be adjudicated to be
not entitled to indemnification under Article VI, which undertaking may be
accepted without regard to the financial ability of such person to make
repayment.
The indemnification provided for in Article VI is a contract right inuring
to the benefit of the directors, officers and others entitled to
indemnification. In addition, the indemnification is expressly not exclusive of
any other rights to which such director, officer or other person may be entitled
by contract or otherwise under law, and inures to the benefit of the heirs,
executors and administrators of such a person.
Genzyme also has in place agreements with certain officers and directors
which affirm Genzyme's obligation to indemnify them to the fullest extent
permitted by law and contain various procedural and other provisions which
expand the protection afforded by Genzyme's By-Laws.
Section 13(b)(1 1/2) of chapter 156B of the Massachusetts Business
Corporation Law provides that a corporation may, in its articles of
organization, eliminate a director's personal liability to the corporation and
II-1
<PAGE> 17
its stockholders for monetary damages for breaches of fiduciary duty, except in
circumstances involving (i) a breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unauthorized distributions and loans to insiders and (iv) transactions from
which the director derived an improper personal benefit. Article VI.C.5. of
Genzyme's Amended and Restated Articles of Organization provides that no
director shall be personally liable to Genzyme or its stockholders for monetary
damages for any breach of fiduciary duty as a director, except to the extent
that such exculpation is not permitted under the Massachusetts Business
Corporation Law as in effect when such liability is determined.
ITEM 16. EXHIBITS
See Exhibit Index immediately following signature page.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 15 hereof, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cambridge, Commonwealth of Massachusetts, as of
September 30, 1998.
GENZYME CORPORATION
By: /s/ DAVID J. MCLACHLAN
----------------------------------
DAVID J. MCLACHLAN, EXECUTIVE VICE
PRESIDENT, FINANCE AND CHIEF
FINANCIAL OFFICER
POWER OF ATTORNEY
We, the undersigned officers and directors of Genzyme Corporation, hereby
severally constitute and appoint Henri A. Termeer, David J. McLachlan, Peter
Wirth and Evan M. Lebson, and each of them singly, our true and lawful
attorneys, with full power to them in any and all capacitates, to sign any
amendments to this Registration Statement on Form S-3 (including Pre-and
Post-Effective Amendments), and any related Rule 462(b) registration statement
or amendment thereto, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact may do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ HENRI A. TERMEER Director and Principal Executive Officer
- ---------------------------------------------------
HENRI A. TERMEER
/s/ DAVID J. MCLACHLAN Principal Financial and Accounting Officer
- ---------------------------------------------------
DAVID J. MCLACHLAN
/s/ CONSTANTINE E. ANAGNOSTOPOULOS Director
- ---------------------------------------------------
CONSTANTINE E. ANAGNOSTOPOULOS
/s/ DOUGLAS A. BERTHIAUME Director
- ---------------------------------------------------
DOUGLAS A. BERTHIAUME
/s/ HENRY E. BLAIR Director
- ---------------------------------------------------
HENRY E. BLAIR
Director
- ---------------------------------------------------
ROBERT J. CARPENTER
/s/ CHARLES L. COONEY Director
- ---------------------------------------------------
CHARLES L. COONEY
/s/ HENRY R. LEWIS Director
- ---------------------------------------------------
HENRY R. LEWIS
</TABLE>
II-3
<PAGE> 19
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
4.1 Restated Articles of Organization of Genzyme. Filed as Exhibit 1 to
Genzyme's Registration Statement on Form 8-A filed with the Commission
on June 18, 1997, and incorporated hereby by reference.
4.2 By-laws of Genzyme. Filed as Exhibit 3.2 to Genzyme's Form 8-K dated
December 31, 1991 (File No. 0-14680), and incorporated herein by
reference.
4.3 Indenture, dated as of May 22, 1998, between Genzyme and State Street
Bank and Trust Company, as Trustee, including the form of Note. Filed
as Exhibit 4.3 to Genzyme's Registration Statement on Form S-3 (File
No. 333-59513) and incorporated herein by reference.
4.4 Registration Rights Agreement, dated as of May 19, 1998, among
Genzyme, Credit Suisse First Boston Corporation, Goldman, Sachs & Co.
and Cowen & Company. Filed as Exhibit 4.4 to Genzyme's Registration
Statement on Form S-3 (File No. 333-59513) and incorporated herein by
reference.
4.5 Purchase Agreement, dated as of May 19, 1998, among Genzyme, Credit
Suisse First Boston Corporation, Goldman, Sachs & Co. and Cowen &
Company. Filed as Exhibit 4.5 to Genzyme's Registration Statement on
Form S-3 (File No. 333-59513) and incorporated herein by reference.
4.6 Series Designation for Genzyme Molecular Oncology Division Common
Stock, $.01 par value. Filed as Exhibit 2 to Genzyme's Registration
Statement on Form 8-A filed with the Commission on June 18, 1997, and
incorporated hereby by reference.
4.7 Series Designation for the Series A, Series B and Series C Junior
Participating Preferred Stock, $.01 par value, of Genzyme. Filed as
Exhibit 3 to Genzyme's Registration on Form 8-A filed with the
Commission on June 18, 1997, and incorporated hereby by reference.
4.8 Amended and Restated Rights Agreement dated as of June 12, 1997
between Genzyme and American Stock Transfer and Trust Company. Filed
as Exhibit 5 to Genzyme's Registration Statement on Form 8-A filed
with the Commission on June 18, 1997, and incorporated herein by
reference.
4.9 Specimen Callable Warrant to purchase Genzyme Common Stock issued to
shareholders of Neozyme II. Filed as Exhibit 28.6 to Genzyme's Form
10-Q for the quarter ended March 31,1992, and incorporated herein by
reference.
4.10 Warrant issued to Richard Warren, Ph.D. Filed as Exhibit 4 to the Form
8-K of IG Laboratories, Inc. dated October 11, 1990 (File No.
0-18439), and incorporated herein by reference.
4.11 Genzyme Common Stock Purchase Warrant No. A-1 dated July 31, 1997
issued to Canadian Medical Discoveries Fund, Inc. ("CMDF"). Filed as
Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended September
30, 1997, and incorporated herein by reference.
4.12 Genzyme Common Stock Purchase Warrant No. A-2 dated July 31, 1997
issued to CMDF. Filed as Exhibit 10.3 to Genzyme's Form 10-Q for the
quarter ended September 30, 1997, and incorporated herein by
reference.
4.13 Genzyme Common Stock Purchase Warrant No. A-3 dated July 31, 1997
issued to CMDF. Filed as Exhibit 10.3 to Genzyme's Form 10-Q for the
quarter ended September 30, 1997, and incorporated herein by
reference.
4.14 Registration Rights Agreement dated as of July 31, 1997 by and between
Genzyme and CMDF. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the
quarter ended September 30, 1997, and incorporated herein by
reference.
4.15 Genzyme Molecular Oncology Division Convertible Debenture dated August
29, 1997, including a schedule with respect thereto filed pursuant to
Instruction 2 to Item 601 of Regulation S-K. Filed as Exhibit 10.6 to
Genzyme's Form 10-Q for the quarter ended September 30, 1997, and
incorporated herein by reference.
4.16 Form of Genzyme General Division Convertible Debenture. Filed as
Exhibit 10.7 to Genzyme's Form 10-Q for the quarter ended September
30, 1997, and incorporated herein by reference. Filed herewith.
<PAGE> 20
EXHIBIT
NO. DESCRIPTION
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4.17 Registration Rights Agreement dated as of August 29, 1997 by and among
Genzyme and the entities listed on the signature pages thereto. Filed
as Exhibit 10.8 to Genzyme's Form 10-Q for the quarter ended September
30, 1997, and incorporated herein by reference.
4.18 Warrant Agreement between Genzyme and Comdisco, Inc. Filed as Exhibit
10.22 to a Form 10 of PharmaGenics, Inc. ("PharmaGenics") (File No.
0-20138), and incorporated herein by reference.
4.19 Form of Genzyme Corporation Convertible Note dated February 28, 1997
issued to Credit Suisse First Boston (Hong Kong) Ltd. ("CSFB"). Filed
as Exhibit 4.14 to Genzyme's Form 10-K/A for the year ended December
31, 1997 filed with the Commission on April 27, 1998, and incorporated
herein by reference.
4.20 Registration Rights Agreement dated February 27, 1997 by and between
Genzyme and CSFB. Filed as Exhibit 4.15 to Genzyme's Form 10-K/A for
the year ended December 31, 1997 filed with the Commission on April
27, 1998, and incorporated herein by reference.
5.1 Opinion of Palmer & Dodge LLP. Filed herewith.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants to
Genzyme Corporation. Filed herewith.
23.2 Consent of Palmer & Dodge LLP (included in Exhibit 5 hereto).
24.1 Power of Attorney (included on signature page).
<PAGE> 1
Exhibit 5.1
PALMER & DODGE LLP
ONE BEACON STREET
BOSTON, MASSACHUSETTS 02108
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
September 29, 1998
Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
We are rendering this opinion in connection with the Registration
Statement on Form S-3 (the "Registration Statement") filed by Genzyme
Corporation (the "Company") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, on or about the date hereof. The
Registration Statement relates to the registration of 629,641 shares (the
"Shares") of the Genzyme General Division Common Stock, $0.01 par value. We
understand that the Shares are to be offered and sold from time to time by the
securityholders named in the Prospectus forming part of the Registration
Statement in the manner described in such Prospectus.
We have acted as your counsel in connection with the preparation of the
Registration Statement and are familiar with the proceedings taken by the
Company in connection with the authorization and issuance of the Shares. We have
examined all such documents as we consider necessary to enable us to render this
opinion.
Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and when issued and delivered upon conversion of GGD
Convertible Debentures (the "Debentures") issued August 29, 1998, in accordance
with the terms of the Debentures, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Palmer & Dodge LLP
Palmer & Dodge LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Genzyme Corporation to register 787,060 shares of General Division
Common Stock of our reports dated February 27, 1998 on our audits of the
consolidated financial statements and financial statement schedule of Genzyme
Corporation, the combined financial statements and financial statement schedule
of Genzyme General Division, the combined financial statements and financial
statement schedule of Genzyme Tissue Repair Division and the combined financial
statements of General Molecular Oncology Division as of December 31, 1996 and
1997 and for each of the three years in the period ended December 31, 1997,
which reports are included in Genzyme Corporation's 1997 Annual Report on Form
10-K, as amended.
We also consent to the reference to our firm in the Registration
Statement under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
------------------------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 29, 1998
