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Filed by Genzyme Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Biomatrix, Inc.
Registration File No.: 333-34972
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Investors are urged to read the joint proxy statement/prospectus relating to
transaction described below because it contains important information. The joint
proxy statement/prospectus was filed with the Securities and Exchange Commission
and may be obtained free of charge, along with other documents filed by Genzyme
and Biomatrix with the commission, both 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.
* * * *
PRESS RELEASE
FOR IMMEDIATE RELEASE
July 19, 2000
GENZYME TISSUE REPAIR REPORTS 42 PERCENT INCREASE IN U.S CARTICEL SALES
DATE: JULY 19, 2000
Genzyme Tissue Repair (Nasdaq: GZTR) today reported revenues of $6.3 million for
the second quarter of 2000, a 35 percent increase from $4.7 million in revenues
reported in the second quarter of 1999.
Increases in revenue were led by a 42 percent growth in U.S. sales of
Carticel(R) (autologous cultured chondrocytes). U.S. sales of Carticel increased
to $4.0 million for the second quarter of 2000, compared to $2.8 million in the
second quarter of 1999.
Net loss for the second quarter of 2000 decreased 52 percent to $4.0 million, as
compared to $8.4 million in the second quarter of 1999. The loss per share for
the second quarter of 2000 decreased to a loss of $0.14 per share, as compared
to a loss of $0.37 per share in the second quarter of 1999. This improvement is
due to increased revenue and gross margin improvement, as well as the transfer
of the NeuroCell program-a joint venture between Genzyme and Diacrin, Inc.-to
Genzyme General (Nasdaq: GENZ) in May 1999.
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Gross profit more than doubled for the second time this year, increasing 126
percent in the second quarter of 2000 to $3.3 million compared to $1.4 million
in the second quarter of 1999. Gross margin as a percent of total revenue was a
record 52 percent for the quarter, up from 31 percent for the same quarter last
year. The increase in gross profit is due mainly to an increase in sales volume
and leveraging of production costs. Operating losses for the second quarter of
2000 were $3.8 million, a decrease of 41 percent from $6.7 million in the second
quarter of 1999.
"Genzyme Tissue Repair continues to drive Carticel revenues with consistent
average yearly growth of 40 percent in U.S. sales," said Russell Herndon,
president, Genzyme Tissue Repair. "Additionally, our consistent improvements in
gross margin to record levels continue to be a major contributor to our success
in decreasing our loss each quarter."
Worldwide sales of Carticel increased 21 percent to $4.6 million for the second
quarter of 2000, up from $3.8 million in the second quarter of 1999. European
Carticel sales were $0.6 million in the second quarter of 2000, down 42 percent
from $1.0 million in the second quarter of 1999, which was an atypical and
record quarter for Carticel in Europe.
Revenue from Epicel(TM) (cultured epidermal autografts) increased a record 97
percent to $1.7 million in the second quarter of 2000, compared to $0.9 million
for the second quarter of 1999. Epicel revenues fluctuate from quarter to
quarter depending on the need for severe burn care. Genzyme Tissue Repair ended
the quarter with $4.4 million in cash. Genzyme Tissue Repair has access to $15.0
million under a interdivisional financing arrangement from Genzyme General, as
well as access to additional funding from Genzyme's revolving credit facility.
ORTHOPEDIC PRODUCT DEVELOPMENT UPDATE
In the second quarter of 2000, Genzyme Tissue Repair submitted a 510(k) filing
on schedule to the U.S. Food and Drug Administration (FDA) for clearance to
market its Quick Tack(TM) periosteal fixation system. Quick Tack is a small
device designed to replace the use of sutures during the Carticel implantation.
It is expected to simplify the procedure and decrease the time needed for the
surgery. In addition, Quick Tack is the first step from the current open-knee
procedure toward an arthroscopic (closed knee) Carticel procedure.
CARTICEL PHASE 4 STUDY UPDATE
Genzyme Tissue Repair has made significant progress in all of its three Carticel
post-marketing studies, including the completion of one study. The studies are
required by the U.S. Food and Drug Administration as part of Carticel's
accelerated marketing approval.
During the quarter, the first of these three studies, the Registry Based Study,
was completed ahead of schedule and has been sent to the FDA for review. The
study met its primary and secondary endpoints related to efficacy.
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The second post-approval study, called STAR (Study of the Treatment of Articular
Repair), is ahead of schedule in site initiation and patient enrollment. Genzyme
Tissue Repair received protocol approval for STAR in the first quarter of 2000
and to date, 17 sites have been initiated and 7 patients have received Carticel
implantation. Investigators will evaluate approximately 100 patients in this
study and will follow these patients for four years.
Genzyme Tissue Repair has also made significant progress in its third
post-approval commitment-a preclinical study assessing the contribution of the
cells to the cartilage repair. The study is designed to compare the results from
the Carticel procedure (cultured cartilage cells implanted in the defect are
covered with a patch of periosteum to hold them in place) versus placing
periosteum over the defect without Carticel. The periosteum is a membrane
covering the shin bone. Data collection for this study is expected to be
complete by the end of 2000.
NEUROCELL UPDATE
In the second quarter of 2000, the Genzyme Corporation Board of Directors
extended the first milestone date for the NeuroCell program. The milestone date
to initiate a phase 3 clinical trial of NeuroCell-PD to treat Parkinson's
disease was extended to December 31, 2000, from June 30, 2000.
The milestone date and related financial obligation to Genzyme General were
extended to allow time to complete and review the current blinded phase 2
clinical trial. In the meantime, preparations for the phase 3 clinical trial are
moving forward. The FDA has reviewed the phase 3 trial protocol and trial sites
and investigators have been selected. The first Institutional Review Board (IRB)
approval for the protocol was obtained in May 2000.
Genzyme transferred its interest in the NeuroCell joint venture from Genzyme
Tissue Repair to Genzyme General in May 1999. The milestone, based on the
initiation of a phase 3 clinical trial, is part of the terms of the transfer
agreement.
FORMATION OF GENZYME BIOSURGERY
Progress continues toward the proposed merger which would combine Genzyme Tissue
Repair with Genzyme Surgical Products (Nasdaq: GZSP), and acquire Biomatrix Inc.
(NYSE: BXM) to form a new publicly-traded division of Genzyme Corporation called
Genzyme Biosurgery.
The merger has received clearance from the Federal Trade Commission under the
Hart-Scott-Rodino Antitrust Improvements Act and is being reviewed by the
Securities and Exchange Commission. Once effective, a joint proxy
statement/prospectus will be mailed to shareholders of each company. A special
shareholder meeting will be held to vote on the proposed merger plan. The
meeting is expected to occur in the third quarter.
The formation of Genzyme Biosurgery will create critical mass in the area of
bio-orthopedics and establish the business as a leader in this
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field with two marketed break-through bio-orthopedic products: Biomatrix'
Synvisc for osteoarthritis and Carticel. The financial and technical strength of
the new business will also allow Genzyme Tissue Repair to accelerate development
of its pipeline products including Carticel II, intended to allow implantation
arthroscopically, and its small molecule therapy under development for the
treatment of osteoarthritis.
Upon formation, Genzyme Biosurgery will have approximately 1,300 employees; six
dedicated manufacturing facilities; global clinical and regulatory capabilities;
cutting-edge scientific and technological expertise; an extensive intellectual
property portfolio; several established sales organizations in focused surgical
markets in both the United States and Europe; and marketing and distribution
agreements with a number of large, multinational health care companies.
Genzyme Tissue Repair is a leading developer of biological products for the
treatment of orthopedic injuries such as cartilage damage, and severe burns. It
is a division of Genzyme Corp. and has its own common stock intended to reflect
its value and track its performance.
This press release contains forward-looking statements, including statements
about Genzyme Tissue Repair's expected benefits of Quick Tack, the anticipated
timing of regulatory submissions and the completion of clinical studies, the
planned acquisition of Biomatrix, the anticipated creation of Genzyme
Biosurgery, the timing for the creation of Genzyme Biosurgery, the expected
growth and success of Genzyme Biosurgery, Genzyme Biosurgery's anticipated
impact on Genzyme Corp.'s involvement in the biosurgery and bio-orthopedic
markets and the expected effects of the creation of Genzyme Biosurgery on
Genzyme Tissue Repair's development of products. Actual results may differ
materially due to many factors, including the results of operations, the actual
benefits of Quick Tack, enrollment rates for trials, the actual safety and
efficacy of products, the time involved in compiling and analyzing clinical
trial data, the timing and content of submissions to and decisions by the FDA
and other regulatory authorities, the likelihood of regulatory and other
approvals of the planned acquisition of Biomatrix and the creation of Genzyme
Biosurgery and related matters, the operational integration associated with the
anticipated transactions and other risks generally associated with such
transactions, the accuracy of information about the biosurgery and
bio-orthopedic markets, the competitive environment for the biosurgery and
bio-orthopedic markets, and the ability to successfully complete preclinical and
clinical development of products. GZTR stock is a class of common stock of
Genzyme Corporation, therefore GZTR shareholders are subject to the risks and
uncertainties described in Genzyme's filings with the Securities and Exchange
Commission under the Exchange Act of 1934, as amended, including Exhibit 99.2 to
Genzyme's Annual Report on Form 10-K for the year ended December 31, 1999.
Genzyme Tissue Repair's second quarter earnings conference call will be
broadcast live over the Internet at 11:00 a.m. EDT today on Genzyme's website.
The conference call will be available through midnight EDT July 27.
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Investors can also listen to a playback of a conference call discussing the
second quarter financial results by phone by dialing 1-800-633-8284 in the
United States or 1-858-812-6440 elsewhere from 1pm EDT today through 12 midnight
EDT July 27. Refer to reservation number 15487322.
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GENZYME TISSUE REPAIR
COMBINED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SIX MONTHS ENDED
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) JUNE 30, JUNE 30,
2000 1999 2000 1999
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Total revenues $ 6,287 $ 4,665 $ 12,154 $ 8,688
Operating costs and expenses:
Cost of services sold 3,023 3,221 6,046 6,219
Selling, general and administrative 5,626 6,115 11,365 12,429
Research and development 1,452 2,003 3,323 3,971
Total operating costs and expenses 10,101 11,339 20,734 22,619
Operating loss (3,814) (6,674) (8,580) (13,931)
Other income (expenses):
Equity in net loss of joint venture - (1,361) - (3,368)
Other - - (5) -
Interest income 106 72 208 165
Interest expense (323) (419) (625) (864)
Total other income (expenses) (217) (1,708) (422) (4,067)
Net loss $ (4,031) $ (8,382) $ (9,002) $(17,998)
Net loss per GZTR basic and diluted common share $ (0.14) $ (0.37) $ (0.31) $ (0.81)
Weighted average shares outstanding 28,666 22,764 28,598 22,355
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CONDENSED COMBINED BALANCE SHEETS JUNE 30, DECEMBER 31,
(IN THOUSANDS) 2000 1999
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Cash and all marketable securities $ 4,382 $ 9,373
Other current assets 8,519 7,615
Property, plant and equipment, net 2,099 2,545
Other assets 101 115
Total assets $ 15,101 $ 19,648
Current liabilities $ 3,536 $ 4,876
Noncurrent liabilities 18,152 18,227
Division equity (6,587) (3,455)
Total liabilities and division equity $ 15,101 $ 19,648
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CARTICEL PERFORMANCE INDICATORS
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1995 1996 1997 1998 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 SINCE
INCEPTION
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PATIENTS TREATED
US 60 251 476 855 227 258 252 339 308 325 3351
Europe/ROW 0 52 184 239 79 121 70 93 88 74 1000
TOTAL TREATED 60 303 660 1094 306 379 322 432 396 399 4351
US REIMBURSEMENT ACTIVITY
THIRD PARTY COVERAGE 101 525 141 142 164 169 179 179
(EST MILLIONS OF LIVES)
CUMULATIVE # OF PAYORS
WITH PROTOCOL TO ROUTINELY PAY 67 325 89 92 99 101 103 103
FOR CARTICEL
US PATIENT APPROVALS 72 301 543 1078 278 335 324 377 396 402
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Please call Genzyme's corporate communications department at 1-617-252-7570 for
additional information.
