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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 6, 1999.
REGISTRATION NO. 333-68629
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- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
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)
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<S> <C>
MASSACHUSETTS 06-1047163
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
</TABLE>
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, ESQ.
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
------------------------
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. [ ]
------------------------
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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SUBJECT TO COMPLETION, DATED JANUARY 6, 1999
[GENZYME MOLECULAR ONCOLOGY CORP. LOGO]
452,915 SHARES OF GENZYME MOLECULAR ONCOLOGY DIVISION
COMMON STOCK
Genzyme Molecular Oncology Division Common Stock trades on the Nasdaq National
Market under the symbol "GZMO." On January 4, 1999 the last sale price reported
by the Nasdaq was $3.50.
We previously issued $250,000,000 principal amount of 5 1/4% Convertible
Subordinated Notes due 2005. The holders of these Convertible Notes can convert
outstanding principal and accrued interest into shares of Genzyme General
Division Common Stock and shares of Genzyme Molecular Oncology Division Common
Stock. This prospectus relates to sales of the Genzyme Molecular Oncology
Division Common Stock received upon conversion. On January 1, 1999, each $1,000
principal amount of the Convertible Notes was convertible into approximately 25
shares of Genzyme General Division Common Stock and approximately 3 shares of
Genzyme Molecular Oncology Division Common Stock.
We will not receive any portion of the proceeds from sales of the shares.
-------------------------
INVESTING IN SHARES OF GENZYME MOLECULAR ONCOLOGY DIVISION COMMON STOCK INVOLVES
A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND CONSIDER THE "RISK FACTORS"
BEGINNING ON PAGE 5.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
-------------------------
You should rely only on the information included in this prospectus. We have not
authorized anyone to provide you with different information. You should not
assume that the information in this prospectus is accurate as of any date other
than date below.
-------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY , 1999.
GENZYME CORPORATION - ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139 - (617)
252-7500
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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PAGE
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Genzyme Corporation............... 3
Where You Can Find More
Information..................... 3
Risk Factors...................... 5
Selling Securityholders........... 16
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PAGE
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<S> <C>
Plan of Distribution.............. 19
Legal Matters..................... 20
Experts........................... 20
</TABLE>
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GENZYME CORPORATION
Genzyme is a biotechnology company that develops innovative products and
services for significant unmet medical needs. We have three divisions: (1)
Genzyme General Division, which develops and markets therapeutic and surgical
products and diagnostic products and services; (2) Genzyme Tissue Repair
Division, which develops and markets biological products for the treatment of
cartilage damage, severe burns and neurodegenerative diseases; and (3) Genzyme
Molecular Oncology Division, which develops gene-based approaches to cancer
therapy and diagnosis through genomics, gene therapy, a small molecule drug
discovery program 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 the three divisions: Genzyme General Division Common
Stock, Genzyme Tissue Repair Division Common Stock and Genzyme Molecular
Oncology Division Common Stock. Genzyme General Division Common Stock, Genzyme
Tissue Repair Division Common Stock and Genzyme Molecular Oncology Division
Common Stock are listed on the Nasdaq National Market under the symbols "GENZ,"
"GENZL" and "GZMO."
For purposes of financial presentation, we allocate programs, products, assets
and liabilities among our divisions; however, Genzyme, the corporation,
continues to own all of the assets and is responsible for all of the liabilities
allocated to each of the divisions.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available on the SEC's
Website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information by referring to
those documents. The information incorporated by reference is a part of this
prospectus and will automatically be updated and superseded by the information
we later file. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the sale of all the shares covered
by this prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1997, as
amended by amendments on Form 10-K/A filed with the SEC on April 27,
1998 and June 30, 1998;
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
3. Current Reports on Form 8-K dated January 6, 1998, May 19, 1998 and
October 15, 1998;
4. The description of Genzyme Molecular Oncology Division Common Stock and
Genzyme Molecular Oncology Division Common Stock Purchase Rights
contained in our Registration Statement on Form 8-A filed with the SEC
on June 18, 1997;
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5. The audited financial statements of PharmaGenics, Inc. included in
Genzyme's Current Report on Form 8-K filed with the SEC on June 30,
1997; and
6. The unaudited combined pro forma financial statements of Genzyme
Molecular Oncology Division included on pages F-21 through F-24 in
Genzyme's Registration Statement on Form S-3 filed with the SEC on
April 28, 1998
You may request a copy of these filings and future filings, at no cost, by
writing or telephoning us at the following address or number:
Shareholder Services
Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
(617) 252-7526.
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RISK FACTORS
If you purchase shares of Genzyme Molecular Oncology Division Common Stock, you
will take on financial risk. In deciding whether to invest, you should consider
carefully the following risk factors as well as the other information in this
prospectus.
It is especially important to keep these risk factors in mind when you read
forward-looking statements. These are statements that relate to future periods
and include statements about our
- product development;
- receipt of regulatory approvals;
- plans for sales and marketing;
- projected cash needs;
- financial results; and
- dividend policy.
Generally, the words "anticipates," "expects," "believes," "intends" and similar
expressions identify these forward-looking statements. Forward-looking
statements involve risks and uncertainties, and our actual results could differ
significantly from the results discussed in the forward-looking statements.
RISKS RELATED TO GENZYME MOLECULAR ONCOLOGY DIVISION
You should carefully consider the following factors affecting the business of
the Molecular Oncology Division prior to purchasing Genzyme Molecular Oncology
Division Common Stock.
LACK OF SIGNIFICANT REVENUE AND UNCERTAINTIES INHERENT IN THE DEVELOPMENT OF
BIOTECHNOLOGY PRODUCTS
We do not expect the Molecular Oncology Division's products and services to
generate significant revenue for several years. SAGE(TM) services represent the
only product or service which is not at an early stage of development. To date,
SAGE(TM) services have generated only modest revenue, and we are aware of
several companies that provide genomic services that compete with SAGE(TM)
services. Prior to commercializing any other products and services, the
Molecular Oncology Division will need to conduct substantial research and
development, undertake preclinical and clinical testing and pursue regulatory
approvals. We cannot guarantee that these efforts will be successful. Clinical
trials, for example, may not support the safety or effectiveness of a particular
product or service. Currently, the Molecular Oncology Division's gene therapy
products for melanoma are its only therapeutic products in clinical development.
We may encounter problems in these or other clinical trials that lead to delay
or suspension of the trials. In addition, gene therapy represents a new approach
to cancer treatment, and we will need to overcome many technical obstacles in
developing gene therapy products. To date, the FDA has not approved the sale of
any gene therapy products.
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SIGNIFICANT OPERATING LOSSES AND CASH REQUIREMENTS MAY REDUCE FLEXIBILITY IN
OPERATIONS
We expect the Molecular Oncology Division to have significant operating losses
for the next several years. The Molecular Oncology Division plans to spend
substantial amounts of money on, among other things:
- commercialization of SAGE(TM) services;
- research and development;
- preclinical and clinical testing; and
- pursuing regulatory approvals.
We cannot guarantee that the efforts underlying these expenditures will be
successful or that the Molecular Oncology Division's operations will ever be
profitable. It may be years before the division generates any revenue from sales
of products or services other than SAGE(TM) services.
We anticipate that the Molecular Oncology Division's current cash resources,
together with amounts available under a line of credit from the General Division
and revenues generated from SAGE(TM) services, license agreements and committed
research funding from collaborators, will be sufficient to fund its operations
through 2000. However, the Molecular Oncology Division's cash needs may differ
from those planned because of many factors, including:
- the results of research and development and clinical testing;
- the achievement of milestones under existing strategic alliances;
- the ability to establish and maintain additional strategic alliances and
licensing arrangements;
- the enforcement of patent and other intellectual property rights;
- the development of competitive products and services; and
- the ability to satisfy regulatory requirements of the FDA and other
government authorities.
The Molecular Oncology Division may require significant additional financing to
continue operations at anticipated levels. We cannot guarantee that the division
will be able to obtain any additional financing or find it on favorable terms.
If the Molecular Oncology Division has insufficient funds or is unable to raise
additional funds, it may delay, reduce or eliminate certain of its programs. The
Molecular Oncology Division may also have to give rights to third parties to
attempt to commercialize technologies or products that it would otherwise
commercialize itself.
UNCERTAINTY REGARDING PATENTS AND THE PROTECTION OF MOLECULAR ONCOLOGY
DIVISION'S PROPRIETARY TECHNOLOGY
Our long-term success largely depends on our ability to market technologically
competitive products. We can prevent unauthorized third parties from using
proprietary rights relating to our products and services only if these rights
are covered by patents or are kept confidential as trade secrets.
Third party patent rights and pending patent applications filed by third
parties, if issued, may cover some of the therapeutic products the Molecular
Oncology Division is developing
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or testing. As a result, the division may be required to obtain licenses from
the holders of these patents in order to test, use or market certain products
and services. We cannot guarantee that these licenses will be available on
acceptable terms.
Several patents have recently issued that may affect the Molecular Oncology
Division's business. The first is a U.S. patent issued to an academic
institution that claims to cover the use of any recombinant viral vector in gene
therapy, including adenoviral vectors. Based on public statements by the
academic institution, the Molecular Oncology Division understands that the
institution intends to make non-exclusive licenses under this patent widely
available. The second, a group of U.S. and European patents recently issued to a
third party that relate to the collection and analysis of gene expression data
from chemically exposed mammalian, plant and yeast cells. The third party has
invited us to negotiate for a license for these patents. The third is a U.S.
patent recently issued to a third party relating to methods for introducing DNA
sequences encoding gene products into mammals systemically using lipid carriers.
The Molecular Oncology Division is in the process of evaluating the scope and
validity of each of these patents to determine whether obtaining licenses to
these patents is necessary.
The Molecular Oncology Division has a right of first negotiation to exclusively
license the rights to inventions made by the National Cancer Institute relating
to its use of adenoviral vectors for the tumor antigens MART-1 and gp100. In
addition, the Molecular Oncology Division may negotiate for pre-existing rights
to MART-1 and gp100 held by National Cancer Institute. The Molecular Oncology
Division is aware of a U.S. patent issued to a third party which appears to
cover the MART-1 gene. The Molecular Oncology Division is continuing to evaluate
this patent and is in discussions with the patent holder regarding a
non-exclusive license to the MART-1 gene. The Molecular Oncology Division is
also aware of two published Patent Cooperation Treaty applications by two
different third party applicants which appear to cover the gp100 gene.
Accordingly, we cannot guarantee that the National Cancer Institute will
ultimately obtain the patent rights to gp100. The Molecular Oncology Division
may need to obtain licenses from both the National Cancer Institute and others
in order to commercialize immunotherapy products based on MART-1 and gp100.
We cannot guarantee that the patents issued or licensed to us will remain free
from challenge by third parties. If the Molecular Oncology Division becomes
involved in litigation to defend itself in patent suits brought by third parties
or if it initiates such suits, it could consume a substantial portion of the
Molecular Oncology Division's resources. Any legal action against the Molecular
Oncology Division or its strategic partners claiming damages or seeking to stop
commercial activities relating to the affected products and processes could
subject the Molecular Oncology Division to potential liability for damages.
These actions may also require the Molecular Oncology Division or its strategic
partner to obtain a license in order to continue to manufacture or market the
affected products and services. We cannot guarantee that the Molecular Oncology
Division or its strategic partner would prevail in any legal action. If the
Molecular Oncology Division is required to obtain a license, we cannot guarantee
that one would be made available or made available on acceptable terms.
The Molecular Oncology Division also relies upon trade secrets, proprietary
know-how and continuing technological innovation to remain competitive. We
cannot guarantee that other parties will not independently develop such know-how
or otherwise obtain access to the Molecular Oncology Division's technology.
While the Molecular Oncology Division's employees, consultants and corporate
partners with access to proprietary information are
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generally required to enter into confidentiality agreements, we cannot guarantee
that these agreements will be honored. In addition, some of the Molecular
Oncology Division's consultants have developed portions of the Molecular
Oncology Division's proprietary technology at universities or in governmental
laboratories. These universities or governmental authorities may claim rights to
the intellectual property arising out of the research performed at the
university or governmental laboratory.
UNCERTAINTY REGARDING MOLECULAR ONCOLOGY DIVISION'S ABILITY TO SATISFY
REGULATORY REQUIREMENTS
The Molecular Oncology Division's ability to successfully satisfy regulatory
requirements will significantly determine its future success. We cannot
guarantee that any required regulatory approvals will be granted or that they
will be granted on a timely basis. The production and sale of health care
products and provision of health care services are highly regulated. In
particular, the FDA and comparable agencies in foreign countries must approve
human therapeutic and diagnostic products before they are marketed. This
approval process can involve lengthy and detailed laboratory and clinical
testing, sampling activities and other costly and time-consuming procedures.
This regulation may delay the time at which a product or service can first be
sold, limit how a product or service may be used or adversely impact third party
reimbursement.
INTENSE COMPETITION FROM OTHER PHARMACEUTICAL AND BIOTECHNOLOGY COMPANIES COULD
HURT MOLECULAR ONCOLOGY DIVISION'S PERFORMANCE
The human health care products and services industry is extremely competitive.
Major pharmaceutical companies and other biotechnology companies compete with
the Molecular Oncology Division. Certain of these competitors may have superior
research and development, marketing and production capabilities. Some
competitors also may have greater financial resources than the Molecular
Oncology Division. The Molecular Oncology Division incurs significant costs
developing and marketing new products without any guarantee that they will be
commercially successful. The future success of the Molecular Oncology Division
will depend on its ability to effectively develop and market its products
against those of its competitors. We are aware of several companies that provide
genomic services that compete with SAGE(TM) services.
RAPID TECHNOLOGICAL CHANGE COULD MAKE MOLECULAR ONCOLOGY DIVISION'S PRODUCTS OR
SERVICES OBSOLETE
The field of biotechnology is characterized by significant and rapid
technological change. Although the Molecular Oncology Division attempts to
expand its technological capabilities in order to remain competitive, research
and discoveries by others may make its products or services obsolete. For
example, certain of Molecular Oncology Division's competitors may develop
genomic services that make SAGE(TM) services obsolete.
RELIANCE ON COLLABORATORS AND UNCERTAINTY OF REVENUE FROM COLLABORATIONS
The Molecular Oncology Division's strategy to develop and commercialize certain
of its products and services includes entering into various arrangements with
both academic collaborators and corporate partners and licensees. The Molecular
Oncology Division depends on the success of these parties in performing
research, preclinical and clinical testing and marketing. These arrangements may
require the Molecular Oncology Division to transfer certain important rights to
such corporate partners and licensees. While the Molecular Oncology Division
believes its collaborators and licensees will want to perform their contractual
responsibilities, in some cases the amount and timing of resources that
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they devote to their collaborations with the division, and the ability to
terminate the collaboration, will be controlled by the collaborators. As a
result, the Molecular Oncology Division cannot guarantee that it will receive
revenues or profits from these arrangements, that any of its strategic alliances
will continue or not terminate early, or that it will be able to enter into
future collaborations.
UNCERTAINTY REGARDING THIRD PARTY REIMBURSEMENT AND HEALTH CARE COST CONTAINMENT
INITIATIVES MAY IMPACT MOLECULAR ONCOLOGY DIVISION'S REVENUE
A substantial portion of the Molecular Oncology Division's future revenue may
come from payments by third party payers, including government health
administration authorities and private health insurers. Third party payers may
not reimburse patients for newly approved health care products. More and more
third party payers are attempting to contain health care costs by:
- challenging the prices charged for health care products and services;
- limiting both coverage and the amount of reimbursement for new
therapeutic products;
- denying or limiting coverage for products that are approved by the FDA
but are considered experimental or investigational by third party payers;
and
- refusing in some cases to provide coverage when an approved product is
used for disease indications in a way that has not received FDA marketing
approval.
Government and other third party payers may provide no or inadequate insurance
coverage and reimbursement for the Molecular Oncology Division's products and
services.
In addition, Congress has occasionally discussed implementing broad-based
measures to contain health care costs. While Congress has not enacted any
legislation specifically designed to contain health care costs, it is possible
that Congress will revisit the issue. We cannot predict what effect any actual
legislation would have on our business.
VOLATILITY OF PRICES COULD RESULT IN LOSS OF SIGNIFICANT AMOUNT OF INVESTMENT;
ABSENCE OF DIVIDENDS
The market price for Genzyme Molecular Oncology Division Common Stock may vary
widely as a result of several factors, including:
- announcements of technological innovations or new commercial products by
us or by our competitors;
- governmental regulatory initiatives;
- patent or proprietary rights developments;
- public concern as to the safety or other implications of biotechnology
products; and
- general market conditions.
This volatility could lead to the loss of a significant amount of your
investment.
On November 16, 1998, Genzyme Molecular Oncology Division Common Stock began
trading on the Nasdaq National Market.
We have never paid any cash dividends on Genzyme Molecular Oncology Division
Common Stock, and we do not plan to do so in the foreseeable future.
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POSSIBLE ADVERSE EFFECT OF ANTI-TAKEOVER PROVISIONS
Our stockholders may be deprived of the opportunity to receive a premium for
their shares because of certain provisions of Massachusetts law and our charter,
bylaws and stockholder rights plan. These provisions may delay or prevent a
change in control of Genzyme or a change in our management. Tracking stock may
also deprive our stockholders of the opportunity to realize such a premium
because, in order to obtain control of a particular division, an acquiror would
have to obtain control of Genzyme. In addition, our board of directors may issue
shares of undesignated common and preferred stock from time to time in one or
more series. This could discourage attempts to takeover Genzyme.
RISKS RELATED TO GENZYME CORPORATION, INCLUDING THE OTHER GENZYME DIVISIONS
Holders of Genzyme Molecular Oncology Division Common Stock are stockholders of
Genzyme Corporation. Liabilities or contingencies of the other divisions of
Genzyme that affect Genzyme's resources or financial condition could affect the
financial condition or results of operations of the Molecular Oncology Division.
Accordingly, you should carefully consider the following risks prior to
investing in Genzyme Molecular Oncology Division Common Stock.
DEPENDENCE ON SALES OF PRODUCTS WHICH TREAT GAUCHER DISEASE
Genzyme Corporation generates a majority of its product revenues from sales of
enzyme-replacement products for patients with Gaucher disease. We entered this
market in 1991 with Ceredase(R) enzyme. Because production of Ceredase(R) enzyme
is subject to supply constraints, we developed Cerezyme(R) enzyme, a recombinant
form of the enzyme which we introduced in 1994. We ceased producing Ceredase(R)
enzyme during 1998, after substantially all the patients previously using
Ceredase(R) enzyme had converted to Cerezyme(R) enzyme. These products have been
allocated to the Genzyme General Division.
================================================================================
SALES OF CEREZYME(R) ENZYME AND CEREDASE(R) ENZYME
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SALES OF PERCENTAGE OF
CEREZYME(R) ENZYME GENZYME
AND CORPORATION'S
PERIOD CEREDASE(R) ENZYME PRODUCT REVENUES
------ ------------------- ----------------
<S> <C> <C>
Year ended
December 31, 1997............. $332.7 million 63%
Nine months ended
September 30, 1998............ $297.6 million 67%
</TABLE>
================================================================================
Because our business is highly dependent on Cerezyme(R) enzyme, a reduction in
revenue from sales of this product would adversely effect our results of
operations. Revenues from Cerezyme(R) enzyme would be negatively impacted if
competitors developed alternative treatments for Gaucher disease and these
alternative products gained commercial acceptance. Certain companies have
initiated efforts to develop competitive products and other companies may do so
in the future.
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SIGNIFICANT FUTURE CAPITAL NEEDS MAY REDUCE FLEXIBILITY IN OPERATIONS
As of September 30, 1998, Genzyme had approximately $555.1 million in cash, cash
equivalents and short and long-term investments (excluding investments in equity
securities).
Although we currently have substantial cash resources, we intend to use
substantial portions for:
- paying strategic collaborators and funding joint venture obligations;
- product development and marketing;
- expansion of our facilities; and
- marketing the Carticel(TM) service and the Sepra products.
We will further reduce our cash reserves to pay principal and interest on the
following debt:
- As of January 1, 1999, we owed approximately $100 million under a $225
million revolving credit facility with a group of commercial banks. Of
this outstanding amount, we allocated $82 million to the General Division
and $ million to the Tissue Repair Division. Amounts borrowed under this
revolving credit facility bear interest at a floating rate based upon an
applicable margin above the London InterBank Offered Rate. We must repay
all borrowings under this facility on November 15, 1999.
- In February 1997 we issued a $13 million convertible note. This
convertible note bears interest at an annual rate of 5% and matures on
February 27, 2000, but the holder of this convertible note may exchange
principal, and under certain circumstances interest, on the note for
shares of Genzyme Tissue Repair Division Common Stock. As of January 1,
1999, $12.4 million of principal on this convertible note was
outstanding.
- In August 1998 we issued $21.2 million in convertible debentures. These
convertible debentures bear interest at an annual rate of 5% and mature
on August 29, 2003, but the holders of these convertible debentures may
exchange principal, and under certain circumstances interest, on the
convertible debentures for shares of Genzyme General Division Common
Stock.
- In May 1998, we issued $250 million in convertible notes. These
convertible notes bear interest at an annual rate of 5 1/4% and mature on
June 1, 2005, but the holders of these notes may exchange principal on
the notes for shares of Genzyme General Division Common Stock and shares
of Genzyme Molecular Oncology Division Common Stock.
On November 2, 1998, we announced that the FDA granted marketing approval for
RenaGel(R) Capsules for the reduction of serum phosphorus in patients with end
stage renal disease. We have formed a joint venture with GelTex Pharmaceuticals,
Inc. to commercialize RenaGel(R) Capsules. Under the terms of the joint venture,
Genzyme paid GelTex Pharmaceuticals, Inc. $15 million in connection with the
receipt of FDA approval of RenaGel(R) Capsules and will pay an additional $10
million on the first anniversary of that approval. This program has been
allocated to the General Division.
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To satisfy these and other commitments, we may have to obtain additional
financing. We cannot guarantee that we will be able to obtain any additional
financing or obtain it on favorable terms.
POTENTIAL PRODUCT LIABILITY CLAIMS AND LIMITATIONS OF INSURANCE
Individuals who use our products or services may bring product liability claims
against us. While we have taken, and continue to take, what we believe are
appropriate precautions, we cannot guarantee that we will avoid significant
liability exposure. We have only limited amounts of product liability insurance,
and we cannot guarantee that such insurance will provide sufficient coverage
against any product liability claims. If we attempt to obtain additional
insurance in the future, we may not be able to do so on acceptable terms, and
any additional insurance we do obtain may not provide adequate coverage against
any asserted claims.
RISKS INHERENT IN INTERNATIONAL OPERATIONS
We have direct investments in a number of subsidiaries in foreign countries
(primarily in Europe and Japan). Fluctuations in the value of foreign currencies
affect the dollar value of our net investment in these foreign subsidiaries. As
of December 31, 1997, we have reduced General Division stockholders' equity by
$12.4 million to reflect foreign currency translation adjustments. Reduction in
the dollar value of our foreign holdings reduces the dollar returns we can
expect to realize upon any sales of our foreign investments. We do not currently
hedge net foreign investments. If our board of directors approves hedging of net
foreign investments in the future, we cannot guarantee it will be successful.
Our foreign operations accounted for 36% of consolidated sales in 1997. These
operations accounted for 35% of consolidated sales in 1996 and 1995. For
financial statement purposes, we translate operating results of foreign
subsidiaries into dollars at average monthly exchange rates. Reported revenues,
therefore, may be depressed or inflated by exchange rate trends.
Exchange rates also determine the dollar value of transactions denominated in
foreign currencies and the number of dollars we receive upon repatriation of
amounts earned in foreign currencies.
Currently, our largest foreign currency exposures are in Dutch guilders, British
pounds, French francs, German marks, Spanish pesetas, Italian lira and Japanese
yen.
POSSIBLE ADVERSE EFFECT OF THE EURO CONVERSION
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between their existing currencies and a new
common currency called the "euro." This represents an initial step in a process
expected to culminate in the replacement of the existing currencies with the
euro. The conversion to the euro will have operational and legal implications
for some of our international business activities. We have begun evaluating
these implications, but we have yet to estimate the potential impact on our
financial condition or operating results. Our preliminary judgment, however, is
that the nature of our business and customers makes a material impact unlikely.
UNCERTAINTY REGARDING YEAR 2000 COMPLIANCE
Many currently installed computer systems, software products and equipment with
embedded chips or processors are programmed to accept only two digit entries in
the date
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<PAGE> 14
code field. These date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, our
software and computer systems may need to be upgraded or replaced in order to
comply with "Year 2000" requirements. We have implemented a Year 2000 compliance
program to identify and minimize exposure to Year 2000 problems, which includes
an assessment of our internal readiness as well as the readiness of third
parties that are critical to our business. We may incur significant costs in
identifying, resolving and mitigating Year 2000 compliance issues. In addition,
we cannot guarantee that our Year 2000 issues will be fully identified and
resolved by the end of 1999. The failure to identify and resolve these issues
could result in interruptions in, or failures of, certain normal business
activities or operations that may have an adverse effect on our business,
results of operations and financial condition. The failure of third parties that
are significant to our business to be Year 2000 compliant could also have an
adverse effect on our business, results of operations and financial condition.
RISKS RELATED TO GENZYME TRACKING STOCK
We currently have three series of common stock outstanding which are intended to
reflect the value and track the performance of our three operating divisions.
You should consider carefully the following risks in deciding whether to invest
in Genzyme tracking stock.
STOCKHOLDERS OF ONE COMPANY; FINANCIAL IMPACTS ON ONE DIVISION COULD AFFECT THE
OTHER DIVISIONS
Genzyme has three divisions: Genzyme General Division, Genzyme Tissue Repair
Division and Genzyme Molecular Oncology Division. For purposes of financial
presentation, we allocate programs, products, assets and liabilities among our
divisions; however, Genzyme, the corporation, continues to own all of the assets
and is responsible for all of the liabilities allocated to each of the
divisions. A Molecular Oncology Division stockholder, for example, would not
have any specific rights to the assets of the corporation allocated to the
Molecular Oncology Division in Genzyme's financial statements. Additionally, any
one division's liabilities could affect the other divisions' financial
condition. In deciding whether to invest in Genzyme Molecular Oncology Division
Common Stock, you should read both Genzyme's consolidated financial statements
and the financial statements of the Molecular Oncology Division. The section of
this document entitled "WHERE YOU CAN FIND MORE INFORMATION" shows you where you
can find these financial statements.
NO RIGHTS OR ADDITIONAL DUTIES WITH RESPECT TO THE DIVISIONS; POTENTIAL
CONFLICTS OF INTEREST
There may be times when the interests of holders of each series of Genzyme
common stock diverge or appear to diverge. We do not know how Massachusetts law
would define the duties of a board of directors in such a situation. However,
based on the advice of counsel, we believe that a Massachusetts court would
conclude 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. Under Massachusetts law, if a disinterested and adequately informed
board of directors were to determine in good faith that an action would be 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, then the board of directors should be able to successfully defend any
claim by a stockholder that such action could have an unequal effect on
different series of common stock. However, a Massachusetts court hearing a case
13
<PAGE> 15
involving such a claim may decide to apply principles of Massachusetts law other
than those described above, or may develop new principles of Massachusetts law,
to decide such a case.
A member of our board of directors could have or appear to have a potential
conflict of interest if he or she were to own a disproportionate amount of stock
in a particular series or the value of his or her stockholdings in a particular
series were different from the value of his or her stockholdings in another
series and he or she had to decide among corporate actions that impacted each
series of common stock differently. Nevertheless, we believe 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 unequal
values. The members of our board of directors may from time to time create one
or more committees to review matters that raise conflict issues. Such a
committee would report to the full board on these matters.
NO ADDITIONAL SEPARATE VOTING RIGHTS LIMITS DECISION-MAKING POWER OF TISSUE
REPAIR DIVISION AND MOLECULAR ONCOLOGY DIVISION STOCKHOLDERS
Holders of each series of Genzyme common stock vote together as a single class
on all matters that require common stockholder approval, including the election
of directors. Holders of each series of common stock do not have the right to
vote on matters separately except in certain limited circumstances provided
under Massachusetts law, our charter or the management and accounting policies
adopted by our board of directors. Therefore, stockholders of one series of
common stock generally could not make a proposal that would require the approval
of just the holders of that series. Instead, they would have to get approval for
the proposal from all common stockholders.
On all matters that require common stockholder approval, each share of Genzyme
General Division Common Stock has one vote and, until December 31, 2000, each
share of Genzyme Tissue Repair Division Common Stock has 0.06 vote and each
share of Genzyme Molecular Oncology Division Common Stock has 0.08 vote. On
January 1, 2001 and on January 1 every two years thereafter, the number of votes
to which each share of Genzyme Oncology Division Common Stock is entitled will
be adjusted as follows:
<TABLE>
<S> <C> <C>
# of votes for one = market value of one share of Genzyme Tissue Repair Division Common Stock
share of Genzyme ------------------------------------------------------------------------
Tissue Repair market value of one share of Genzyme General Division Common Stock
Division Common Stock
# of votes for one = market value of one share of Genzyme Molecular Oncology Division Common Stock
share of Genzyme -----------------------------------------------------------------------------
Molecular Oncology market value of one share of Genzyme General Division Common Stock
Division Common Stock
</TABLE>
We calculate market value using a 20 trading day average beginning on the 30th
trading day prior to the determination date. Based on the number of votes per
share and the number of shares of each series outstanding on November 30, 1998,
but giving effect to
14
<PAGE> 16
the adjustment to per share voting rights which occurred on January 1, 1999,
voting power of each series is divided as follows:
================================================================================
<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE OF
SERIES TOTAL VOTING POWER
------ -------------------------
<S> <C>
Genzyme General Division Common
Stock........................ 97.3%
Genzyme Tissue Repair Division
Common Stock................. 1.5%
Genzyme Molecular Oncology
Division Common Stock........ 1.2%
</TABLE>
================================================================================
On matters which require common stockholder approval, the holders of Genzyme
General Division Common Stock are likely to decide the outcome.
EXCHANGE OF TISSUE REPAIR DIVISION COMMON STOCK AND MOLECULAR ONCOLOGY DIVISION
COMMON STOCK AT A FIXED OR PREDETERMINED PREMIUM MAY LIMIT RETURN ON INVESTMENT
Our board of directors can, in its sole discretion, decide to exchange shares of
Genzyme Tissue Repair Division Common Stock or Genzyme Molecular Oncology
Division Common Stock for any combination of cash and shares of Genzyme General
Division Common Stock at a 30% premium over the then current market value of
such series of common stock. In addition, if we transfer or sell all or
substantially all of the assets of the Tissue Repair Division or the Molecular
Oncology Division, we must exchange the shares of Genzyme Tissue Repair Division
Common Stock or Genzyme Molecular Oncology Division Common Stock, as the case
may be, for cash and/or shares of Genzyme General Division Common Stock at a 30%
premium over the market value of such series of common stock. Consequently,
holders of Genzyme Tissue Repair Division Common Stock and Genzyme Molecular
Oncology Division Common Stock may receive a premium for their shares that is
greater or less than the premium that would be paid by a third party buyer of
all or substantially all of the assets of the Tissue Repair Division or the
Molecular Oncology Division. Our board's discretion to cause such an exchange is
described in our charter, which is an exhibit to the registration statement.
NO ADJUSTMENT TO LIQUIDATION UNITS FOR CHANGES IN RELATIVE VALUES OF DIFFERENT
SERIES OF STOCK
If we dissolve, liquidate or wind up our affairs (other than as part of a
merger, business combination or sale of substantially all of our assets), our
stockholders will receive any remaining assets according to the percentage of
total liquidation units that they hold. Each share of Genzyme General Division
Common Stock has 100 liquidation units, each share of Genzyme Tissue Repair
Division Common Stock has 58 liquidation units and each share of Genzyme
Molecular Oncology Division Common Stock has 25 liquidation units. The
liquidation units will not be adjusted to reflect changes in the relative market
value or performance of each of the divisions.
15
<PAGE> 17
MANAGEMENT AND ACCOUNTING POLICIES SUBJECT TO CHANGE
Our board of directors has adopted management and accounting policies for
preparing Genzyme's financial statements, allocating corporate expenses, assets
and liabilities and other accounting matters, reallocating assets between
divisions and other matters. Our board of directors may modify or rescind these
policies or adopt new ones without the approval of our stockholders. The board's
discretion to make changes is only limited by the policies themselves and the
board's fiduciary duty to all stockholders. We encourage you to review the full
text of these policies, which have been filed as Exhibit 99.1 to our Annual
Report on Form 10-K for the year ended December 31, 1997.
POSSIBLE COMPETITION AMONG THE DIVISIONS
Our board of directors has adopted a policy regarding competition among our
divisions. This non-compete policy requires that we develop certain products and
services within the Molecular Oncology Division or through joint ventures
involving the Molecular Oncology Division. This non-compete policy, however,
does not cover the entire field of oncology. Accordingly, the General Division
and the Tissue Repair Division may develop oncology products that will not be
allocated to the Molecular Oncology Division. In other words, we cannot
guarantee that all oncology products we develop will be allocated to the
Molecular Oncology Division. We encourage you to review the full text of this
policy, which is included in Exhibit 99.1 to our Annual Report on Form 10-K for
the year ended December 31, 1997.
REALLOCATION OF OPERATING LOSSES MAY CAUSE LOWER EARNINGS AND GREATER TAX BURDEN
FOR CERTAIN DIVISIONS
Our board of directors has adopted a policy which provides that if any division
of Genzyme is unable to use its operating losses or other projected tax benefits
to reduce its current or deferred income tax expense, we may reallocate such
losses or benefits to another division on a quarterly basis for financial
reporting purposes. Although the actual payment of taxes is a liability of the
corporation, separate financial statements are prepared for each division, and
we allocate any losses that a division cannot use among the profitable divisions
rather than carry them forward to reduce the future tax liability of the
division generating the losses. This will result in a division with losses (such
as the Tissue Repair Division and Molecular Oncology Division currently) being
charged a greater portion of the total corporate tax liability and reporting
lower earnings after taxes in the future than would be the case if that division
had retained its losses or other benefits in the form of a net operating loss
carryforward. We encourage you to review the full text of this policy, which is
included in Exhibit 99.1 to our Annual Report on Form 10-K for the year ended
December 31, 1997.
SELLING SECURITYHOLDERS
We previously issued $250,000,000 principal amount of Convertible Subordinated
Notes due 2005. Prior to November 16, 1998, the holders of the Convertible Notes
could convert principal into shares of Genzyme General Division Common Stock. On
November 16, 1998, we distributed 0.10805 share of Genzyme Molecular Oncology
Division Common Stock for each share of Genzyme General Division Common Stock
held as of November 2, 1998. Under the terms of the Convertible Notes, on and
after November 16, 1998, upon conversion, holders of the Convertible Notes will
receive 0.10805 share of Genzyme Molecular Oncology Division Common Stock in
addition to each share of
16
<PAGE> 18
Genzyme General Division Common Stock. The distribution of Genzyme Molecular
Oncology Division Common Stock did not affect the conversion price, which is
currently $39.60. One thousand dollars in principal amount of Convertible Notes,
consequently, is currently convertible into approximately 25.25 shares of
Genzyme General Division Common Stock and 2.73 shares of Genzyme Molecular
Oncology Division Common Stock. The number of shares of Genzyme General Division
Common Stock and the number of shares of Genzyme Molecular Oncology Division
Common Stock issuable upon conversion of a given principal amount of Convertible
Notes is subject to adjustment under certain circumstances in order to prevent
dilution. Our registration of the shares of Genzyme Molecular Oncology Division
Common Stock does not necessarily mean that the holders of the Convertible Notes
will convert and sell all or any of their shares.
The following table sets forth information concerning the aggregate principal
amount of Convertible Notes beneficially owned by each selling securityholder
and the number of shares of Genzyme Molecular Oncology Division Common Stock
issuable upon conversion of these Convertible Notes. These shares may be offered
from time to time pursuant to this prospectus. The table below has been prepared
on the basis of the information furnished to us by the selling securityholders.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES
PRINCIPAL SHARES OF OF GMO STOCK+
AMOUNT OF GMO STOCK+ BENEFICIALLY
NOTES BENEFICIALLY ISSUABLE UPON OWNED PRIOR TO
NAME OWNED CONVERSION(1) CONVERSION
---- ------------------ ------------- ----------------
<S> <C> <C> <C>
Allegheny Teledyne Inc. Pension Plan... $ 2,165,000 5,907 0
Chrysler Corporation Master Retirement
Trust................................ 785,000 2,141 0
Delta Airlines Inc. Retirement Plan.... 9,979,000 27,228 0
Delta Air Lines Master Trust (Oak Tree
Capital Management, LLC)............. 400,000 1,091 0
Donaldson, Lufkin & Jenrette Securities
Corporation.......................... 50,000 136 0
Frederic C. Hamilton................... 207,000 564 0
Golden Rule Insurance Company.......... 123,000 335 0
GranGem 23 41 LLC...................... 500,000 1,364 0
John M. Olin Foundation, Inc........... 137,000 373 0
Kapiolani Medical Center -- Froley
Revy................................. 200,000 545 0
L.A. Fire and Police Pension Fund...... 555,000 1,514 0
Lipper Convertibles, L.P............... 3,250,000 8,867 0
Lipper Offshore Convertibles, L.P...... 2,750,000 7,503 0
Lombard Odier & Cie.................... 100,000 272 0
Merrill Lynch Convertible Fund, Inc.... 1,900,000 5,184 0
Merrill Lynch Equity Convertible Series
Convertible Securities Portfolio..... 700,000 1,909 0
Merrill Lynch World Income Fund,
Inc.................................. 900,000 2,455 0
OCM Convertible Trust.................. 545,000 1,487 0
Pacific Life Insurance Company......... 1,000,000 2,728 0
Partner Reinsurance Company Ltd........ 205,000 559 0
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES
PRINCIPAL SHARES OF OF GMO STOCK+
AMOUNT OF GMO STOCK+ BENEFICIALLY
NOTES BENEFICIALLY ISSUABLE UPON OWNED PRIOR TO
NAME OWNED CONVERSION(1) CONVERSION
---- ------------------ ------------- ----------------
<S> <C> <C> <C>
Pitney Bowes Retirement Fund........... 237,000 646 0
Raytheon Company Master Pension
Trust................................ 290,000 791 0
State Employees' Retirement Fund of the
State of Delaware.................... 210,000 572 0
State of Connecticut Combined
Investment Funds..................... 930,000 2,537 0
The Fondren Foundation................. 90,000 245 0
U.S. Olympic Foundation................ 335,000 914 0
Vanguard Convertible Securities Fund,
Inc.................................. 680,000 1,855 0
Van Kampen Convertible Securities
Fund................................. 590,000 1,609 59,772(2)
Van Kampen Harbor Fund................. 3,410,000 9,304 59,772(2)
Xerox Corporation Profit Sharing
Plan................................. 254,000 693 0
Unnamed holders of Convertible Notes or
future transferees, pledgees, donees
or successors of or from such unnamed
holders(3)........................... $115,115,000 314,095 0
</TABLE>
- -------------------------
+ Genzyme Molecular Oncology Division Common Stock.
(1) Assumes conversion of the full amount of Convertible Notes held by such
holder at the initial rate of 2.72854 shares of Genzyme Molecular Oncology
Division Common Stock per $1,000 in principal amount of the Convertible
Notes. Under the terms of the Convertible Notes, fractional shares will not
be issued upon conversion; cash will be paid instead of fractional shares.
(2) Held by other funds for which Van Kampen Asset Management Inc., this Selling
Securityholder's investment advisor, acts as investment advisor.
(3) Assumes that the unnamed holders of the Convertible Notes or future
transferees, pledgees, donees or successors of or from any such unnamed
holder do not beneficially own any Genzyme Molecular Oncology Division Stock
other than the Genzyme Molecular Oncology Division Stock issuable upon
conversion of the Convertible Notes. No such unnamed holder may offer shares
pursuant to this prospectus until such unnamed holder is identified as a
selling securityholder in an amendment or a supplement to this prospectus.
On November 30, 1998, 12,646,943 shares of Genzyme Molecular Oncology Division
Common Stock were outstanding.
None of the listed selling securityholders has had a material relationship with
Genzyme during the past three years. Credit Suisse First Boston Corporation,
however, has in the past and may in the future provide investment banking
services to Genzyme.
Individuals and entities who receive shares from the listed entities as a gift
or in connection with a pledge may sell up to 500 of such shares using this
prospectus.
18
<PAGE> 20
PLAN OF DISTRIBUTION
The selling securityholders may offer the shares of Genzyme Molecular Oncology
Division Common Stock received upon conversion of the Convertible Notes at
various times in transactions:
- in the over-the-counter market;
- on any exchange where Genzyme Molecular Oncology Division Common Stock is
then listed;
- with broker-dealers or third parties other than in the over-the-counter
market or on an exchange (including block sales);
- in connection with short sales;
- in connection with writing call options or in other hedging arrangements;
or
- involving a combination of such methods.
The selling securityholders may sell their shares at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, at
negotiated prices, at fixed prices or at a combination of such prices.
The selling securityholders may use dealers, agents or underwriters to sell
their shares. If this happens, the dealers, agents or underwriters may receive
compensation in the form of discounts or commissions from the selling
securityholders or from the purchasers of shares or from both (which
compensation to a particular broker might be in excess of customary
compensation).
The selling securityholders and any dealers, agents or underwriters that
participate with the selling securityholders in the distribution of the shares
may be deemed to be "underwriters" (as this term is defined in the Securities
Act). Any commissions paid or any discounts or concessions allowed to any such
persons, and any profits received on the resale of such shares of Genzyme
Molecular Oncology Division Common Stock offered by this prospectus, may be
deemed to be underwriting commissions or discounts under the Securities Act.
To the extent required, we will amend or supplement this prospectus to disclose
material arrangements regarding the plan of distribution. If, for example, the
selling securityholders 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
underwriters, whether the underwriters are acting as principals or agents, any
underwriting discounts, concessions or commissions allowed or reallowed or paid
to dealers. When the underwriters act as principals in 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. In this case, 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. When the
underwriters act as principals in connection with an underwritten sale of
shares, the underwriters may receive compensation from the selling
securityholders in the form of underwriting discounts, concessions or
commissions and/or commissions from purchasers of the shares for whom they may
act as agents. Underwriters may sell shares to or through dealers, and these
dealers may receive compensation in the
19
<PAGE> 21
form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agents.
Underwriters may be entitled under agreements with us to indemnification by us
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution from us for payments such underwriters may be required
to make in connection with certain civil liabilities. These underwriters may
engage in transactions with, or perform services for, us for customary
compensation.
We will pay most expenses incident to the offer and sale of the shares offered
by the selling securityholders using this prospectus. The selling
securityholders, however, will pay any underwriting discounts and selling
commissions. We have 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
by this prospectus 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 of Genzyme Molecular Oncology Division
Common Stock covered by this prospectus may be limited in its ability to engage
in market activities with respect to such shares. The selling securityholders,
for example, will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, which may limit the timing of purchases
and sales of any shares of Genzyme Molecular Oncology Division Common Stock by
the selling securityholders. This may affect the marketability of the shares
offered by this prospectus.
LEGAL MATTERS
Palmer & Dodge LLP, Boston, Massachusetts, counsel to Genzyme, is giving Genzyme
an opinion on the validity of the shares offered by this prospectus.
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 related financial statement 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 Division and Genzyme Tissue
Repair Division 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 related
financial statement schedules 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.
20
<PAGE> 22
The combined balance sheets of Genzyme Molecular Oncology Division 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.
The balance sheets of PharmaGenics, Inc. as of December 31, 1995 and 1996, and
the related statements of operations and cash flows for each of the three years
in the period ended December 31, 1997 included in Genzyme's Current Report on
Form 8-K dated June 18, 1997, have also been incorporated herein in reliance on
the report of Arthur Andersen LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
21
<PAGE> 23
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 Molecular Oncology Division Common Stock are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee.................................. $ 347
Printing and engraving expenses....................... $ 1,000
Accounting fees and expenses.......................... $ 7,500
Legal fees and expenses............................... $10,000
Miscellaneous expenses................................ $ 1,153
-------
Total....................................... $20,000
=======
</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.
II-1
<PAGE> 24
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 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 the Exhibit Index immediately following the 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
II-2
<PAGE> 25
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-3
<PAGE> 26
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
January 5, 1999.
GENZYME CORPORATION
By: /s/ DAVID J. MCLACHLAN
-----------------------------------
David J. McLachlan,
Executive Vice President,
Finance and Chief Financial
Officer
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 January 5, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director and Principal
- ----------------------------------------------------- Executive Officer
Henri A. Termeer
/s/ DAVID J. MCLACHLAN Principal Financial Officer
- -----------------------------------------------------
David J. McLachlan
* Principal Accounting Officer
- -----------------------------------------------------
Michael S. Wyzga
* Director
- -----------------------------------------------------
Constantine E. Anagnostopoulos
* Director
- -----------------------------------------------------
Douglas A. Berthiaume
* Director
- -----------------------------------------------------
Henry E. Blair
* Director
- -----------------------------------------------------
Robert J. Carpenter
* Director
- -----------------------------------------------------
Charles L. Cooney
* Director
- -----------------------------------------------------
Henry R. Lewis
*By
/s/ DAVID J. MACLACHLAN
- ----------------------------------------------------
David J. MacLachlan
Attorney In Fact
</TABLE>
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
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 herein 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 herein 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.
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
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 Form of Genzyme General Division Convertible Debenture dated
August 29, 1998, including a schedule with respect thereto
filed pursuant to Instruction 2 to Item 601 of Regulation
S-K. Filed as Exhibit 4.15 to Genzyme's Registration
Statement on Form S-3 (File No. 333-64901) and incorporated
herein by reference.
4.16 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.
4.17 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.
4.18 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.
4.19 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 Opinion of Palmer & Dodge LLP. Filed as the same numbered
exhibit to the initial filing of this Registration
Statement.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants to Genzyme. Filed herewith.
23.2 Consent of Arthur Andersen LLP, independent accountants to
PharmaGenics.
23.3 Consent of Palmer & Dodge LLP (contained in Exhibit 5.1
hereto).
24 Power of Attorney (included on signature page of the initial
filing of this Registration Statement).
</TABLE>
<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 452,915 shares of Genzyme Molecular
Oncology 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
January 5, 1999
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of Genzyme Corporation to
register 452,915 shares of Genzyme Molecular Oncology Division Common Stock of
our report dated March 3, 1997 relating to the financial statements of
PharmaGenics, Inc. included in Genzyme Corporation's report on Form 8-K dated
June 18, 1997 and to all references to our firm included in this registration
statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Roseland, New Jersey
January 5, 1999
