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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-87449
617,200 SHARES OF GENZYME MOLECULAR ONCOLOGY DIVISION
COMMON STOCK
Genzyme Molecular Oncology Division Common Stock trades on the Nasdaq National
Market under the symbol "GZMO." We refer to this stock as GZMO Stock. On October
7, 1999 the last sale price for GZMO Stock reported by Nasdaq was $4.75.
This prospectus relates to sales of up to 617,200 shares of GZMO Stock by
Canadian Medical Discoveries Fund Inc. Canadian Medical Discoveries Fund
acquired these shares when we purchased one-half of its interest in
StressGen/Genzyme LLC.
We will not receive any portion of the proceeds from sales of the shares.
INVESTING IN SHARES OF GZMO STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE "RISK FACTORS RELATING TO GZMO STOCK" BEGINNING ON PAGE
5.
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 the date below.
THE DATE OF THIS PROSPECTUS IS OCTOBER 12, 1999.
GENZYME CORPORATION -- ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139 --
(617) 252-7500
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TABLE OF CONTENTS
PAGE
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Genzyme Corporation..........................................................3
Where You Can Find More Information..........................................4
Risk Factors Relating to GZMO Stock..........................................5
Selling Securityholder......................................................15
Plan of Distribution........................................................16
Legal Matters...............................................................17
Experts.....................................................................17
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GENZYME CORPORATION
We are a biotechnology company that develops innovative products and services
for significant unmet medical needs. We have four operating divisions:
- Genzyme General, which develops and markets therapeutic products and
diagnostic services and products, with an expanding focus on developing
new products to treat patients suffering from lysosomal storage
disorders and other specialty therapeutics;
- Genzyme Molecular Oncology, which is developing cancer products, with a
focus on therapeutic vaccines and angiogenesis inhibitors, through the
integration of its gene discovery, gene therapy, small molecule drug
discovery, protein therapeutic and genetic diagnostic efforts;
- Genzyme Surgical Products, which develops, markets and distributes a
comprehensive portfolio of surgical devices, closures, biomaterials and
biotherapeutics for the cardiovascular, general and plastic surgery
markets, with a focus on developing and commercializing gene therapy,
cell therapy and other biosurgery products to treat cardiovascular
disease; and
- Genzyme Tissue Repair, which develops and markets biological products
and devices for the treatment of orthopedic injuries, such as cartilage
damage, and severe burns.
We currently have four designated series of common stock, each of which is
intended to reflect the value and track the performance of one of our divisions.
We refer to these series of common stock in this prospectus by their Nasdaq
trading symbols:
SERIES OF COMMON STOCK NASDAQ TRADING SYMBOL
---------------------- ---------------------
Genzyme General Division Common Stock GENZ
Genzyme Molecular Oncology Division Common Stock GZMO
Genzyme Surgical Products Division Common Stock GZSP
Genzyme Tissue Repair Division Common Stock GZTR
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.
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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" information contained in
documents we file with them, which means that we may 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 that 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 filed with the SEC on March 31, 1999 (except
for the financial statements on pages 2-31 of Exhibit 13.1, which we
restated and filed with the SEC on June 30, 1999 as Exhibit 99 to our
Form 8-K), as amended by Amendment No. 1 on Form 10-K/A filed with the
SEC on June 30, 1999.
2. Quarterly Reports on Form 10-Q filed with the SEC on May 17, 1999
(except for pages 4-9 and 26-28 to the extent the financial statements
and related discussion relates to Genzyme General, which we restated
and filed with the SEC on June 30, 1999 as Exhibit 99 to our form 8-K)
and August 16, 1999.
3. Current Reports on Form 8-K filed with the SEC on March 17, 1999, June
11, 1999, and June 30, 1999.
4. The description of GZMO Stock and GZMO Stock Purchase Rights contained
in our Registration Statement on Form 8-A filed with the SEC on June
18, 1997.
You may request a copy of any of our 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 RELATING TO GZMO STOCK
The following are risks associated with owning shares of GZMO Stock.
You should keep these risk factors in mind when you read forward-looking
statements. These are statements that relate to future periods and include
statements about:
- product development activities and projected expenditures;
- receipt of regulatory approvals;
- plans for sales and marketing;
- projected cash needs;
- financial results; and
- dividend policy.
Generally, the words "anticipates," "expects," "believes," "intends," "could,"
"may" and similar expressions identify forward-looking statements.
Forward-looking statements involve risks and uncertainties, and our actual
results could differ significantly from results discussed in the forward-looking
statements.
Throughout these risk factors, the words "we," "us," "our" and "Genzyme" refer
to Genzyme Corporation and all of its business divisions collectively, and "our
board of directors" or "our board" refer to the board of directors of Genzyme
Corporation.
A. RISKS RELATED TO GENZYME TRACKING STOCK
GZMO Stock is one of four series of Genzyme tracking stock. The following are
risks related to owning shares of our tracking stock.
THE HOLDERS OF OUR TRACKING STOCK ARE STOCKHOLDERS OF A SINGLE COMPANY AND
UNFAVORABLE FINANCIAL TRENDS AFFECTING ONE DIVISION COULD NEGATIVELY AFFECT
OUR OTHER DIVISIONS.
Neither Genzyme Molecular Oncology nor our other divisions are separate legal
entities. Holders of GZMO Stock, together with holders of our other series of
tracking stock, are stockholders of a single company and face all of the risks
of an investment in Genzyme.
For purposes of financial presentation, we allocate programs, products, assets
and liabilities among our four divisions. Genzyme Corporation, however,
continues to own all of the assets and is responsible for all of the liabilities
allocated to each of the divisions. A holder of GZMO Stock, for example, does
not have any specific rights to the assets allocated to Genzyme Molecular
Oncology in our financial statements. Furthermore, if we are unable to satisfy
one division's liabilities out of the assets we allocate to that division, we
may be required to satisfy those liabilities with assets we have allocated to
another division. You should read both our consolidated financial statements and
the financial statements of Genzyme Molecular Oncology included in the reports
that we file with the SEC.
OUR BOARD OF DIRECTORS MAY TAKE ACTIONS THAT, WHILE IN THE BEST INTERESTS OF
GENZYME AS A WHOLE, HAVE AN UNEQUAL AND ADVERSE EFFECT ON ONE OR MORE SERIES OF
OUR TRACKING STOCK.
There may be times when the interests of holders of each series of our common
stock diverge or appear to diverge. Massachusetts law does not define a board of
directors' duties in that situation. Based on the advice of counsel, however, 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
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or additional duties to any particular group of stockholders. That duty is the
fiduciary duty to act in good faith and in a manner the board reasonably
believes to be in the best interests of the corporation. Under Massachusetts
law, if a disinterested and adequately informed board of directors determines in
good faith that an action would be in the corporation's best interests, taking
into account both the interests of holders of each series of tracking stock as
well as the alternatives reasonably available, then the board of directors
should be able to successfully defend against any stockholder claim that the
action could have an unequal effect on different series of tracking stock. In
March 1999, the Delaware Court of Chancery reached a similar conclusion in two
separate cases and dismissed, in each case, all stockholder claims that the
board of directors had violated its fiduciary duties under Delaware law by
approving actions that had a disparate impact on holders of different classes of
tracking stock. The court concluded in each case that even where the decision of
the board of directors affected holders of separate classes of tracking stock
differently, stockholders must allege facts sufficient to indicate that a board
of directors' approval was not based on the good faith belief that such actions
were in the corporation's best interests. While Delaware case law is not binding
on a Massachusetts court, we believe that a Massachusetts court would be
influenced by these decisions in addressing similar issues. A Massachusetts
court hearing a case, however, may apply principles of Massachusetts law other
than those described above or develop new principles of Massachusetts law to
decide the case.
MEMBERS OF OUR BOARD OF DIRECTORS MAY FAVOR ONE SERIES OF TRACKING STOCK OVER
ANOTHER IF THEY OWN A DISPROPORTIONATE AMOUNT OF THAT SERIES.
A member of our board may own a disproportionate amount of tracking stock in a
particular series, or the value of his or her holdings of a particular series of
stock may be different from the value of his or her holdings in another series.
This disparate stock ownership may cause the board member to favor one series of
stock over another. Nevertheless, we believe that a member of our board could
properly discharge his or her fiduciary responsibilities even if his or her
interests in shares of different series were disproportionate or of unequal
values. Our board members may create committees to review matters that raise
conflict-of-interest issues. If a committee is formed, it would report to the
full board.
HOLDERS OF OUR TRACKING STOCK HAVE LIMITED DECISION-MAKING POWER BECAUSE THEY
HAVE LIMITED SEPARATE VOTING RIGHTS.
Holders of all series of our tracking stock vote together as a single class on
all matters requiring common stockholder approval, including the election of
directors. Holders of one series of tracking stock do not have the right to vote
on matters separately from the other series except in limited circumstances.
These circumstances are dictated by Massachusetts law, our articles of
organization and the management and accounting policies adopted by our board of
directors. Therefore, stockholders of one series of tracking stock generally
could not make a proposal that would require approval only of the holders of
that series. Instead, they would have to obtain approval from all common
stockholders. The holders of GENZ Stock hold a large majority of the
stockholders' voting power. Consequently, on matters requiring common
stockholder approval, the holders of GENZ Stock are likely to decide the
outcome.
INVESTORS MAY BE REQUIRED TO EXCHANGE THEIR SHARES OF GZMO STOCK FOR CASH OR
SHARES OF GENZ STOCK VALUED AT LESS THAN WHAT A THIRD PARTY MIGHT PAY.
Our board of directors may at any time, in its sole discretion, decide to
exchange shares of GZMO Stock, GZSP Stock or GZTR Stock for any combination of
cash and shares of GENZ Stock at a 30% premium over the exchanged series' then
current market value. In addition, if we transfer or sell to a third party all
or substantially all of the assets of Genzyme Molecular Oncology, Genzyme
Surgical Products or Genzyme Tissue Repair, we must exchange the shares of that
division's tracking stock as follows:
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<TABLE>
<CAPTION>
IF WE ARE TRANSFERRING OR SELLING FOR THE AMOUNT OF CASH
ASSETS OF THEN, WE MUST EXCHANGE AND/OR GENZ STOCK EQUAL TO
<S> <C> <C>
Genzyme Molecular Oncology each share of GZMO Stock for a 30% premium over the
cash and/or shares of GENZ market value of the GZMO
Stock Stock being exchanged
Genzyme Surgical Products each share of GZSP Stock for the market value of the GZSP
cash and/or shares of GENZ Stock being exchanged
Stock
Genzyme Tissue Repair each share of GZTR Stock for a 30% premium over the
cash and/or shares of GENZ market value of the GZTR
Stock Stock being exchanged
</TABLE>
Consequently, holders of GZMO Stock, GZSP Stock and GZTR Stock may receive an
amount for their shares that is greater or less than the premium that a third
party buyer of the division's assets would pay. Our board's discretion to cause
such an exchange is described in our charter, which we filed with the SEC on
June 18, 1997 as Exhibit 1 to our Registration Statement on Form 8-A.
WE MAY ELIMINATE TRACKING STOCK IF A CORPORATE LEVEL TAX IS IMPOSED ON THE
ISSUANCE OF TRACKING STOCK.
A recent tax proposal by the Clinton Administration would impose a corporate
level tax on issuances of tracking stock. If the proposal is enacted into law or
effected through Treasury regulations, we could be taxed on an amount up to the
gain realized in future financings in which we sell tracking stock, including
the GZMO Stock. Also, any use of our tracking stock to acquire other companies
could be taxed. We also may be taxed if we distribute to stockholders
"designated" shares of tracking stock, which are shares designated by the
tracked division as issuable at our board's option for Genzyme General's
benefit. These or similarly adverse tax consequences could cause us to eliminate
tracking stock from our capital structure. We cannot predict, however, whether
Congress will enact legislation, or the Treasury Department will issue
regulations, effecting this or a similar proposal.
THE LIQUIDATION RIGHTS FOR EACH SERIES OF TRACKING STOCK ARE NOT ADJUSTED TO
REFLECT CHANGES IN THE SERIES' MARKET VALUE.
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. The number of liquidation units per
share for each series of our tracking stock is as follows:
- each share of GENZ Stock has 100 liquidation units;
- each share of GZMO Stock has 25 liquidation units;
- each share of GZSP Stock has 61 liquidation units; and
- each share of GZTR Stock has 58 liquidation units.
Although liquidation units are adjusted to prevent dilution in the event of
certain subdivisions, combinations or distributions of common stock, they are
not adjusted to reflect changes in the relative market value or performance of
the divisions. Therefore, at the time of a dissolution, liquidation or winding
up, the relative liquidation units attributable to each series of tracking stock
may not correspond to the value of the underlying assets of that division.
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OUR BOARD OF DIRECTORS MAY CHANGE ITS MANAGEMENT AND ACCOUNTING POLICIES TO THE
DETRIMENT OF ONE SERIES OF TRACKING STOCK WITHOUT STOCKHOLDER APPROVAL.
Our board of directors has adopted management and accounting policies that are
used to govern our business and to prepare our financial statements. These
policies cover the allocation of our corporate expenses, assets and liabilities
and other accounting matters, and the reallocation of assets between divisions
and other matters. Our board generally may modify or rescind these policies or
adopt new ones without stockholder approval. Any revised policies could have
different effects on each series of our tracking stock and could be detrimental
to one series as compared to another. Our board's discretion to make changes is
limited only by the policies themselves and the board's fiduciary duty to all of
our stockholders. We encourage you to review the full text of our management and
accounting policies, which are included as Exhibit 99.5 to the Current Report on
Form 8-K that we filed with the SEC on June 11, 1999.
OUR OTHER DIVISIONS MAY DEVELOP PRODUCTS IN THE FIELD OF ONCOLOGY THAT WILL NOT
BE ALLOCATED TO GENZYME MOLECULAR ONCOLOGY AND MAY COMPETE WITH ITS PRODUCTS.
Our board of directors has adopted a policy that no division may engage in
another division's principal business other than through joint ventures or other
collaborative arrangements with more than one division and third parties. This
non-compete policy, however, does not cover the entire field of oncology.
Therefore, Genzyme General, Genzyme Surgical Products and Genzyme Tissue Repair
may develop oncology products that will not be allocated to Genzyme Molecular
Oncology and that may compete with Genzyme Molecular Oncology's products. We
encourage you to review the full text of our non-compete policy, which is
included in Exhibit 99.5 to the Current Report on Form 8-K that we filed with
the SEC on June 11, 1999.
THE USE OF OPERATING LOSSES TO LOWER THE REPORTED TAX LIABILITY OF OUR
PROFITABLE DIVISIONS WILL CAUSE LOWER REPORTED EARNINGS IN THE FUTURE FOR THE
DIVISIONS GENERATING THESE OPERATING LOSSES.
Genzyme Corporation, rather than its divisions, is liable for taxes. Under our
management and accounting policies, for financial reporting purposes we
generally allocate taxes among our divisions as if they were separate taxpayers.
However, our board of directors has adopted a policy that provides that if any
of our divisions is unable to use its operating losses or other projected annual
tax benefits to reduce its current or deferred income tax expense, we may
reallocate these losses or benefits to our profitable divisions on a quarterly
basis for financial reporting purposes. This will result in a division with
current losses (such as Genzyme Molecular Oncology, Genzyme Surgical Products
and Genzyme Tissue Repair) reporting lower earnings available to its common
stockholders in the future than would be the case if that division had retained
its historical losses or other benefits in the form of a net operating loss
carryforward. We encourage you to review the full text of our tax allocation
policy, which is included in Exhibit 99.5 to the Current Report on Form 8-K that
we filed with the SEC on June 11, 1999.
B. RISKS RELATED TO GENZYME MOLECULAR ONCOLOGY
The following risks and uncertainties may adversely affect the business of
Genzyme Molecular Oncology:
THE SAGE(TM) TECHNOLOGY GENERATES ONLY MODEST REVENUES AND IT IS UNCERTAIN
WHETHER GENZYME MOLECULAR ONCOLOGY WILL BE ABLE TO DEVELOP AND COMMERCIALIZE
OTHER MARKETABLE PRODUCTS AND SERVICES.
We do not expect Genzyme Molecular Oncology's products and services to generate
significant revenue for several years. Services based on the SAGE(TM) gene
expression technology represent the only product or service that is nOt at an
early stage of development. To date, these services have generated only modest
revenue, and we compete with several companies in the genomic services market.
Prior to commercializing any other products and services, Genzyme Molecular
Oncology will need to conduct substantial research and development, including,
in some cases, the replication of pre-clinical studies performed by its
collaborators, undertake preclinical and clinical testing and pursue regulatory
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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, Genzyme Molecular Oncology'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.
GENZYME MOLECULAR ONCOLOGY ANTICIPATES FUTURE LOSSES AND MAY NEVER BECOME
PROFITABLE.
We expect Genzyme Molecular Oncology to have significant operating losses for
the next several years. Genzyme Molecular Oncology plans to spend substantial
amounts of money on, among other things:
- commercialization of the SAGE(TM) technology;
- 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 Genzyme Molecular Oncology's operations will ever be
profitable. It may be years before the division generates any revenue from sales
of products or services other than those based on the SAGE(TM) technology.
IF GENZYME MOLECULAR ONCOLOGY FAILS TO OBTAIN THE CAPITAL NECESSARY TO FUND ITS
OPERATIONS, IT WILL BE UNABLE TO FUND DEVELOPMENT PROGRAMS AND COMPLETE CLINICAL
TRIALS.
We anticipate that Genzyme Molecular Oncology's current cash resources, together
with amounts available under a line of credit from Genzyme General and revenues
generated from the SAGE(TM) technology, license agreements and committed
research funding from collaborators, will be sufficient to fund its operations
through 2000. However, Genzyme Molecular Oncology'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.
Genzyme Molecular Oncology 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 Genzyme Molecular Oncology has insufficient funds or is unable to raise
additional funds, it may delay, reduce or eliminate certain of its programs.
Genzyme Molecular Oncology may also have to give rights to third parties to
attempt to commercialize technologies or products that it would otherwise
commercialize itself.
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GENZYME MOLECULAR ONCOLOGY MAY FAIL TO PROTECT ADEQUATELY ITS PROPRIETARY
TECHNOLOGY, WHICH WOULD ALLOW COMPETITORS TO TAKE ADVANTAGE OF ITS RESEARCH AND
DEVELOPMENT EFFORTS.
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.
While Genzyme Molecular Oncology's employees, consultants and corporate partners
with access to proprietary information generally are required to enter into
confidentiality agreements, we cannot guarantee that these agreements will be
honored. In addition, some of Genzyme Molecular Oncology's consultants have
developed portions of Genzyme Molecular Oncology'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.
Genzyme Molecular Oncology 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 Genzyme Molecular Oncology's technology.
We cannot guarantee that the patents issued or licensed to us will remain free
from challenge by third parties.
GENZYME MOLECULAR ONCOLOGY MAY BE REQUIRED TO LICENSE TECHNOLOGY FROM
COMPETITORS IN ORDER TO DEVELOP AND COMMERCIALIZE SOME OF ITS PRODUCTS AND
SERVICES, AND IT IS UNCERTAIN WHETHER THESE LICENSES WILL BE AVAILABLE.
Third party patent rights and pending patent applications filed by third
parties, if issued, may cover some of the products Genzyme Molecular Oncology is
developing or testing. As a result, Genzyme Molecular Oncology may be required
to obtain licenses from the holders of these patents in order to use or sell
certain products and services. We cannot guarantee that these licenses will be
available on acceptable terms. If these licenses are not available, Genzyme
Molecular Oncology's ability to commercialize its products and services may be
impaired.
In its immunotherapy program, Genzyme Molecular Oncology is in the process of
evaluating the therapeutic administration of genes that encode specific tumor
antigens and antigenic peptide products, including MART-1 and gp100. Genzyme
Molecular Oncology is aware of two issued U.S. patents directed to the gene
which encodes MART-1. While Genzyme Molecular Oncology has obtained rights
under one of these patents, it is still in the process of evaluating the scope
and validity of the other. Genzyme Molecular Oncology is also evaluating an
issued U.S. patent covering the gene that encodes gp100 and three published
Patent Cooperation Treaty applications by three different third party applicants
which may cover antigens derived from gp100. Genzyme Molecular Oncology is in
the process of evaluating the scope and validity of these patents and patent
applications to determine whether obtaining licenses is necessary.
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GENZYME MOLECULAR ONCOLOGY MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION
OR OTHER PROCEEDINGS RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS.
If Genzyme Molecular Oncology initiates or is required to defend itself in
patent litigation, it could consume a substantial portion of Genzyme Molecular
Oncology's resources. Any legal action against Genzyme Molecular Oncology or its
strategic partners claiming damages or seeking to stop commercial activities
relating to the affected products and processes could subject Genzyme Molecular
Oncology to liability for damages.
These actions may also require Genzyme Molecular Oncology 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 Genzyme Molecular
Oncology or its strategic partner would prevail in any legal action. If Genzyme
Molecular Oncology is required to obtain a license, we cannot guarantee that one
would be made available or made available on acceptable terms.
REGULATION BY GOVERNMENT AGENCIES IMPOSES SIGNIFICANT COSTS AND RESTRICTIONS ON
THE DEVELOPMENT OF GENZYME MOLECULAR ONCOLOGY'S PRODUCTS AND SERVICES.
Genzyme Molecular Oncology'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 first can be
sold, limit how a product or service may be used, or adversely impact third
party reimbursement.
GENZYME MOLECULAR ONCOLOGY'S COMPETITORS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL
INDUSTRIES MAY HAVE SUPERIOR PRODUCTS, MANUFACTURING CAPABILITIES OR MARKETING
EXPERTISE.
The human health care products and services industry is extremely competitive.
Major pharmaceutical companies and other biotechnology companies compete with
Genzyme Molecular Oncology. Certain of these competitors may have superior
research and development, marketing and production capabilities. Some
competitors also may have greater financial resources than Genzyme Molecular
Oncology. The future success of the division will depend on its ability to
effectively develop and market its products against those of its competitors.
IF GENZYME MOLECULAR ONCOLOGY IS UNABLE TO KEEP UP WITH RAPID TECHNOLOGICAL
CHANGES, ITS PRODUCTS OR SERVICES MAY BECOME OBSOLETE.
The field of biotechnology is characterized by significant and rapid
technological change. Although Genzyme Molecular Oncology 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 Genzyme Molecular Oncology's competitors may develop genomic services
that make the SAGE(TM) technology obsolete.
GENZYME MOLECULAR ONCOLOGY MAY NOT RECEIVE SIGNIFICANT PAYMENTS FROM
COLLABORATORS DUE TO UNSUCCESSFUL RESULTS IN EXISTING COLLABORATIONS OR A
FAILURE TO ENTER INTO FUTURE COLLABORATIONS.
Genzyme Molecular Oncology's strategy to develop and commercialize certain of
its products and services includes entering into various arrangements with both
academic collaborators, and corporate
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partners and licensees. Genzyme Molecular Oncology depends on the success of
these parties in performing research, preclinical and clinical testing, and
marketing. These arrangements may require Genzyme Molecular Oncology to transfer
certain important rights to its corporate partners and licensees. While Genzyme
Molecular Oncology believes its collaborators and licensees will want to perform
their contractual responsibilities, in some cases the amount and timing of
resources that they devote to their collaborations with the division, and the
ability to terminate the collaboration, will be controlled by the collaborators.
As a result, Genzyme Molecular Oncology 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.
IF GENZYME MOLECULAR ONCOLOGY FAILS TO OBTAIN ADEQUATE LEVELS OF REIMBURSEMENT
FOR ITS ONCOLOGY PRODUCTS AND SERVICES FROM THIRD-PARTY PAYERS, THE COMMERCIAL
POTENTIAL OF ITS PRODUCTS AND SERVICES WILL BE SIGNIFICANTLY LIMITED.
A substantial portion of Genzyme Molecular Oncology'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 inadequate or no insurance
coverage and reimbursement for Genzyme Molecular Oncology'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.
THE VOLATILITY IN THE PRICE OF GZMO STOCK COULD RESULT IN THE LOSS OF A
SIGNIFICANT AMOUNT OF YOUR INVESTMENT.
The market price for GZMO 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.
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C. RISKS RELATED TO GENZYME, INCLUDING THE OTHER GENZYME DIVISIONS
Holders of GZMO Stock are stockholders of Genzyme. Liabilities or contingencies
of the divisions of Genzyme other than Genzyme Molecular Oncology that affect
Genzyme's resources or financial condition could affect the financial condition
or results of operations of Genzyme Molecular Oncology. Therefore, you should
review the following risks as well as the risks and uncertainties described
under the heading "Management's Discussion and Analysis of Genzyme Corporation
and Subsidiaries' Financial Condition and Results of Operations -- Factors
Affecting Future Operating Results" included on pages 41 through 44 of Exhibit
13.1 of our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on June
30, 1999.
A REDUCTION IN REVENUES FROM SALES OF PRODUCTS THAT TREAT GAUCHER DISEASE WOULD
HAVE AN ADVERSE AFFECT ON OUR BUSINESS.
Through Genzyme General, we generate a majority of our product revenues from
sales of enzyme-replacement products for patients with Gaucher disease. Genzyme
General entered this market in 1991 with Ceredase(R) enzyme. Because production
of Ceredase(R) enzyme was subject to supply constraints, the division developed
Cerezyme(R) enzyme, a recombinant form of the enzyme. Genzyme General stopped
producing Ceredase(R) enzyme, except for small quantities, during 1998, after
substantially all the patients previously using Ceredase(R) enzyme had converted
to Cerezyme(R) enzyme. Sales of Ceredase(R) enzyme and Cerezyme(R) enzyme
totaled $411.1 million for the year ended December 31, 1998, representing
approximately 67% of our, and 81% of Genzyme General's, product revenues for
that year, and $230.7 million for the six months ended June 30, 1999,
representing approximately 70% of our, and 84% of Genzyme General's, product
revenues for that period.
Because our business is highly dependent on Cerezyme(R) enzyme, a reduction in
revenue from sales of this product would affect adversely our results of
operations. Revenues from Cerezyme(R) enzyme would be impacted negatively 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.
WE MAY REQUIRE SIGNIFICANT ADDITIONAL FINANCING WHICH MAY NOT BE AVAILABLE ON
FAVORABLE TERMS, IF AT ALL.
As of June 30, 1999, we had approximately $651.8 million in cash, cash
equivalents and short- and long-term investments (excluding investments in
equity securities).
Although we currently have substantial cash resources and positive cash flow, we
intend to use substantial portions of our available cash for:
- product development and marketing;
- expanding facilities; and
- working capital.
We will further reduce available cash reserves to pay principal and interest on
the following debt:
- As of June 30, 1999, we owed approximately $100 million under a $225
million revolving credit facility with a group of commercial banks. Of
this outstanding amount, we have allocated $82 million to Genzyme
General and $18 million to Genzyme Tissue Repair. 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. We intend to renew this credit line, although we cannot guarantee
that we will be able to do so on the same or as favorable terms, if at
all.
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- In February 1997, we issued a $13 million convertible note, the entire
principal amount of which is allocated to Genzyme Tissue Repair. This
convertible note bears interest at an annual rate of 5% and matures on
February 27, 2000, but the holders of these convertible notes may
exchange principal, and under some circumstances interest, on the note
for shares of GZTR Stock. As of June 30, 1999, $7.36 million of
principal on this convertible note was outstanding.
- In August 1998, we issued $21.2 million in convertible debentures, the
entire principal amount of which is allocated to Genzyme General. 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 some circumstances interest, on the
convertible debentures for shares of GENZ Stock.
- In May 1998, we issued $250 million in convertible notes, the entire
principal amount of which is allocated to Genzyme General. 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 GENZ Stock, GZMO Stock and GZSP Stock.
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, extend any existing financing arrangement, or obtain either on
favorable terms.
SEVERAL ANTI-TAKEOVER PROVISIONS MAY DEPRIVE OUR STOCKHOLDERS OF THE OPPORTUNITY
TO RECEIVE A PREMIUM FOR THEIR SHARES UPON A CHANGE IN CONTROL.
Certain provisions of Massachusetts law and our articles of organization, bylaws
and stockholder rights plan could delay or prevent a change in control of
Genzyme or a change in Genzyme's management.
Our tracking stock structure may also deprive our stockholders of the
opportunity to receive a premium for their shares upon a change in control
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, in
its sole discretion, (1) exchange shares of GZMO Stock, GZSP Stock or GZTR Stock
for GENZ Stock at a 30% premium over the market value of the exchanged shares
and (2) issue shares of undesignated common and preferred stock from time to
time in one or more series. Either of these board actions could increase the
cost of an acquisition of Genzyme and thus discourage a takeover attempt.
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SELLING SECURITYHOLDER
This prospectus relates to sales of up to 617,200 shares of GZMO Stock by
Canadian Medical Discoveries Fund Inc. Canadian Medical Discoveries Fund
acquired these shares when we purchased one-half of its interest in
StressGen/Genzyme LLC.
The shares of GZMO Stock being registered may be offered from time to time
pursuant to this prospectus. Our registration of the GZMO Stock does not
necessarily mean that the selling securityholder will sell all or any of its
shares.
Prior to the issuance of the 617,200 shares of GZMO Stock covered by this
prospectus, the selling securityholder did not beneficially own any shares of
GZMO Stock. On October 4, 1999, 12,740,428 shares of GZMO Stock were
outstanding. The GZMO shares being registered will represent approximately 4.6%
of GZMO Stock outstanding as of the date of this prospectus.
Other than as an investor in StressGen/Genzyme LLC, the selling securityholder
has not had a material relationship with Genzyme during the past three years.
Individuals and entities who receive shares from the selling securityholder as a
gift or in connection with a pledge may sell up to 500 of those shares using
this prospectus.
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PLAN OF DISTRIBUTION
The selling securityholder may offer the shares of GZMO Stock at various times
in transactions:
- in the over-the-counter market;
- on any exchange where GZMO 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 securityholder may sell its 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 securityholder may use dealers, agents or underwriters to sell its
shares. If this happens, the dealers, agents or underwriters may receive
compensation in the form of discounts or commissions from the selling
securityholder or from the purchaser(s) of shares or from both (which
compensation to a particular broker might be in excess of customary
compensation).
The selling securityholder and any dealers, agents or underwriters that
participate with the selling securityholder in the distribution of the shares
may be deemed to be "underwriters" (as this term is defined in the Securities
Act of 1933). Any commissions paid or any discounts or concessions allowed to
any such persons, and any profits received on the resale of such shares of GZMO
Stock offered by this prospectus, may be deemed to be underwriting commissions
or discounts under the Securities Act of 1933.
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 securityholder 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
securityholder 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 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 of 1933, 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.
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We have agreed to pay for most of the expenses incident to the offer and sale of
the shares offered by the selling securityholder using this prospectus. The
selling securityholder, however, will pay any underwriting discounts and selling
commissions.
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.
LEGAL MATTERS
Our counsel, Palmer & Dodge LLP, Boston, Massachusetts, is giving us an opinion
on the validity of the shares offered by this prospectus.
EXPERTS
The financial statements of Genzyme Corporation, Genzyme Tissue Repair and
Genzyme Molecular Oncology incorporated in this prospectus on Form S-3 by
reference to the Annual Report on Form 10-K for the year ended December 31,
1998, as amended, the financial statements of Genzyme Surgical Products
incorporated in this prospectus on Form S-3 by reference to the Form 8-K as
filed on June 11, 1999, the financial statements of Genzyme General incorporated
in this prospectus on Form S-3 by reference to the Form 8-K as filed on June 30,
1999, and the financial statements of the Genzyme Retirement Savings Plan
incorporated in this prospectus on Form S-3 by reference to the Form 10-K/A as
filed on June 30, 1999, have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
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