<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1999.
REGISTRATION NO. 333-82395
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GENZYME CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MASSACHUSETTS 06-1047163
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
</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)
-------------------------
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.
-------------------------
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.
================================================================================
<PAGE> 2
SUBJECT TO COMPLETION, DATED AUGUST 6, 1999
GENZYME SURGICAL PRODUCTS LOGO
1,130,123 SHARES OF GENZYME SURGICAL PRODUCTS DIVISION
COMMON STOCK
Genzyme Surgical Products Division Common Stock trades on the Nasdaq National
Market under the symbol "GZSP." We refer to this stock as GZSP Stock. On August
5, 1999 the last sale price of GZSP Stock reported by Nasdaq was $4.875.
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 into shares of Genzyme General Division Common Stock,
which we refer to as GENZ Stock, shares of Genzyme Molecular Oncology Division
Common Stock, which we refer to as GZMO Stock, and shares of GZSP Stock. This
prospectus relates to sales of the GZSP Stock that the holders receive upon
conversion. On June 30, 1999, each $1,000 principal amount of the Convertible
Notes was convertible into approximately twenty five shares of GENZ Stock,
approximately three shares of GZMO Stock and approximately five shares of GZSP
Stock.
We will not receive any portion of the proceeds from sales of the shares.
-------------------------
INVESTING IN SHARES OF GZSP STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY READ AND CONSIDER THE "RISK FACTORS" 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 AUGUST , 1999.
GENZYME CORPORATION - ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139 - (617)
252-7500
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Genzyme Corporation......................................... 3
Where You Can Find More Information......................... 4
Risk Factors Relating to GZSP Stock......................... 5
Selling Securityholders..................................... 18
Plan of Distribution........................................ 20
Legal Matters............................................... 21
Experts..................................................... 21
</TABLE>
2
<PAGE> 4
GENZYME CORPORATION
We are a biotechnology company that develops innovative products and services
for significant unmet medical needs. We have four 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 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:
<TABLE>
<CAPTION>
SERIES OF COMMON STOCK NASDAQ TRADING SYMBOL
---------------------- ---------------------
<S> <C>
GENZ Stock GENZ
GZMO Stock GZMO
GZSP Stock GZSP
Genzyme Tissue Repair Division Common
Stock, which we refer to as GZTR Stock GZTR
</TABLE>
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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<PAGE> 5
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 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 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 pages 2-31 of Exhibit 13.1, which financial statements have been
restated and filed with the SEC on Form 8-K on June 30, 1999), as
amended by Amendment No. 1 on Form 10-K/A filed with the SEC on June 30,
1999.
2. Quarterly Report on Form 10-Q filed with the SEC on May 17, 1999 (except
for pages 4-9 and 26-28 to the extent such discussion relates to Genzyme
General, which financial statements and related discussion have been
restated and filed with the SEC on Form 8-K on June 30, 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 GZSP Stock and GZSP Stock Purchase Rights contained
in our Registration Statement on Form 8-A filed with the SEC on June 11,
1999.
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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<PAGE> 6
RISK FACTORS RELATING TO GZSP STOCK
The following are risk factors associated with owning shares of GZSP Stock.
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:
- 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.
A. RISKS RELATED TO GENZYME TRACKING STOCK
GZSP Stock is one of four series of our tracking stock. The following are risks
related to owning shares of our tracking stock.
FINANCIAL IMPACT ON ONE OF OUR DIVISIONS COULD ADVERSELY AFFECT OUR OTHER
DIVISIONS.
Neither Genzyme Surgical Products nor our other divisions are separate legal
entities. Holders of GZSP 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 and all of our businesses, assets and liabilities.
For purposes of financial presentation, we allocate programs, products, assets
and liabilities among our four divisions. However, Genzyme continues to own all
of the assets and is responsible for all of the liabilities allocated to each of
the divisions. A holder of GZSP Stock, for example, would not have any specific
rights to the assets allocated to Genzyme Surgical Products 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 Surgical Products included in the reports that we have filed 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 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
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<PAGE> 7
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 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 common stock as well as the
alternatives reasonably available, then the board of directors should be able to
successfully defend against any stockholder claim that such action could have an
unequal effect on different series of common 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. However, a Massachusetts court hearing such a case
may apply principles of Massachusetts law other than those described above or
develop new principles of Massachusetts law to decide such a case.
MEMBERS OF OUR BOARD OF DIRECTORS MAY FAVOR ONE SERIES OF STOCK OVER ANOTHER IF
THEY OWN A DISPROPORTIONATE AMOUNT OF THAT SERIES.
A member of our board may own a disproportionate amount of stock in a particular
series or the value of his or her stockholdings may be different from the value
of his or her stockholdings 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 from time to time create committees to review matters that raise conflict-
of-interest issues. Any such committee would report to the full board on these
matters.
HOLDERS OF OUR TRACKING STOCK HAVE LIMITED DECISION-MAKING POWER DUE TO THE
STOCKS' LIMITED SEPARATE VOTING RIGHTS.
Holders of each series of our common stock vote together as a single class on
all matters requiring common stockholder approval, including the election of
directors. Holders of a series of common stock do not have the right to vote on
matters separately from another series except in limited circumstances, which
are provided for under Massachusetts law, our articles of organization and 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 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.
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<PAGE> 8
INVESTORS MAY BE REQUIRED TO EXCHANGE THEIR SHARES OF GZSP STOCK, GZMO STOCK OR
GZTR STOCK FOR CASH OR SHARES OF GENZ STOCK BELOW WHAT A THIRD PARTY MIGHT PAY.
Our board of directors may at any time, in its sole discretion, decide to
exchange shares of GZSP Stock, GZMO Stock or GZTR Stock for any combination of
cash and shares of GENZ Stock at a 30% premium over a 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 Surgical Products, Genzyme Molecular
Oncology or Genzyme Tissue Repair, we must exchange the shares of that
division's tracking stock as follows:
<TABLE>
<CAPTION>
THE AMOUNT OF CASH AND/OR
IF WE ARE TRANSFERRING OR GENZ STOCK GIVEN IN
SELLING ASSETS OF . . . THEN, WE MUST EXCHANGE . . . EXCHANGE WOULD EQUAL . . .
- ------------------------- ---------------------------- --------------------------
<S> <C> <C>
Genzyme Surgical Products each share of GZSP Stock for The market value of the
cash and/or shares of GENZ GZSP Stock being
Stock. exchanged.
Genzyme Molecular each share of GZMO Stock for a 30% premium over the
Oncology cash and/or shares of GENZ market value of the GZMO
Stock. Stock being exchanged.
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 GZSP Stock, GZMO 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 articles of organization. Furthermore, our
board may exchange shares of GZSP Stock into GENZ Stock in the event of certain
adverse tax developments, as discussed in the immediately following risk factor.
WE MAY EXCHANGE GENZ STOCK FOR GZSP STOCK IF A RECENT CLINTON ADMINISTRATION
PROPOSAL IMPOSING A CORPORATE LEVEL TAX ON THE ISSUANCE OF TRACKING STOCK IS
ADOPTED.
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 GZSP 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, or the Treasury Department will issue, regulations
effecting this or a similar proposal.
The GZSP Stock's terms provide that in the event of adverse tax developments, we
may exchange shares of GZSP Stock for shares of GENZ Stock without any premium
to the holders. Upon the exchange, a former holder of GZSP Stock would no longer
hold a security intended to reflect the value and track the performance of
assets and programs that were allocated to Genzyme Surgical Products immediately
prior to the exchange. Instead, he, she or it would hold a security intended to
reflect the value and track the
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<PAGE> 9
performance of the assets and programs allocated to Genzyme General, including
the assets and programs previously allocated to Genzyme Surgical Products.
THE LIQUIDATION UNITS FOR EACH SERIES OF COMMON 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 common stock is as follows:
- each share of GZSP Stock has 61 liquidation units;
- each share of GENZ Stock has 100 liquidation units;
- each share of GZMO Stock has 25 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 common stock
may not correspond to the value of the underlying assets of that division.
OUR BOARD OF DIRECTORS MAY CHANGE ITS MANAGEMENT AND ACCOUNTING POLICIES TO THE
DETRIMENT OF ONE SERIES OF COMMON 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 may generally modify or rescind these policies or
adopt new ones without stockholder approval. Any revised policies could have
different effects on each series of our common 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 these policies,
which have been filed as Exhibit 99.5 to our Current Report on Form 8-K dated
June 11, 1999.
OUR OTHER DIVISIONS MAY DEVELOP PRODUCTS IN THE FIELD OF BIOSURGERY OR SURGICAL
PRODUCTS THAT WILL NOT BE ALLOCATED TO GENZYME SURGICAL PRODUCTS AND MAY COMPETE
WITH ITS PRODUCTS.
Our board of directors has adopted a policy that no division 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 biosurgery or
surgical products. Therefore, Genzyme General, Genzyme Molecular Oncology and
Genzyme Tissue Repair may develop biosurgery or surgical products that will not
be allocated to Genzyme Surgical Products and that may compete with Genzyme
Surgical Products' products. For example, both Genzyme Surgical Products and the
Pharmaceuticals business unit of Genzyme General are investigating the use of
certain biomaterials for drug delivery purposes, and both may compete in this
field. In addition, the Therapeutics business unit of Genzyme General is
developing recombinant human antithrombin III for use in coronary artery bypass
graft surgery under a joint
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venture with Genzyme Transgenics Corporation. We encourage you to review the
full text of our non-compete policy, which is included in Exhibit 99.5 to our
Current Report on Form 8-K dated June 11, 1999.
THE USE OF OPERATING LOSSES TO LOWER THE TAX LIABILITY OF OUR PROFITABLE
DIVISIONS WILL CAUSE LOWER FUTURE EARNINGS AND FULL TAX BURDEN 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 such 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 Surgical Products, Genzyme Molecular Oncology
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 this policy, which is
included in Exhibit 99.5 to our Current Report on Form 8-K dated June 11, 1999.
WE CANNOT PREDICT HOW THE DISTRIBUTION OF THE GZSP STOCK WILL AFFECT THE MARKET
PRICE OF GENZ STOCK.
On June 28, 1999, we distributed shares of GZSP Stock as a stock dividend on
shares of GENZ Stock. While this distribution of the GZSP Stock may have
affected the market prices of our common stock, we cannot predict what further
effect, if any, this distribution will have on the market price of the GENZ
Stock or of our other series of common stock.
B. RISKS RELATED TO GENZYME SURGICAL PRODUCTS
The following risks and uncertainties may adversely affect the business of
Genzyme Surgical Products.
GENZYME SURGICAL PRODUCTS ANTICIPATES FUTURE LOSSES AND MAY NEVER BECOME
PROFITABLE.
Genzyme Surgical Products expects to have significant operating losses for the
next several years. It plans to spend substantial amounts of money on, among
other things:
- conducting research and development activities;
- pursuing regulatory approvals;
- conducting commercialization activities; and
- providing surgeon education and training.
We cannot guarantee that the efforts underlying these expenditures will be
successful or that Genzyme Surgical Products' operations will ever be
profitable. It may be years before the division generates any revenue from sales
of products currently under development.
We anticipate that Genzyme Surgical Products' current cash resources, together
with revenues generated from its products and distribution agreements, will be
sufficient to fund
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its operations through 2001. However, its cash needs may differ from those
planned because of many factors, including:
- the ability to become profitable;
- the results of research and development efforts;
- the ability to establish strategic alliances and licensing arrangements
for research and development programs;
- the achievement of milestones under strategic alliances;
- the ability to establish and maintain additional distribution
arrangements;
- the enforcement of patent and other intellectual property rights;
- market acceptance of novel approaches and therapies;
- the development of competitive products; and
- the ability to satisfy regulatory requirements of the FDA and other
government authorities.
Genzyme Surgical Products may require significant additional financing to
continue operations at anticipated levels. We cannot guarantee that it will be
able to obtain additional financing on favorable terms, if at all. If the
division has insufficient funds or is unable to raise additional funds, it may
delay, reduce or eliminate certain of its programs. It may also have to give
rights to third parties to attempt to commercialize technologies or products
that it would otherwise commercialize itself.
BECAUSE THE DEVELOPMENT OF GENZYME SURGICAL PRODUCTS' THERAPEUTIC PRODUCTS WILL
INVOLVE A LENGTHY AND COMPLEX PROCESS, IT IS UNCERTAIN WHETHER THE DIVISION WILL
BE ABLE TO DEVELOP ANY MARKETABLE THERAPEUTIC PRODUCTS.
Prior to commercializing any of its therapeutic products, Genzyme Surgical
Products will need to:
- conduct substantial research and development;
- undertake pre-clinical and clinical testing; and
- pursue regulatory approvals.
We cannot guarantee that these efforts will be successful. Many of the
division's biomaterials, gene therapy and cell therapy products are currently in
pre-clinical development. If any of these products advance into clinical trials,
the trials may not support the safety or effectiveness of such products. Genzyme
Surgical Products may encounter problems in clinical trials that lead it to
delay or suspend the trials. Gene and cell therapies may cause serious side
effects that may preclude regulatory approval. To date, the FDA has not approved
the sale of any gene therapy products.
ANY MARKETABLE THERAPEUTIC PRODUCTS THAT THE DIVISION DEVELOPS MAY NOT BE
COMMERCIALLY SUCCESSFUL.
The commercial success of any marketable therapeutic product that Genzyme
Surgical Products develops will depend on many factors, including:
- regulation by the FDA and other government authorities;
- market acceptance by surgeons and hospital administrators;
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- the effectiveness of Genzyme Surgical Products' sales force;
- the effectiveness of Genzyme Surgical Products' production and marketing
capabilities;
- the success of competitive products; and
- the availability of third party reimbursement.
For example, although the division continues to market Sepracoat(TM) Coating
Solution in Europe, in January 1998, it announced that it had discontinued
development of the product for abdominal surgery in the United States after an
FDA advisory committee recommended against approval of the product. The division
may stop developing other product candidates if there is insufficient demand or
if it encounters regulatory or development problems.
IF GENZYME SURGICAL PRODUCTS EXERCISES AN OPTION TO PURCHASE CERTAIN LIMITED
PARTNERSHIP INTERESTS, ITS CASH RESOURCES MAY DIMINISH AND THE RIGHTS OF ITS
STOCKHOLDERS MAY BE DILUTED.
In 1989, we organized Genzyme Development Partners, L.P., a special purpose
research and development entity, transferring to it certain technology and
commercial rights to the Sepra family of products. We have an option to purchase
the limited partnership interests in the partnership under certain circumstances
for approximately $26 million plus continuing royalties based on certain sales
of the Sepra products. We have allocated the purchase option to Genzyme Surgical
Products. The option's exercise price is payable in cash, shares of GENZ Stock
valued at a 5% discount to their then fair market value, or a combination of the
two, as determined by Genzyme Surgical Products when it exercises the option.
If Genzyme Surgical Products exercises this option, it will have to make
substantial cash payments or compensate Genzyme General with shares of GZSP
Stock for the GENZ Stock used, or both. If the division makes cash payments, its
cash resources would diminish. If it makes the payment in whole or in part in
shares of GENZ Stock, then our board of directors would need to approve the
issuance of GENZ Stock in return for Genzyme General receiving a number of GZSP
designated shares with a fair market value equal to the fair market value of the
shares of GENZ Stock. Those GZSP designated shares would be shares of GZSP Stock
that our board would have the option to issue from time to time with all
proceeds allocable to Genzyme General. Beginning on June 30, 2000, and on every
June 30th thereafter, we will have to distribute substantially all the GZSP
designated shares if the number of those shares exceeds the sum of 10% of the
GZSP Stock then outstanding plus all shares of GZSP Stock then issuable under
options, warrants or other securities either convertible into or exchangeable
for GZSP Stock.
We cannot guarantee that our board would authorize the issuance of shares of
GENZ Stock for payment of the option exercise price and the creation of any GZSP
designated shares. If our board did create and subsequently distribute or
otherwise dispose of any GZSP designated shares, this would substantially dilute
the rights of the holders of GZSP Stock and could significantly affect the
market price of GZSP Stock.
If Genzyme Surgical Products does not exercise the option, the partnership would
have the right to sell or otherwise transfer to a third party a license to
background technology that we granted to it. Such a sale or transfer may
terminate our joint venture with the partnership to manufacture and sell the
Sepra products in the United States and Canada. In addition, failure to exercise
the option would cause the joint venture to become
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terminable upon 90 days' prior notice by either Genzyme or Genzyme Development
Partners.
GENZYME SURGICAL PRODUCTS IS DEVOTING SIGNIFICANT RESOURCES TO DEVELOPING NOVEL
ALTERNATIVE PRODUCTS AND TREATMENTS THAT MAY NOT BE COMMERCIALLY SUCCESSFUL.
Genzyme Surgical Products is devoting a significant amount of money to
developing products that will represent alternatives to traditional surgical
procedures or treatments. These products will likely require several years of
aggressive and costly marketing before they might become widely accepted by the
surgical community. Genzyme Surgical Products is developing products that are
designed to enable surgeons to perform minimally invasive cardiovascular
surgery. The medical conditions that can be treated with minimally invasive
cardiovascular surgery are currently being treated with widely accepted surgical
procedures such as coronary artery bypass grafting and catheter-based
treatments, including balloon angioplasty, atherectomy and coronary stenting. To
date, minimally invasive cardiovascular surgery has been performed on a limited
basis and its further adoption by the surgical community will partly depend upon
Genzyme Surgical Products' ability to educate cardiothoracic surgeons about its
effectiveness and to facilitate the training of cardiothoracic surgeons in
minimally invasive cardiovascular surgery techniques.
Similarly, until recently surgeons have not used products designed to reduce the
incidence and extent of postoperative adhesions. Since 1996, when Seprafilm(R)
Bioresorbable Membrane was introduced, market acceptance of anti-adhesion
products has been slow. To increase sales of the Sepra family of products, the
division has had to educate surgeons and hospital administrators about the
problems of, and costs associated with, adhesions and the benefit of preventing
adhesions. It has also had to train surgeons on the proper handling and use of
these products.
Gene and cell therapies also represent new approaches to the treatment of
cardiovascular disease, and Genzyme Surgical Products will need to overcome many
technical obstacles in developing products based upon gene and cell therapies.
We cannot guarantee that Genzyme Surgical Products' efforts in educating and
training the surgical community will result in the widespread adoption of
minimally invasive cardiovascular surgery, anti-adhesion products and gene and
cell therapies or that surgeons adopting these procedures and products will use
the division's products.
GENZYME SURGICAL PRODUCTS MAY FAIL TO ADEQUATELY PROTECT ITS PROPRIETARY
TECHNOLOGY WHICH WOULD ENABLE COMPETITORS TO TAKE ADVANTAGE OF ITS RESEARCH AND
DEVELOPMENT EFFORTS.
Genzyme Surgical Products' long-term success largely depends on its ability to
market technologically competitive products. It can prevent unauthorized third
parties from using proprietary rights relating to its products and services only
if these rights are covered by patents or are kept confidential as trade
secrets.
We cannot guarantee that the division's proprietary technology is adequately
protected against unauthorized use by third parties. Third party patent rights
and pending patent applications filed by third parties, if issued, may cover
some of the products the division is developing 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, if at all.
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<PAGE> 14
We cannot guarantee that the patents issued or licensed to Genzyme and
attributed to Genzyme Surgical Products will remain free from challenge by third
parties. If we become involved in litigation to defend ourselves in patent suits
brought by third parties involving the intellectual property used by Genzyme
Surgical Products or if we initiate such suits, it could consume a substantial
portion of that division's resources. Any legal action against us or the
division's strategic partners claiming damages or seeking to stop commercial
activities relating to the division's products and processes could subject us
and therefore the division to potential liability for damages.
Congress recently imposed restrictions on the ability of medical device
manufacturers to enforce certain patent claims relating to surgical and medical
methods against medical practitioners. These restrictions may prevent us from
adequately protecting the division's proprietary procedures against unauthorized
use by medical practitioners.
The 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 division's technology. While Genzyme Surgical Products' employees,
consultants and corporate partners with access to proprietary information are
generally required to enter into confidentiality agreements, we cannot guarantee
that these agreements will be honored. In addition, some of the division's
consultants have developed portions of the 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.
REGULATION BY GOVERNMENT AGENCIES IMPOSES SIGNIFICANT COSTS AND RESTRICTIONS ON
THE DEVELOPMENT OF GENZYME SURGICAL PRODUCTS' THERAPEUTIC PRODUCTS.
Genzyme Surgical Products' 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.
COMPETITION FROM OTHER MEDICAL DEVICE AND TECHNOLOGY COMPANIES COULD HURT
GENZYME SURGICAL PRODUCTS' PERFORMANCE.
The human health care products and services industry is extremely competitive.
Major medical device and technology companies compete or may compete with
Genzyme Surgical Products. These include such companies as:
- Atrium Medical Corporation and Sherwood-Davis & Geck, a division of Tyco
International, Ltd., in the cardiovascular chest drainage and fluid
management market;
- The Ethicon division of Johnson & Johnson Ltd. and U.S. Surgical
Corporation, a division of Tyco, in the cardiovascular closure market;
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<PAGE> 15
- CardioThoracic Systems, Inc., Medtronic, Inc., U.S. Surgical, Guidant
Corporation, Baxter Healthcare Corporation and Ethicon in the minimally
invasive cardiovascular surgery market;
- Ethicon, Lifecore Biomedical, Inc., Life Medical Sciences, Inc. and
Gliatech, Inc. in the anti-adhesion market; and
- Karl Storz Endoscopy America, Inc., Scanlan International, Inc., Pilling
Weck Surgical Instruments and the Codman division of Johnson & Johnson
Ltd. in the reusable instruments market.
These competitors may have superior research and development, marketing and
production capabilities. Some competitors also may have greater financial
resources than Genzyme Surgical Products. The division is likely to incur
significant costs developing and marketing new products without any guarantee
that they will be commercially successful. The future success of the division
will depend on its ability to effectively develop and market its products
against those of its competitors.
The trend toward consolidation in the surgical devices industry may adversely
affect the division's ability to successfully market its products to some
significant purchasers. The current trend among hospitals and other significant
consumers of surgical devices is to combine into larger purchasing groups to
increase their purchasing power and thus reduce their purchase price for
surgical devices. Partly in response to this development, surgical device
manufacturers have been consolidating to be able to offer a more comprehensive
product line to these larger purchasing groups. In order to successfully market
its products to larger purchasing groups, Genzyme Surgical Products may have to
expand its product lines or enter into joint marketing or distribution
agreements with other manufacturers of surgical devices. We cannot guarantee
that the division will be able to employ either of these initiatives or that,
when employed, these initiatives will increase the marketability of its
products.
RAPID TECHNOLOGICAL CHANGE COULD MAKE THE DIVISION'S PRODUCTS OBSOLETE.
The fields of biotechnology, biosurgery and surgical instrumentation are
characterized by significant and rapid technological change. Although Genzyme
Surgical Products attempts to expand its technological capabilities in order to
remain competitive, research, discoveries and innovations by others may make its
products obsolete.
GENZYME SURGICAL PRODUCTS MAY NOT RECEIVE SIGNIFICANT PAYMENTS FROM
COLLABORATORS DUE TO UNSUCCESSFUL RESULTS IN EXISTING COLLABORATIONS OR A
FAILURE TO ENTER INTO FUTURE COLLABORATIONS.
Genzyme Surgical Products' strategy to develop and commercialize certain of its
products, in particular its gene and cell therapies for the treatment of
cardiovascular disease, includes entering into various arrangements with both
academic collaborators and corporate partners and licensees. The division may
depend on the success of these parties in performing research, pre-clinical and
clinical testing and marketing. These arrangements may require the division to
transfer certain important rights to these collaborators and licensees. While we
believe that the division's 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
and licensees. As a result, we cannot guarantee that the division will receive
revenues or profits from these arrangements, that
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<PAGE> 16
any of its strategic alliances will continue or not terminate early, or that it
will be able to enter into future collaborations.
YOU MAY HAVE DIFFICULTY SELLING GZSP STOCK IF AN ACTIVE PUBLIC MARKET IS NOT
SUSTAINED.
Prior to the distribution on June 28, 1999 of GZSP Stock as a stock dividend on
shares of GENZ Stock, there had been no public market for GZSP Stock. An active
public market for this stock may not be sustained. Without active trading in
GZSP Stock, you may be unable to sell any shares of this stock and thus
liquidate any portion of your GZSP Stock holdings.
BECAUSE THE MARKET PRICE OF GZSP STOCK IS LIKELY TO BE VOLATILE, YOU MAY LOSE A
SIGNIFICANT AMOUNT OF THE VALUE OF YOUR GZSP STOCK.
We determined the initial value of GZSP Stock prior to its distribution as a
stock dividend on shares of GENZ Stock through consultations with our financial
advisors. This initial value is not necessarily indicative of the market price
at which GZSP Stock trades. Some of our large institutional stockholders may be
forced immediately to sell some or all of the shares of GZSP Stock they have
received in the distribution if their investment guidelines restrict their
investing in entities with Genzyme Surgical Products' market capitalization. In
addition, a significant portion of other holders of GENZ Stock may, for various
reasons, choose not to retain the GZSP Stock they have received. Significant
selling would depress the GZSP Stock's market price. The market price for GZSP
Stock may also vary widely as a result of several factors, including:
- announcements of technological innovations or new commercial products by
Genzyme Surgical Products or by its competitors;
- governmental regulatory initiatives;
- patent or proprietary rights developments;
- public concern as to the safety or other implications of biotechnology
products;
- adoption of legislation relating to tracking stock; and
- general market conditions.
This volatility could lead to the loss of a significant amount of the value of
GZSP Stock.
FUTURE SALES OR DISTRIBUTIONS OF GZSP DESIGNATED SHARES MAY DILUTE YOUR
OWNERSHIP OF GZSP STOCK SIGNIFICANTLY.
Our management and accounting policies require us to sell or distribute any GZSP
designated shares that may be created subject to certain limitations. Proceeds
from a sale or distribution will not be allocated to Genzyme Surgical Products
and the issuance and sale may substantially dilute your ownership of GZSP Stock.
In addition, we may sell additional shares of GZSP Stock in the future to
finance the operations of the division.
C. RISKS RELATED TO GENZYME, INCLUDING THE OTHER GENZYME DIVISIONS
Holders of GZSP Stock are stockholders of Genzyme. Liabilities or contingencies
of the divisions of Genzyme other than Genzyme Surgical Products that affect
Genzyme's resources or financial condition could affect the financial condition
or results of operations of Genzyme Surgical Products. 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
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<PAGE> 17
Operations -- Factors Affecting Future Operating Results" included on pages 41
through 44 of Exhibit 13.1 of Genzyme's 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 WHICH TREAT GAUCHER DISEASE WOULD
AVERSELY AFFECT OUR BUSINESS.
Genzyme, through Genzyme General, generates a majority of its 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 Cerezyme(R) enzyme and Ceredase(R)
enzyme totaled $411.1 million for the year ended December 31, 1998, representing
approximately 78% of our product revenues for that year, and $230.7 million for
the six months ended June 30, 1999, representing approximately 84% of our
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 adversely affect 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.
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 for:
- product development and marketing;
- expanding facilities; and
- working capital as Genzyme grows.
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.
- 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
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<PAGE> 18
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, shares of GZMO Stock and shares of
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 GZSP Stock, GZMO Stock or GZTR Stock
for GENZ Stock at a 30% premium over the market value of the respective shares
being so exchanged 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 take
over attempt.
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<PAGE> 19
SELLING SECURITYHOLDERS
We previously issued $250,000,000 principal amount of 5 1/4% Convertible
Subordinated Notes due 2005. Initially, the holders of the Convertible Notes
could convert principal solely into shares of GENZ Stock. On November 16, 1998,
we distributed 0.10805 of a share of GZMO Stock for each share of GENZ Stock
held as of November 2, 1998. Also, on June 28, 1999, we distributed 0.17901 of a
share of GZSP Stock for each share of GENZ Stock held as of June 14, 1999. As a
result, under the terms of the Convertible Notes, holders of the Convertible
Notes will now receive upon conversion 0.10805 of a share of GZMO Stock and
0.17901 of a share of GZSP Stock in addition to each share of GENZ Stock. The
distributions of GZMO Stock and GZSP 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 GENZ Stock, approximately 2.73 shares of GZMO Stock and
approximately 4.52 shares of GZSP Stock. The number of shares of GENZ Stock,
GZMO Stock and GZSP 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 GZSP 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 GZSP 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 GZSP STOCK
AMOUNT OF GZSP 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 9,785 0
Delta Airlines Inc. Retirement
Plan............................. 8,979,000 40,585 0
Eugenio Berci...................... 40,000 180 0
Frederic C. Hamilton............... 207,000 935 0
Fred Mannisi....................... 40,000 180 0
GranGem 23 41 LLC.................. 500,000 2,260 0
John M. Olin Foundation, Inc....... 137,000 619 0
Knoxville Utilities Board
Retirement System................ 316,000 1,428 0
L.A. Fire and Police Pension
Fund............................. 555,000 2,508 0
Lipper Convertibles, L.P........... 3,250,000 14,690 0
Lipper Offshore Convertibles,
L.P.............................. 2,750,000 12,430 0
Marc Gillioz....................... 20,000 90 0
Pacific Life Insurance Company..... 1,000,000 4,520 0
Pitney Bowes Retirement Fund....... 237,000 1,071 0
U.S. Olympic Foundation............ 335,000 1,514 0
Unnamed holders of Convertible
Notes or future transferees,
pledgees, donees or successors of
or from such unnamed
holders(2)....................... 229,469,000 1,037,199 0
</TABLE>
- -------------------------
(1) Assumes conversion of the full amount of the Convertible Notes held by such
holder at the initial rate of 4.52 shares of GZSP 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.
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<PAGE> 20
(2) 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 GZSP Stock other than the GZSP Stock
issuable upon conversion of the Convertible Notes. No such unnamed holder
may offer shares pursuant to this prospectus until the unnamed holder is
identified as a selling securityholder in an amendment or a supplement to
this prospectus.
On July 31, 1999, 14,835,161 shares of GZSP Stock were outstanding.
None of the listed selling securityholders has had a material relationship with
Genzyme during the past three years.
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.
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<PAGE> 21
PLAN OF DISTRIBUTION
The selling securityholders may offer the shares of GZSP Stock received upon
conversion of the Convertible Notes at various times in transactions:
- in the over-the-counter market;
- on any exchange where GZSP 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 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 GZSP
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 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 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
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<PAGE> 22
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 of 1933.
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 Securities Exchange Act of
1934, any person engaged in a distribution of the shares of GZSP 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 Securities Exchange Act of 1934 and the
rules and regulations thereunder, which may limit the timing of purchases and
sales of any shares of GZSP 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 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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<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
GZSP Stock are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 1,120
Printing and engraving expenses............................. $ 1,000
Accounting fees and expenses................................ $ 5,000
Legal fees and expenses..................................... $ 5,000
Miscellaneous expenses...................................... $ 380
-------
Total............................................. $12,500
=======
</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
August 6, 1999.
GENZYME CORPORATION
By: /s/ MICHAEL S. WYZGA
-----------------------------------
Michael S. Wyzga,
Senior Vice President 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 August 6, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director and Principal Executive
- --------------------------------------------------- Officer
Henri A. Termeer
/s/ MICHAEL S. WYZGA Principal Financial and 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
</TABLE>
*By /s/ MICHAEL S. WYZGA
--------------------------
Michael S. Wyzga
Attorney-In-Fact
II-4
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
4.1 Restated Articles of Organization of Genzyme, as amended.
Filed as Exhibit 1 to Genzyme's Registration Statement on
Form 8-A filed with the Commission on June 18, 1997, and
incorporated herein 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, Series C and
Series D Junior Participating Preferred Stock, $.01 par
value, of Genzyme. Filed as Exhibit 2 to Amendment No. 1 to
Genzyme's Registration Statement on Form 8-A filed with the
Commission on June 11, 1999, and incorporated herein by
reference.
4.8 Amended and Restated Renewed Rights Agreement dated as of
June 10, 1999 between Genzyme and American Stock Transfer
and Trust Company. Filed as Exhibit 4 to Amendment No. 1 to
Genzyme's Registration Statement on Form 8-A dated June 11,
1999, and incorporated herein by reference.
4.9 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.
4.10 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.
4.11 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.
4.12 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>
4.13 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.
4.14 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.
4.15 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.
4.16 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.
4.17 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.
4.18 Series Designation for Genzyme Surgical Products 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 11, 1999, and incorporated herein by
reference.
4.19 Specimen stock certificate of Genzyme Surgical Products
Division Common Stock. Filed as the same numbered exhibit to
the initial filing of this Registration Statement.
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 Palmer & Dodge LLP (contained in Exhibit 5
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 hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Genzyme Corporation (to register 1,130,123 shares of
Genzyme Surgical Products Division Common Stock) of: our reports dated
February 23, 1999 relating to the financial statements and financial statement
schedules of Genzyme Corporation, Genzyme Tissue Repair and Genzyme Molecular
Oncology which appear in Genzyme Corporation's Annual Report on Form 10-K for
the year ended December 31, 1998; our report dated June 9, 1999 relating to the
financial statements and financial statement schedule of Genzyme Surgical
Products which appears in Genzyme Corporation's Form 8-K as filed on June 11,
1999; our report dated June 28, 1999 relating to the financial statements and
financial statement schedule of Genzyme General which appears in Genzyme
Corporation's Form 8-K as filed on June 30, 1999; and our report dated June 16,
1999 relating to the financial statements of the Genzyme Retirement Savings
Plan which appears in Genzyme Corporation's Form 10-K/A as filed on June 30,
1999. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
August 6, 1999
