U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number: 0-21994
GLYKO BIOMEDICAL LTD.
(Exact name of small business issuer as specified in its charter)
Canada 98-0195569
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
371 Bel Marin Keys Blvd., Suite 210, Novato,
California 94949 (address of principal
executive offices)
(415) 884-6700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes ____ No_____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 31,485,870 common shares
outstanding as of August 1, 1999.
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE>
GLYKO BIOMEDICAL LTD.
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Balance Sheets as of June 30, 1999
and December 31, 1998.............................................2
Consolidated Statements of Operations for the three and six months
ended June 30, 1999 and 1998......................................3
Consolidated Statements of Cash Flows for the three and six months
ended June 30, 1999 and 1998......................................4
Notes to Consolidated Financial Statements...........................5
Item 2. Management's Discussion and Analysis........................10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................25
Item 2. Changes in Securities......................................25
Item 3. Defaults upon Senior Securities............................25
Item 4. Submission of Matters to a Vote of Security Holders........25
Item 5. Other Information..........................................25
Item 6. Exhibits and Reports on Form 8-K...........................25
SIGNATURE....................................................................26
<PAGE>
PART I. - FINANCIAL INFORMATION
GLYKO BIOMEDICAL LTD.
BALANCE SHEETS
(In U.S. dollars)
<TABLE>
<CAPTION>
June 30 December 31,
1999 1998
----------------------- ------------------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 415,071 $ 2,567,824
Note receivable - 100,000
Other current assets 91,890 -
----------------------- ------------------------
Total current assets 506,961 2,667,824
Note receivable from BioMarin Pharmaceutical Inc. 4,300,000 -
Investment in BioMarin Pharmaceutical Inc. 3,150,794 7,674,729
----------------------- ------------------------
Total assets $ 7,957,755 $ 10,342,553
======================= ========================
Accrued liabilities $ 349,934 $ 411,109
----------------------- ------------------------
Total current liabilities 349,934 411,109
Common stock, no par value, unlimited shares authorized,
31,485,870 and 28,020,234 shares issued and outstanding at
June 30, 1999 and December 31, 1998, respectively 20,551,611 17,963,167
Additional paid in capital 11,222,691 11,222,691
Common stock warrants and options 163,737 547,285
Note receivable from stockholder (746,761) (721,971)
Accumulated deficit (23,583,457) (19,079,728)
----------------------- ------------------------
Total stockholders' equity 7,607,821 9,931,444
----------------------- ------------------------
Total liabilities and stockholders' equity $ 7,957,755 $ 10,342,553
======================= ========================
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in U.S. dollars)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- ----------------------------
1999 1998 1999 1998
----------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Revenues:
Sales of products $ - $ 221,948 $ - $ 505,782
Sales of services - 12,645 - 35,370
Other revenues - 105,210 - 204,345
------------- ----------- -------------- -----------
Total revenues: - 339,803 - 745,497
Expenses:
Cost of products - 81,858 - 160,099
Cost of services - 9,519 - 19,792
Research and development - 182,692 - 346,377
Selling, general and administrative 66,088 175,364 133,002 359,438
Other - (168,880) - (165,880)
------------- ----------- -------------- ------------
Total expenses: 66,088 280,553 133,002 719,826
------------- ----------- -------------- ------------
Income (loss) from operations (66,088) 59,250 (133,002) 25,671
Equity in loss of BioMarin
Pharmaceutical Inc. (2,804,902) (796,900) (4,523,934) (1,341,438)
Interest income 111,967 11,209 153,208 17,009
------------- ----------- -------------- -------------
Net loss $(2,759,023) $ (726,441) $ (4,503,728) $ (1,298,758)
============= =========== ============== =============
Net loss per common share, basic
and diluted $ (0.09) $ (0.03) $ (0.15) $ (0.06)
============= =========== ============== =============
Weighted average number of shares
used in computing per share amounts 31,485,870 22,848,127 30,478,824 22,364,091
============= =========== ============== =============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in U.S. dollars)
Six months ended June 30,
------------------------------
1999 1998
------------- -------------
Cash flows from operating activities:
Net loss $ (4,503,728) $ (1,298,758)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization - 23,702
Equity in the loss of BioMarin
Pharmaceutical, Inc. 4,523,934 1,341,438
Gain on settlement of claim - (165,880)
Change in assets and liabilities:
Trade receivables - 40,229
Inventories - 20,846
Other assets (91,890) (10,502)
Accounts payable - 4,508
Accrued liabilities (3,109) (45,070)
Deferred rent and related costs - (200,000)
------------- -----------
Total adjustments 4,428,935 1,009,271
------------- -----------
Net cash used in operating activities (74,793) (289,487)
Cash flows from investing activities:
Purchase of note receivable from
BioMarin Pharmaceutical Inc. (4,300,000) -
Investment in BioMarin Pharmaceutical Inc. - (1,000,000)
Purchases of property and equipment - (6,951)
------------- -----------
Net cash used in investing activities (4,300,000) (1,006,951)
Cash flows from financing activities:
Net proceeds from the issuance of common stock
pursuant to a technology and license agreement - 70,740
Interest on note from shareholder (24,790) -
Proceeds from the exercise of stock options and
common stock warrants 2,146,830 1,417,398
Repayment of note receivable 100,000 -
------------- -----------
Net cash provided by financing activities 2,222,040 1,488,138
------------- -----------
Net (decrease) increase in cash (2,152,753) 191,700
Cash and cash equivalents, beginning of period 2,567,824 528,280
------------- -----------
Cash and cash equivalents, end of period $ 415,071 $ 719,980
============= ===========
The accompanying notes are an integral part of these statements.
4
<PAGE>
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Company and Description of the Business
Glyko Biomedical Ltd. (the Company or GBL), a Canadian company, was
incorporated in 1992 to acquire all of the outstanding capital stock of
Glyko, Inc., a Delaware corporation. Both entities were under common
control and the share exchange was accounted for in a manner similar to
a pooling. Since its inception in October 1990, Glyko, Inc. has been
engaged in research, development, manufacturing and marketing of new
techniques to analyze and manipulate carbohydrates for research,
diagnostic and pharmaceutical purposes. Glyko, Inc. has developed a line
of analytic instrumentation laboratory products that include an imaging
system, analysis software and chemical analysis kits.
In October 1996, GBL incorporated BioMarin Pharmaceutical Inc.
(BioMarin), a Delaware corporation in the development stage, to develop
the Company's pharmaceutical products. BioMarin began business on March
21, 1997 and issued 1,500,000 shares of common stock to GBL for $1.5
million. As consideration for a certain license agreement dated June
1997, BioMarin issued GBL 7,000,000 shares of BioMarin common stock.
Beginning in October 1997, BioMarin raised capital from third parties
with the result that at December 31, 1997, GBL's ownership interest in
BioMarin had been reduced to 41.3% of BioMarin's outstanding capital
stock. As of December 31, 1997, the Company began recording its share of
BioMarin's net loss utilizing the equity method of accounting.
On June 30, 1998, BioMarin raised net proceeds of $3.3 million (598,535
shares) from a private placement including a $1.0 million investment
from GBL. In another private placement, on August 3, 1998, BioMarin
raised an additional $8.1 million (1,416,800 shares)from third parties.
On September 4, 1998, BioMarin received $8 million from Genzyme Corp.
(Genzyme) upon execution of a joint venture agreement in which
BioMarin issued 1,333,333 shares of common stock to Genzyme. BioMarin
has a 50% interest in the income or loss of this joint venture,
BioMarin/Genzyme LLC.
On October 7, 1998, GBL sold to BioMarin 100% of the outstanding capital
stock of Glyko, Inc. in exchange for 2,259,039 shares of BioMarin's
common stock, the assumption of options, previously issued to employees
of Glyko, Inc., to purchase up to 585,969 shares of GBL's common stock
(exercisable into 255,540 shares of BioMarin common stock) and $500
in cash. As of December 31, 1998, GBL owned 41.7% of BioMarin's
outstanding capital stock.
On April 13, 1999, GBL purchased BioMarin convertible notes in the amount
of $4,300,000, as part of BioMarin's $26,000,000 convertible note
financing. Subsequent to June 30, 1999, BioMarin closed its initial
public offering of 4,500,000 shares at $13.00 per share concurrent with a
$10 million investment from Genzyme. Concurrent with BioMarin's initial
public offering on July 23, 1999, BioMarin's convertible notes payable
(including interest accrued) were converted into 2,672,020 shares of
BioMarin's common stock at $10.00 per share. GBL's $4,300,000
convertible note plus accrued interest of $119,110 was converted to
441,911 shares of BioMarin's common stock. GBL's ownership of
BioMarin's outstanding common stock was 33.3% at July 23, 1999.
In May 1999, BioMarin's wholly-owned subsidiary, Glyko, Inc., acquired
key assets of the Biochemical Research Reagent Division of Oxford
GlycoSciences Plc. The acquisition was made to increase Glyko, Inc.'s
product offerings and was valued from $1.5 million to $2.1 million,
depending on the future sales of the acquired products, and was accounted
for as a purchase.
Since its inception, GBL has incurred a cumulative deficit of $23.6
million and the Company expects to continue to incur losses during 1999
due to its share of BioMarin's net loss resulting from the ongoing
research and development of BioMarin's pharmaceutical product candidates.
As a result of GBL's sale of Glyko, Inc. on October 7, 1998, GBL has no
operating activities and its principal asset is its investment in
BioMarin. Accordingly, without further investment in other companies or
technologies, management believes that GBL
5
<PAGE>
GLYKO BIOMEDICAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
has sufficient cash to sustain planned operations which are of limited
scope and cost for at least two years. BioMarin had an accumulated
deficit of $26.5 million at June 30, 1999 and is expected to incur
significant losses throughout 1999 and beyond. Management of BioMarin
believes that the proceeds from the convertible notes and the estimated
net proceeds of $62.9 million from the initial public offering and the
concurrent Genzyme closing will be sufficient to meet its obligations
through June 30, 2000. Management of GBL believes that at June 30, 1999
there has not been any impairment of its investment in BioMarin.
The accompanying financial statements should be read in conjunction with
the Company's annual report on form 10-KSB for the fiscal year ended
December 31, 1998.
2. Summary of Significant Accounting Policies
The accompanying consolidated financial statements and related footnotes
have been prepared in conformity with U.S. generally accepted accounting
principles using U.S. dollars as essentially all of the Company's
operations were located in the United States. The consolidated
financial statements include the accounts and operations of the Company
and Glyko,Inc for the period from January 1, 1998 through June 30, 1998.
For the three and six months ended June 30, 1999, the operations of
Glyko, Inc. have been consolidated into the operations of BioMarin.
The results of operations of BioMarin have been reported in the
Company's financial statements for the three and six months ended
June 30, 1999 and 1998, based on the equity method of accounting.
All significant intercompany accounts and transactions have been
eliminated.
Use of Estimates:
The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make certain estimates and assumptions that effect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the dates of the consolidated
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Cash and Cash Equivalents:
Cash and cash equivalents consist of amounts held with banks and
short-term investments with original maturities of 90 days or less.
Sale of Glyko, Inc. and Investment in BioMarin Pharmaceutical Inc.:
BioMarin acquired Glyko, Inc. from GBL through the exchange of BioMarin
stock for Glyko, Inc. stock and accounted for the acquisition based upon
the fair market value of the BioMarin stock issued (using the same per
share price as used in a recent arms-length transaction), the assumption
of responsibility for certain stock options previously issued to Glyko,
Inc. employees (see Note 1), and $500 in cash. In consolidating Glyko,
Inc., BioMarin recorded intangible assets, including goodwill, to the
extent that the fair market value of the stock issued exceeded the fair
market value of the tangible assets of Glyko, Inc. GBL recorded the stock
of BioMarin received at the historical cost basis of its investment in
Glyko, Inc. GBL accounts for its investment in BioMarin using the equity
method of accounting. However, as it has not recorded its investment in
BioMarin at fair market value, it does not record its share of the losses
recorded by BioMarin related to the write-off or amortization of
intangible assets recorded on the acquisition of Glyko, Inc.
6
<PAGE>
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the three and six months ended June 30, 1999, BioMarin recorded a
charge to operations of $542,548 and $271,274, respectively in connection
with its purchase of Glyko, Inc. for the amortization of goodwill and
other intangible assets, which are being amortized over ten years. In
recording its share of BioMarin's loss for this period, GBL reduced this
loss for its share of the amortization of goodwill and other intangible
assets.
As of June 30, 1999, GBL's share of BioMarin's outstanding capital stock
was 41.7%. The exercise of BioMarin options or warrants will result in a
reduction of GBL's ownership percentage and future fundraising efforts of
BioMarin may result in a similar reduction of GBL's ownership percentage.
To the extent that the issuance of common stock by BioMarin to third
parties at a per share price greater than or less than the per share
carrying value of GBL's investment in BioMarin, the resulting gain or
loss is reflected as an increase or decrease, respectively, in additional
paid in capital in the accompanying balance sheets.
Product Sales:
During the period in which the Company consolidated the operations of
Glyko, Inc., the Company recognized product revenues and related cost of
sales upon shipment of products. Service revenues were recognized upon
completion of services as evidenced by the transmission of reports to
customers. Other revenues, principally licensing and distribution fees,
were recognized upon completion of applicable contractual obligations.
During 1994, the Company recorded a charge to operations of $219,811
related to the termination of an agreement with one of its stockholders.
This charge was the estimated fair value of 500,000 shares of common
stock to be received by the stockholder in settlement of the agreement.
The Toronto Stock Exchange has not permitted the issuance of the 500,000
shares because the transaction is not considered arms length. The
stockholder was a stockholder in the Company from 1990 until April 1998.
At June 30, 1999 the liability of $219,811 is included in accrued
liabilities in the accompanying balance sheets.
Net Loss per Share:
Potentially dilutive securities outstanding at June 30, 1999 and 1998,
respectively, include options for the purchase of 339,560 and 2,112,636
shares of common stock and warrants for the purchase of 2.5 million and
8.9 million shares of common stock, respectively. These securities were
not considered in the computation of dilutive loss per share because
their effect would be anti-dilutive for the three and six months ended
June 30, 1999 and 1998.
New Accounting Standards:
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, which is effective for
fiscal years beginning after June 15, 2000 is not expected to have a
material impact on the Company's financial position or results of
operations.
Reclassifications:
Certain balances in prior periods have been reclassified to conform with
the current period presentation.
7
<PAGE>
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Investment in BioMarin Pharmaceutical Inc.
Results of the Company's unconsolidated affiliate, BioMarin, a
development stage company, are summarized as follows for the six months
ended June 30, 1999 and 1998 and for the period from March 21, 1997
(inception) to June 30, 1999:
<TABLE>
<CAPTION>
Six months ended Six months ended Period from
June 30, June 30, March 21, 1997
1999 1998 (inception), to
June 30, 1999
------------------ ------------------ ------------------
(unaudited)
<S> <C> <C> <C>
Revenues - products $ 528,865 $ - $ 667,027
Revenues - services 77,961 - 190,096
Revenues from joint venture 1,903,730 - 2,741,187
Revenues - other 151,245 - 253,900
------------------ ------------------ ------------------
Total revenues 2,661,801 - 3,852,210
OPERATING COSTS AND EXPENSES:
Cost of goods sold - products 116,750 - 165,997
Cost of goods sold - services 98,233 - 156,928
Research and development 10,371,330 2,155,558 22,787,761
General and administrative 2,803,578 1,331,745 7,248,763
------------------ ------------------ ------------------
Loss from operations (10,728,090) (3,487,303) (26,507,239)
EQUITY IN LOSS OF BIOMARIN/
GENZYME, LLC (554,989) - (602,160)
INTEREST INCOME 452,629 239,269 1,202,530
INTEREST EXPENSE (560,862) - (560,862)
------------------ ------------------ ------------------
Net loss $ (11,391,312) $ (3,248,034) $ (26,467,731)
================== ================== ==================
For the periods presented above, GBL's equity in loss of BioMarin was as follows:
$ (4,523,934) $ (1,341,438) $ (10,779,414)
================== ================== ==================
</TABLE>
4. Note Receivable
As part of its compensation for certain services, GBL issued stock
options to a consulting group. In September 1998, GBL loaned $100,000 to
the consulting group in anticipation that the Toronto Stock Exchange
would approve the stock options. In the first quarter of 1999, the
options were approved by the Toronto Stock Exchange and this note was
repaid in full.
In November 1998, per the terms of the BioMarin acquisition of Glyko,
Inc., GBL loaned $712,261 to an officer of the Company to exercise
expiring stock options. The loan is secured by the stock and is a full
recourse note.
8
<PAGE>
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Related Party Transactions
Prior to the sale of Glyko, Inc. to BioMarin, the Company subleased
office and lab space to, and performed certain administrative and
research and development functions for BioMarin. BioMarin reimbursed the
Company for rent, salaries and related benefits and other administrative
costs and the Company reimbursed BioMarin for salaries and related
benefits. BioMarin reimbursed the Company a net $0 for the three and six
months ended June 30, 1999 and a net $31,809 and $42,626 for the three
and months ended June 30, 1998, respectively. The Company also provided
analytical services and products to BioMarin at a 27% discount in 1998.
Total receipts to the Company from sales to BioMarin totaled $0 and
$16,491 during the three and six months ended June 30, 1998.
Since October 8, 1998, the Company has agreed to pay BioMarin a monthly
management fee for its services to the Company primarily relating to
management, accounting, finance and government reporting. The Company has
accrued management fee expenses due to BioMarin of $15,441 for the
quarter ended June 30, 1999.
6. Subsequent Events
In July, 1999, BioMarin closed its initial public offering of 4,500,000
shares at $13.00 per share concurrent with a $10 million investment
(769,230 shares) from Genzyme. Net proceeds after closing costs of the
BioMarin initial public offering and Genzyme closing are estimated at
$62.9 million. Concurrent with BioMarin's initial public offering,
BioMarin issued 2,672,020 shares of common stock for the conversion of
the convertible notes plus accrued interest at a conversion rate of $10
per share pursuant to the convertible note subscription agreement. GBL
received 441,911 shares of BioMarin common stock in exchange for its
$4,300,000 convertible note plus accrued interest of $119,110.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of financial condition and results
of operations contains certain forward looking statements within the
meaning of Section 27A of the U.S. Securities Act of 1933, as amended,
and Section 21E of the U.S. Securities Exchange Act of 1934, as amended,
that involve risks and uncertainties, such as statements regarding the
Company's ongoing liquidity as discussed in "Liquidity and Capital
Resources." The Company's actual results could differ materially from the
results anticipated in these forward-looking statements. Risks are
identified in "Overview, " "Results of Operations," and "Liquidity and
Capital Resources."
Overview
Glyko Biomedical Ltd. (GBL or the Company) is a Canadian company that
at June 30, 1999 owned 41.7% of the outstanding capital stock of BioMarin
Pharmaceutical Inc. (BioMarin). As of October 7, 1998, BioMarin owned 100% of
the capital stock of Glyko, Inc. Glyko, Inc. and BioMarin are operating
companies based in California. On October 7, 1998, BioMarin acquired Glyko,
Inc., in a transaction valued at $14,500,500. As consideration for the
acquisition of all of the outstanding shares of Glyko, Inc., BioMarin issued
2,259,039 shares of common stock to the Company, assumed Glyko, Inc.'s employee
stock options exercisable for 255,540 shares of BioMarin common stock, and paid
$500 in cash. Glyko Biomedical Ltd. consolidated the operations of Glyko, Inc.
through October 7, 1998. Subsequent to October 7, 1998, the accounts of Glyko
Biomedical Ltd. are presented on a stand-alone basis. In this period the results
of operations of Glyko, Inc. have been consolidated into the results of
operations of BioMarin. BioMarin's results of operations are recorded by Glyko
Biomedical Ltd. using the equity method of accounting. Numerical references in
the following discussion are rounded to the nearest thousand.
Since its inception in October 1990, Glyko, Inc. has been engaged in the
research, development, manufacturing and marketing of new techniques to analyze
and manipulate carbohydrates for research, diagnostic and pharmaceutical
purposes. Glyko, Inc. has developed a line of analytic instrumentation
laboratory products that include an imaging system, analysis software and
chemical analysis kits. Glyko, Inc., as a wholly owned subsidiary of BioMarin,
continues to develop additional chemical kits for use with the imaging system,
and is also developing a line of carbohydrate diagnostic products. In May 1999,
Glyko, Inc., acquired key assets of the Biochemical Research Reagent Division of
Oxford GlycoSciences Plc. The acquisition was made to increase Glyko, Inc.'s
product offerings and was valued from $1.5 million to $2.1 million, depending on
the future sales of the acquired products, and was accounted for as a purchase.
In addition to the activities of Glyko, Inc., BioMarin is engaged in the
discovery,development and commercialization of carbohydrate enzyme therapeutics.
On April 13, 1999, GBL purchased BioMarin notes in the amount of $4,300,000, as
part of BioMarin's $26,000,000 convertible note financing. Subsequent to June
30, 1999, BioMarin closed its initial public offering of 4,500,000 shares at
$13.00 per share concurrent with a $10 million investment (769,230 shares) from
Genzyme. Concurrent with BioMarin's initial public offering on July 23, 1999,
BioMarin's convertible notes payable were converted into 2,672,020 shares of
BioMarin's common stock.GBL's $4,300,000 convertible note plus accrued interest
of $119,110 was converted to 441,911 shares of BioMarin's common stock. GBL's
ownership of BioMarin's outstanding common stock was 33.3% at July 23, 1999.
The Company's net loss for the six months ended June 30, 1999 and 1998 was
$4,504,000 and $1,299,000, respectively. The primary component of this loss was
the Company's share of the net loss of BioMarin accounted for under the equity
method of accounting. The losses of Glyko, Inc. for the three and six months
ended June 30, 1999 have been consolidated into BioMarin's loss for that period.
GBL expects to continue to incur losses during 1999 due to its share of
BioMarin's net loss resulting from BioMarin's ongoing research and development
of pharmaceutical product candidates. The BioMarin losses do not have an impact
on the cash position of GBL. As a result of GBL's sale of Glyko, Inc., as of
October 7, 1998, GBL has no operating activities and its principal asset is its
investment in BioMarin. BioMarin has an accumulated deficit of $26,468,000 at
June 30, 1999 and is expected to incur significant losses throughout 1999 and
beyond. Management of BioMarin believes that the convertible note financing and
the estimated net proceeds of $62.9 million from the initial public offering and
the concurrent Genzyme closing will be sufficient to meet its obligations
through June 30, 2000. Management of GBL believes that at June 30, 1999 there
has not been any impairment of its investment in BioMarin.
10
<PAGE>
Results of Operations
The principal operations of GBL were the operations of Glyko, Inc. through
October 7, 1998. The three and six months ended June 30, 1998 include the
operations of Glyko, Inc. For the three and six ended June 30, 1999, the
operations of Glyko, Inc. are reflected in the accompanying financials
statements through the Company's equity in the loss of BioMarin.
The Quarters Ended June 30, 1999 and 1998
There were no revenues for the quarter ended June 30, 1999 due to the sale of
the Company's operating entity, Glyko, Inc. Revenues for the three months ended
June 30, 1998 were $340,000 and consisted of sales of products of $222,000,
sales of services of $13,000 and other revenues representing grant revenues of
$105,000, all by Glyko, Inc. Sales of products and services consisted of sales
of chemical analysis kits and imaging systems, and fees for custom analytic
services.
There were no costs of sales of products and of services for the quarter ended
June 30, 1999 due to the Company's sale of Glyko, Inc. Costs of sales of
products and of services was 39 percent of revenues from the sales of products
and services for the quarter ended June 30, 1998.
There were no research and development expenses for the quarter ended June 30,
1999 due to the Company's sale of Glyko, Inc. Research and development expenses
for the quarter ended June 30, 1998 were $183,000 representing internal research
expenses for the development of future products, including diagnostic software,
new enzymes and improvements on the imaging system.
Selling, general and administrative expense was $66,000 for the quarter ended
June 30, 1999, a decrease of $109,000 from selling, general and administrative
expenses of $175,000 incurred for the quarter ended June 30, 1998. The decrease
is due to the sale of Glyko, Inc. by the Company and the subsequent reduction in
administrative requirements. Selling, general and administrative expense for the
quarter ended June 30, 1999 represented management fees accrued to BioMarin for
management, accounting, finance and government reporting and expenses related to
the Company's annual meeting on June 24, 1999.
Other operating expenses in the second quarter of 1998 of $(165,880) represents
the gain on the settlement of a claim at an amount less than was provided for by
the Company.
Equity in loss of BioMarin for the quarter ended June 30, 1999 was $2,805,000
compared to $797,000 for the quarter ended June 30, 1998, an increase of
$2,008,000. The increase was primarily due to the increased net loss of
BioMarin.
Interest income earned for the quarter ended June 30, 1999 and 1998 of $112,000
and $11,000, respectively, resulted from earnings on cash invested in short term
interest bearing accounts and, in 1999, includes interest accrued on the
Company's convertible note from BioMarin and a note from stockholder. The
increase in interest income in the second quarter of 1999 resulted from higher
cash balances available for investment due to the exercise of stock options and
warrants in the last three quarters of 1998 and the first two quarters of 1999
and due to the loan by the Company to a shareholder and the investment in a
convertible note from BioMarin. Interest expense for the quarters ended June 30,
1999 and 1998 was immaterial.
The Six Months Ended June 30, 1999 and 1998
There were no revenues for the six months ended June 30, 1999 due to the sale of
the Company's operating entity, Glyko, Inc. in October 1998. Revenues for the
six months ended June 30, 1998 were $745,000 and consisted of sales of products
11
<PAGE>
of $506,000, sales of services of $35,000 and other revenues representing
development fees of $25,000 and grant revenues of $179,000, all by Glyko, Inc.
Sales of products and services consisted of sales of chemical analysis kits and
imaging systems, and fees for custom analytic services.
There were no costs of sales of products and of services for the six months
ended June 30, 1999 due to the Company's sale of Glyko, Inc. Costs of sales of
products and of services was 33 percent of revenues from sales of products and
services for the six months ended June 30, 1998.
There were no research and development expenses for the six months ended June
30, 1999 due to the Company's sale of Glyko, Inc. Research and development
expenses for the six months ended June 30, 1998 were $346,000 representing
research expenses for the development of future products, including diagnostic
software, new enzymes and improvements on the imaging system.
Selling, general and administrative expense was $133,000 for the six months
ended June 30, 1999, a decrease of $226,000 from selling, general and
administrative expenses of $359,000 incurred for the six months ended June 30,
1998. The decrease is due to the sale of Glyko, Inc. by the Company and the
subsequent reduction in administrative requirements. Selling, general and
administrative expense for the six months ended June 30, 1999 represented
management fees accrued to BioMarin for management, accounting, finance and
government reporting and expenses related to the Company's special meeting and
annual meeting on March 10, 1999 and June 24, 1999, respectively.
Other operating expenses in the second quarter of 1998 of $(165,880) represents
the gain on the settlement of a claim at an amount less than was provided for by
the Company.
Equity in loss of BioMarin for the six months ended June 30, 1999 was $4,524,000
compared to $1,341,000 for the six months ended June 30, 1998, an increase of
$3,183,000.The increase was primarily due to the increased net loss of BioMarin.
Interest income earned for the six months ended June 30, 1999 and 1998 of
$153,000 and $17,000, respectively, resulted from earnings on cash invested in
short term interest bearing accounts and, in 1999, includes interest accreed on
the Company's convertible note from BioMarin and a note from stockholder. The
increase in interest income in the first six months of 1999 resulted from higher
cash balances available for investment due to the exercise of stock options and
warrants in the last three quarters of 1998 and the first two quarters of 1999
and due to the loan by the Company to a shareholder and the investment in a
convertible note from BioMarin. Interest expense for the quarters ended June 30,
1999 and 1998 was immaterial.
Liquidity and Capital Resources
The Company's cash position decreased by $2,153,000 in the first six months of
1999 to $415,000. Net cash proceeds of $2,222,000 relating primarily to the
issuance of common stock from the exercise of stock options and warrants and
proceeds from a loan repayment advanced for a stock option exercise was offset
by net cash used in operating activities of $75,000 and the purchase of BioMarin
convertible notes totaling $4,300,000.
Since its inception, the Company has incurred a cumulative deficit of $23.6
million and GBL expects to continue to incur losses during 1999 due to its share
of BioMarin's net loss resulting from BioMarin's ongoing research and
development of pharmaceutical product candidates. As a result of GBL's sale of
Glyko, Inc., as of October 7, 1998, GBL has no operating activities and its
principal asset is its investment in BioMarin. Accordingly, without further
investments in other companies or technologies, management believes that GBL has
sufficient cash to sustain planned operations which are of limited scope and
cost for at least two years. BioMarin has an accumulated deficit of $26.5
million at June 30, 1999 and is expected to incur significant losses throughout
1999 and beyond. Management of BioMarin believes that the convertible note
financing notes and the estimated net proceeds of $62.9 million from the initial
public offering and the concurrent Genzyme closing will be sufficient to meet
its obligations through June 30, 2000. Management of GBL believes that at June
30, 1999 there has not been any impairment of its investment in BioMarin. See
"Risk Factors - Dependence on Investment in BioMarin," "-History of Operating
Losses Uncertainty of Future Profitability."
12
<PAGE>
RISK FACTORS
RISKS RELATED TO GLYKO BIOMEDICAL LTD.
Dependence on Investment in BioMarin
As of June 30, 1999, GBL's principal asset was its 41.7% ownership of BioMarin's
outstanding capital stock. GBL's success is dependent on the successful
operations of BioMarin including, but not limited to, BioMarin's ability to
receive FDA approval of existing and future pharmaceutical product candidates,
BioMarin's ability to retain key personnel, BioMarin's ability to manufacture
and market products effectively and successfully and BioMarin's ability to raise
additional cash to fund future operations. BioMarin is a development stage
company, with its only revenues currently being earned from the sale of its
analytic and diagnostic products resulting from the acquisition of Glyko, Inc.
History of Operating Losses - Uncertainty of Future Profitability
The Company's share of BioMarin's net loss resulted in the Company reporting a
net loss for the six months ended June 30, 1999 of $4.5 million. GBL expects to
continue to incur losses during 1999 due to its share of BioMarin's net loss
resulting from BioMarin's ongoing research and development of pharmaceutical
product candidates. As a result of GBL's sale of Glyko, Inc., as of October 7,
1998, GBL has no operating activities and its principal asset is its investment
in BioMarin. Accordingly, without further investments in other companies or
technologies, management believes that GBL has sufficient cash to sustain
planned operations. BioMarin has an accumulated deficit of $26.5 million at June
30, 1999 and is expected to incur significant losses throughout 1999 and beyond.
Management of BioMarin believes that the convertible note financing notes and
the estimated net proceeds of $62.9 million from the initial public offering and
the concurrent Genzyme closing will be sufficient to meet its obligations
through June 30, 2000. Management of GBL believes that at June 30, 1999 there
has not been any impairment of its investment in BioMarin.
If we experience any problems with Year 2000 compliance our operations may be
disrupted.
The following is intended to constitute "Year 2000 Readiness Disclosure" under
the Year 2000 Information and Readiness Disclosure Act of 1998.
GBL has conducted a review of potential year-2000 compliance issues. Since GBL
no longer offers products and services for sale, GBL is focusing its inquiry on
the impact of these issues on its internal administrative activities and on its
professional service providers and other third parties. GBL does not currently
anticipate that it will incur material expenditures in connection with any
products or services it previously offered. GBL may incur some expense in
connection with this review, thought it does not currently anticipate that these
expenses will be material.
RISKS RELATED TO BIOMARIN PHARMACEUTICAL INC.
The following risk factors pertain to BioMarin and its wholly-owned
subsidiaries, Glyko, Inc. and BioMarin Genetics, Inc. References to "we" and
"our" in the following risk factors represent BioMarin and its wholly-owned
subsidiaries.
If we continue to incur operating losses for a period longer than anticipated,
we may be unable to continue our operations.
We are in an early stage of development and have operated at a net loss since we
were formed. Since we began operations in March 1997, we have been engaged
primarily in research and development. We have no sales revenues from any of our
drug products. As of June 30, 1999, we had an accumulated deficit of
approximately $26.5 million. We expect to continue to operate at a net loss at
least through the calendar year 2000. Our future profitability depends on our
receiving regulatory approval of our drug candidates and our ability to
successfully manufacture and market any approved drugs, either by ourselves or
jointly with others. The extent of our future losses and the timing of
profitability are highly uncertain. If we fail to become profitable or are
unable to sustain profitability on a quarterly or annual basis, then we may be
unable to continue our operations.
13
<PAGE>
Because of the relative small size and scale of our wholly-owned subsidiary,
Glyko, Inc., profits from products and services offered by it will be
insufficient to offset the expenses associated with our pharmaceutical business.
As a result, we expect that operating losses will continue and increase for the
foreseeable future.
If we fail to obtain the capital necessary to fund our operations we will be
unable to complete our product development programs.
In the future, we may need to raise substantial additional capital to fund
operations. We cannot be certain that any financing will be available when
needed. If we fail to raise additional financing as we need it, we will have to
delay or terminate our product development programs.
We expect to continue to spend substantial amounts of capital for our operations
for the foreseeable future. Activities which will require additional
expenditures include:
. research and development programs
. preclinical studies and clinical trials
. regulatory processes
. establishment of commercial scale manufacturing capabilities and
. expansion of sales and marketing activities.
The amount of capital we may need depends on many factors, including:
. The progress, timing and scope of our research and development programs
. The progress, timing and scope of our preclinical studies and clinical
trials
. The time and cost necessary to obtain regulatory approvals
. The time and cost necessary to build our manufacturing facilities and
obtain the necessary regulatory approvals for those facilities
. The time and cost necessary to respond to technological and market
developments
. Any changes made or new developments in our existing collaborative,
licensing and other commercialrelationships
. Any new collaborative, licensing and other commercial relationships that
we may establish
Moreover, our fixed expenses such as rent, license payments and other
contractual commitments are substantial and will increase in the future. These
fixed expenses will increase because we may enter into:
. additional leases for new facilities and capital equipment
. additional licenses and collaborative agreements
. additional contracts for consulting, maintenance and administrative
services
. additional expenses associated with being a public company.
We believe that the net proceeds of our initial public offering, together with
our available cash, cash equivalents, short-term investment securities and
investment income, will be sufficient to meet our operating and capital
requirements through at least the next 12 months. This estimate is based on
assumptions which may prove to be wrong. As a result, we may need additional
financing prior to that time.
14
<PAGE>
If we fail to obtain regulatory approval to commercially manufacture or sell any
of our future drug products, or if approval is delayed, we will be unable to
generate revenue from the sale of our products.
We must obtain regulatory approval to market our products in the U.S. and
foreign jurisdictions.
We must obtain regulatory approval before marketing or selling our future drug
products. In the United States, we must obtain FDA approval for each drug that
we intend to commercialize. The FDA approval process is typically lengthy and
expensive, and approval is never certain. Products distributed abroad are also
subject to foreign government regulation. None of our drug products has received
regulatory approval to be commercially marketed and sold. If we fail to obtain
regulatory approval we will be unable to market and sell our future drug
products. We have several drug products in various stages of preclinical and
clinical development. BM101, our first drug product, is not expected to be
commercially available until at least 2000. Our other drug product will not be
commercially available for at least several more years. Because of the risks and
uncertainties in biopharmaceutical development, our drug candidates could take a
significantly longer time to gain regulatory approval than we expect or may
never gain approval. If regulatory approval is delayed our management's
credibility, the value of our company and our operating results may be adversely
affected.
To obtain regulatory approval to market our products, preclinical studies and
costly and lengthy clinical trials may be required and the results of the
studies and trials are highly uncertain.
As part of the FDA approval process, we must conduct, at our own expense,
preclinical studies on animals and clinical trials on humans on each drug
candidate. We expect the number of preclinical studies and clinical trials that
the FDA will require will vary depending on the drug product, the disease or
condition the drug is being developed to address and regulations applicable to
the particular drug. We may need to perform multiple preclinical studies using
various doses and formulations before we can begin clinical trials, which could
result in delays in our ability to market any of our drug products. Furthermore,
even if we obtain favorable results in preclinical studies on animals, the
results in humans may be different.
After we have conducted preclinical studies in animals we must demonstrate that
our drug products are safe and effective for use on the target human patients in
order to receive regulatory approval for commercial sale. Adverse or
inconclusive clinical results would stop us from filing for regulatory approval
of our products. Additional factors that can cause delay or termination of our
clinical trials include:
. Slow patient enrollment
. Longer treatment time required to demonstrate efficacy
. Lack of sufficient supplies of the drug candidate
. Adverse medical events or side effects in treated patients
. Lack of effectiveness of the drug candidate being tested
Typically, if a drug product is intended to treat a chronic disease safety and
efficacy data must be gathered over an extended period of time which ranges from
six months to three years. In addition, clinical trials on humans are typically
conducted in three phases. The FDA generally requires two pivotal clinical
trials that demonstrate substantial evidence of safety and efficacy and
appropriate dosing in a broad patient population at multiple sites to support an
application for regulatory approval. If a drug is intended for the treatment of
a serious or life-threatening condition and the drug demonstrates the potential
to address unmet medical needs for this condition, a single trial may be
sufficient to prove safety and efficacy under the FDA's Modernization Act of
1997.
Our strategy to conduct only one clinical trial on a small number of patients
for products developed to treat genetic disorders may not be sufficient to
obtain regulatory approval.
We believe that our enzyme drug products will be regulated by the FDA as
biologics rather than drugs because they are manufactured by biological
processes. Our strategy for the development of therapeutics for genetic
disorders is to
15
<PAGE>
conduct only one clinical trial on a small number of patients, which would then
be the basis for our submission of a biologics license application to the FDA.
For example, at the end of October 1998, we completed a six-month evaluation of
ten patients on our first drug candidate BM101. Because 12-month data will be
available, the FDA has requested that we evaluate data for these patients for
the 12-month period rather than the six-month period which formed the basis of
our initial evaluation. In addition the FDA has also requested that we evaluate
this data using other criteria that may demonstrate that the surrogate endpoints
are a predictor of clinical benefit. We are currently performing this
evaluation. We cannot assure you that this evaluation will support our findings
with regard to the primary endpoints in the clinical trial. If this analysis
does not support our findings with regard to the primary endpoints, or if the
surrogate endpoints do not predict a clinical benefit, it could delay the filing
of the biologics license application and could jeopardize FDA approval of BM101.
The FDA may request additional trials to be conducted. If we have to conduct
further clinical trials, whether for BM101 or other products we develop in the
future, it would significantly increase our expenses and delay marketing of our
product. Also, the results of initial smaller clinical trials could differ from
the results obtained from subsequent more extensive long-term trials. A
significant difference in the results of multiple clinical trials could cause
the FDA to require still more clinical trials which would significantly delay
the approval process.
The fast track designation for BM101 may not actually lead to a faster review
process.
Although BM101 has obtained a fast track designation, we cannot guarantee a
faster review process or faster approval compared to the normal FDA procedures.
If BM101 is approved, we will be required to conduct a study after we obtain
approval of BM101 to demonstrate that the primary endpoints used in our single
study are reasonably likely to predict clinical benefits to the patients. If
this post-approval study fails to verify the clinical benefit of BM101 or
demonstrates that BM101 is not safe or effective, our FDA approval can be
withdrawn on an expedited basis. Furthermore, if adverse effects are identified
after marketing, FDA approval may be rapidly revoked and we could not market the
drug.
We will not be able to sell our products if we fail to comply with
manufacturing regulations.
Before we can begin commercially manufacturing our products we must obtain
regulatory approval of our manufacturing facility and process. In addition,
manufacture of our drug products must comply with the FDA's current Good
Manufacturing Practices regulations, commonly known as cGMP. The cGMP
regulations govern quality control and documentation policies and procedures.
Our manufacturing facilities are continuously subject to inspection by the FDA,
the State of California and foreign regulatory authorities, before and after
product approval. Because we are currently in the process of developing the
manufacturing site and process for commercial manufacture of BM101, our facility
has not yet been inspected by any governmental entity. We cannot guarantee that
BioMarin, or any potential third- party manufacturer of our drug products, will
be able to comply with cGMP regulations. Material changes to the manufacturing
processes after approvals have been granted are also subject to review and
approval by the FDA or other regulatory agencies.
We currently have a contract with Harbor-UCLA Research and Education Institute
to manufacture BM101 in limited quantities for use in preclinical studies and
clinical trials. In order to produce initial commercial requirements for BM101
in our facility we will have to prove that the product manufactured at our
facility is comparable to the clinical trial product produced in the Harbor-UCLA
facility. This will require laboratory testing and may require clinical trials.
We must pass FDA and state inspections and manufacture three process
qualification batches to final specifications under cGMP controls before the
BM101 BLA can be approved. We cannot assure you that we will pass the
inspections in a timely manner, if at all.
If we fail to obtain orphan drug exclusivity for our products, our competitors
may sell products to treat the same conditions and our revenues may be reduced.
As part of our business strategy, we intend to develop drugs that may be
eligible for FDA orphan drug designation. Under the Orphan Drug Act, the FDA may
designate a product as an orphan drug if it is a drug intended to treat a rare
disease or condition, defined as a patient population of less than 200,000. The
company that obtains the first FDA approval for a designated orphan drug for a
given rare disease receives marketing exclusivity for use of that drug for the
stated condition for a period of seven years. However, different drugs can be
approved for the same condition.
16
<PAGE>
Because the extent and scope of patent protection for our drug candidates is
limited, orphan drug designation is particularly important for our products that
are eligible for orphan drug designation. We plan to rely on the exclusivity
period under the orphan drug designation to maintain a competitive position. If
we do not obtain orphan drug exclusivity for any one of our drug products, our
competitors may then sell the same drug to treat the same condition.
We received orphan drug designation from the FDA for BM101 in September 1997. In
February 1999, we received orphan drug designation from the FDA for BM102. Even
if we obtain orphan drug designation, we cannot guarantee that we will be the
first to obtain marketing approval for any orphan indication or that exclusivity
would effectively protect the product from competition. Orphan drug designation
does not shorten the development or FDA review time of a drug so designated nor
give the drug any advantage in the FDA review or approval process.
Because the target patient populations for our products are small we must
achieve significant market share and obtain high per patient prices for our
products to achieve profitability.
Our initial drug candidates target disorders with small patient populations. As
a result, our prices must be high enough to recover our development costs and
achieve profitability. For example, two of our initial drug products in genetic
disorders, BM101 and BM102, target patients with MPS-I and MPS-VI, respectively.
We estimate that there are approximately 3,400 patients with MPS-I and 1,100
patients with MPS-VI in the developed world. We believe that we will need to
market worldwide to achieve significant market share. In addition, we are
developing other drug candidates to treat conditions, such as other genetic
diseases and serious burns, with small patient populations. We cannot be certain
that we will be able to obtain sufficient market share for our drug products at
a price high enough to justify our product development efforts.
If we fail to obtain an adequate level of reimbursement for our drug products by
third-party payors there would be no commercially viable markets for our
products.
The course of treatment for patients with MPS-I using BM101 is expected to be
expensive. We expect patients to need treatment throughout their lifetimes. We
expect that families of patients will not be capable of paying for this
treatment themselves. There will be no commercially viable market for BM101
without reimbursement from third-party payors.
Third-party payors, such as government or private health care insurers,
carefully review and increasingly challenge the price charged for drugs.
Reimbursement rates from private companies vary depending on the third-party
payor, the insurance plan and other factors. Reimbursement systems in
international markets vary significantly by country and by region, and
reimbursement approvals must be obtained on a country-by-country basis. We
cannot be certain that third-party payors will pay for the costs of our drugs
and the courses of treatment. Even if we are able to obtain reimbursement from
third-party payors, we cannot be certain that reimbursement rates will be enough
to allow us to profit from sales of our drugs.
We currently have no expertise obtaining reimbursement. We expect to rely on the
expertise of our partner Genzyme to obtain reimbursement for BM101. We cannot
predict what the reimbursement rates will be. In addition, we will need to
develop our own reimbursement expertise for future drug candidates unless we
enter into collaborations with other companies with the necessary expertise.
We expect that in the future reimbursement will be increasingly restricted both
in the United States and internationally. The escalating cost of health care has
led to increased pressure on the health care industry to reduce costs.
Governmental and private third-party payors have proposed health care reforms
and cost reductions. A number of federal and state proposals to control the cost
of health care, including the cost of drug treatments have been made in the
United States. In some foreign markets, the government controls the pricing
which would affect the profitability of drugs. Current government regulations
and possible future legislation regarding health care may affect our future
revenues from sales of our drugs and may adversely affect our business and
prospects.
17
<PAGE>
If we are unable to protect our proprietary technology we may not be able to
compete as effectively.
Where appropriate, we seek patent protection for certain aspects of our
technology. Meaningful patent protection may not be available for some of the
enzymes we are developing, including BM101 and BM102. If we must spend
significant time and money protecting our patents, designing around patents held
by others or licensing, for excessively large fees, patents or other proprietary
rights held by others, our business and prospects may be harmed.
The patent positions of biotechnology companies are extremely complex and
uncertain. The scope and extent of patent protection for some of our products
are particularly uncertain because key information on some of the enzymes we are
developing has existed in the public domain for many years. Other parties have
published the structure of the enzymes, the methods for purifying or producing
the enzymes or the methods of treatment. The composition and genetic sequences
of animal and/or human versions of many of our enzymes, including those for
BM101 and BM102, have been published and are in the public domain. The
composition and genetic sequences of other MPS enzymes which we intend to
develop as products have also been published. Publication of this information
may prevent us from obtaining composition of matter patents, which are generally
believed to offer the strongest patent protection. For enzymes with no prospect
of composition of matter patents, we will depend on orphan drug status.
In addition, our owned and licensed patents and patent applications do not
ensure the protection of our intellectual property for a number of other
reasons:
. We do not know whether our patent applications will result in actual
patents. For example, we may not have developed a method for treating a
disease before others developed similar methods.
. Competitors may interfere with our patent process in a variety of
ways. Competitors may claim that they invented the claimed invention
prior to us. Competitors may also claim that we are infringing on
their patents and therefore cannot practice our technology as claimed
under our patent. Competitors may also contest our patents by showing
the patent examiner that the invention was not original, novel or was
obvious. As a Company, we have no meaningful experience with
competitors interfering with our patents or patent applications.
. Even if we receive a patent, it may not provide much practical
protection. If we receive a patent with a narrow scope, then it will be
easier for competitors to design products that do not infringe on our
patent.
. Enforcing patents is expensive and may absorb significant time by our
management. In litigation, a competitor could claim that our issued
patents are not valid for a number of reasons. If the court agrees, we
would lose that patent.
In addition, competitors also seek patent protection for their technology. There
are many patents in our field of technology, and we cannot guarantee that we do
not infringe on those patents or that we will not infringe on patents granted in
the future. If a patent holder believes our product infringes on their patent,
the patent holder may sue us even if we have received patent protection for our
technology. If someone else claims we infringe on their technology, we would
face a number of issues, including:
. Defending a lawsuit takes significant time and can be very expensive.
. If the court decides that our product infringes on the competitor's
patent, we may have to pay substantial damages for past infringement.
18
<PAGE>
. The court may prohibit us from selling or licensing the product unless
the patent holder licenses the patent to us. The patent holder is not
required to grant us a license. If a license is available, we may have to
pay substantial royalties or grant cross-licenses to our patents.
. Redesigning our product so it does not infringe may not be possible
and could require substantial funds and time.
It is also unclear whether our trade secrets will provide useful protection.
While we use reasonable efforts to protect our trade secrets, our employees or
consultants may unintentionally or willfully disclose our information to
competitors. Enforcing a claim that someone else illegally obtained and is using
our trade secrets, like patent litigation, is expensive and time consuming, and
the outcome is unpredictable. In addition, courts outside the United States are
sometimes less willing to protect trade secrets. Our competitors may
independently develop equivalent knowledge, methods and know-how.
We may also support and collaborate in research conducted by government
organizations or by universities. We cannot guarantee that we will be able to
acquire any exclusive rights to technology or products derived from these
collaborations. If we do not obtain required licenses or rights, we could
encounter delays in product development while we attempt to design around other
patents or even be prohibited from developing, manufacturing or selling products
requiring these licenses. There is also a risk that disputes may arise as to the
rights to technology or products developed in collaboration with other parties.
If our joint venture with Genzyme were terminated, we could be barred from
commercializing BM101 or our ability to commercialize BM101 would be delayed.
We are relying on Genzyme to apply the expertise it has developed through the
launch and sale of Ceredase(R) and Cerezyme(R) enzymes for Gaucher disease, a
rare genetic disorder, to the marketing of our initial drug product, BM101.
Because it is our initial product, our operations are substantially dependent
upon the development of BM101. We have no experience selling, marketing or
obtaining reimbursement for pharmaceutical products. In addition, without enzyme
we would be required to pursue foreign regulatory approvals. We have no
experience in seeking foreign regulatory approvals.
We cannot guarantee that Genzyme will devote the resources necessary to
successfully market BM101. In addition, either party may terminate the joint
venture for specified reasons, including if the other party is in material
breach of the agreement or has experienced a change of control or has declared
bankruptcy and also is in breach of the agreement. Either party may also
terminate the agreement upon one year prior written notice for any reason after
the earlier of December 31, 2000 or after the joint venture has received the
FDA's approval of the biologics license application for BM101. Furthermore, we
may terminate the joint venture if Genzyme fails to fulfill its contractual
obligation to pay us $12.1 in cash upon the approval of the biologics license
application for BM101.
Upon termination of the joint venture one party must buy out the other party's
interest in the joint venture. The party who buys out the other will then also
obtain, exclusively, all rights to BM101 and any related intellectual property
and regulatory approvals. For a more detailed analysis of the economics of this
buy out obligation see "Business--Corporate Collaborations--Joint Venture with
Genzyme Corporation."
If the joint venture is terminated by Genzyme for a breach on our part, Genzyme
would be granted, exclusively, all of the rights to BM101 and any related
intellectual property and regulatory approvals and would be obligated to buy out
our interest in the joint venture. We would then effectively be unable to
develop and commercialize BM101. If we terminated the joint venture for a breach
by Genzyme, we would be obligated to buy out Genzyme's interest in the joint
venture and, we would then be granted all of these rights to BM101 exclusively.
While we could then continue to develop BM101, that development would be slowed
because we would have to divert substantial capital to buy out Genzyme's
interest in the joint venture and would then have to search for a new partner to
commercialize the product and to obtain foreign regulatory approvals or to
develop these capabilities ourselves.
19
<PAGE>
If the joint venture is terminated by us without cause, Genzyme would have the
option, exercisable for one year, to immediately buy out our interest in the
joint venture and obtain all rights to BM101 exclusively. If the agreement is
terminated by Genzyme without cause, we would have the option, exercisable for
one year, to immediately buy out Genzyme's interest in the joint venture and
obtain these exclusive rights. In event of termination of the buy out option
without exercise by the non-terminating party as described above, all right and
title to BM101 is to be sold to the highest bidder, with the proceeds to be
split equally between Genzyme and us.
If the joint venture is terminated by us because Genzyme fails to make the $12.1
million payment to us upon FDA approval of the biologics license application for
BM101, we would be obligated to buy Genzyme's interest in the joint venture and
would obtain all rights to BM101 exclusively. If the joint venture is terminated
by either party because the other declared bankruptcy and is also in breach of
the agreement, the terminating party would be obligated to buy out the other and
would obtain all rights to BM101 exclusively. If the joint venture is terminated
by a party because the other party experienced a change of control, the
terminating party shall notify the other party, the offeree, of its intent to
buy out the offeree's interest in the joint venture for a stated amount set by
the terminating party at its discretion. The offeree must then either accept
this offer or agree to buy the terminating party's interest in the joint venture
on those same terms. The party who buys out the other would then have exclusive
rights to BM101.
We cannot assure you that if the joint venture were terminated and if we were
obligated, or given the option, to buy out Genzyme's interest in the joint
venture, and gain exclusive rights to BM101, that we will have sufficient funds
to do so or that we will be able to obtain the financing to do so. If we fail to
buy out Genzyme's interest we may be held in breach of the agreement and may
lose any claim to the rights to BM101 and the related intellectual property and
regulatory approvals. We would then effectively be prohibited from developing
and commercializing the product.
Termination of the joint venture where we retain the rights to BM101 could cause
us significant delays in product launch in the United States, difficulties in
obtaining third-party reimbursement and delays or failure to obtain foreign
regulatory approval, any of which could hurt our business and results of
operations. Since Genzyme funds 50% of the joint venture's operating expenses,
the termination of the joint venture would double our financial burden and
reduce the funds available to us for other product programs.
If we are unable to manufacture our drug products in sufficient quantities and
at acceptable cost, we may be unable to meet demand for our products and lose
potential revenues.
We have no experience manufacturing drug products in volumes that will be
necessary to support commercial sales. Our unproven manufacturing process may
not meet initial expectations as to schedule, reproducibility, yields, purity,
costs, quality, and other measurements of performance. Improvements in
manufacturing processes typically are very difficult to achieve and are often
very expensive. We cannot know with any certainty how long it might take to make
improvements if it became necessary to do so. If we contract for manufacturing
services with an unproven process, our contractor is subject to the same
uncertainties, high standards and regulatory controls.
If we are unable to establish and maintain commercial scale manufacturing within
our planned time and cost parameters, sales of our products and our financial
performance will be adversely affected.
We may encounter problems with any of the following if we attempt to increase
the scale or size of manufacturing:
. Design, construction and qualification of manufacturing facilities
that meet regulatory requirements
. Production yields
. Purity
. Quality control and assurance
. Shortages of qualified personnel
. Compliance with FDA regulations
20
<PAGE>
We are developing a total of 31,000 square feet of space at two facilities, one
in Novato and one in Torrance, for the manufacture of BM101. The construction
and qualification of these facilities may take longer than planned and the
actual construction costs of these facilities may be higher than those which we
have budgeted. We expect that the manufacturing process of all of our new
products, including BM102, will also require lengthy development time before we
can begin manufacturing them in commercial quantity. Even if we can establish
this capacity, we cannot be certain that manufacturing costs will be
commercially reasonable, especially if reimbursement is substantially lower than
expected.
In order to achieve our product cost targets we must develop efficient
manufacturing processes either by
. improving the colonies of cells which have a common genetic make-up,
or cell lines,
. improving the processes licensed from others, or
. developing a recombinant cell line and production processes.
A recombinant cell line is a cell line with foreign DNA inserted which is used
to produce a protein that it would not have otherwise produced and related
purification. The development of a stable, high production cell line for any
given enzyme is risky, expensive and unpredictable and may not yield adequate
results. In addition, the development of protein purification processes is
difficult and may not produce the high purity required with acceptable yield and
costs. If we are not able to develop efficient manufacturing processes, the
investment in manufacturing capacity sufficient to satisfy market demand will be
much greater and will place heavy financial demands upon us. If we do not
achieve our manufacturing cost targets, we will have lower margins and reduced
profitability in commercial production and greater losses in manufacturing
start-up phases.
If we are unable to increase our marketing and distribution capabilities or to
enter into agreements with third parties to do so, our ability to generate
revenues will be diminished.
If we cannot increase our marketing capabilities either by developing our sales
and marketing organization or by entering into agreements with others, we may be
unable to successfully sell our products. If we are unable to effectively sell
our drug products, our ability to generate revenues will be diminished.
To increase our distribution and marketing for both our drug candidates and our
Glyko, Inc. products, we will have to increase our current sales force and/or
enter into third-party marketing and distribution agreements. We cannot
guarantee that we will be able to hire in a timely manner, the qualified sales
and marketing personnel we need if at all. Nor can we guarantee that we will be
able to enter into any marketing or distribution agreements on acceptable terms,
if at all. If we cannot increase our marketing capabilities as we intend, either
by increasing our sales force or entering into agreements with third parties,
sales of our products may be adversely affected.
We have recently entered into a joint venture with Genzyme where Genzyme will be
responsible for marketing and distributing BM101. We cannot guarantee that we
will be able to establish sales and distribution capabilities or that BioMarin,
the joint venture or any future collaborators will successfully sell any of our
drug candidates.
If we fail to compete successfully, our revenues and operating results will be
adversely affected.
Our competitors may develop, manufacture and market products that are more
effective or less expensive than ours. They may also obtain regulatory approvals
for their products faster than we can obtain them, including orphan drug
designation, or commercialize their products before we do. If our competitors
successfully commercialize a product which treats a given rare genetic disease
before we do, we will effectively be precluded from developing a product to
treat that disease because the patient populations of the rare genetic diseases
are so small. These companies also compete with us to attract qualified
personnel and parties for acquisitions, joint ventures or other collaborations.
They also compete with us to attract academic research institutions as partners
and to license these institution's proprietary technology. If our competitors
successfully enter into partnering arrangements or license agreements with
academic research institutions, we will then be precluded from pursuing those
specific opportunities. Since each of
21
<PAGE>
these opportunities is unique, we may not be able to find a substitute. Several
pharmaceutical and biotechnology companies have already established themselves
in the field of enzyme therapeutics, including Genzyme, our joint venture
partner. These companies have already begun many drug development programs, some
of which may target diseases that we are also targeting, and have already
entered into partnering and licensing arrangements with academic research
institutions, reducing the pool of available opportunities.
Universities and public and private research institutions are also competitors.
While these organizations primarily have educational objectives, they may
develop proprietary technology and acquire patents that we may need for the
development of our drug products. We will attempt to license this proprietary
technology, if available. These licenses may not be available to us on
acceptable terms, if at all. We also directly compete with a number of these
organizations to recruit personnel, especially scientists and technicians.
We believe that established technologies provided by other companies, such as
laboratory and testing services firms compete with Glyko Inc.'s products and
services. For example, Glyko, Inc.'s FACE Imaging System competes with
alternative carbohydrate analytical technologies, including capillary
electrophoresis, high-pressure liquid chromatography, mass spectrometry and
nuclear magnetic resonance spectrometry. These competitive technologies have
established customer bases and are more widely used and accepted by scientific
and technical personnel because they can be used for non-carbohydrate
applications. Companies competing with Glyko, Inc. may have greater financial,
manufacturing and marketing resources and experience.
If we fail to manage our growth or fail to recruit and retain personnel, our
product development programs may be delayed.
Our rapid growth has strained our managerial, operational, financial and other
resources. We expect this growth to continue. We recently entered into a joint
venture with Genzyme. If we receive FDA approval to market BM101, the joint
venture will be required to devote additional resources to support the
commercialization of BM101.
To manage expansion effectively, we need to continue to develop and improve our
operating and financial systems, sales and marketing capabilities. We cannot
guarantee that our systems, procedures or controls will be adequate to support
our operations or that our management will be able to manage successfully future
market opportunities or our relationships with customers and other third
parties.
Our future growth and success depend on our ability to recruit, retain, manage
and motivate our employees. The loss of key scientific, technical and managerial
personnel may delay our product development programs. Any harm to our research
and development programs would harm our business and prospects.
Because of the specialized scientific nature of our business, we rely heavily on
our ability to attract and retain qualified scientific, technical and managerial
personnel. In particular, the loss of Grant W. Denison, Jr., Chairman and Chief
Executive Officer, John C. Klock, M.D., President and Secretary or Christopher
M. Starr, Ph.D., Vice President for Research and Development would be
detrimental to us. While each of these individuals is party to an employment
agreement with us, which includes financial incentives for each of them to
remain employed with us, these agreements each terminate in June 2000 and we
cannot guarantee that any of them will remain employed with us beyond that time.
In addition, these agreements do not restrict their ability to compete with us
after their employment is terminated. The competition for qualified personnel in
the biopharmaceutical field is intense. We cannot be certain that we will
continue to attract and retain qualified personnel necessary for the development
of our business.
If product liability lawsuits are successfully brought against us, we may incur
substantial liabilities.
We are exposed to the potential product liability risks inherent in the testing,
manufacturing and marketing of human drug treatments. We currently do not
maintain insurance against product liability lawsuits. Although we intend to
obtain product liability insurance within the next three months for our clinical
trials of BM102 and shortly before initiating clinical trials for our other
products, we cannot be certain that we will be able to obtain adequate insurance
coverage. In addition, we may be subject to claims in connection with our
current clinical trials for BM101 for which we have no insurance coverage. We
cannot be certain that if BM101 receives FDA approval, the product liability
insurance we will need to obtain in connection with the commercial sales of
BM101 will be available at a reasonable cost. In addition, we cannot be certain
that we can successfully defend any product liability lawsuit brought against
22
<PAGE>
us. If we are the subject of a successful product liability claim which exceeds
the limits of any insurance coverage we may obtain, we may incur substantial
liabilities which would adversely affect our earnings and financial condition.
If we experience any problems with Year 2000 compliance our operations may be
disrupted.
The following is intended to constitute "Year 2000 Readiness Disclosure" under
the Year 2000 Information and Readiness Disclosure Act of 1998.
Beginning in the year 2000, the date fields coded in certain software products
and computer systems will need to accept four digit entries in order to
distinguish 21st century dates from 20th century dates (commonly known as the
year 2000 problem). It is not clear what potential problems may arise as the
biopharmaceutical industry, and other industries, try to resolve this year 2000
problem.
It is possible that our currently installed computer systems, software products
or other business systems, or those of our suppliers or service providers,
working either alone or in conjunction with other software or systems, will not
accept input of, store, manipulate and output dates for the years 1999, 2000 or
subsequent years without error or interruption. We have formed a team to review
and resolve those aspects of the year 2000 problem that are within our direct
control and adjust to or influence those aspects that are not within our direct
control. The team has reviewed our software products, including those under
development, and determined that our software products do not use date data and
are year 2000 compliant. Our biopharmaceutical products do not have any year
2000 exposure. Based on representations from our vendors, the team has reviewed
the year 2000 compliance status of our major internal information technology
programs and systems used for administrative requirements and determined that
they are year 2000 compliant.
Some risks associated with the year 2000 problem are beyond our ability to
control, including the extent to which our suppliers and service providers can
address the year 2000 problem. The failure by a third party to adequately
address the year 2000 issue could have an adverse effect on their operations,
which could have an adverse effect on us. We are assessing the possible effects
on our operations of the possible failure of our key suppliers and providers,
contractors and collaborators to identify and remedy potential year 2000
problems.
Our stock price may be volatile and your investment in our stock could suffer a
decline in value.
Prior to our initial public offering effective July 23, 1999, there has been no
public market for our common stock. The initial public offering price was
negotiated among the underwriters and us and may not be indicative of prices
that will prevail in the trading markets after the offering. Our valuation and
the initial public offering stock price have no meaningful relationship to
current or historical earnings, asset values, book value or any other criteria
of value. The market price of the common stock will fluctuate and may be higher
or lower than the initial public offering price due to factors including:
. Progress of BM101 and our other lead drug candidates through the
regulatory process, especially BM101 regulatory actions in the United
States
. Results of clinical trials, announcements of technological
innovations or new products by us or our competitors
. Government regulatory action affecting our drug candidates or our
competitors' drug candidates in both the United States and foreign
countries
. Developments or disputes concerning patent or proprietary rights
. General market conditions for emerging growth and biopharmaceutical
companies
. Economic conditions in the United States or abroad
23
<PAGE>
. Actual or anticipated fluctuations in our operating results
. Broad market fluctuations may cause the market price of our common
stock to fluctuate
. Changes in financial estimates by securities analysts
In addition, the value of our common stock may fluctuate because it is listed on
both the Nasdaq National Market and the Swiss Exchange. We cannot be certain
what effect, if any, the dual listing will have on the price of our stock in
either market. Listing on both exchanges may increase stock price volatility due
to:
. trading in different time zones
. different ability to buy or sell our stock
. different trading volume
In the past, following periods of large price declines in the public market
price of a company's securities, securities class action litigation has often
been initiated against that company. Litigation of this type could result in
substantial costs and diversion of management's attention and resources, which
would hurt our business. Any adverse determination in litigation could also
subject us to significant liabilities.
If our officers, directors and largest stockholder elect to act together they
may be able to control our management and operations, acting in their best
interests and not necessarily those of other stockholders.
Our directors and officers will control approximately 11.0% of the outstanding
shares of our common stock. If the underwriters exercise their over-allotment
option in its entirety then the officers and directors will own approximately
10.8%. Glyko Biomedical owns 33.3% of the outstanding shares of capital stock.
Three of six Glyko Biomedical directors are officers or directors of BioMarin.
As a result, due to their concentration of stock ownership, directors and
officers, together with Glyko Biomedical if they act together, may be able to
otherwise control our management and operations, and may be able to prevail on
all matters requiring a stockholder vote including:
. The election of all directors
. The amendment of charter documents or the approval of a merger, sale
of assets or other major corporate transactions
. The defeat of any non-negotiated takeover attempt that might
otherwise benefit the public stockholders
Anti-takeover provisions in our charter documents and under Delaware law may
make an acquisition of us, which may be beneficial to our stockholders, more
difficult.
BioMarin is incorporated in Delaware. Certain anti-takeover provisions of
Delaware law and our charter documents as in effect at the time of the closing
may make a change in control of BioMarin more difficult, even if a change in
control would be beneficial to the stockholders. Our anti-takeover provisions
include provisions in the certificate of incorporation providing that
stockholders' meetings may only be called by the board of directors and a
provision in the bylaws providing that the stockholders may not take action by
written consent. Additionally, our board of directors will have after the
closing of this offering the authority to issue 1,000,000 shares of preferred
stock and to determine the terms of those shares of stock without any further
action by the stockholders. The rights of holders of our common stock are
subject to the rights of the holders of any preferred stock that may be issued.
The issuance of preferred stock, could make it more difficult for a third party
to acquire a majority of the outstanding voting stock of BioMarin. Delaware law
also prohibits corporations from engaging in a business combination with any
holders of 15% or more of their capital stock until the holder has held the
stock for three years unless, among other possibilities, the board of directors
approves the transaction. The board of directors may use these provisions to
prevent changes in the management and control of our company. Also, under
applicable Delaware law, our board of directors may adopt additional
anti-takeover measures in the future.
24
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting, held on June 24, 1999, the Company's
shareholders took the following action:
(a) The following directors were elected to serve until the next Annual Meeting:
Vote
Director Elected For Against Withheld
---------------- --- -------- --------
John C. Klock, M.D. 13,291,768 Nil 435
Raymond W. Anderson 13,291,768 Nil 435
John H. Craig 13,291,768 Nil 435
John S. Glass 13,291,768 Nil 435
Gwynn R. Williams 13,291,768 Nil 435
Mark I. Young 13,291,768 Nil 435
(b) Arthur Andersen LLP was appointed as the Company's auditors, by a
vote of 13,290,453 shares in favor, nil shares against, and 1,750
shares withheld.
There were 18,197,402 shares which abstained from all matters
presented to the meeting including broker non-votes.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as part of this report
See Exhibit Index attached hereto.
(b) Reports on Form 8K
No reports were filed on Form 8-K during the six
months ended June 30, 1999.
25
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GLYKO BIOMEDICAL LTD.
Dated: August 16, 1999 By: \s\ John C. Klock, M.D.
- ---------------------- ------------------------------------
John C. Klock, M.D.
President, Chief Executive Officer
and Chief Financial Officer
26
<PAGE>
EXHIBIT INDEX
Exhibit Description
Number
BioMarin Pharmaceutical Inc.
dated September 15, 1998. (Filed as Exhibit 2.1 to Form
10-KSB dated December 31, 1998 and incorporated herein by
reference).
3.1 Registrant's Articles of Incorporation and Bylaws (filed as
exhibit 3.1 to Form 10-SB Registration Statement No. 0-21994
dated August 6, 1993 and incorporated herein by reference).
3.2 Amended Restated Certificate of Incorporation of BioMarin
Pharmaceutical, Inc.
3.3 Amended Bylaws of BioMarin Pharmaceutical, Inc.
4.1 Registrant's Articles of Incorporation and Bylaws (filed as
exhibit 3.1 to Form 10-SB Registration
Statement No. 0-21994 dated August 6, 1993 and
incorporated herein by reference).
10.1 Glyko Biomedical Share Option Plan - 1994 (filed as exhibit
10.1 to Form 10-QSB dated June 30, 1994 and incorporated
herein by reference).
10.2 License Agreement between Glyko Biomedical Ltd. and BioMarin
Pharmaceutical, Inc. (filed as
Exhibit 10 to Form 10-QSB dated September 30, 1997, and
incorporated herein by reference.)
27.1 Financial Data Schedule (see Financial Data Schedule hereto
attached at page 57)
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
BIOMARIN PHARMACEUTICAL INC.
BioMarin Pharmaceutical Inc., a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
A. The name of the Corporation is BioMarin Pharmaceutical Inc. The
Corporation was originally incorporated under the same name and the original
Certificate of Incorporation of the Corporation was filed with the Delaware
Secretary of State on October 25, 1996, and subsequently restated on May 6,
1997. An Amended and Restated Certificate of Incorporation was filed with the
Delaware Secretary of State on March 22, 1999, and was subsequently corrected on
April 21, 1999.
B. Pursuant to Sections 242 and 245 of the General Corporation Law of the State
of Delaware, this Amended and Restated Certificate of Incorporation restates and
amends the provisions of the Amended and Restated Certificate of Incorporation
of this Corporation previously filed on March 22, 1999, as corrected. C. The
text of the Amended and Restated Certificate of Incorporation previously filed
on March 22, 1999, as corrected, is hereby amended and restated in its entirety
to read as follows:
ARTICLE I.
The name of the corporation (the "Corporation") is BioMarin
Pharmaceutical Inc.
ARTICLE II.
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
law of Delaware.
ARTICLE IV.
The Corporation is authorized to issue two classes of stock to be
designated, respectively, as "Common Stock" and "Preferred Stock." The number of
shares of Common Stock which the Corporation is authorized to issue is Seventy
Five Million (75,000,000) shares, par value $0.001 per share (the "Common
Stock"). The number of shares of Preferred Stock which the Corporation is
authorized to issue is one million (1,000,000) shares, par value $0.001 per
share (the "Preferred Stock").
Shares of Common Stock may be issued from time to time for such
consideration as the Board of Directors may determine pursuant to a resolution
or resolutions providing for such issue duly adopted by the Board of Directors
(authority to do so being hereby expressly vested in the Board). Shares of
Preferred Stock may be issued from time to time in one or more series pursuant
to a resolution or resolutions providing for such issue duly adopted by the
Board of Directors (authority to do so being hereby expressly vested in the
Board). The Board of Directors is further authorized to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of any
series of Preferred Stock and the designation of any such series of Preferred
Stock. The Board of Directors, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting any series, may increase or decrease (but not below the
number of shares in any such series then outstanding) the number of shares of
any series subsequent to the issue of shares of that series.
The Corporation shall from time to time in accordance with the laws of
the State of Delaware increase the authorized amount of its Common Stock if at
any time the number of shares of Common Stock remaining unissued and available
for issuance shall not be sufficient to permit conversion of the Preferred
Stock.
<PAGE>
Except as otherwise required by law or herein, the holder of each share
of Common Stock issued and outstanding shall have one vote with respect to such
share and the holder of each share of Preferred Stock shall be entitled with
respect to such share to a number of votes equal to the number of shares of
Common Stock into which such share of Preferred Stock could be converted at the
record date for determination of the stockholders entitled to vote on such
matters, or, if no such record date is established, at the date such vote is
taken or any written consent of stockholders is solicited, such votes to be
counted together with all other shares of stock of the Company having general
voting power and not separately as a class (except as required by the General
Corporation Law of Delaware). Holders of Common Stock and Preferred Stock shall
be entitled to notice of any stockholders' meeting in accordance with the Bylaws
of the Corporation. Fractional votes by the holders of Preferred Stock shall
not, however, be permitted and any fractional voting rights shall (after
aggregating all shares into which shares of Preferred Stock held by each holder
could be converted) be rounded to the nearest whole number.
ARTICLE V.
The Corporation reserves the right to amend, alter, change, or repeal
any provisions contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
ARTICLE VI.
The Corporation is to have perpetual existence.
ARTICLE VII.
1. Limitation of Liability. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
2. Indemnification. The Corporation shall indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or investigative,
by reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII,
nor the adoption of any provision of the Corporation's Amended and Restated
Certificate of Incorporation inconsistent with this Article VII, shall eliminate
or reduce the effect of this Article VII, in respect of any matter occurring, or
any action or proceeding accruing or arising or that, but for this Article VII,
would accrue or arise, prior to such amendment, repeal, or adoption of an
inconsistent provision.
ARTICLE VIII.
Elections of Directors need not be by written ballot unless the Bylaws
of the Corporation shall at the time of any such election so provide.
ARTICLE IX.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the Corporation.
ARTICLE X.
Following the date of the final prospectus in connection with
the initial public offering of the Corporation's Common Stock pursuant to a firm
commitment underwriting, no action shall be taken by the stockholders of the
Corporation except at an annual meeting of the stockholders or special meeting
of the stockholders called, in accordance with the Bylaws, by the Chairman of
the Board of Directors or by a majority of the then-current directors, and no
action shall be taken by the stockholders by written consent. The affirmative
vote of sixty-six and two-thirds percent (66 2/3%) of the then issued and
outstanding voting securities of the Corporation, voting together as a single
class, shall be required to amend, repeal or modify the provisions of this
Article X of this Amended and Restated Certificate of Incorporation or Sections
2.3 (Special Meeting), or 2.10 (Stockholder Action by Written Consent Without a
Meeting) of the Corporation's Bylaws.
ARTICLE XI.
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
<PAGE>
ARTICLE XII.
The name and mailing address of the incorporator are:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Francis S. Currie, Esq.
D. The Amended and Restated Certificate of Incorporation set forth
herein has been duly approved by the Board of Directors of the Corporation
pursuant to Section 242 of the Delaware General Corporation Law. This Amended
and Restated Certificate of Incorporation has been duly approved by the required
vote of stockholders in accordance with Sections 228 and 242 of the Delaware
General Corporation Law. The number of shares of Common Stock voting in favor of
the amendment and restatement equaled or exceeded the vote required. The
percentage vote required was more than 50% of the outstanding Common Stock.
E. I declare under penalty of perjury under the laws of the State of
Delaware that the matters set forth in the foregoing Amended and Restated
Certificate of Incorporation are true and correct of my own knowledge.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by John C. Klock, its President and Secretary, this 22nd day of July,
1999.
/s/ John C. Klock
John C. Klock, President and Secretary
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
BIOMARIN PHARMACEUTICAL INC.
ARTICLE I
CORPORATE OFFICES
I.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
I.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
II.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the corporation.
II.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the third
Wednesday of June in each year at 10 a.m.. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At the meeting, directors shall be elected and any
other proper business may be transacted.
<PAGE>
II.3 SPECIAL MEETING
A Special meeting of the Stockholders may be called, at any time for
any purpose or purposes, by the Board of Directors or by such person or persons
as may be authorized by the Certificate of Incorporation or the Bylaws.
Upon the effective date of the final prospectus in connection with the
initial public offering of the Corporation's capital stock, a special meeting of
the stockholders may be called at any time for any purpose or purposes by the
Chairman of the Board of Directors or by a majority of the then-current members
of the Board of Directors.
II.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
II.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
II.6 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
<PAGE>
II.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
II.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).
Except as provided in the last paragraph of this Section 2.8, or as may
be otherwise provided in the certificate of incorporation, each stockholder
shall be entitled to one vote for each share of capital stock held by such
stockholder.
At a stockholders' meeting at which directors are to be elected, or at
elections held under special circumstances, a stockholder shall be entitled to
cumulate votes (i.e., cast for any candidate a number of votes greater than the
number of votes which such stockholder normally is entitled to cast). Each
holder of stock, or of any class or classes or of a series or series thereof,
who elects to cumulate votes shall be entitled to as many votes as equals the
number of votes which (absent this provision as to cumulative voting) he would
be entitled to cast for the election of directors with respect to his shares of
stock multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or for any two or more of them, as he may see fit.
II.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
<PAGE>
II.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
Upon the effective date of the final prospectus in connection with the
initial public offering of any of the Corporation's securities, the stockholders
of the Corporation may not take any action by written consent without a meeting
but must take any such action at a duly called annual or special meeting of
stockholders.
II.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed.
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
<PAGE>
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
II.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
II.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
III.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.
<PAGE>
III.2 NUMBER OF DIRECTORS
The authorized number of directors shall be five (5). This
number may be changed by a duly adopted amendment to the certificate of
incorporation or by an amendment to this bylaw adopted by the vote or written
consent of the holders of a majority of the stock issued and outstanding and
entitled to vote or by resolution of a majority of the board of directors.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
III.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
III.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
corporation. When one or more directors so resigns and the resignation is
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office as
provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
<PAGE>
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
III.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
III.6 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
III.7 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time and at such place as shall from time to time be determined by the
board.
<PAGE>
III.8 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram or by facsimile, it shall be delivered personally or by
telephone or to the telegraph company at least one (1) hour before the time of
the holding of the meeting. Any oral notice given personally or by telephone may
be communicated either to the director or to a person at the office of the
director who the person giving the notice has reason to believe will promptly
communicate it to the director. The notice need not specify the purpose or the
place of the meeting, if the meeting is to be held at the principal executive
office of the corporation.
III.9 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
III.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
<PAGE>
III.11 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
III.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
III.13 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors.
III.14 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
III.15 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
<PAGE>
ARTICLE IV
COMMITTEES
IV.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution, or (v) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
IV.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
<PAGE>
IV.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of
adjournment), and Section 3.12 (action without a meeting), with such changes in
the context of those bylaws as are necessary to substitute the committee and its
members for the board of directors and its members; provided, however, that the
time of regular meetings of committees may also be called by resolution of the
board of directors and that notice of special meetings of committees shall also
be given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
V.1 OFFICERS
The officers of the corporation shall be a president, one or more vice
presidents, a secretary, and a treasurer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more
assistant vice presidents, assistant secretaries, assistant treasurers, and any
such other officers as may be appointed in accordance with the provisions of
Section 5.3 of these bylaws. Any number of offices may be held by the same
person.
V.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be chosen by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
V.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
V.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
<PAGE>
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
V.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
V.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
V.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
V.8 VICE PRESIDENT
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
<PAGE>
V.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
V.10 TREASURER
The treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all money and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, shall render to the president and
directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
V.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
<PAGE>
V.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
V.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
VI.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was an agent of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation includes any person (i) who is or was
a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
<PAGE>
VI.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
VI.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware.
ARTICLE VII
RECORDS AND REPORTS
VII.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its shareholders listing their names and addresses and the number and class of
shares held by each shareholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
<PAGE>
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
VII.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
VII.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
VII.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the
treasurer, the secretary or assistant secretary of this corporation, or any
other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
ARTICLE VIII
GENERAL MATTERS
VIII.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
<PAGE>
VIII.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
VIII.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
<PAGE>
VIII.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
VIII.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
VIII.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
VIII.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
VIII.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
<PAGE>
VIII.9 SEAL
The corporation shall adopt a corporate seal, which may be altered at
pleasure, and use the same by causing it or a facsimile thereof, to be impressed
or affixed or in any other manner reproduced.
VIII.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
VIII.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any
agreement with any number of shareholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
VIII.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
<PAGE>
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of
directors of the corporation that the corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent
in writing, either in person or by duly authorized attorney, to a dissolution,
no meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consent's becoming effective in
accordance with Section 103 of the General Corporation Law of Delaware, the
corporation shall be dissolved. If the consent is signed by an attorney, then
the original power of attorney or a photocopy thereof shall be attached to and
filed with the consent. The consent filed with the Secretary of State shall have
attached to it the affidavit of the secretary or some other officer of the
corporation stating that the consent has been signed by or on behalf of all the
stockholders entitled to vote on a dissolution; in addition, there shall be
attached to the consent a certification by the secretary or some other officer
of the corporation setting forth the names and residences of the directors and
officers of the corporation.
ARTICLE XI
CUSTODIAN
XI.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or
<PAGE>
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the required
vote for action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or
(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate or distribute its
assets.
XI.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of BioMarin Pharmaceutical
Inc.; and
2. That the foregoing Bylaws, comprising 21 pages, constitute the Bylaws
of said corporation as duly adopted by the Board of Directors of the
corporation on April 22, 1999.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the corporation as of the ___ day of July, 1999.
\s\ John C. Klock
John C. Klock, Secretary
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - CORPORATE OFFICES.................................................1
1.1 REGISTERED OFFICE...........................................1
1.2 OTHER OFFICES...............................................1
ARTICLE II - MEETINGS OF STOCKHOLDERS.........................................1
2.1 PLACE OF MEETINGS...........................................1
2.2 ANNUAL MEETING..............................................1
2.3 SPECIAL MEETING.............................................2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS............................2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE................2
2.6 QUORUM......................................................2
2.7 ADJOURNED MEETING; NOTICE...................................2
2.8 VOTING......................................................3
2.9 WAIVER OF NOTICE............................................3
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING ....3
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.4
2.12 PROXIES.....................................................4
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE.......................5
ARTICLE III - DIRECTORS.......................................................5
3.1 POWERS......................................................5
3.2 NUMBER OF DIRECTORS.........................................5
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.....6
3.4 RESIGNATION AND VACANCIES...................................6
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE....................7
3.6 FIRST MEETINGS..............................................7
3.7 REGULAR MEETINGS............................................7
3.8 SPECIAL MEETINGS; NOTICE....................................7
3.9 QUORUM......................................................8
3.10 WAIVER OF NOTICE............................................8
3.11 ADJOURNED MEETING; NOTICE...................................8
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING...........8
3.13 FEES AND COMPENSATION OF DIRECTORS..........................9
3.14 APPROVAL OF LOANS TO OFFICERS...............................9
3.15 REMOVAL OF DIRECTORS........................................9
ARTICLE IV - COMMITTEES.......................................................9
4.1 COMMITTEES OF DIRECTORS.....................................9
4.2 COMMITTEE MINUTES..........................................10
4.3 MEETINGS AND ACTION OF COMMITTEES..........................10
ARTICLE V - OFFICERS.........................................................11
5.1 OFFICERS...................................................11
5.2 ELECTION OF OFFICERS.......................................11
5.3 SUBORDINATE OFFICERS.......................................11
5.4 REMOVAL AND RESIGNATION OF OFFICERS........................11
5.5 VACANCIES IN OFFICES.......................................11
5.6 CHAIRMAN OF THE BOARD......................................12
5.7 PRESIDENT..................................................12
5.8 VICE PRESIDENT.............................................12
5.9 SECRETARY..................................................12
5.10 TREASURER..................................................13
5.11 ASSISTANT SECRETARY........................................13
5.12 ASSISTANT TREASURER........................................13
5.13 AUTHORITY AND DUTIES OF OFFICERS...........................14
ARTICLE VI - INDEMNITY.......................................................14
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS..................14
6.2 INDEMNIFICATION OF OTHERS..................................14
6.3 INSURANCE..................................................14
ARTICLE VII - RECORDS AND REPORTS............................................15
7.1 MAINTENANCE AND INSPECTION OF RECORDS......................15
7.2 INSPECTION BY DIRECTORS....................................15
7.3 ANNUAL STATEMENT TO STOCKHOLDERS...........................16
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.............16
ARTICLE VIII - GENERAL MATTERS...............................................16
8.1 CHECKS.....................................................16
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS...........16
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.....................17
8.4 SPECIAL DESIGNATION ON CERTIFICATES........................17
8.5 LOST CERTIFICATES..........................................17
8.6 CONSTRUCTION; DEFINITIONS..................................18
8.7 DIVIDENDS..................................................18
8.8 FISCAL YEAR................................................18
8.9 SEAL.......................................................18
8.10 TRANSFER OF STOCK..........................................18
8.11 STOCK TRANSFER AGREEMENTS..................................19
8.12 REGISTERED STOCKHOLDERS....................................19
ARTICLE IX - AMENDMENTS......................................................19
ARTICLE X - DISSOLUTION......................................................19
ARTICLE XI - CUSTODIAN.......................................................20
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES................20
11.2 DUTIES OF CUSTODIAN........................................21
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000908401
<NAME> Glyko Biomedical Ltd.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> APR-1-1999 JAN-1-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<EXCHANGE-RATE> 1 1
<CASH> 415,071 415,071
<SECURITIES> 0 0
<RECEIVABLES> 91,890 91,890
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 506,961 506,961
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 7,957,755 7,957,755
<CURRENT-LIABILITIES> 349,934 349,934
<BONDS> 0 0
0 0
0 0
<COMMON> 20,551,611 20,551,611
<OTHER-SE> (12,943,790) (12,943,790)
<TOTAL-LIABILITY-AND-EQUITY> 7,957,755 7,957,755
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 66,088 133,002
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (2,759,023) (4,503,728)
<INCOME-TAX> (2,759,023) (4,503,728)
<INCOME-CONTINUING> (2,759,023) (4,503,728)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,759,023) (4,503,728)
<EPS-BASIC> (.09) (0.15)
<EPS-DILUTED> (.09) (0.15)
</TABLE>
