<PAGE>
FILED BY GENZYME CORPORATION (COMMISSION FILE NO. 000-14680)
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933
SUBJECT COMPANY: GELTEX PHARMACEUTICALS, INC. (COMMISSION FILE NO. 000-26872)
[GENZYME GENERAL LETTERHEAD]
FOR IMMEDIATE RELEASE MEDIA CONTACT: INVESTOR CONTACT:
October 19, 2000 Caren Arnstein Sally Curley
617-252-7635 617-591-7140
GENZYME CORP. ANNOUNCES THIRD-QUARTER FINANCIAL RESULTS FOR GENZYME GENERAL
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STRONG EARNINGS AND REVENUE GROWTH REPORTED
CAMBRIDGE, Mass.--Genzyme Corp. today announced third-quarter financial
results for Genzyme General (Nasdaq: GENZ). Net income allocated to Genzyme
General for the quarter increased 55 percent to $59.4 million, or $.64 per
diluted share, compared with net income of $38.2 million, or $.43 per diluted
share, for the same quarter of 1999.
Reported net income for the third quarter of 2000 includes a pre-tax
gain of $10.9 million from the sale of Genzyme Transgenics Corp. stock and a
pre-tax charge to research and development of $2.0 million associated with a
collaboration agreement with Cambridge Antibody Technology.
Excluding these items, Genzyme General's earnings were $.58 per diluted
share, up 23 percent from $.49 per diluted share before special items in the
third quarter of last year.
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 2
Revenues for the third quarter grew 22 percent to $192.2 million,
compared with revenues of $157.7 million for the same quarter of 1999.
"This was another excellent quarter for Genzyme General, marked by a
solid financial performance and several defining events significant to our
future growth," said Henri A. Termeer, chairman and chief executive officer of
Genzyme Corp. "Revenues increased across all of our businesses, led by sales of
Renagel that once again surpassed our expectations. We also announced in
September that we will acquire GelTex Pharmaceuticals, which will expand our
portfolio of marketed products, our development pipeline, and our technology
base. We look forward to closing this transaction in December or January."
The effective net tax rate allocated to Genzyme General in the third
quarter, including allocated tax benefits, was 21 percent. Genzyme expects the
effective tax rate allocated to Genzyme General to be in the mid-twenty-percent
range for 2000, increasing to the high-twenty-percent range in 2001.
Earnings per share of Genzyme General stock were calculated this
quarter using approximately 97 million shares. This calculation reflects the net
impact of anticipated dilution, offset by the reduced interest expense, that
would be caused by the conversion of outstanding notes and debentures allocated
to Genzyme General.
Consistent with the recently announced modifications to the format for
its financial statements, Genzyme Corp. is now presenting earnings-per-share,
earnings-allocation, and tax-allocation information for each tracking stock
within Genzyme Corp.'s consolidated financial statements rather than in the
financial statements of each division. The new format is designed to provide
greater clarity for investors.
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 3
THERAPEUTICS REVENUES
Therapeutics revenues for the quarter were $158.5 million, 25 percent
greater than revenues of $126.5 million in the same quarter a year earlier.
Genzyme General continues to see consistent revenue growth for
Cerezyme(R) (imiglucerase for injection) enzyme replacement therapy for Type I
Gaucher disease. Despite the effect of the strong dollar in Europe,
third-quarter Cerezyme sales increased 13 percent to $136.7 million, compared to
$121.1 million for the same quarter a year earlier.
Third-quarter sales of Renagel-Registered Trademark- (sevelamer
hydrochloride) were $13.8 million, up 35 percent from second-quarter sales of
$10.2 million. Third-quarter 1999 Renagel sales were $4.5 million. Renagel is
a rapidly growing product used to reduce serum phosphorous levels in patients
with end-stage renal disease on dialysis. In the United States, approximately
91,000 total prescriptions for Renagel were written during the third quarter
of 2000. This includes over 71,000 retail prescriptions, as reported by IMS,
as well as sales to hospitals and other non-retail outlets.
Renagel sales for the first three quarters of this year were $32.0
million. Based on these better-than-expected results, Genzyme is increasing its
Renagel forecast for the third time in six months and now expects to generate
approximately $48 million in revenue from Renagel in 2000. A new tablet
formulation of Renagel launched in September is expected to help increase
product sales.
The European launch of Renagel is progressing well. The product has
been formally introduced in seven countries since its approval eight months ago.
Sales in Germany and Italy have been particularly strong to date.
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 4
At this month's American Society of Nephrology meeting in Toronto,
Genzyme presented baseline data from its three-year study comparing Renagel with
calcium-based phosphate binders. The data reveal the dramatic cardiac
calcification that is present in dialysis patients who have historically been
using calcium-based phosphate binders. Genzyme's trial is designed to evaluate
Renagel's ability to slow the progression of this calcification and lower
phosphorous into the normal range.
A study by Dr. Allan Collins that compared Medicare patients treated
with Renagel and patients treated with calcium binders was published this month
in CLINICAL NEPHROLOGY. The study showed a significant improvement in morbidity
and improved trends in mortality among the patients treated with Renagel.
Sales of other therapeutic products including Thyrogen-Registered
Trademark- (thyrotropin alfa for injection) increased for the quarter
compared to the third quarter of last year.
DIAGNOSTICS REVENUES
Total diagnostics revenues for the third quarter were $30.9 million, up
8 percent from revenues of $28.6 million for the same period the year before.
Within the diagnostic products business, revenues were $15.8 million,
up 11 percent compared with revenues of $14.3 million for the third quarter of
last year. Sales of HDL and LDL cholesterol testing products increased 11
percent compared to the third quarter of last year, and sales of point-of-care
testing products doubled compared with the same quarter of 1999.
(more)
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 5
Revenues from genetic testing services increased 6 percent to $15.1
million in the third quarter, compared to revenues of $14.3 million for the same
quarter in the previous year, led by growth in DNA and cancer testing.
GELTEX ACQUISITION
During the quarter, Genzyme announced it would acquire GelTex
Pharmaceuticals Inc. in a stock-and-cash transaction valued at approximately $1
billion. The transaction is expected to close in December or January, pending
regulatory and GelTex shareholder approval. Upon the completion of the
transaction, the amount of Genzyme General stock outstanding will increase by
approximately 8 million shares.
Based on its current assessment, Genzyme expects that the in-process
research and development write-off for the transaction would be between 6-12
percent of the purchase price, which would be recorded at the time of the
closing. Tangible assets and useable net operating losses would be about 20-25
percent of the total price. The remaining portion would be made up of
intangibles and goodwill, which will be amortized over approximately 15 years.
The acquisition is expected to be dilutive to Genzyme General's 2001 earnings by
approximately 12-15 percent prior to depreciation, amortization, and
deal-related compensation. It is expected to become accretive to earnings in
2002 prior to the same three factors, and accretive to earnings in 2003 after
depreciation, amortization, and deal-related compensation.
With the acquisition, Genzyme will obtain two patent-protected,
marketed products: Renagel--which Genzyme believes will transform clinical
practice and outcomes and has the potential to become a blockbuster product--and
WelChol-TM- (colesevelam hydrochloride), a new cholesterol-lowering agent just
launched in the
(more)
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 6
United States by Sankyo-Parke Davis. In addition, Genzyme will obtain a
significant pipeline of promising products in development and a proven and
productive polymer technology platform.
NEAR-TERM PIPELINE UPDATE
Earlier this month, the full results of Genzyme's Phase 3 clinical
trial of Fabrazyme-TM- (agalsidase beta) were presented for the first time at
the American Society of Human Genetics (ASHG) meeting by the trial's principal
investigator, Dr. Christine Eng of the Baylor College of Medicine. The pivotal
trial's primary endpoint--the nearly complete clearance of the lipid GL-3 from
the blood vessels of the kidney--was met with high statistical significance (p
less than 0.0001). The progressive accumulation of GL-3 in patients with Fabry
disease results in devastating symptoms such as kidney failure, stroke, cardiac
disease, severe pain and numbness. The trial also met two of its three secondary
efficacy endpoints with statistical significance. In addition, Dr. Eng presented
data from Genzyme's open-label extension trial of Fabrazyme that confirm the
positive results seen in the pivotal study.
Fabrazyme is Genzyme's investigational enzyme replacement therapy for
patients with Fabry disease. Genzyme has applied for regulatory approval of
Fabrazyme in both the United States and Europe, and has received orphan drug
designation in both markets. A decision on U.S. approval is expected by
mid-January, 2001. A decision on European approval is expected during the first
half of next year. Genzyme has also begun accruing patients in a bridging study
of Fabrazyme in Japan.
(more)
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 7
At the ASHG meeting, positive results were also presented from the
first two clinical trials ever conducted for Pompe disease. Genzyme General and
Pharming Group N.V. are working in partnership to develop a treatment for Pompe
disease and are associated with both clinical studies.
In the first of these trials--a 36-week Phase 2 study enrolling four
infants with Pompe disease--researchers at Sophia Children's Hospital in
Rotterdam found that transgenic human alpha-Glucosidase decreased cardiac size
significantly, lowered lysosomal glycogen storage, and improved tissue
morphology. The results from this trial, which was sponsored by Genzyme and
Pharming, were published in THE LANCET in July.
In the second trial--an ongoing Phase 1-2 study being conducted at Duke
Medical Center--three infants witH Pompe disease have received enzyme
replacement therapy for over one year with a recombinant form of the enzyme
human alpha-Glucosidase produced in CHO cells. The preliminary results from this
trial also demonstrated improvement in cardiac and skeletal muscle functions.
Genzyme and Pharming plan to initiate a second clinical trial of the CHO-cell
product by the end of 2000 in patients with infantile-onset Pompe disease.
Genzyme and its joint venture partner BioMarin Pharmaceutical Inc. will
begin enrolling patients with MPS I in the confirmatory Phase 3 clinical trial
of Aldurazyme-TM- (alpha-L-iduronidase) enzyme replacement therapy during this
quarter. Manufacturing scale up and other preparations for the trial are
proceeding on schedule.
(more)
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 8
Genzyme and Diacrin Inc. extended the blinded NeuroCell-TM--PD
phase 2 clinical trial for Parkinson's disease to 18 months from 12 months.
The extension of this pivotal trial to March 2001 is intended to enable
investigators to maximize the amount of long-term durability data for
NeuroCell-PD, and to provide the best efficacy data for potential product
approval. Preparations are moving forward for a Phase 3 trial, which would
start upon completion of the current trial.
During the quarter, Genzyme formed a broad strategic alliance with
Cambridge Antibody Technology to develop and commercialize human monoclonal
antibodies directed against TGF-beta. All clinical indications, with the
exception of ophthalmic uses, are covered by the agreement. The partners plan to
focus initially on developing a fully human monoclonal antibody-based treatment
for diffuse scleroderma, a chronic and life-threatening disorder in which the
production of excess collagen leads to scarring of the skin and internal organs.
There is currently no effective therapy for the disease, which affects an
estimated 200,000 people worldwide. Other potential applications of
anti-TGF-beta treatment include post-surgical scarring, fibrosis of all major
organs such as the lungs, liver, and kidneys, and certain forms of cancer.
FORMATION OF GENZYME BIOSURGERY
Progress continues toward the planned formation of Genzyme Biosurgery,
a new Genzyme Corp. division. Genzyme Biosurgery will be created by combining
the businesses of Genzyme Tissue Repair and Genzyme Surgical Products and
acquiring Biomatrix Inc. (NYSE: BXM).
Once effective, a joint proxy statement/prospectus will be mailed, and
each company will hold a special meeting of its shareholders to obtain the
required approvals
(more)
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 9
for the merger and recapitalization. The meetings are expected to occur during
the fourth quarter. Holders of Genzyme General stock, along with holders of each
of Genzyme Corp.'s three other tracking stocks, will be asked to vote to approve
a charter amendment creating the Genzyme Biosurgery stock and eliminating the
Genzyme Tissue Repair and Genzyme Surgical Products stocks. Genzyme expects to
conclude this transaction before the end of the year.
Genzyme General is a division of Genzyme Corp. and develops and markets
therapeutic products and diagnostic products and services. Genzyme General has
three therapeutic products on the market and a strong pipeline of therapeutic
products in development focused on the treatment of genetic diseases.
Genzyme Corp. has four series of common stock--Genzyme General Stock,
Genzyme Molecular Oncology Stock, Genzyme Surgical Products Stock, and Genzyme
Tissue Repair Stock--which are referred to as "tracking stock." Net income and
earnings per share amounts reflect income allocated to, and earnings per share
of, Genzyme General stock. Operating information, including revenues and
expenses directly relate to Genzyme General, a division of Genzyme Corp. Income
allocated to Genzyme General stock is equal to the division net income of
Genzyme General and as adjusted for tax benefits allocated to or from Genzyme
General in accordance with our management and accounting policies.
This press release contains forward-looking statements, including
statements about: the anticipated impact of events that occurred during the
third quarter on Genzyme General's future growth; the anticipated consummation,
timing and benefits of the merger with GelTex Pharmaceuticals; the adoption of a
new format for presenting financial results in filings made with the SEC; the
anticipated clarity of disclosure that will be provided to investors by
presenting financial information in conformance with this new format; expected
revenues from Renagel in 2000; the expected benefits of the tablet formulation
of Renagel; the anticipated impact of Renagel on cardiac calcification and
phosphorous; the estimated value of the consideration to be paid in connection
with the merger with GelTex; the anticipated immediate and long-term impact of
the acquisition of GelTex on Genzyme General's earnings, shares of Genzyme
General Stock outstanding and development programs; the potential impact, market
opportunity and long-term revenues for Renagel; potential regulatory approvals
of Fabrazyme; the expected timing of decisions by regulatory authorities; the
anticipated benefits of the CHO-cell product for Pompe disease on cardiac and
skeletal muscle; anticipated timing
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 10
of clinical trials; the estimated incidence of diffuse scleroderma; potential
indications for anti-TGF-beta treatment; the anticipated consummation and timing
of the merger with Biomatrix and creation of Genzyme Biosurgery and a new series
of tracking stock; and the anticipated timing of stockholder meetings. Actual
results may materially differ due to numerous factors, including without
limitation: conditions in the financial markets relevant to the proposed mergers
with GelTex and Biomatrix; the receipt and timing of regulatory and other
approvals of proposed mergers and reorganization; the operational integration
associated with the transactions and other risks generally associated with
mergers and a reorganization of this type; the ability of Genzyme and Biomatrix
to successfully negotiate an extension to their merger agreement; the likelihood
of completing the mergers and formation of Genzyme Biosurgery on schedule;
increasing market acceptance of Renagel; optimizing dosing and increasing
patient compliance with respect to Renagel; the accuracy of Genzyme General's
expectations concerning the market for Renagel; the competitive environment in
the current and potential future markets for Renagel; the results and actual
timing of pre-clinical and clinical studies; the final results of the extended
trial protocol of Fabrazyme; the actual efficacy and safety of products;
enrollment rates for clinical trials; the content and timing of submissions to
and decisions by the FDA and other regulatory authorities; the availability and
extent of reimbursement from third-party payers; the ability to manufacture
sufficient quantities of product for development and commercialization
activities; the accuracy of Genzyme General's information about the market for
Renagel and the incidence of diffuse scleroderma; the ability of Genzyme General
to successfully commercialize products; changes in SEC policies and practices;
the effect that future changes in SEC policies and practices may have on the
presentation of the financial results of the corporation; the ability of the
corporation to provide greater clarity to investors in presenting financial
information in a format consistent with SEC policy and practices; and the risks
and uncertainties described in Genzyme and GelTex's reports filed with the SEC
under the Securities Exchange Act of 1934, as amended, including without
limitation Exhibit 99.2 to Genzyme's Annual Report on Form 10-K for the year
ended December 31, 1999, as amended. Genzyme General Stock is a series of common
stock of Genzyme Corporation. Therefore, holders of Genzyme General Stock are
subject to all of the risks and uncertainties described in the aforementioned
reports filed by Genzyme.
# # #
There will be a conference call at 11:00 a.m. EDT today to discuss Genzyme
General's third-quarter financial results. This call will be broadcast live over
the Internet at http://www.genzyme.com/ir/events.htm. If you would like to
participate by telephone, please dial 212-896-6053. A replay of the call will be
available from 1:00 p.m. EDT today through midnight EDT on October 26. The
replay telephone number is 800-633-8284 in the United States and 1-858-812-6440
from outside the United States. Please refer to reservation number 16405353.
Please note that all Genzyme Corporation divisions will report fourth quarter
and year-end 2000 earnings on March 8, 2001. For information regarding live Web
casts and
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Genzyme Corp. Announces Third-Quarter Financial Results for Genzyme General
--page 11
investment community conference calls related to these fourth quarter financial
results, please refer to www.genzyme.com approximately one week prior to the
financial reporting release date.
This material is not a substitute for the prospectus/proxy statement Genzyme and
GelTex will file with the Securities and Exchange Commission. Investors are
urged to read that document because it will contain important information,
including detailed risk factors. The proxy statement/prospectus and other
documents filed by Genzyme and GelTex with the SEC will be available free of
charge at the SEC's website (www.sec.gov) and from Genzyme or GelTex.
Investors are urged to read the joint proxy statement/prospectus relating to the
formation of Genzyme Biosurgery filed with the Securities and Exchange
Commission because it contains important information. The joint proxy
statement/prospectus and other documents filed by Genzyme and Biomatrix with the
commission may be obtained free of charge at the commission's Web site
(www.sec.gov) and from Genzyme or Biomatrix. Requests to Genzyme may be directed
to Sally Curley, or you can access documents on the company's Web site. Requests
to Biomatrix should be directed to Anne Marie Fields, or you can access
documents on the company's Web site.
Genzyme's releases are available on the World Wide Web at
http://www.genzyme.com. They are also available from Genzyme's fax-on-demand
service at 1-800-436-1443 within the United States or 1-201-521-1080 outside the
United States.
(more)
<PAGE>
GENZYME GENERAL (A DIVISION OF GENZYME CORPORATION)
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<TABLE>
<CAPTION>
COMBINED STATEMENTS OF OPERATIONS THREE MONTHS ENDED NINE MONTHS ENDED
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) SEPTEMBER 30, SEPTEMBER 30,
---------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Total revenues $ 192,165 $ 157,669 $ 549,485 $ 462,640
--------- --------- --------- ---------
Operating costs and expenses:
Cost of products and services sold 54,355 36,437 141,398 109,328
Selling, general and administrative 41,780 36,388 122,974 114,446
Research and development 25,567 22,884 83,701 68,896
Amortization of intangibles 1,983 1,978 5,962 6,081
Charge for in-process technology - 5,436 - 5,436
--------- --------- --------- ---------
Total operating costs and expenses 123,685 103,123 354,035 304,187
--------- --------- --------- ---------
Operating income 68,480 54,546 195,450 158,453
--------- --------- --------- ---------
Other income (expenses):
Equity in net loss of unconsolidated affiliates (11,420) (9,352) (30,866) (24,077)
Minority interest 977 843 3,185 2,573
Investment income 11,072 6,970 27,798 23,713
Interest expense (4,647) (5,445) (11,639) (15,631)
Gain on affiliate sale of stock 2,419 1,164 22,689 1,770
Gain on sale of product line (1) - 518 - 8,018
Gain on sale of investment in equity securities (2) 8,544 - 22,709 1,963
Charge for impaired investment (3) - - - (5,487)
Other (4) (43) - 5,110 -
--------- --------- --------- ---------
Total other income (expenses) 6,902 (5,302) 38,986 (7,158)
--------- --------- --------- ---------
Income before income taxes 75,382 49,244 234,436 151,295
Provision for income taxes (24,409) (19,273) (74,164) (59,906)
--------- --------- --------- ---------
Genzyme General division net income 50,973 29,971 160,272 91,389
Genzyme Surgical Products net loss (5) - - - (27,523)
Allocated tax benefits (6) 8,476 8,216 21,849 30,250
--------- --------- --------- ---------
Net income allocated to Genzyme General Stock $ 59,449 $ 38,187 $ 182,121 $ 94,116
========= ========= ========= =========
Net income per share of Genzyme General Stock:
Basic $ 0.69 $ 0.46 $ 2.14 $ 1.14
========= ========= ========= =========
Diluted (7) $ 0.64 $ 0.43 $ 1.99 $ 1.09
========= ========= ========= =========
Weighted average shares outstanding:
Basic 86,380 83,621 85,277 82,741
========= ========= ========= =========
Diluted (7) 97,074 94,331 95,614 93,196
========= ========= ========= =========
</TABLE>
(1) Represents a payment of $7.5M for previously fully reserved notes
receivable. Genzyme General received these notes in parital consideration
of the sale of Genetic Design in 1996.
(2) Includes a $10.9 million gain on the sale of shares of Genzyme
Transgenics Corporation (GTC) common stock offset by realized losses on
other investments. Nine months ended September 30, 2000 includes
additional gains of $5.5 million on sales of GTC common stock and a $7.6
million gain in connection with a sale of a strategic investment.
(3) Represents a charge for the write-down of certain strategic equity
investment whose decline in market value was deemed as "other than
temporary".
(4) Includes net proceeds of approximately $5.1 million in connection with a
settlement of a lawsuit against its insurance carrier.
(5) Genzyme Surgical Products Division was created and Surgical Products
Stock was issued on June 28, 1999. The previously reported net income
allocated to Genzyme General Stock reflected the allocation of losses of
the surgical products business prior to June 28, 1999 to the Genzyme
Surgical Products Division. For purposes of determining net income per
share of Genzyme General Stock, the net income allocated to Genzyme
General Stock for the nine months ended September 30, 1999 has been
revised to include the net losses of the surgical products business prior
to June 28, 1999.
(6) Represents tax benefits allocated from Genzyme Molecular Oncology,
Genzyme Surgical Products, and Genzyme Tissue Repair.
(7) Net income per share of Genzyme General Stock on a diluted basis and
weighted average shares-diluted includes the dilutive effect of the
convertible subordinated notes and debentures allocated to Genzyme
General.
<PAGE>
<TABLE>
<CAPTION>
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CONDENSED COMBINED BALANCE SHEETS SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2000 1999
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and all marketable securities $ 691,905 $ 513,905
Other current assets 324,307 296,042
Property, plant and equipment (net) 380,474 362,548
Intangibles (net) 68,938 75,370
Other assets 243,602 151,718
--------------------- ---------------------
Total assets $ 1,709,226 $1,399,583
===================== =====================
Current liabilities $ 154,259 $ 117,244
Noncurrent liabilities 285,063 274,725
Division equity 1,269,904 1,007,614
--------------------- ---------------------
Total liabilities and division equity $ 1,709,226 $1,399,583
===================== =====================
</TABLE>
<PAGE>
GENZYME GENERAL
A DIVISION OF GENZYME CORPORATION
ANALYST SCHEDULE
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
-------------- ------------- ------------- --------------- ----------------
Q3 99 Q4 99 Q1 00 Q2 00 Q3 00
-------------- ------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Product and Service Revenue:
Diagnostics $28,597 $28,565 $30,388 $30,711 $30,942
Therapeutics $126,451 $134,753 $137,842 $152,740 $158,473
Other $2,082 $4,339 $2,229 $3,080 $2,591
Total Product and
Service Revenue $157,130 $167,657 $170,459 $186,531 $192,006
R&D Revenue $539 $5,069 $167 $163 $159
Total Revenue $157,669 $172,726 $170,626 $186,694 $192,165
Total Product and Service
Gross Profit $120,693 $126,223 $129,411 $140,536 $137,651
SG&A Expense $36,388 $34,981 $38,222 $42,972 $41,780
R&D Expense $22,884 $28,850 $23,243 $25,641 $25,567
Amortization expense $1,978 $2,025 $1,968 $2,011 $1,983
Operating Profit $59,982 $65,436 $66,145 $70,075 $68,480
Other Income (Expenses):
Equity in Loss of
Unconsolidated Affiliates ($8,188) ($8,433) ($8,133) ($11,313) ($11,420)
Minority Interest $843 $1,101 $856 $1,352 $977
Investment income $6,970 $7,168 $8,087 $8,639 $11,072
Interest Expense ($5,445) ($4,254) ($3,551) ($3,441) ($4,647)
Gain on Sale of Investment $0 $0 $0 $8,629 ($2,317)
Charge for Impaired Investment (1) $0 ($225) $0 $0 $0
Other (2,3,4,5,6,7) ($4,918) $14,389 $749 $20,960 $13,237
Profit Before Tax $49,244 $75,182 $64,153 $94,901 $75,382
Tax provision ($19,273) ($24,494) ($18,844) ($30,911) ($24,409)
Division net income $29,971 $50,688 $45,309 $63,990 $50,973
Genzyme Surgical Products net loss
prior to June 28, 1999 (8) $0 $0 $0 $0 $0
Allocated tax benefits $8,216 $4,556 $6,328 $7,045 $8,476
Net income (loss) allocated to
Genzyme General Stock $38,187 $55,244 $51,637 $71,035 $59,449
Net income (loss)per share of
Genzyme General Stock-diluted $0.43 (9) $0.62 (9) $0.57 (9) $0.77 (9) $0.64(9)
Adjusted Weighted Average
Shares Outstanding 94,331 93,324 94,726 95,044 97,074
-------------- ------------- ------------- --------------- ----------------
<CAPTION>
---------
Q3 00
vs.
Q3 99 YTD
-------------- ------------ ------------ -------------
% B/(W) 1996 1997 1998 1999 9/30/00
--------- -------------- ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Product and Service Revenue:
Diagnostics 8% $127,424 $122,123 $121,166 $115,237 $92,041
Therapeutics 25% $271,659 $341,081 $423,733 $500,431 $449,055
Other 24% $36,324 $21,723 $20,273 $13,086 $7,900
Total Product and
Service Revenue 22% $435,407 $484,927 $565,172 $628,754 $548,996
R&D Revenue (71%) $25,321 $11,441 $4,147 $6,612 $489
Total Revenue 22% $460,728 $496,368 $569,319 $635,366 $549,485
Total Product and Service
Gross Profit 14% $269,242 $321,319 $406,888 $477,992 $407,598
SG&A Expense (15%) $108,219 $117,087 $126,172 $149,427 $122,974
R&D Expense (12%) $62,276 $62,905 $73,139 $97,746 $74,451
Amortization expense (0%) $5,865 $6,887 $7,610 $8,106 $5,962
Operating Profit 14% $118,203 $145,881 $204,114 $229,325 $204,700
Other Income (Expenses):
Equity in Loss of
Unconsolidated Affiliates (39%) ($2,643) ($5,782) ($17,370) ($30,740) ($30,866)
Minority Interest 16% $0 $0 $4,285 $3,674 $3,185
Investment income 59% $13,825 $10,145 $22,953 $30,881 $27,798
Interest Expense 15% ($6,784) ($8,074) ($16,994) ($19,885) ($11,639)
Gain on Sale of Investment $1,711 $0 $3,391 $1,963 $6,312
Charge for Impaired Investment (1) $0 $0 ($3,397) ($5,712) $0
Other (2,3,4,5,6,7) 369% ($106,469) ($21,803) $16,444 $16,971 $34,946
Profit Before Tax 53% $17,843 $120,367 $213,426 $226,477 $234,436
Tax provision (27%) ($28,530) ($43,725) ($80,374) ($84,400) ($74,164)
Division net income ($10,687) $76,642 $133,052 $142,077 $160,272
Genzyme Surgical Products net loss
prior to June 28, 1999 (8) ($44,313) ($29,740) ($49,856) ($27,523) $0
Allocated tax benefits (3%) $24,498 $30,533 $37,857 $34,806 $21,849
Net income (loss) allocated to
Genzyme General Stock 56% ($30,502) $77,435 $121,053 $149,360 $182,121
Net income (loss)per share of
Genzyme General Stock-diluted 49% ($0.45) $0.98 $1.48 $1.71 $1.99(9)
Adjusted Weighted Average
Shares Outstanding 3% 68,289 78,925 85,822 93,228 95,614
--------- -------------- ------------ ------------ ------------- ---------------
</TABLE>
(1) Includes in Q-4 1998 and Q-2 1999, charges of $(3,397)K and $(5,487)K,
respectively, for the write-down of certain strategic equity investments
whose decline in market value was deemed as "other than temporary".
(2) Other income of $16,444K for the full year 1998 includes the net gain of
$31,202K from the sale of Genzyme's Research Biologics business to TECHNE
Corp. in July 1998, offset in part by a charge of $(14,758)K related to the
write-down of Ceredase.
(3) In Q2-1999, other income of $7,500K represents a gain related to the
collection of certain notes receivable which were previously fully
reserved. The notes related to the sale of Genetic Design, Inc. in 1996.
(4) Other expense of $(4,918)K in Q3-1999 includes a charge for in-process
technology of $(5,436)K related to the acquisition of Peptimmune, Inc. in
July 1999, offset in part by a gain of $518K from the sale of Genzyme's
immunochemistry product lines to Sybron Laboratory Corp. in July 1999.
(5) Other expense in 1996 of $(106,469)K represents a charge for in-process
technology related to the acquisition of Neozyme II.
In 1997, other expense of $(21,803)K includes financial provisions which
represent: $(18,069)K of charges primarily related to the Melatonin product
line which the Company has discontinued; $(1,529)K of charges primarily
related to certain headcount reductions and charges of $(2,205)K primarily
related to the sale of Genetic Design, Inc. in 1996.
(6) In Q4-1999, other income represents a net gain on the termination of the
definitive agreement to acquire Cell Genesys in December 1999.
(7) In Q1-00, other income includes: a gain of $20,270K on Genzyme General's
investment in GTC due to issuance by GTC of additional shares of GTC common
stock; a charge for research and development of $(19,500)K related to the
Synpac technology access rights associated with Pompase; and $(56)K of
other expenses.
In Q2-00, other income includes: a credit of $10.3 million which represents
Pharming's reimbursement of research and development expenses related to
our strategic alliance with Synpac and Pharming; a net gain of $5.5 million
on the sale of shares of GTC common stock; a $5.1 million credit which
represents the net settlement of a lawsuit; and a $7.6 million gain in
connection with a sale of a strategic investment.
In Q3-00, other income includes: a gain of $10.9 million on the sale of a
portion of Genzyme General's shares of GTC common stock offset by realized
losses on other investments.
(8) Genzyme Surgical Products Division was created and Surgical Products Stock
was issued on June 28, 1999. The previously reported net income (loss)
allocated to Genzyme General Stock for the years ended December 31, 1996,
1997, 1998 and 1999 represented net income (loss) of Genzyme General
excluding the operations of the surgical products business in each of those
years. For purposes of determining net income (loss) per share of Genzyme
General Stock, the net income (loss) allocated to Genzyme General Stock has
been revised to include the net losses of the surgical products business
prior to June 28, 1999.
(9) Includes the dilutive effect of options, warrants and the convertible
subordinated notes and debentures allocated to Genzyme General.
<PAGE>
GENZYME GENERAL
A DIVISION OF GENZYME CORPORATION
ANALYST SCHEDULE
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<TABLE>
<CAPTION>
---------------- -------------- ---------------- ----------------- ----------------
Q3 99 Q4 99 Q1 00 Q2 00 Q3 00
---------------- -------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Total Revenue $157,669 $172,726 $170,626 $186,694 $192,165
As a % of Total Product and
Service Revenue:
Diagnostics 18% 17% 18% 16% 16%
Therapeutics 81% 80% 81% 82% 83%
Other 1% 3% 1% 2% 1%
Total Product and Service
Gross Margin 77% 75% 76% 75% 72%
SG&A Expense as % of
Total Revenue 23% 20% 22% 23% 22%
R&D Expense as % of
Total Revenue 15% 17% 14% 14% 13%
Operating Profit as %
of Total Revenue 38% 38% 39% 38% 36%
Tax Provision (Benefit) as
% of Profit Before Tax (10) 22% 27% 20% 25% 21%
<CAPTION>
---------------- -------------- ---------------- ----------------- ----------------
Q3 99 Q4 99 Q1 00 Q2 00 Q3 00
---------------- -------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Other Selected Financial Data:
Cash and Marketable
Securities (11) $530,096 $513,905 $560,630 $585,977 $691,905
Working Capital $514,399 $487,561 $432,740 $466,929 $446,652
Fixed Assets $363,436 $362,548 $365,921 $375,449 $380,474
Goodwill and Intangible
Assets $78,503 $75,370 $73,160 $71,177 $68,938
Total Assets $1,399,021 $1,399,583 $1,530,975 $1,529,602 $1,709,226
Long-Term Debt $272,399 $272,622 $272,885 $273,150 $273,477
Division Equity $921,960 $1,007,614 $1,133,340 $1,129,864 $1,269,904
---------------- -------------- ---------------- ----------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
-----------------
-------------- --------------- ----------------- ---------------- YTD
1996 1997 1998 1999 9/30/00
-------------- --------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Total Revenue $460,728 $496,368 $569,319 $635,366 $549,485
As a % of Total Product and
Service Revenue:
Diagnostics 29% 25% 21% 18% 17%
Therapeutics 63% 70% 75% 80% 82%
Other 8% 5% 4% 2% 1%
Total Product and Service
Gross Margin 62% 66% 72% 76% 74%
SG&A Expense as % of
Total Revenue 23% 24% 22% 24% 22%
R&D Expense as % of
Total Revenue 14% 13% 13% 15% 14%
Operating Profit as %
of Total Revenue 26% 29% 36% 36% 37%
Tax Provision (Benefit) as
% of Profit Before Tax (10) 23% 11% 20% 22% 22%
<CAPTION>
-------------- --------------- ----------------- ---------------- -----------------
1996 1997 1998 1999 Q3 00
-------------- --------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Other Selected Financial Data:
Cash and Marketable
Securities (11) $169,543 $192,222 $556,097 $513,905 $691,905
Working Capital $340,817 $273,697 $381,685 $487,561 $446,652
Fixed Assets $354,991 $348,789 $362,743 $362,548 $380,474
Goodwill and Intangible
Assets $60,539 $59,915 $85,851 $75,370 $68,938
Total Assets $975,910 $960,490 $1,410,391 $1,399,583 $1,709,226
Long-Term Debt $223,846 $117,978 $274,646 $272,622 $273,477
Division Equity $645,185 $745,895 $939,967 $1,007,614 $1,269,904
-------------- --------------- ----------------- ---------------- -----------------
</TABLE>
(10) Calculated amount is net of allocated tax benefits.
(11) On June 28, 1999, Genzyme General transferred $150.0 million of cash and
investments to Genzyme Surgical Products.
<PAGE>
GENZYME CORPORATION
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED NINE MONTHS ENDED
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) SEPTEMBER 30, SEPTEMBER 30,
----------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $ 227,359 $ 191,415 $ 659,402 $ 561,843
------------ -------------- ------------- -------------
Operating costs and expenses:
Cost of products and services sold 75,797 56,763 201,517 169,651
Selling, general and administrative 66,379 58,648 195,358 183,951
Research and development 39,678 35,925 123,954 109,632
Amortization of intangibles 3,409 6,128 15,191 18,501
Charge for in-process technology - 5,436 - 5,436
------------ -------------- ------------- -------------
Total operating costs and expenses 185,263 162,900 536,020 487,171
------------ -------------- ------------- -------------
Operating income 42,096 28,515 123,382 74,672
------------ -------------- ------------- -------------
Other income (expenses):
Equity in net loss of unconsolidated affiliates (11,420) (10,407) (30,866) (29,507)
Minority interest 977 843 3,185 2,573
Investment income 12,758 9,404 33,333 26,692
Interest expense (5,010) (5,922) (12,785) (17,010)
Gain on affiliate sale of stock 2,419 1,164 22,689 1,770
Gain on sale of product line (1) - 518 - 8,018
Gain on sale of investment in equity securities (2) 8,544 - 22,709 1,963
Charge for impaired investment (3) - - - (5,487)
Other (4) (10) 58 5,185 101
------------ -------------- ------------- -------------
Total other income (expenses) 8,258 (4,342) 43,450 (10,887)
------------ -------------- ------------- -------------
Income before income taxes 50,354 24,173 166,832 63,785
Provision for income taxes (15,933) (10,395) (51,101) (27,659)
------------ -------------- ------------- -------------
Net income $ 34,421 $ 13,778 $ 115,731 $ 36,126
============ ============== ============= =============
NET INCOME (LOSS) PER SHARE:
ALLOCATED TO GENZYME GENERAL STOCK:
Genzyme General net income $ 50,973 $ 29,971 $ 160,272 $ 91,389
Genzyme Surgical Products net loss (5) - - - (27,523)
Tax benefit allocated from Genzyme Molecular Oncology 2,021 2,016 5,558 6,326
Tax benefit allocated from Genzyme Surgical Products 4,424 3,841 11,080 14,191
Tax benefit allocated from Genzyme Tissue Repair 2,031 2,359 5,211 9,733
------------ -------------- ------------- -------------
Net income allocated to Genzyme General Stock $ 59,449 $ 38,187 $ 182,121 $ 94,116
============ ============== ============= =============
Net income per share of Genzyme General Stock:
Basic $ 0.69 $ 0.46 $ 2.14 $ 1.14
============ ============== ============= =============
Diluted (6) $ 0.64 $ 0.43 $ 1.99 $ 1.09
============ ============== ============= =============
Weighted average shares outstanding:
Basic 86,380 83,621 85,277 82,741
============ ============== ============= =============
Diluted (6) 97,074 94,331 95,614 93,196
============ ============== ============= =============
ALLOCATED TO MOLECULAR ONCOLOGY STOCK:
Net loss $ (5,504) $ (7,559) $ (17,924) $ (22,777)
============ ============== ============= =============
Net loss per share of Molecular Oncology Stock-basic
and diluted $ (0.37) $ (0.60) $ (1.28) $ (1.80)
============ ============== ============= =============
Weighted average shares outstanding 14,884 12,682 14,002 12,672
============ ============== ============= =============
ALLOCATED TO SURGICAL PRODUCTS STOCK:
Net loss $ (13,936) $ (10,953) $ (34,346) $ (11,833)
============ ============== ============= =============
Net loss per share of Surgical Products Stock-basic
and diluted $ (0.93) $ (0.74) $ (2.30) $ (0.80)
============ ============== ============= =============
Weighted average shares outstanding 14,959 14,835 14,907 14,835
============ ============== ============= =============
ALLOCATED TO TISSUE REPAIR STOCK:
Net loss $ (5,588) $ (6,148) $ (14,590) $ (24,146)
============ ============== ============= =============
Net loss per share of Tissue Repair Stock-basic
and diluted $ (0.19) $ (0.25) $ (0.51) $ (1.05)
============ ============== ============= =============
Weighted average shares outstanding 28,975 24,275 28,664 22,995
=========== ============== ============ =============
</TABLE>
(1) Represents a payment of $7.5M for previously fully reserved notes
receivable. Genzyme General received these notes in partial consideration
of the sale of Genetic Design in 1996.
(2) Includes a $10.9 million gain on the sale of shares of Genzyme Transgenics
Corporation (GTC) common stock offset by realized losses on other
investments. Nine months ended September 30, 2000 includes additional gains
of $5.5 million on sales of GTC common stock and a $7.6 million gain in
connection with a sale of a strategic investment.
(3) Represents a charge for the write-down of certain strategic equity
investment whose decline in market value was deemed as "other than
temporary".
(4) Includes net proceeds of approximately $5.1 million in connection with a
settlement of a lawsuit against its insurance carrier.
(5) Genzyme Surgical Products Division was created and Surgical Products Stock
was issued on June 28, 1999. The previously reported net income allocated
to
<PAGE>
Genzyme General Stock reflected the allocation of losses of the surgical
products business prior to June 28, 1999 to the Genzyme Surgical Products
Division. For purposes of determining net income per share of Genzyme
General Stock, the net income allocated to Genzyme General Stock for the
nine months ended September 30, 1999 has been revised to include the net
losses of the surgical products business prior to June 28, 1999.
(6) Net income per share of Genzyme General Stock on a diluted basis and
weighted average shares-diluted includes the dilutive effect of the
convertible subordinated notes and debentures allocated to Genzyme General.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2000 1999
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and all marketable securities $ 808,300 $ 652,990
Other current assets 378,267 344,185
Property, plant and equipment (net) 400,630 383,181
Intangibles (net) 237,343 253,153
Other assets 252,006 153,773
---------------------- ----------------------
Total assets $ 2,076,546 $ 1,787,282
====================== ======================
Current liabilities $ 175,549 $ 137,938
Noncurrent liabilities 301,256 292,952
Stockholders' equity 1,599,741 1,356,392
---------------------- ----------------------
Total liabilities and stockholders' equity $ 2,076,546 $ 1,787,282
====================== ======================
</TABLE>
<PAGE>
GENZYME GENERAL
COMBINED INCOME AND PER SHARE INFORMATION
QUARTER ENDED SEPTEMBER 30, 2000
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ONE-TIMERS
---------------------------------------
BEFORE GAIN ON
GAINS/ SALE OF R&D CHARGE AS
(CHARGES) GTC SHARES FOR CAT REPORTED
-------------- ------------------ ------------------ --------------
<S> <C> <C> <C> <C>
Pretax profit $ 66,476 $ 10,861 $ (1,955) $ 75,382
Provision for income taxes (12,709) (3,932) 708 (15,933)
-------------- ------------------ ------------------ --------------
Net income allocated to Genzyme General Stock $ 53,767 $ 6,929 $ (1,247) $ 59,449
============== ================== ================== ==============
Net income per share of Genzyme General Stock:
Basic $ 0.62 $ 0.08 $ (0.01) $ 0.69
Diluted $ 0.58(1) $ 0.07 $ (0.01) $ 0.64(1)
Weighted average shares outstanding:
Basic 86,380 86,380 86,380 86,380
Diluted 97,074 97,074 97,074 97,074
(1) Includes $2.6 million for the effect of dilutive securities.
</TABLE>
