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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
COMMISSION FILE NO. 0-14680
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GENZYME CORPORATION
(Exact name of Registrant as specified in its Charter)
MASSACHUSETTS 06-1047163
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE KENDALL SQUARE
CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive office) (Zip Code)
(617) 252-7500
(Registrant's telephone number, including area code)
--------------------------
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
GENZYME GENERAL DIVISION COMMON STOCK, $0.01 PAR VALUE ("GENZYME GENERAL STOCK")
GENZYME BIOSURGERY DIVISION COMMON STOCK, $0.01 PAR VALUE ("BIOSURGERY STOCK")
GENZYME MOLECULAR ONCOLOGY DIVISION COMMON STOCK, $0.01 PAR VALUE ("MOLECULAR
ONCOLOGY STOCK")
GENZYME GENERAL STOCK PURCHASE RIGHTS
BIOSURGERY STOCK PURCHASE RIGHTS
MOLECULAR ONCOLOGY STOCK PURCHASE RIGHTS
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Aggregate market value of voting stock held by non-affiliates of the Registrant
as of March 1, 2001:
$8,889,677,071
Number of shares of Genzyme General Stock outstanding as of March 1,
2001: 95,853,496
Number of shares of Biosurgery Stock outstanding as of March 1,
2001: 36,400,580
Number of shares of Molecular Oncology Stock outstanding as of March 1,
2001: 15,906,376
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2000 Genzyme General, Genzyme Biosurgery and Genzyme Molecular
Oncology Annual Reports are incorporated by reference into Parts I, II and IV of
this Form 10-K. Portions of the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on May 31, 2001 are incorporated by reference
into Part III of this Form 10-K.
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NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements,
including statements regarding our:
- projected timetables for the pre-clinical and clinical development of,
regulatory submissions and approvals for, and market introduction of, our
products and services;
- estimates of the potential markets for our products and services,
including the anticipated drivers for future growth;
- sales and marketing plans;
- assessments of competitors and potential competitors;
- estimates of the capacity of manufacturing and other facilities to support
our products and services;
- expected future revenues, operations and expenditures;
- projected cash needs; and
- plans to divest the Snowden-Pencer-Registered Trademark- product lines and
to sell our manufacturing facility in Quebec, Canada.
These statements are based upon the current assumptions of our management and
are only expectations of future results. These statements are also subject to
risks and uncertainties, and our actual results may differ significantly from
those that are described in this report. These risks and uncertainties include:
- our ability to successfully complete preclinical and clinical development
of our products and services;
- our ability to manufacture sufficient amounts of our products for clinical
trials and commercialization activities;
- our ability to obtain, maintain and successfully enforce adequate patent
and other proprietary rights protection of our products and services;
- the content and timing of submissions to and decisions made by the FDA and
other regulatory agencies;
- the impact of the expiration of the orphan drug status of
Cerezyme-Registered Trademark- and Ceredase-Registered Trademark- enzymes
on May 2001 on our revenues from these products;
- our ability to satisfy the FDA's request for additional data and
clarification in connection with our Biologics License Application
submission for Fabrazyme-TM- enzyme;
- our ability to resolve manufacturing issues related to
Renagel-Registered Trademark- tablets and expand manufacturing capacity
for sevelamer hydrocloride for Renagel-Registered Trademark- capsules and
tablets;
- our ability to optimize dosing and improve patient compliance with
Renagel-Registered Trademark- capsules and tablets;
- our ability to successfully increase market penetration for
Synvisc-Registered Trademark- as a treatment for osteoarthritis of the
knee and other joints;
- the accuracy of our estimates of the size and characteristics of the
markets to be addressed by our products and services, including growth
projections;
- market acceptance of our products and services;
- our ability to obtain reimbursement for our products and services from
third-party payors, and the extent of such coverage;
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- our ability to establish and maintain strategic license, collaboration and
distribution arrangements;
- the continued funding of our joint ventures;
- our ability to identify purchasers for, and successfully negotiate
purchase and sale agreements regarding, our
Snowden-Pencer-Registered Trademark- product lines and manufacturing
facility in Quebec, Canada; and
- the accuracy of our information regarding the products and resources of
our competitors and potential competitors.
We have included more detailed descriptions of these risks and uncertainties in
Exhibit 99.2, "Factors Affecting Future Operating Results," to this Annual
Report on Form 10-K. We encourage you to read those descriptions carefully.
NOTE REGARDING REFERENCES TO GENZYME DIVISIONS
Throughout this Annual Report on Form 10-K, the words "we," "us," "our" and
"Genzyme" refer to Genzyme Corporation and all of its operating divisions taken
as a whole, and "our board of directors" refers to the board of directors of
Genzyme Corporation. In addition, we refer to our three operating divisions as
follows:
- Genzyme General Division = "Genzyme General;"
- Genzyme Biosurgery Division = "Genzyme Biosurgery;" and
- Genzyme Molecular Oncology Division = "Genzyme Molecular Oncology."
NOTE REGARDING INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to disclose important
information to you by referring you to other documents we have filed with the
SEC. The information that we refer you to is "incorporated by reference" into
this Annual Report on Form 10-K. Please read that information.
NOTE REGARDING TRADEMARKS
Genzyme-Registered Trademark-, Cerezyme-Registered Trademark-,
Ceredase-Registered Trademark-, Thyrogen-Registered Trademark-,
N-geneous-Registered Trademark-, Contrast-Registered Trademark-,
InSight-Registered Trademark-, AFP3-Registered Trademark-,
MASDA-Registered Trademark-, Snowden-Pencer-Registered Trademark-,
Pleur-evac-Registered Trademark-, Thora-Klex-Registered Trademark-,
Tevdek-Registered Trademark-, Polydek-Registered Trademark-,
Deklene-Registered Trademark-, SaphLITE-Registered Trademark-,
Sepragel-Registered Trademark-, Carticel-Registered Trademark- and
Epicel-Registered Trademark- are registered trademarks of Genzyme.
Fabrazyme-TM-, NeuroTrack-TM-, SmartStroke-TM-, SAGE-TM-, SPHERE-TM-,
NextStitch-TM-, Sahara-TM-, GlyPro-TM-, Immobilizer-TM-, Sepra-TM-,
Seprafilm-TM-, Sepramesh-TM- and Seprapack-TM- are trademarks of Genzyme.
AFP4-SM- is a service mark of Genzyme. Renagel-Registered Trademark- is a
registered trademark of GelTex Pharmaceuticals, Inc.
Synvisc-Registered Trademark-, Hylaform-Registered Trademark-,
Hylashield-Registered Trademark- and HsS-Registered Trademark- are registered
trademarks and Hylashield Nite-TM- and Hylasine-TM- are trademarks of Genzyme
Biosurgery Corporation. Welchol-TM- is a trademark of Sankyo Pharma, Inc.
NeuroCell-TM--PD is a trademark of Diacrin/Genzyme LLC.
FocalSeal-Registered Trademark--L is a registered trademark of Focal, Inc.
Provisc-Registered Trademark- is a registered trademark of Alcon
Laboratories, Inc. TNKase-TM- is a trademark of Genentech, Inc.
AVONEX-Registered Trademark- is a registered trademark of Biogen, Inc.
Aldurazyme-TM- is a trademark of BioMarin/ Genzyme LLC. Replagal-TM- is a
trademark of Transkaryotic Therapies, Inc. Foznal-TM- is a trademark of Shire
Laboratories, Inc. Interceed-Registered Trademark- is a registered trademark and
Intergel-TM- is a trademark of Johnson & Johnson Corporation.
Orthovisc-Registered Trademark- is a registered trademark of Anika Research,
Inc. Hylagan-Registered Trademark- is a registered trademark of
Sanofi-Synthelabo Inc. Artz-TM- is a trademark of Seikagaku Kogyo Kabushiki
Kaisha. Express-Registered Trademark- and Oasis-Registered Trademark- are
registered trademarks of Atrium Medical Corporation. Supartz-TM- is a trademark
of Smith & Nephew Orthopedics.
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TABLE OF CONTENTS
PAGE
----
PART I
ITEM 1. BUSINESS.................................................... 5
Introduction................................................ 5
Genzyme General--Products and Development Programs.......... 5
Genzyme Biosurgery--Products and Development Programs....... 13
Genzyme Molecular Oncology--Technology Platforms and
Development Programs...................................... 18
Competition................................................. 21
Patents, License Agreements and Trademarks.................. 26
Government Regulation....................................... 27
Employees................................................... 31
Financial Information Regarding Segment Reporting........... 31
Research and Development Costs.............................. 31
Sales by Geographic Area, Significant Customers and
Products.................................................. 31
ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT........................ 32
ITEM 2. PROPERTIES.................................................. 33
ITEM 3. LEGAL PROCEEDINGS........................................... 35
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 36
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS....................................... 37
ITEM 6. SELECTED FINANCIAL DATA..................................... 38
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 39
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK...................................................... 39
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................. 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.................................. 39
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 39
ITEM 11. EXECUTIVE COMPENSATION...................................... 40
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 40
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 40
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.................................................. 40
14(a)(1) Financial Statements............................... 40
14(a)(2) Financial Statement Schedules...................... 42
14(a)(3) Exhibits........................................... 42
14(b) Reports on Form 8-K................................... 42
14(c) Exhibits.............................................. 43
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PART I
ITEM 1. BUSINESS
INTRODUCTION
We are a biotechnology and human healthcare company that develops innovative
products and provides services for major unmet medical needs. We were founded as
a Delaware corporation in June 1981 and became a Massachusetts corporation in
1991. We currently have three operating divisions. Each of our divisions has a
related series of common stock that is intended to reflect its value and track
its financial performance. Our three divisions are:
- Genzyme General, which develops and markets therapeutic products and
diagnostic products and services with an emphasis on genetic disorders and
other chronic debilitating diseases with well-defined patient populations.
Genzyme General Stock is listed on the Nasdaq National Market under the
symbol "GENZ."
- Genzyme Biosurgery, which develops and markets instruments, devices,
biomaterials and biotherapeutic products to improve or replace surgery,
with an emphasis on the orthopaedics and cardiothoracic markets.
Biosurgery Stock is listed on the Nasdaq National Market under the symbol
"GZBX."
- Genzyme Molecular Oncology, which is utilizing its functional genomics and
antigen discovery technology platforms to develop novel cancer products
focused on cancer vaccines and angiogenesis inhibitors, and to generate
partnering revenue. Molecular Oncology Stock is listed on the Nasdaq
National Market under the symbol "GZMO."
We allocate all of our products, services, programs, assets and liabilities
among our divisions for purposes of financial statement presentation; however,
Genzyme, the corporation, continues to own all of the assets and is responsible
for all of the liabilities allocated to each of the divisions.
GENZYME GENERAL--PRODUCTS AND DEVELOPMENT PROGRAMS
Genzyme General primarily consists of our Therapeutics and Diagnostics
business units and our wholly-owned subsidiary GelTex Pharmaceuticals, Inc.,
which we acquired in December 2000. The Therapeutics business unit focuses on
developing and marketing products for genetic diseases and other chronic
debilitating diseases, including a family of diseases known as lysosomal storage
diseases, and specialty therapeutics. The Diagnostics business unit develops,
markets and distributes IN VITRO diagnostic products and genetic testing
services. GelTex develops non-absorbed polymer drugs that bind and eliminate
targeted substances in the gastrointestinal track and small-molecule
pharmaceuticals consisting of novel polyamine analogues and metal chelators.
THERAPEUTICS
Genzyme General's Therapeutics business unit currently has three therapeutic
products on the market and several other therapeutic products in varying stages
of development. Genzyme General also sells synthetic phospholipids, synthetic
peptides and amino acid derivatives, which are used in research as raw materials
for pharmaceutical manufacturers. It also produces and sells bulk hyaluronan for
a number of applications. Under an agreement with Alcon Laboratories, Inc.,
Genzyme General supplies pharmaceutical grade hyaluronan powder to Alcon for
incorporation into Provisc-Registered Trademark-, an ophthalmic
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surgical aid product. In addition, hyaluronan is sold to a number of customers
for various research and development applications.
PRODUCT INDICATION STATUS LICENSOR
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CEREZYME-REGISTERED TRADEMARK- Type I Gaucher disease Ceredase-Registered Trademark- None
(IMIGLUCERASE FOR INJECTION) AND marketed since 1991;
CEREDASE-REGISTERED TRADEMARK- Cerezyme-Registered Trademark-
(ALGLUCERASE FOR INJECTION) marketed since 1994;
available in over 55
countries
RENAGEL-REGISTERED TRADEMARK- (SEVELAMER Reduction of serum Marketed since 1998; None*
HYDROCHLORIDE) phosphorus in patients approved in the U.S. in
with end-stage renal 1998, Israel in 1999
disease on hemodialysis and in Europe in 2000
THYROGEN-REGISTERED TRADEMARK- Adjunctive diagnostic Marketed since 1998; None
(THYROTROPIN ALFA FOR INJECTION) agent in the follow-up approved in the U.S. in
of patients with well- 1998, in Puerto Rico in
differentiated thyroid 1999 and in Europe,
cancer Israel and Brazil in
2000
FABRAZYME-TM- (AFGALSIDASE BETA FOR Fabry disease BLA submitted to the Mt. Sinai School of
INJECTION) FDA in June 2000; MAA Medicine
submitted to the EMEA
in July 2000
ALDURAZYME-TM- (LARONIDASE FOR MPS-I One phase 3 trial BioMarin
INJECTION) successfully completed; Pharmaceutical, Inc.**
a confirmatory phase 3
trial initiated in 2000
RENAGEL-REGISTERED TRADEMARK- (SEVELAMER Reduction of serum Phase 3 trial ongoing Chugai Pharmaceuticals,
HYDROCHLORIDE) phosphorus in patients Inc.
with end-stage renal
disease on hemodialysis
(in Japan)
AVONEX-REGISTERED TRADEMARK- Relapsing forms of Phase 3 trial ongoing Biogen, Inc.
(INTERFERON-BETA 1A) multiple sclerosis (in
Japan)
ALPHA-GLUCOSIDASE Pompe disease Phase 1-2 pilot trial; Pharming Group N.V.**
phase 2 trial planned
for 2001
NEUROCELL-TM--PD Parkinson's disease Final analysis of phase Diacrin Inc.**
2 trial ongoing to
determine whether
further development is
warranted
DX 88 Hereditary angioedema Phase 2 trial ongoing Dyax Corp.
SMALL MOLECULE Multiple sclerosis IND filing planned for None
2001
SMALL MOLECULE Cystic fibrosis Preclinical None
PEPTIDE THERAPY Pemphigus vulgaris Preclinical None
ACID SPHINGOMYELINASE Type B Niemann-Pick Preclinical Mt. Sinai School of
disease Medicine
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PRODUCT INDICATION STATUS LICENSOR
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TGF-Beta ANTAGONISTS Systemic sclerosis Preclinical Cambridge Antibody
Technology Ltd. **
SMALL MOLECULE Autoimmune disease Preclinical None
SMALL MOLECULE Lysosomal storage Preclinical University of Michigan
diseases
GENE THERAPY Lysosomal storage Preclinical Targeted Genetics
diseases and genetic Corporation
diseases
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* We acquired GelTex Pharmaceuticals, Inc., our joint venture partner, in
December 2000.
** If you would like information about our strategic collaborations, you should
read Note I., "Investments," to our consolidated financial statements, which
are contained in Exhibit 13.1 to this Annual Report on Form 10-K (our
"Consolidated Financial Statements") and are incorporated into this
discussion by reference.
We have provided more details on our therapeutic products and our late-stage
development programs below.
CEREZYME-REGISTERED TRADEMARK- (IMIGLUCERASE FOR
INJECTION)/CEREDASE-REGISTERED TRADEMARK- (ALGLUCERASE FOR
INJECTION). Treatment with Cerezyme-Registered Trademark- or
Ceredase-Registered Trademark- enzyme replacement therapy currently represents
the only safe and effective treatment available for Type I Gaucher disease, a
lysosomal storage disease. We entered the market in 1991 with
Ceredase-Registered Trademark- enzyme. Because production of
Ceredase-Registered Trademark- enzyme was subject to supply constraints, we
developed Cerezyme-Registered Trademark- enzyme, a recombinant form of human
beta glucocerebrosidase, the enzyme that is deficient in Gaucher patients.
Recombinant technology uses specially engineered cells to produce enzymes, or
other substances, by inserting into cells of one organism the genetic material
of a different species. In the case of Cerezyme-Registered Trademark- enzyme,
Chinese hamster ovary cells are engineered to produce human beta
glucocerebrosidase. We stopped producing Ceredase-Registered Trademark- enzyme,
except for small quantities, in 1998 after substantially all patients who
previously used Ceredase-Registered Trademark- enzyme were converted to
Cerezyme-Registered Trademark- enzyme.
Genzyme General is marketing these products directly to physicians,
hospitals and treatment centers worldwide through a highly trained sales force.
This marketing effort is directed at identifying and initiating treatment for
the estimated 5,000 to 10,000 Gaucher patients Genzyme General believes exist
worldwide. Cerezyme-Registered Trademark- enzyme is currently distributed in
over 55 countries worldwide. Our results of operations are highly dependent on
sales of these products. Sales of Cerezyme-Registered Trademark- and
Ceredase-Registered Trademark- enzymes totaled approximately $536.9 million in
2000, which represented approximately 66% of our consolidated revenue in that
year. Sales of these products totaled approximately $478.4 million, or 70% of
our consolidated revenue, in 1999 and approximately $411.0 million, or 67% of
our consolidated revenue, in 1998.
RENAGEL-REGISTERED TRADEMARK- (SEVELAMER
HYDROCHLORIDE). Renagel-Registered Trademark- capsules and tablets are used for
the reduction of serum phosphorus in patients with end-stage renal disease on
hemodialysis. There are an estimated 280,000 end-stage renal disease patients in
the United States, approximately 95% of whom receive a phosphate control
product. There are also an estimated 170,000 end-stage renal disease patients in
Europe. Genzyme General is marketing Renagel-Registered Trademark- capsules and
tablets directly to nephrologists, renal dieticians and payors through a
dedicated sales force. The launch of the tablet formulation in September 2000
was intended to help nephrologists manage patients into the normal serum
phosphorus range. Sales of Renagel-Registered Trademark- capsules and tablets
totaled approximately $56.0 million in 2000 and approximately $19.5 million in
1999.
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Genzyme General believes that the worldwide opportunity for
Renagel-Registered Trademark- capsules and tablets is greater than originally
anticipated. It expects that at least four fundamental factors will contribute
to the growth of this product opportunity:
- the establishment of the Renagel-Registered Trademark- products as a
preferred first-line treatment for dialysis patients;
- appropriate adjustment of daily doses of the Renagel-Registered Trademark-
products by physicians to lower patient phosphorus levels into the normal
range and improve patient compliance;
- substantial growth in the dialysis patient population, which Genzyme
General estimates is currently approximately 1 million people worldwide
and expects to reach approximately 1.7 million by 2009; and
- the potential for the Renagel-Registered Trademark- products to lower the
overall cost of caring for dialysis patients.
Genzyme General is taking several steps to support its belief about the market
potential for these products. Genzyme General is currently conducting a
three-year study comparing Renagel-Registered Trademark- capsules to the
standard calcium binders. It also initiated a 2,000-patient study designed to
demonstrate the ability of the products to improve patient morbidity and
mortality in 2001.
THYROGEN-REGISTERED TRADEMARK- (THYROTROPIN ALFA FOR
INJECTION). Thyrogen-Registered Trademark- hormone was developed by Genzyme
General to allow patients to continue taking their thyroid hormone supplements
while they are being screened for residual of recurring thyroid cancer. This
allows patients to avoid the debilitating effects of hypothyroidism. In the
United States, physicians order approximately 135,000 thyroglobulin tests and
25,000 radioiodine imaging whole body scans each year for thyroid cancer
patients. Genzyme General is marketing Thyrogen-Registered Trademark- hormone in
the United States through a direct sales force. Brazil has the highest incidence
of thyroid cancer in the developed world, outside of the United States.
Physicians order approximately 28,000 thyroglobulin tests and 12,000 radioiodine
imaging whole body scans each year in Brazil for thyroid cancer patients.
Biobras S.A. exclusively distributes and markets the product in Brazil.
FABRAZYME-TM- (ALGALSIDASE BETA FOR INJECTION). Genzyme General is
developing Fabrazyme-TM- enzyme, a recombinant form of the human enzyme
alpha-galactosidase, as a treatment for Fabry disease. Fabry disease is a
lysosomal storage disease that is estimated to affect 1 in 40,000 males
worldwide, with an estimated 2,000 to 4,000 patients worldwide. We filed for
marketing approval for Fabrazyme-TM- enzyme in the United States and in Europe
in 2000. We also began treating patients in France with Fabrazyme-TM- enzyme
under an Authorisation Temporaire d'Utilisation from the French Medicines
Agency, which allows patients in France to receive treatment before marketing
authorization for the therapy is granted in the European Union.
In March 2001, the Committee for Proprietary Medicinal Products, commonly
referred to as the CPMP, issued a positive opinion of our Marketing
Authorization Application for Fabrazyme-TM- enzyme for Fabry disease. The
proposed labeling recommended by the CPMP includes the following indication:
"Fabrazyme-TM- is indicated for long-term enzyme replacement therapy in patients
with a confirmed diagnosis of Fabry disease (galactosidase A deficiency)." The
CPMP is the scientific body composed of representatives from the 15 member
states of the European Union that provides advice to the European Medicines
Evaluation Agency, commonly referred to as the EMEA, on the approval of
medicinal products.
We are currently preparing a response to the FDA's request for additional
data and clarification related to our Biologics License Application for
Fabrazyme-TM- enzyme. We expect action on the U.S. regulatory submissions this
year. In addition, Genzyme General initiated a phase 4 trial of Fabrazyme-TM-
enzyme in January 2001, which is required under the FDA's accelerated approval
mechanism.
ALDURAZYME-TM- (LARONIDASE FOR INJECTION). Genzyme General and BioMarin
have formed a joint venture to develop Aldurazyme-TM- enzyme, a recombinant form
of the human enzyme
8
alpha-L-iduronidase, to treat a lysosomal storage disease known as
mucopolysaccharidosis I, or MPS-I. Approximately 2,000 to 3,000 people in the
developed world have been diagnosed with MPS-I. BioMarin has completed a phase
1-2 trial of Aldurazyme-TM- enzyme, and the joint venture initiated a
confirmatory phase 3 trial in December 2000, which is expected to conclude in
the third quarter of 2001.
AVONEX-REGISTERED TRADEMARK- (INTERFERON-BETA 1A). In September 1998, we
entered into an agreement with Biogen Inc. under which Genzyme General will
commercialize and, following regulatory approval, exclusively distribute
AVONEX-Registered Trademark- in Japan. AVONEX-Registered Trademark- is Biogen's
treatment for relapsing forms of multiple sclerosis. Genzyme General is managing
the clinical development program for AVONEX-Registered Trademark- in Japan and
is working to obtain registration and reimbursement approvals for the product.
Genzyme General estimates that there are at least 5,000 multiple sclerosis
patients in Japan.
ALPHA-GLUCOSIDASE. Genzyme General and Pharming Group N.V. are developing a
recombinant form of the human enzyme alpha-glucosidase produced in Chinese
hamster ovary cells for the treatment of Pompe disease. Pompe disease is a
lysosomal storage disease that is estimated to affect between 5,000 to 10,000
people worldwide. We licensed this product from Synpac (North Carolina), Inc. in
March 2000. Genzyme General and Pharming expect to initiate a phase 2 trial of
this product in infants in 2001.
NEUROCELL-TM--PD. Genzyme General and Diacrin, Inc. are developing
NeuroCell-TM--PD for the treatment of Parkinson's disease. NeuroCell-TM--PD is a
cellular approach that involves the transplantation of porcine fetal neural
cells to attempt to replace cells lost to disease. We have completed a
preliminary analysis of results from the phase 2 trial of NeuroCell-TM--PD.
Patients were evaluated at baseline and at three-month intervals for at least
18 months following surgery using a broad range of clinical measurements. The
trial's primary endpoint was the difference between the treated group and the
control group in the change in total score on the Unified Parkinson's Disease
Rating Scale in the off state (more than 12 hours since last medication)
obtained pre-operatively and 18 months after surgery. Both the treatment group
and the control group, on average, showed improvement from baseline. There was
no difference, however, between the treatment and the control group. Genzyme
General and Diacrin expect to complete additional analysis of the phase 2 data
as quickly as possible and to reach a decision within a few months whether to
proceed with additional clinical studies of NeuroCell-TM--PD. Based on the
preliminary analysis of the trial results and the need for additional analysis,
a phase 3 trial of NeuroCell-TM--PD will not be initiated before June 30, 2001.
Under the terms of the transfer agreement between Genzyme General and Genzyme
Biosurgery, Genzyme General, at its election, may require Genzyme Biosurgery to
return to Genzyme General a $20.0 million prepayment. This refund, together with
accrued interest, will be due within 90 days of receipt of Genzyme General's
notice of its election. This payment may be made in cash, Biosurgery designated
shares, or a combination of both, at Genzyme Biosurgery's option. Biosurgery
designated shares are authorized but unissued shares of Biosurgery Stock that
can be sold or distributed for the benefit of Genzyme General without allocating
any of the proceeds to Genzyme Biosurgery.
ANTI-THROMBIN III. Genzyme General and Genzyme Transgenics Corporation
formed a joint venture in 1998 for the development and commercialization of
recombinant human antithrombin III, also known as rhATIII, a protein naturally
produced by the body that, when bound to heparin, prevents blood clotting.
Genzyme General and Genzyme Transgenics were developing transgenically-produced
rhATIII through the joint venture to restore heparin sensitivity in
heparin-resistant patients undergoing elective heart surgery requiring pulmonary
bypass. Transgenic proteins are produced by inserting human DNA into animal
cells so that the target protein, or drug, is secreted into the milk of female
offspring during lactation. Representatives of the joint venture held a meeting
with the FDA in February 2001 to discuss the status of the clinical development
program for rhATIII. As a result of this meeting, Genzyme Transgenics announced
that the joint venture no longer expected to actively pursue additional
development of rhATIII for this indication due to the level of expense and time
involved in developing
9
the additional data required by the FDA, which was not justified by the
potential market size of the heparin resistance indication.
DIAGNOSTICS
DIAGNOSTIC PRODUCTS
Genzyme General develops, markets and distributes IN VITRO diagnostic
products, with an emphasis on point-of-care, clinical chemistry and rapid test
products. Genzyme General sells its diagnostic products through its technical
sales representatives in the United States and Europe and through distributors
in Japan.
CARDIOVASCULAR PRODUCTS. Genzyme General sells devices and reagents for the
measurement of low-density lipoprotein, or LDL, and high-density lipoprotein, or
HDL, cholesterol levels. Genzyme General's N-geneous-REGISTERED TRADEMARK- LDL
and Liquid N-geneous-REGISTERED TRADEMARK- HDL tests measure cholesterol levels
directly without the labor intensive pretreatment steps that were previously
needed and are easily adaptable to automated chemistry analyzers.
N-geneous-REGISTERED TRADEMARK- LDL was the first homogenous LDL test available
for sale in the United States. Both tests are being distributed in the United
States by Genzyme General under an agreement with the manufacturer of the tests,
Daiichi Pure Chemicals Co., Ltd., of Tokyo. In addition to the United States,
Genzyme General is also the exclusive marketing partner for the
N-geneous-REGISTERED TRADEMARK- LDL and Liquid N-geneous-REGISTERED TRADEMARK-
HDL tests in Europe and the rest of the world, with the exception of Asia, where
we hold co-exclusive distribution rights.
GLYPRO-TM- TEST. Genzyme General's GlyPro-TM- test is a tool for monitoring
diabetes. The GlyPro-TM- test measures blood sugar levels over two to three
weeks, which is a valuable resource for reducing diabetes-related complications.
Test results supplement the "snap shot" view provided by daily glucose
monitoring, enabling physicians to more accurately understand and guide the
diabetic patient behavior.
RAPID TESTS. Genzyme General's product portfolio includes patented
Contrast-Registered Trademark- rapid tests for pregnancy, Strep A, infectious
mononucleosis and GIARDIA/CRYTOSPORIDIUM determination. It also introduced the
first combination rapid test for the two most common causes of parasitic
intestinal disease.
DIAGNOSTIC INTERMEDIATES. Genzyme General produces and sells intermediates
such as diagnostic enzymes, substrates and reagents for use in diagnostic kits
used for sample analysis in clinical chemistry laboratories. One area of
emphasis is pancreatic function, where Genzyme General provides enzymes,
substrates, bulk reagents, finished devices and patented methodologies for
amylase and lipase determination to diagnostic kit manufacturers. Genzyme
General is also a primary supplier of cholesterol enzymes used in testing for
coronary heart disease.
DEVELOPMENT PROGRAMS. Genzyme General and SYN-X Pharma Inc. are
collaborating on a point of care product called NeuroTrack-TM--SmartStroke-TM-
to aid in the diagnosis and differentiate stroke patients. SYN-X and Genzyme are
developing the product, and Genzyme General will exclusively manufacture and
market the product worldwide following approval. Stroke is the third leading
cause of death in the United States, affecting approximately 700,000 people
annually, with a similar incidence in Europe. Approximately 150,000 Americans
die as a result of stroke each year.
Genzyme General is also developing point-of-care products for infectious
diseases. Other development programs include a homocysteine test to determine
cardiovascular disease risk and a liquid lipase test for pancreatitis.
GENETIC DIAGNOSTIC SERVICES
Genzyme General applies advanced biotechnology to develop and provide high
quality, sophisticated genetic diagnostic services in the United States and
internationally through a national
10
network of laboratories and a direct sales force as well as through joint
ventures in Germany and Japan. Genzyme General offers three types of genetic
diagnostic services:
- biochemical testing services, which consist primarily of a widely used
screening test known as AFP3-Registered Trademark- to determine if further
prenatal genetic testing is appropriate;
- classical and molecular cytogenetic testing services, which involve the
analysis of fetal cells obtained through amniocentesis or a process known
as chorionic villi sampling to evaluate chromosomal abnormalities; and
- DNA testing, which is performed to determine the likelihood that the
patient has, or is a carrier of, a specific genetic disorder, such as
cystic fibrosis and/or Gaucher disease.
Genzyme General employs over 70 board certified genetics professionals who
interpret results and provide genetic counseling and support services to medical
practitioners and their patients.
In July 2000, we entered into an agreement with Healtheon/WebMD that allows
Genzyme General's customer network of approximately 5,000 clinicians to use an
application located on WebMD's internet site to order laboratory tests and
acquire test results. Our customer network includes obstetricians,
perinatologists, geneticists, pediatricians, hematologists and oncologists. The
arrangement with Healtheon/WebMD offers convenience and secure access to medical
professionals who use Genzyme General's genetic testing services.
We have described some of Genzyme General's genetic diagnostic tests and
development programs below.
AFP4-SM- TEST. Genzyme General added this advanced screening test to its
comprehensive prenatal genetic services program during the fourth quarter of
1999. This test is more accurate than the AFP3-Registered Trademark- test in
detecting mutations associated with fetal risk of Down Syndrome, and other
genetic defects.
INSIGHT-REGISTERED TRADEMARK- TEST. Genzyme General's
InSight-Registered Trademark- test is a cytogenetic test to be used as an
adjunct to traditional chromosome analysis that permits identification of the
most frequently occurring chromosomal abnormalities within 48 hours, which is
significantly faster than the one to three weeks required to perform classical
cytogenetic testing (karyotyping). The InSight-Registered Trademark- analysis is
provided in conjunction with a complete karyotype.
MASDA-REGISTERED TRADEMARK- SERVICE. Genzyme General's patented multiplex
allele-specific diagnostic assay, which is known as the
MASDA-Registered Trademark- Service, can analyze in a single test up to 500 DNA
samples simultaneously for over 100 known gene mutations. The
MASDA-Registered Trademark- Service not only analyzes different patient samples
for different disease indications in a single test, it also identifies multiple
mutations in one or more genes in a single patient's DNA sample. Genzyme General
is pursuing a number of commercialization strategies for the
MASDA-Registered Trademark- Service. In addition, the
MASDA-Registered Trademark- Service is also being used to provide genetic
profiling services for clinical trials being conducted by pharmaceutical
companies.
HEREDITARY NONPOLYPOSIS COLON CANCER. Genzyme General introduced a test
that screens for mutations associated with the most common form of hereditary
colon cancer, hereditary nonpolyposis colon cancer, which is also known as Lynch
Syndrome. Lynch Syndrome accounts for between approximately three and six
percent of all colorectal cancers in the United States, or an estimated 4,000 to
8,000 cases every year.
ADENOMATOUS POLYPOSIS COLI. Genzyme General's APC I1307K test screens for a
gene mutation associated with an increased risk of colorectal cancer in
Ashkenazi Jewish families. The specific gene mutation occurs more frequently in
this population and has been found in approximately 28% of Ashkenazi Jewish
individuals who have both a personal history and family history of colon cancer.
CF86 TEST. Genzyme General's CF86 test screens for 86 genetic mutations
associated with cystic fibrosis.
11
DEVELOPMENT PROGRAMS. Genzyme General is developing additional platforms
for complex mutational analysis and conducts research and development programs
in such areas as genomics and rare cell separation and analysis methods. It is
developing an HER-2 gene amplification assay, new predispositional colon cancer
tests and an inherited thrombophilia panel. Genzyme General is also developing a
multiple disease carrier test using the MASDA-Registered Trademark- technology
and integrated scanning sequencing approaches for rapid detection of both
previously characterized and unknown gene mutations.
GELTEX PHARMACEUTICALS, INC.
TECHNOLOGY PLATFORMS
POLYMER BASED NON-ABSORBED PRODUCTS. During the digestive process, the
intestinal tract delivers nutrients and water to the bloodstream and eliminates
waste products and indigestible materials through the bowel. Absorption of
nutrients, electrolytes, water and certain digestive substances such as bile
acids is controlled by the intestinal wall, which acts as a gateway from the
intestines to the bloodstream, allowing small molecules to pass from the
intestinal tract into the bloodstream and preventing larger molecules from
entering circulation. Orally administered drugs are either absorbed through the
intestinal wall into the bloodstream, or are non-absorbed and achieve their
intended therapeutic effect by acting in the intestinal tract. Non-absorbed
drugs are less likely to cause the toxicities associated with many absorbed
drugs.
GelTex's product development approach represents an advance in the use of
polymers as pharmaceuticals. Its technology enables GelTex to combine
commercially available or novel monomers that have distinct structural qualities
to create proprietary, non-absorbed polymers that selectively bind target
molecules. GelTex designs its polymers to carry a high density of binding sites
for the targeted molecules, making them potent at low dosage levels. Its
products are designed to be orally administered in capsule or tablet form. The
compounds are not broken down during the digestive process and are too large to
be absorbed through the intestinal wall and into the bloodstream. As the
polymers pass through the stomach and into the intestines, they bind targeted
molecules and pass easily through the intestinal tract and, with the attached
target molecules, are excreted from the body.
GelTex believes that its enabling technology offers the following benefits:
- GelTex believes its enabling technology is applicable to a broad range of
diseases and conditions treatable through the intestinal tract, such as
elevated LDL cholesterol, obesity and certain infectious diseases;
- since GelTex's products are designed to act only in the intestinal tract
and are not absorbed into the bloodstream, they are less likely to cause
the toxicities associated with many absorbed drugs; and
- GelTex's polymer-based products are designed to be potent enough to permit
oral administration in a convenient capsule or tablet form.
POLYAMINES AND METAL CHELATORS. Polyamines are naturally occurring
compounds found in human cells that remain as metabolically distinct entities
within the cells. Research indicates that these polyamines bind to nucleic acids
and promote the integrity and fidelity of many of the functions of nucleic acids
that are necessary for cellular proliferation to occur. GelTex's polyamine
analogue compounds are structurally similar to the cell's naturally occurring
polyamines and, as a result, these analogues are recognized as natural
polyamines by the cell's polyamine uptake system and gain entry to the cell.
Once inside the cell, GelTex's polyamine analogues cause the cell to shut down
the enzymes that would normally make natural polyamines and to increase
production of the enzyme that is responsible for the breakdown and export of
natural polyamines from the cell. The combined effect on the enzymes controlling
the proper level of polyamines in the cell results in a reduction in the amount
of natural polyamines in the cell and a corresponding increase in the amount of
analogues in the cell.
12
Metal chelators are drugs that bind tightly to certain metals, such as iron,
in the bloodstream and inside cells. They eliminate quantities of metals in
excess of the body's needs, thereby helping to avoid damage to vital organs such
as the liver, heart and pancreas. Chelators are administered to enhance the
body's ability to get rid of excess metal concentrations.
PRODUCT AND DEVELOPMENT PROGRAMS
PRODUCT INDICATION STATUS COLLABORATOR OR LICENSOR
- --------------------- --------------------- --------------------- ------------------------
WELCHOL-TM- Reduction of elevated Marketed since 2000; Sankyo Pharma Inc.
(COLESEVELAM LDL cholesterol in approved in the U.S.
HYDROCHLORIDE) patients with primary in 2000
hypercholesterolemia
GT160-246 CLOSTRIDIUM DIFFICILE Pilot trial ongoing; None
colitis larger phase 2 trial
to be initiated in
2001
POLYAMINE ANALOGUE Psoriasis Phase 1-2 trial University of Florida
ongoing
POLYMER Oral mucositis IND filing planned None
for 2001
ORAL IRON CHELATOR Iron overload IND filing planned None
disorders for second half of
2001
FAT ABSORPTION Anti-obesity Research None
INHIBITOR
We have described GelTex's product and most advanced development program
below.
WELCHOL-TM- (COLESEVELAM HYDROCHLORIDE). GelTex received marketing approval
for WelChol-TM- from the FDA in May 2000. WelChol-TM- is approved for
administration alone or in combination with an HMG-CoA reductase inhibitor, also
known as a "statin," as adjunctive therapy to diet and exercise for the
reduction of elevated LDL cholesterol in patients with primary
hypercholesterolemia. While the risks of hypercholesterolemia are well
recognized, the condition remains significantly under-treated worldwide. An
estimated 25 million Americans require drug therapy to achieve adequate
reductions in cholesterol levels. However, only approximately 8 million
Americans are receiving cholesterol-reducing drugs, and it is estimated that
more than 60% of this population is not at their appropriate National
Cholesterol Education Program LDL cholesterol goal. Worldwide, approximately
one-third of the individuals who should be receiving cholesterol-reducing drugs
are receiving therapy. WelChol-TM- is being marketed in the United States by
Sankyo Pharma. Sankyo Pharma launched WelChol-TM- in September 2000.
GT 160-246 FOR C. DIFFICILE COLITIS. GelTex's leading product currently in
development is a toxin binder for CLOSTRIDIUM DIFFICILE, also known as C.
DIFFICILE. C. DIFFICILE is a major cause of antibiotic associated colitis, a
condition common in hospitals and nursing homes. C. DIFFICILE is estimated to
affect over 500,000 patients each year in the United States, resulting in
prolonged hospital stays and increased costs, and is the cause of an estimated
5,000 deaths annually. GelTex is conducting a pilot phase 2 trial of GT160-246
and plans to initiate a large phase 2 trial by the end of 2001.
GENZYME BIOSURGERY--PRODUCTS AND DEVELOPMENT PROGRAMS
We created Genzyme Biosurgery in December 2000 by combining two of our
former divisions, Genzyme Surgical Products and Genzyme Tissue Repair, and
simultaneously acquiring Biomatrix, Inc. Genzyme Biosurgery is organized into
three business units: Orthopaedics, Cardiothoracic and
13
Biosurgical Specialties. Its product and development program portfolio consists
of biomaterials, biotherapeutics, traditional devices and surgical closures, as
well as advanced devices for minimally invasive cardiovascular surgery. Genzyme
Biosurgery's sales force markets products directly to surgeons and hospital
administrators throughout the United States and Europe. It also uses a network
of distributors to sell products in Europe, Asia and Latin America.
In February 2001, we announced our intention to divest the
Snowden-Pencer-Registered Trademark- surgical instruments product lines. These
product lines include hand-held reusable instruments and endoscopic instruments
for general, plastic and gynecological surgery. We also announced our intention
to terminate the production of Synvisc-Registered Trademark- in Canada and sell
our manufacturing facility in Pointe-Claire, Quebec, Canada. We expect these
transactions to be completed during the second half of 2001.
ORTHOPAEDICS
SYNVISC-REGISTERED TRADEMARK- (HYLAN G-F20). Synvisc-Registered Trademark-
is an hyaluronan-based biomaterial used to treat osteoarthritis of the knee to
reduce pain and improve joint mobility. When injected into the knee joint,
Synvisc-Registered Trademark- supplements the synovial fluid to restore
lubrication and cushioning. Synvisc-Registered Trademark- is approved in over 50
countries and is sold in more than 35 countries through marketing and
distribution agreements with major pharmaceutical companies, including
Wyeth-Ayerst Laboratories in the U.S., Germany, Portugal and Turkey. In 2000, we
completed a pilot clinical trial in which Synvisc-Registered Trademark- was
evaluated for the treatment of osteoarthritis of the hip. A pivotal trial for
this indication is planned for 2001. Genzyme Biosurgery plans to conduct
additional clinical studies evaluating Synvisc-Registered Trademark- in other
joints in the future.
CARTICEL-REGISTERED TRADEMARK- (AUTOLOGOUS CULTURED
CHONDROCYTES). Carticel-Registered Trademark- chondrocytes are used to treat
damaged articular knee cartilage. Genzyme Biosurgery employs a proprietary
process to grow autologous--a patient's own--cartilage cells for use in
repairing damaged knee cartilage in patients who have had an inadequate response
to a prior surgical procedure. Genzyme Biosurgery also sells biopsy kits and a
variety of reusable disposable instruments and sutures that are typically used
in the Carticel-Registered Trademark- procedure.
The FDA has required Genzyme Biosurgery to conduct two confirmatory
post-marketing studies of Carticel-Registered Trademark- chondrocytes. The first
study, which was successfully completed in 2000 ahead of schedule, measured
outcomes of patients in Genzyme Biosurgery's registry who did not respond to
other treatment before being implanted with Carticel-Registered Trademark-
chondrocytes. Outcomes before and after implantation were compared. The second
study is designed to compare the long-term clinical effect of treatment with
Carticel-Registered Trademark- chondrocytes to other treatments. Genzyme
Biosurgery received protocol approval for this study in the first quarter of
2000. Investigators will evaluate approximately 100 patients in the study and
will follow these patients for four years.
Genzyme Biosurgery markets Carticel-Registered Trademark- chondrocytes to
orthopedic surgeons in the United States and Europe directly and through
distributors. Genzyme Biosurgery also trains orthopedic surgeons, collects and
analyzes outcomes data through a registry, and assists physicians and patients
in obtaining reimbursements from third-party payors. Approximately one-fourth of
its 85-person U.S. sales and reimbursement staff is involved directly in claims
processing and educating insurers about the appropriate uses of the product.
Genzyme Biosurgery expects that Carticel-Registered Trademark- sales may be
lower in the summer months as fewer operative procedures are typically performed
during those months.
CARTICEL-REGISTERED TRADEMARK- II. Carticel-Registered Trademark- II, which
is currently in development, is a next-generation product based on the
development of a pre-formed autologous cartilage tissue implant. The implant is
intended to allow the procedure to be performed arthroscopically. If it is
successfully developed, Carticel-Registered Trademark- II could significantly
decrease rehabilitation time for patients and allow surgeons to treat larger
cartilage defects. In connection with the development of
Carticel-Registered Trademark- II, Genzyme Biosurgery obtained an exclusive
worldwide license in 2000 from Sentron Medical, Inc., for technology and related
intellectual property
14
rights that include autologous chondrocyte graft technology to produce cartilage
tissue on a supporting membrane IN VITRO.
OTHER DEVELOPMENT PROGRAMS. Genzyme Biosurgery is conducting preclinical
studies of a small molecule therapy for the treatment of osteoarthritis. Genzyme
Biosurgery is conducting basic research and development into the biology of
cartilage and the cartilage repair process. The objective of this research is to
identify biologic materials that promote more rapid regeneration of articular
cartilage, to develop new methods for the repair of arthritic joints and large
surface area cartilage defects and to enable the implantation procedure to be
performed less invasively. Genzyme Biosurgery is also committing resources to
meet requirements specified by the FDA for validation of certain product
manufacturing parameters.
CARDIOTHORACIC
DEVICES AND SUTURES. Genzyme Biosurgery's products for traditional
cardiothoracic surgery include a comprehensive portfolio of products, including
fluid management (chest drainage) systems and sutures. Its line of fluid
management systems consists primarily of self-contained, disposable chest
drainage devices used to drain blood from the chest cavity following open-heart
and lung surgery. Genzyme Biosurgery also sells autotransfusion devices that
allow the collection of blood lost by the patient and its reinfusion
postoperatively, which eliminates the risks associated with blood transfusions.
Genzyme Biosurgery's self-contained, disposable Pleur-evac-Registered Trademark-
chest drainage unit was introduced in 1967 and is the market leader in chest
drainage devices. Genzyme Biosurgery also sells a line of dry suction-
controlled chest drainage and autotransfusion devices under the Sahara-TM- and
Thora-Klex-Registered Trademark- brand names. In 2000, Genzyme Biosurgery
entered into selling agreements for its chest drainage devices with Novations,
LLC, Amerinet, Inc. and Health Services Corporation of America, which are large
hospital group purchasing organizations representing approximately 45% of the
hospitals in the United States. Genzyme Biosurgery also markets sutures,
including the Tevdek-Registered Trademark- and Polydek-Registered Trademark-
valve sutures and Deklene-Registered Trademark- bypass sutures. Genzyme
Biosurgery received 510(k) clearance from the FDA to market the NextStitch-TM-
cardiovascular valve suture for use in heart-valve replacement surgery in
November 2000. NextStitch-TM- cardiovascular valve suture incorporates two
suture strands into each needle, which allows surgeons to significantly reduce
the time and increase the efficiency of valve suturing. Additionally, Genzyme
Biosurgery sells aortic punches, which are used during coronary artery bypass
graft surgery to make clean, round openings in the aorta prior to grafting.
MINIMALLY INVASIVE CARDIOVASCULAR SURGERY SYSTEMS. Genzyme Biosurgery
markets products for minimally invasive cardiovascular surgery, with a focus on
beating-heart surgery and vein harvesting. In beating-heart surgery, procedures
are performed on the heart without stopping the heart and without the use of a
heart/lung machine to circulate blood and supply oxygen. This allows surgeons to
avoid the complications often associated with the use of heart/lung machines.
Genzyme Biosurgery launched its Immobilizer-TM- System, its third-generation
platform for beating-heart surgery, in August 2000. The Immobilizer-TM- System
combines reusable retractors with disposable devices such as stabilizers,
sutures and punches. Genzyme Biosurgery also introduced the next generation of
its SaphLITE-Registered Trademark- system in August 2000. Genzyme Biosurgery's
new SaphLITE-Registered Trademark- system is used to remove the saphenous vein
from a patient's leg in a minimally-invasive procedure for use as a graft during
a coronary artery bypass graft operation.
BIOMATERIALS. Genzyme Biosurgery launched FocalSeal-Registered Trademark--L
in North America in 2000 for use in pulmonary procedures.
FocalSeal-Registered Trademark--L is a biomaterial developed by Focal, Inc. for
the prevention of air leaks following lung surgery. Genzyme Biosurgery has the
exclusive rights to market FocalSeal-Registered Trademark--L in North America
for cardiovascular and gastrointestinal procedures. Approximately 70,000 lung
surgeries are performed in the United States annually, with almost all patients
at risk for debilitating air leaks.
15
Genzyme Biosurgery's cardiothoracic sales force is initially targeting the top
150 thoracic hospitals in the United States. This force is augmented by Focal
sales specialists.
Genzyme Biosurgery obtained CE Mark approval in the European Union for its
CV Seprafilm-TM- II adhesion barrier, which is designed to reduce the formation
of adhesions (scar tissue) following open-heart surgery. CV Seprafilm-TM- II
adhesion barrier is part of a portfolio of products based on hyaluronan known as
the "Sepra-TM- products" that are being developed and marketed by Genzyme
Biosurgery. Hyaluronan is a substance that is naturally created in the body to
lubricate and protect tissue. We are developing the Sepra-TM- products on behalf
of Genzyme Development Partners, L.P., and market the products in the United
States and Canada on behalf of Genzyme Ventures II, our joint venture with
Genzyme Development Partners. In January 2001, we purchased all of the Class A
limited partnership interests in Genzyme Development Partners for an upfront
cash payment of $35,000 per interest (or $17,500 for each half-interest) and
royalties on sales of the Sepra-TM- products for ten years. The purchase of the
Class A interests was allocated to Genzyme Biosurgery. If you would like more
information about our relationship with Genzyme Development Partners and the
joint venture, you should read Note M., "Research and Development Agreements,"
to our Consolidated Financial Statements, which we are incorporating into this
discussion by reference.
BIOTHERAPEUTICS. In 2000, Genzyme Biosurgery initiated a phase 1 trial of a
proprietary gene therapy designed to promote the growth of new blood vessels
around blocked coronary arteries. The novel gene therapy is based on an
engineered form of the gene known as HIF-1 alpha, which has been shown in
preclinical studies to turn on the expression of many proteins associated with
blood vessel formation. The HIF-1 alpha product is being administered in
patients with coronary artery disease undergoing bypass surgery who have an area
of the heart that is not suitable for surgical revascularization. Genzyme
Biosurgery is also conducting a phase 1 trial to evaluate the use of the HIF-l
alpha to treat patients with severe peripheral vascular disease. In addition,
Genzyme Biosurgery is conducting research on other gene therapy approaches to
congestive heart failure and restenosis.
BIOSURGERY SPECIALTIES
BIOMATERIALS. Genzyme Biosurgery has an extensive line of biomaterial
products on the market and in development for the general surgery market,
including many of the Sepra-TM- products. Genzyme Biosurgery sells the Sepra-TM-
products in the United States and Europe primarily through its own sales force
and in Japan through a distributor.
PRODUCT INDICATION STATUS
- ----------------------------- ----------------------------- -----------------------------
SEPRAFILM-TM- BIORESORBABLE Prevention of adhesions after Approved and marketed in the
MEMBRANE abdominal/pelvic surgery U.S. and Europe since 1996;
approved in Canada and Israel
since 1997 and in Japan since
1998; approved and marketed
in several other countries
SEPRAFILM-TM- BIORESORBABLE Prevention of small bowel Phase 4 clinical trial
MEMBRANE obstructions ongoing
SEPRAFILM-TM- II ADHESION Prevention of adhesions after Marketed in Europe since 1999
BARRIER abdominal/pelvic surgery
SEPRAMESH-TM- BIOSURGICAL Hernia repair Approved and marketed since
COMPOSITE 2000 in the U.S., Europe and
Canada
16
PRODUCT INDICATION STATUS
- ----------------------------- ----------------------------- -----------------------------
HYLAFORM-REGISTERED TRADEMARK- Facial wrinkle and deep scar CE Mark approval received in
repairs 1995; approved in Canada,
Israel and Chile in 1997, in
Argentina in 1998 and in
Australia and China in 1999
SEPRAPACK-TM- PRODUCT Sinus packing Available for sale in the
U.S. in 2000
HYLASHIELD-REGISTERED TRADEMARK-, Ease pain caused by dry-eye Marketed in Canada and Europe
HYLASHIELD NITE-TM- AND and facilitate ophthalmic
HSS-REGISTERED TRADEMARK- surgical procedures
SEPRAGEL-REGISTERED TRADEMARK- Sinus packing Received 510(k) approval in
SINUS (FORMERLY HYLASINE-TM-) the U.S. in 2000
SEPRAGEL-REGISTERED TRADEMARK- Prevention of adhesions after In development
BIORESORBABLE GEL open and laproscopic surgery
SEPRAGEL-REGISTERED TRADEMARK- Spinal surgery In development
SPINE
Seprafilm-TM- bioresorbable membrane is a solid form of modified hyaluronan
that is used to separate and protect tissues and organs that have been damaged
during abdominal and pelvic surgery. It is the only product approved by the FDA
that is clinically proven to reduce the incidence, extent and severity of
postsurgical adhesions in the abdomen and pelvis. To build further clinical
evidence of the safety and effectiveness of Seprafilm-TM- bioresorbable
membrane, Genzyme Biosurgery has initiated a 25-center, 1,700-patient phase 4
trial to test the ability of the Seprafilm-TM- product to reduce the incidence
of bowel obstructions. The study will track patient outcomes for two years after
surgery.
Seprafilm-TM- II adhesion barrier is a modified form of Seprafilm-TM-
bioresorbable membrane designed to have increased plasticity and, thus, improved
handling and overall ease of use. Seprafilm-TM- II adhesion barrier currently is
marketed in Europe for use in open and laproscopic surgery to reduce the
incidence of postoperative abdominal and pelvic adhesions.
In 2000, Genzyme Biosurgery received 510(k) marketing clearance from the FDA
for Sepramesh-TM- biosurgical composite, a mesh product that is coated with
modified hyaluronan for use in hernia repairs and other soft tissue repairs such
as bladder neck suspensions.
Hylaform-Registered Trademark- is a hyaluronan-based biomaterial that is
used to correct facial wrinkles and deep scars by injection directly into the
dermal tissue. It is part of the portfolio of products based on hyaluronan we
acquired through our acquisition of Biomatrix. It is distributed by Inamed
Corporation, formerly called Collagen Aesthetics, Inc., in Europe, Canada,
Japan, Australia, Israel and other select countries worldwide. Inamed also has
the exclusive distribution rights to Hylaform-Registered Trademark- in the
United States, subject to an additional payment and FDA approval.
EPICEL-REGISTERED TRADEMARK- (CULTURAL EPIDERMAL AUTOGRAFTS). Genzyme
Biosurgery's Epicel-Registered Trademark- skin grafts are cultured autologous
skin cells used for permanent skin replacement for patients with severe burns.
Epicel-Registered Trademark- skin grafts were first introduced in 1987. These
epidermal grafts are grown from a patient's own skin cells and, therefore, are
not rejected by the patient's immune system. Most burn wounds involving less
than 60% body surface area are covered with conventional skin grafts within the
three to four weeks it currently takes to grow skin grafts produced using the
Epicel-Registered Trademark- process. The primary candidates for
Epicel-Registered Trademark- skin grafts are the approximately 800 patients each
year in the U.S. who survive burn injuries covering more than 60% of their body
surface area. Genzyme Biosurgery markets Epicel-Registered Trademark- skin
grafts to burn centers in the United States and parts of Europe through its own
direct sales force and in Japan
17
through a distributor. Sales of Epicel-Registered Trademark- skin grafts
fluctuate from quarter to quarter depending on a number of unpredictable
factors, including the number and survival rate of severe burn patients prior to
treatment with Epicel-Registered Trademark- skin grafts.
PLASTIC SURGERY PRODUCTS. Genzyme Biosurgery also manufactures products for
the plastic surgery market. This distinct product line consists of hand-held
instruments, endoscopic plastic surgery equipment, sutures and surgical
compression garments.
GENZYME MOLECULAR ONCOLOGY--TECHNOLOGY PLATFORMS AND DEVELOPMENT PROGRAMS
Genzyme Molecular Oncology is developing a new generation of cancer
therapeutics based upon the growing understanding of the molecular basis of
cancer. It believes that these therapeutics have potential to treat multiple
types of cancer, minimize toxicity and side effects, and complement both
existing and novel therapies. Genzyme Molecular Oncology supplements its
internal resources through collaborations with some of the world's preeminent
scientists and clinicians in the field of cancer.
TECHNOLOGY PLATFORMS
ANTIGEN DISCOVERY. Genzyme Molecular Oncology is seeking to stimulate a
cellular immune response against tumors by using vaccines to present
tumor-specific antigens to the immune system. Antigens are molecular markers in
tumor cells that enable the body's immune system to recognize and respond to
these cells as being foreign. Genzyme Molecular Oncology has built a
proprietary, state-of-the-art antigen discovery platform that combines
identification and validation in one step. It is using this platform to rapidly
and efficiently identify and validate target antigens for incorporation into
novel antigen-specific peptide and gene cancer vaccines. For example, Genzyme
Molecular Oncology plans to analyze the tumor tissue extracted from responding
patients in its ongoing clinical trials using its antigen discovery technologies
in order to identify the antigens associated with the tumor and expand the
development of its antigen-specific vaccines. It plans to file an
Investigational New Drug application for its first proprietary cancer antigen
fragments in 2001. Genzyme Molecular Oncology also established an antigen
discovery and licensing collaboration with Purdue Pharma L.P. in October 2000
related to the discovery and validation of up to 20 cancer antigens.
Building on the success of this platform, Genzyme Molecular Oncology is
beginning to expand its antigen discovery technologies in the field of
infectious disease. In January 2001, it entered into an HIV antigen discovery
and research collaboration with Dr. Bruce Walker of Massachusetts General
Hospital. Dr. Walker and Genzyme Molecular Oncology will perform studies to
identify novel peptides that may be used as HIV vaccines. Genzyme Molecular
Oncology's ability to develop and commercialize novel peptides identified during
this collaboration is subject to the execution of a further agreement with
Massachusetts General Hospital, which is currently being negotiated.
SAGE-TM-. Genzyme Molecular Oncology's SAGE-TM- (Serial Analysis of Gene
Expression) technology is a patented high-throughput, high efficiency method of
simultaneously detecting and measuring the expression level of virtually all
genes expressed in a cell at a given time. The SAGE-TM- technology detects and
quantifies expression of novel as well as known genes and, because of its high
efficiency and sensitivity, SAGE-TM- technology can detect genes expressed at
low levels. Some of the uses of the SAGE-TM- technology are comparison of
disease tissue with healthy tissue, comparison of genes expressed at different
stages of disease, elucidation of disease pathways and measurement of response
to and toxicity of drug candidates. Genzyme Molecular Oncology enhances the
power of its SAGE-TM- technology through software and bioinformatics
development, technology improvements, database expansion and the integration of
the SAGE-TM- technology with other genomics tools, such as microarrays.
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Genzyme Molecular Oncology has used its SAGE-TM- technology to analyze the
most prevalent types of cancer and corresponding normal tissue and also has
access to SAGE-TM- data generated in the laboratories of Drs. Bert Vogelstein
and Kenneth Kinzler at The Johns Hopkins University. Genzyme Molecular Oncology
has accumulated from its proprietary analyses, its collaborators and the Cancer
Genome Anatomy Project at the National Cancer Institute a database of over
3.5 million SAGE-TM- gene sequence identification tags, representing over
125,000 unique transcripts. In August 2000, The Johns Hopkins University
published data from a study in which its researchers had used the SAGE-TM-
technology to identify 79 genes, including 14 novel genes differentially
expressed in tumors versus normal vasculature. Of the 79 genes, 46 were
specifically involved in tumor angiogenesis. Genzyme Molecular Oncology has
rights to the intellectual property related to the genes found in this study
under a sponsored research agreement with the laboratory of Dr. Kinzler.
Genzyme Molecular Oncology also employs its SAGE-TM- technology extensively
in its own drug discovery and development efforts to identify genes that are
functionally relevant. In cancer vaccines, Genzyme Molecular Oncology combines
the SAGE-TM- technology with other proprietary tools to identify tumor-specific
antigens. In angiogenesis inhibition, Genzyme Molecular Oncology is using the
SAGE-TM- technology to dissect the genetic pathways for angiogenesis and to
explore and understand the mechanism of action of drug candidates discovered in
functional assays.
Genzyme Molecular Oncology is using the SAGE-TM- technology and its
proprietary SAGE-TM- database to generate revenues through licenses and database
collaborations. For example, in 2000, Genzyme Molecular Oncology licensed its
SAGE-TM- technology to Pfizer, Syngenta, Medical Molecular Research Collogne,
NeuralStem Biopharmaceuticals and Invitrogen. Genzyme Molecular Oncology also
granted Celera Genomics co-exclusive worldwide rights to market the SAGE-TM-
database to Celera customers on a revenue-sharing basis. The arrangement allows
customers to combine SAGE-TM- expression data with Celera's Genome Reference
Database, providing them with powerful means to more rapidly and efficiently
move drug discovery forward by associating genes with tissues and disease
states.
DEVELOPMENT PROGRAMS
Genzyme Molecular Oncology is developing products primarily focused on
vaccines that treat cancer by stimulating the body's immune system to fight
tumor cells and angiogenesis inhibitors that treat cancer by preventing the
formation and development of blood vessels that tumors require for growth. The
following chart describes the status of Genzyme Molecular Oncology's development
programs.
PROGRAM TYPE(S) OF CANCER STATUS
- ----------------------------- ----------------------------- -----------------------------
CANCER VACCINES
DENDRITIC/TUMOR CELL FUSION Breast Phase 1-2 trial ongoing
VACCINES (CHEMICAL Melanoma Phase 1-2 trial ongoing
PROCESS) Kidney Phase 1-2 trial ongoing
DENDRITIC/TUMOR CELL FUSION Melanoma Preclinical
VACCINES (ELECTROFUSION Kidney Preclinical
PROCESS)
MELAN-A/MART-1 AND GP100 Melanoma (EX VIVO) Phase 1-2 trial ongoing
ANTIGEN-SPECIFIC CANCER Melanoma (IN VIVO) Phase 1-2 trial ongoing
VACCINES
SPHERE-TM- PEPTIDES Multiple Preclinical
NY-ESO-1 ANTIGEN Multiple Preclinical
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PROGRAM TYPE(S) OF CANCER STATUS
- ----------------------------- ----------------------------- -----------------------------
ANGIOGENESIS INHIBITORS
AAATIII* Multiple Preclinical
SMALL MOLECULES Multiple Research
GENE THERAPY Multiple Research
- ------------------------
* Genzyme Molecular Oncology is co-developing aaATIII with ATIII LLC, a joint
venture between Genzyme General and Genzyme Transgenics Corporation. If you
would like additional information concerning this joint venture, please read
Note I., "Investments," to our Consolidated Financial Statements, which we
are incorporating into this discussion by reference.
CANCER VACCINES
Genzyme Molecular Oncology believes that the most successful cancer vaccines
will be those that activate a cellular immune response directed at the tumor.
Its program features two types of vaccines for generating a tumor-specific
cellular immune response:
- where the specific tumor antigens are not known, a cell therapy product is
created by using a technique that fuses the patient's own tumor cells with
dendritic cells, the specialized immune system cells that capture antigens
and present them to T cells--the immune system's cellular response to
disease--which are then able to selectively recognize and destroy the
tumor cells; and
- where specific tumor antigens have been identified as targets of the
cellular immune response, Genzyme Molecular Oncology uses gene-based or
peptide-based tumor vaccines.
Genzyme Molecular Oncology believes that both of these vaccine types will
provide clinical benefit and have commercial potential. Development of
antigen-specific vaccines, however, is currently limited by the lack of known
tumor-specific antigens. Therefore, cell fusion may have broader applicability
in the near term. Over time, as Genzyme Molecular Oncology identifies more
tumor-specific antigens, it anticipates having the ability to provide
off-the-shelf vaccines that are customized based on the set of specific antigens
present in the patient's tumor.
FUSION-BASED CANCER VACCINES.
BREAST CANCER FUSION VACCINE. Working with the Dana-Farber Cancer Institute
and the Beth Israel Deaconess Medical Center in Boston, Genzyme Molecular
Oncology initiated a phase 1-2 trial for the treatment of metastatic breast
cancer in September 1999. A chemical process is being used in this trial to fuse
the patient's tumor cells with dendritic cells. The end points for this trial
are safety, immunologic response and clinical response.
MELANOMA AND KIDNEY CANCER FUSION VACCINES. Genzyme Molecular Oncology
accelerated its fusion vaccine program following the publication by an academic
group in Germany of promising clinical data for the treatment of advanced kidney
cancer with a vaccine produced using electrofusion to combine a patient's cancer
cells with dendritic cells derived from another source. Two additional phase 1-2
trials for cell fusion vaccines were initiated in 2000, one in advanced kidney
cancer and one in metastatic melanoma. Both of these trials employ the chemical
fusion process. Genzyme Molecular Oncology plans to initiate two more
fusion-based vaccine trials in 2001 using the electrofusion process employed by
the German group.
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ANTIGEN-SPECIFIC CANCER VACCINES.
MELAN-A/MART-1 AND GP100 ANTIGEN-SPECIFIC VACCINES. In collaboration with
Dr. Steven Rosenberg at the National Cancer Institute, Genzyme Molecular
Oncology has conducted two phase 1 trials. In these trials, adenoviral gene
delivery vectors carrying either the Melan-A/MART-1 or gp100 gene were evaluated
for safety, immunologic reactivity and potential therapeutic effect when
administered IN VIVO alone or in conjunction with recombinant interleukin-2. The
results from these clinical studies indicated that the adenoviral vectors were
safe and well tolerated, and that a small but notable number of both the 36
patients immunized with Melan-A/MART-1 and the 18 patients treated with gp100
showed clinically significant tumor regression. These responses were seen in
very late stage (stage 4) metastatic disease patients, who are a heavily
pre-treated patient population not expected to mount a robust immune response
and who, as a group, have a very short life expectancy.
In April 1999, Genzyme Molecular Oncology initiated a phase 1-2 trial in
melanoma patients at Massachusetts General Hospital. This trial involves
extracting dendritic cells from the patient and combining these cells with a
vaccine containing Melan-A/MART-1 and gp100 EX VIVO. The treated cells are then
injected into the patient. In this trial, Genzyme Molecular Oncology will assess
safety, immunologic response and clinical response. Throughout the trial,
Genzyme Molecular Oncology will be performing a comprehensive analysis of the
patient's immune response to the vaccine to help it to understand better why
some patients respond well to the therapy while others do not.
Genzyme Molecular Oncology also initiated a phase 1-2 IN VIVO melanoma trial
in September 2000. This study utilizes both the Melan-A/MART-1 and gp100 tumor
antigens delivered intradermally. In this trial, Genzyme Molecular Oncology
intends to monitor patient immune responses in order to further elucidate the
immunology of cancer to enhance its antigen-specific vaccine development
efforts.
SPHERE-TM- PEPTIDE VACCINES. Genzyme Molecular Oncology has identified
numerous proprietary peptides, or antigen fragments, through its antigen
discovery program. It is currently evaluating peptides for multiple cancer
indications in preclinical studies, and plans to file an Investigational New
Drug application for a phase 1 trial in melanoma using its SPHERE-TM- peptides
later in 2001.
NY-ESO-1 ANTIGEN-SPECIFIC VACCINES. NY-ESO-1 is an antigen expressed in a
subset of a number of different tumor types, including breast cancer, melanoma
and lung cancer. Genzyme Molecular Oncology is conducting pre-clinical
development to support a phase 1-2 trial for NY-ESO-1-positive tumors to be
performed in collaboration with the Ludwig Institute for Cancer Research.
ANGIOGENESIS INHIBITORS
Genzyme Molecular Oncology is pursuing multiple approaches to
anti-angiogenesis - the treatment of cancer by cutting off the blood supply that
tumors need to survive. In 2000, Genzyme Molecular Oncology's collaborators at
The Johns Hopkins University used the SAGE-TM- technology to identify 46 genes
implicated in the growth of tumor blood vessels. These genes may yield targets
for the development of cancer therapeutics. In addition, Genzyme Molecular
Oncology is continuing its collaboration with Dr. Judah Folkman's laboratory at
Boston's Children's Hospital around aaATIII, a modified form of antithrombin III
that has been shown in preclinical studies to act as a potent angiogenesis
inhibitor.
COMPETITION
We are engaged in segments of the human healthcare products industry that
are extremely competitive. Our competitors in the United States and elsewhere
are numerous and include major pharmaceutical, surgical device and biotechnology
companies. Some of these competitors may have more extensive research and
development, regulatory, manufacturing and production capabilities. Some
competitors may have greater financial resources. These companies may succeed in
developing products
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that are more effective than any that we have or may develop and may also prove
to be more successful than we are in producing and marketing products and
services. In addition, technological advances or different approaches developed
by one or more of our competitors may render our products obsolete, less
effective or uneconomical.
Each of our products and services faces different competitive challenges,
and we have described many of them below.
CEREZYME-REGISTERED TRADEMARK- AND CEREDASE-REGISTERED TRADEMARK-
ENZYMES. Although Genzyme General is not aware of any current effective
alternative to its products for the treatment for Gaucher disease, competition
potentially could come from other protein replacement therapies, small molecules
or gene therapy. Genzyme General believes that its proprietary production
techniques and, to a certain extent, the orphan drug status of its products,
which provides market exclusivity in the United States until May 2001, give it a
number of advantages over potential competitors using protein replacement
therapy for the treatment of Gaucher disease. Gene therapy techniques are still
in experimental stages. Genzyme General believes that the principal factors that
will affect competition for Cerezyme-Registered Trademark- and
Ceredase-Registered Trademark- enzymes will be clinical effectiveness and
absence of adverse side effects.
RENAGEL-REGISTERED TRADEMARK- CAPSULES AND TABLETS. Phosphate binders are
currently the only available treatment for hyperphosphatemia. There are several
phosphate binders available or under development. A prescription calcium acetate
preparation is currently the only other product approved in the United States
for the control of elevated phosphorus levels in patients with chronic kidney
failure. Other products used as phosphate binders include over-the-counter
calcium- and aluminum-based antacids and dietary calcium supplements. Calcium
acetate and calcium carbonate, the most commonly used agents, must be taken at
sufficient doses to achieve adequate reductions in phosphate absorption, which
can lead to constipation and patient noncompliance. In addition, calcium therapy
requires frequent monitoring because its use can cause hypercalcemia. Aluminum
hydroxide is more effective at lower doses than calcium acetate or calcium
carbonate, but it is infrequently used because aluminum absorbed from the
intestinal tract accumulates in the tissues of patients with chronic kidney
failure, causing aluminum-related osteomalacia, anemia and dialysis dementia.
Genzyme General is aware of one other company, Shire Pharmaceuticals, Inc., that
is developing a phosphate binder for the treatment of hyperphosphatemia in
patients with chronic renal failure. Shire licensed this product, Foznal-TM-,
from AnorMed, Inc. and has filed for marketing approval in Europe and is
expected to file for approval in the United States in early 2002.
WELCHOL-TM-. In the cholesterol-reduction field, products are currently
available that address many of the needs of the market. These products include
other bile acid sequestrants, HMG-CoA reductase inhibitors, fibric acid
derivatives and niacin-based products. In 2000, sales of HMG-CoA reductase
inhibitors represented more than 95% of the market for cholesterol-reducing
drugs sold in the United States. Combined worldwide sales of HMG-CoA reductase
inhibitors were an estimated $16.0 billion in 2000. The most widely prescribed
bile acid sequestrant in the United States is cholestyramine, a polymer resin.
FABRAZYME-TM- ENZYME. Genzyme General is aware of other companies
developing products for the treatment of Fabry disease. Transkaryotic
Therapies Inc., for example, submitted its application for marketing approval
for its Replagal-TM- product for Fabry disease to the FDA approximately one week
before we submitted our application for Fabrazyme-TM- enzyme. If Transkaryotic
Therapies or any other company receives FDA approval for a Fabry disease therapy
with orphan drug designation before we receive FDA approval for Fabrazyme-TM-
enzyme, the Orphan Drug Act may preclude us from selling Fabrazyme-TM- enzyme in
the United States for up to seven years. Similarly, we submitted our application
for marketing approval of Fabrazyme-TM- enzyme with the EMEA within a short time
of Transkaryotic Therapies' filing. In March 2001, the CPMP issued positive
opinions of the Marketing Authorization Applications for both our Fabrazyme-TM-
enzyme and Transkaryotic Therapies' Replagal-TM- product on the
22
same day. If Transkaryotic Therapies or any other company receives EMEA approval
for a Fabry disease therapy with orphan drug designation before we receive EMEA
approval for Fabrazyme-TM- enzyme, the European equivalent of the Orphan Drug
Act may preclude us from selling Fabrazyme-TM- enzyme in the European Union for
up to ten years. We are currently involved in litigation with Transkaryotic
Therapies related to its product. For more information about this litigation,
you should read the section of this Annual Report on Form 10-K entitled "Item 3.
Legal Proceedings."
OTHER LYSOSOMAL STORAGE DISEASES. Genzyme General is aware of other
companies and institutions that are researching and developing enzyme
replacement therapies, small molecules and gene therapies for lysosomal storage
diseases. These include products for Fabry, Pompe, MPS-I and other lysosomal
storage diseases Genzyme General and its collaborative partners are currently
pursuing.
NEUROCELL-TM--PD. While there currently are no effective long-term
therapies for advanced Parkinson's disease, Genzyme General is aware of other
companies and institutions pursuing research and development of alternative
treatments for the diseases. Experimental therapies under development for
Parkinson's disease include surgical destruction of certain portions of the
brain (pallidotomy), gene therapy, cell therapy, the use of growth factors and
neuroprotectant therapy.
DIAGNOSTIC PRODUCTS. Genzyme General acts as a primary supplier of enzymes
and substrates, and generally does not compete with its customers in the sale of
complete diagnostic kits. The market in the diagnostic products industry is
mature and competition is based on price, reliability of supply and the purity
and specific activity of products.
GENETIC DIAGNOSTIC SERVICES. The U.S. market for prenatal cytogenetic and
biochemical testing is divided among approximately 500 laboratories, many of
which offer both types of testing. Of this total group, less than 20
laboratories market their services nationally. Genzyme General believes that the
industry as a whole is still quite fragmented, with the top 20 laboratories
accounting for approximately 50% of market revenues, and with no individual
company accounting for more than 18% of the total other than Genzyme, which
accounts for approximately 22% of the total. Genzyme General believes, however,
that the industry will experience increasing consolidation as smaller
laboratories face the challenges of more complex and stringent regulation. The
Secretary of Health and Human Services Advisory Committee on Genetic Testing
recently published recommendations for increased oversight by the Centers for
Disease Control and the FDA for all genetic testing. This oversight will be
similar to that of the current non-genetic diagnostic products. It requires
systems and expertise not normally found in small clinical laboratories.
Competitive factors in the genetic diagnostics services business generally
include reputation of the laboratory, range of services offered, pricing,
convenience of sample collection and pick-up, quality of analysis and reporting
and timeliness of delivery of completed reports. Genzyme General believes that
its research and development program, which has enabled it to develop and
introduce testing services based on new technology, and its active sales and
marketing force have played significant roles in the growth of its genetic
diagnostics services business.
FLUID MANAGEMENT SYSTEMS AND SUTURES. The principal methods by which
Genzyme Biosurgery competes in the fluid management and sutures markets are:
- continued innovative product development;
- the performance and breadth of its product lines;
- brand name recognition;
- sales force training; and
- educational services, including sponsorship of training programs in
advanced surgical techniques.
23
Its chief competitors in the fluid management market are Atrium Medical
Corporation and Sherwood-Davis & Geck, a division of Tyco International, Ltd. We
have initiated a lawsuit against Atrium related to its chest drainage systems.
For more information about this litigation, you should read the section of this
Annual Report on Form 10-K entitled "Item 3. Legal Proceedings." U.S. Surgical
Corporation, a division of Tyco, and the Ethicon division of Johnson & Johnson
are Genzyme Biosurgery's primary competitors in the cardiovascular sutures
market.
SURGICAL INSTRUMENTS. Genzyme Biosurgery competes against a wide range of
companies in the traditional general, cardiovascular and plastic surgery
instrument markets. In the general surgical instrument area, U.S. Surgical and
Ethicon Endosurgery are Genzyme Biosurgery's primary competitors. In the
traditional cardiovascular instrument market, Genzyme Biosurgery competes
primarily with V. Meuller, the Pilling-Weck Surgical Instruments division of
Teleflex, Inc. and the Codman division of Johnson and Johnson Ltd. The plastic
surgery instrument market is more highly fragmented with primary competition
arising from Karl Storz Surgical Instruments, Walter Lorenz Surgical and Padgett
Instruments.
MINIMALLY INVASIVE CARDIOVASCULAR SURGERY. Genzyme Biosurgery faces
competitors in the minimally invasive cardiovascular surgery field.
CardioThoracic Systems, Inc., which was recently acquired by Guidant
Corporation, was founded solely to pursue minimally invasive cardiovascular
surgery and was among the first companies to draw national attention to the
technology. Several other major surgical products companies have also entered
the minimally invasive cardiovascular surgery market, including
Medtronic, Inc., U.S. Surgical and Ethicon.
CELL THERAPIES FOR CARDIOVASCULAR DISEASE. Genzyme Biosurgery is aware of a
number of companies and institutions that are developing or considering the
development of tissue engineering products for the treatment of cardiovascular
disease. These activities include programs for heart muscle regeneration
utilizing autologous skeletal muscle cells, autologous bone marrow derived
stromal cells and embryonic stem cells. Among a number of organizations, Genzyme
Biosurgery is aware of product development work in these areas at Diacrin, Inc.,
Biohart, Inc., Cardion, AG and research programs at Duke University and Indiana
University. These organizations may develop products or technology that could
directly compete with products and technology currently under development within
Genzyme Biosurgery.
THERAPIES FOR ISCHEMIC HEART DISEASE. There is considerable competition in
the development of protein and gene therapies to induce angiogenesis for the
treatment of ischemic heart disease. Several companies have initiated clinical
trials of gene and protein therapies for ischemic heart disease, and other
companies have products that are still in pre-clinical development. Genzyme
Biosurgery is aware of ongoing research in cell-based approaches to restoring
cardiac function to infarcted tissue. Academic institutions and private
companies are also conducting research to develop mechanical devices to reduce
ventricular size, to minimize ventricular dilation and to perform coronary
functions.
THERAPIES FOR PERIPHERAL VASCULAR DISEASE. There is considerable
competition in the development of protein and gene therapies to induce
angiogenesis for the treatment of periopheral vascular disease.
THERAPIES FOR CONGESTIVE HEART FAILURE. Many pharmaceutical and
biotechnology companies have programs to identify new therapies to manage
congestive heart failure. Many of these programs are targeted toward optimizing
drugs already used for disease management. Since the formation of scar tissue, a
consequence of myocardial infarction, is one of the causes of congestive heart
failure, scar tissue repair may provide significant benefit to the congestive
heart failure patient. As discussed above, Genzyme Biosurgery is aware of
several research programs involving cell-based approaches to restoring cardiac
function and a research program involving a gene therapy approach to converting
myofibroblasts into cardiac muscle.
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SEPRA-TM- PRODUCTS. Genzyme Biosurgery believes that its technology,
expertise, and proprietary manufacturing processes in developing and producing
hyaluronan-based materials will give it a competitive advantage in the marketing
of the Sepra-TM- products. Its anti-adhesion products may face significant
competition, however, from other products based on hyaluronan as well as from
other products and changes in surgical techniques that may obviate the use of
hyaluronan. Genzyme Biosurgery believes that the principal factor that will
affect competition in this area is acceptance of the product by surgeons, which
depends, in large part, upon product performance, safety and price.
Seprafilm-TM- bioresorbable membrane does not have significant direct
competition in the colorectal surgery market. Ethicon markets
Interceed-Registered Trademark-, an anti-adhesion barrier that may have
properties similar to the Seprafilm-TM- product, but is indicated only for
selected gynecological indications. Interceed-Registered Trademark- has been
shown to lose its anti-adhesion properties in the presence of blood. Lifecore
Biomedical, Inc. and Ethicon's Intergel-TM- product, a gel-based anti-adhesion
product, is marketed in Europe. Gliatech, Inc. has completed pivotal clinical
trials of Adcon-A and Adcon-P, which are designed to limit adhesions after
abdominal and pelvic surgery. Life Medical Sciences, Inc. is developing REPEL
for gynecological surgery and REPEL-CV for cardiovascular surgery. These
adhesion barrier membranes are in early clinical trials.
SYNVISC-REGISTERED TRADEMARK-. Competition for
Synvisc-Registered Trademark- consists primarily of products based on earlier
technology, including Hylagan-Registered Trademark-, produced by Fidia S.p.A.
and marketed in the United States by Sanofi-Synthelabo,
Orthovisc-Registered Trademark-, produced by Anika Therapeutics, Inc. and
Artz-TM-, a Japanese product marketed in Japan and Europe which was recently
approved in the United States and will be sold under the name Supartz-TM- by
Smith & Nephew Orthopedics. To the best of Genzyme Biosurgery's knowledge, there
are no other viscosupplementation products on the market, or in development,
which like Synvisc-Registered Trademark-, have the physical properties of
viscosity, elasticity or molecular weight that are comparable to the physical
properties of healthy synovial fluid.
CARTICEL-REGISTERED TRADEMARK- CHONDROCYTES. Genzyme Biosurgery is aware of
two other companies, Verigen, Inc., and Co.don Berlin, which are culturing
autologous chondrocytes for cartilage repair in Europe. In addition to Verigen,
Genzyme Biosurgery knows of three other companies, Advanced Tissue
Sciences, Inc., in conjunction with Smith & Nephew PLC, Integra LifeSciences
Corp. and LifeCell Corp., which are engaged in research on cultured cartilage
products. In addition, a surgical technique known as osteochondral grafting may
be competitive to Carticel-Registered Trademark- chondrocytes. This procedure,
which can be performed arthroscopically, involves transferring plugs of low
weight bearing cartilage and bone to the area of a defect. Smith & Nephew,
Arthrex, Inc. and Innovasive Devices, Inc. are known to have programs relating
to this procedure.
EPICEL-REGISTERED TRADEMARK- SKIN GRAFTS. Genzyme Biosurgery is the only
commercial provider of cultured skin grafts that have been shown to provide
permanent skin replacement for burn patients in the United States. However,
Genzyme Biosurgery may face competition from companies using other approaches to
culture skin tissue. Integra is marketing a collagen-based dermal replacement
product for severely burned patients. This product will still require a skin
graft from the patient or Epicel-REGISTERED TRADEMARK- skin grafts to close a
full-thickness wound, however, and therefore will not compete directly with
Epicel-REGISTERED TRADEMARK- skin grafts. Advanced Tissue Sciences, Inc. has
received approval for a temporary wound covering for burns. Organogenesis, Inc.
has submitted a Pre-Marketing Application for a product to be used for the
closure of venous stasis ulcers. LifeCell Corp. currently has freeze-dried
enzymatically processed human cadaver dermis on the market.
CANCER. Competition in the field of cancer therapeutics is intense. Genzyme
Molecular Oncology faces, and will continue to face, significant competition
from organizations such as large pharmaceutical and biotechnology companies,
universities, government agencies and other research institutions.
25
Competition can arise from the use of the same or similar technologies as
those currently used or contemplated to be used by Genzyme Molecular Oncology,
as well as from existing therapies. Any or all of these may be more effective or
less expensive than those developed by Genzyme Molecular Oncology.
Genzyme Molecular Oncology relies on its collaborators for support in some
of its cancer research and development programs and intends to rely on these
partners for preclinical evaluation, clinical development and marketing of its
potential products and services. Its partners may develop technologies or
products that are competitive with those that Genzyme Molecular Oncology is
developing. Genzyme Molecular Oncology's product candidates, therefore, may be
subject to competition with a potential product under development by one of its
partners.
PATENTS, LICENSE AGREEMENTS AND TRADEMARKS
In general, we pursue a policy of obtaining patent protection both in the
United States and in selected foreign countries for subject matter we consider
patentable and important to our business. In addition, a portion of our
proprietary position is based upon patents that we have licensed from others
either through collaboration or traditional license agreements, including
patents relating to:
- Fabrazyme-TM- enzyme;
- Aldurazyme-TM- enzyme;
- AVONEX-Registered Trademark- (Interferon-beta 1a);
- NeuroCell-TM--PD;
- alpha-glucosidase;
- acid sphingomyelinase;
- autologous chondrocyte graft technology;
- EPI-KAL2;
- small molecules for lysosomal storage diseases;
- the HNPCC and APC I1307K tests;
- TGF- antagonists;
- HIF-1 alpha;
- Cohn Cardiac Stabilizer-TM- device;
- NextStitch-TM- sutures;
- Epicel-REGISTERED TRADEMARK- skin grafts;
- photoactive tissue welding technology;
- SAGE-TM- technology;
- cell fusion technology;
- viral and non-viral gene therapy technology;
- drug delivery technology; and
- various cancer related genes such as p53, MDM2, APC, MSH2 and MelanA.
26
These collaboration and license agreements generally require us to share profits
with our collaborative partners or pay royalties to our licensors upon
commercialization of products covered by the licensed technology. Generally,
patents issued in the United States are effective for:
- the longer of 17 years from the date of issue or 20 years from the
effective filing date of the corresponding patent application if filed
prior to June 8, 1995; and
- 20 years from the filing date for applications filed after June 8, 1995.
In some cases, the patent term can be extended to recapture a portion of the
term lost during FDA regulatory review. The duration of foreign patents varies
in accordance with applicable local law.
We also rely on trade secrets, proprietary know-how and continuing
technological innovation to develop and maintain a competitive position in our
product areas. We require our employees, consultants and corporate partners who
have access to our proprietary information to sign confidentiality agreements.
Our patent position and proprietary technology are subject to certain risks
and uncertainties. We have included information about these risks and
uncertainties under the subheading "Factors Affecting Future Operating Results"
in the following sections:
- "Management's Discussion and Analysis of Genzyme Corporation and
Subsidiaries' Financial Condition and Results of Operations" in the 2000
Genzyme General Annual Report; and
- "Management's Discussion and Analysis of Genzyme Molecular Oncology's
Financial Condition and Results of Operations" in the 2000 Genzyme
Molecular Oncology Annual Report.
We encourage you to read these sections, which we are incorporating into this
discussion by reference.
Our products and services are sold around the world under brand-name
trademarks and service marks. Trademark protection continues in some countries
as long as the mark is used; in other countries, as long as its registered.
Registrations generally are for fixed, but renewable, terms. We consider our
registered trademarks Genzyme-Registered Trademark-,
Cerezyme-Registered Trademark-, Ceredase-Registered Trademark-,
Thyrogen-Registered Trademark-, N-geneous-Registered Trademark-,
Contrast-Registered Trademark-, InSight-Registered Trademark-,
MASDA-Registered Trademark-, AFP3-Registered Trademark-,
Synvisc-Registered Trademark-, Pleur-evac-Registered Trademark-,
Thora-Klex-Registered Trademark-, Tevdek-Registered Trademark-,
Polydek-Registered Trademark-, Deklene-Registered Trademark-,
Hylaform-Registered Trademark-, Hylashield-Registered Trademark-,
HsS-Registered Trademark-, SaphLITE-Registered Trademark-,
Sepragel-Registered Trademark-, Snowden-Pencer-Registered Trademark-,
Carticel-Registered Trademark- and Epicel-Registered Trademark-, together with
our trademarks Fabrazyme-TM-, GlyPro-TM-, NeuroTrack-TM-, SmartStroke-TM-,
Hylashield Nite-TM-, Hylasine-TM-, SAGE-TM-, SPHERE-TM-, Sahara-TM-,
NextStitch-TM-, Immobilizer-TM-, Sepra-TM-, Seprafilm-TM-, Sepramesh-TM- and
Seprapack-TM-, and our service mark AFP4-SM-, in the aggregate, to be of
material importance to our business.
GOVERNMENT REGULATION
Regulation by governmental authorities in the United States and other
countries is a significant factor in the development, manufacture and
commercialization of our products and services.
FDA REGULATION
We expect that most of our products and services will require approval of
the FDA and corresponding agencies in other countries before they can be
marketed. In the United States, the FDA classifies products as either "devices,"
"drugs" or "biologics." Products that do not achieve their principal intended
purpose through chemical action within or on the body and which are not
dependent upon being metabolized by the patient's body in order to be effective
are classified by the FDA as "devices" while other products are classified as
"drugs" or "biologics."
27
The activities required before drugs or biologics may be marketed in the
United States include:
- preclinical laboratory tests, IN VITRO and IN VIVO preclinical studies and
formulation and stability studies;
- the submission to the FDA of an application for human clinical testing,
which is known as an Investigational New Drug application;
- adequate and well controlled human clinical trials to demonstrate the
safety and effectiveness of the drug or biologic;
- the submission of a New Drug Application for a drug or a Biologic License
Application for a biologic; and
- the approval by the FDA of the New Drug Application or Biologic License
Application.
As part of product approval, the manufacturer of the product will have to
undergo a pre-approval Good Manufacturing Practices inspection (for a drug or
biologic) from the FDA. Since any approval granted by the FDA is both site and
process specific, any material change by a company in the manufacturing process,
equipment or location necessitates additional FDA review and approval.
Products that are classified as devices also require FDA approval prior to
marketing. Devices are classified as Class I, II or III, depending upon the
information available to assure their safety and effectiveness. In general,
Class I and Class II devices are devices whose safety and effectiveness can
reasonably be assured through general or specific controls, respectively.
Class III devices are life sustaining, life supporting or implantable devices or
new devices which have been found not to be substantially equivalent to legally
marketed devices. The steps required for approval of a Class III device include:
- preclinical laboratory tests and IN VITRO and IN VIVO preclinical studies;
- the submission to the FDA and approval of an Investigational Device
Exemption application to allow initiation of clinical testing;
- human clinical studies to prove safety and effectiveness of the device;
- the submission of a Pre-Marketing Application; and
- the approval by the FDA of the Pre-Marketing Application.
Typically, clinical testing of devices involves initial testing to evaluate
safety and feasibility and expanded trials to collect sufficient data to prove
safety and effectiveness. In addition, the procedures and the facilities used to
manufacture the device are subject to review and approval by the FDA.
A device (other than a Class III device) which is proven to be substantially
equivalent to a device marketed prior to May 28, 1976, when government
regulations for devices were first introduced, can be marketed after approval of
a 510(k) application rather than the filing of an Investigational Device
Exemption application and a Pre-Marketing Approval application. The 510(k)
application must contain a description of the device, its methods of manufacture
and quality control procedures and the results of testing to demonstrate that
the device is substantially equivalent to the device already marketed.
In May 1996, the FDA published a new guidance document that provided for the
regulation of products such as Carticel-Registered Trademark- chondrocytes that
use manipulated autologous structural cells. Genzyme Biosurgery estimates that
it could take eight years for any competitor to complete a study of this nature
that would demonstrate the clinical efficacy of its proposed treatment. In
August 1997, the FDA granted Genzyme Biosurgery a Biologic License Application
for Carticel-Registered Trademark- chondrocytes. Genzyme Biosurgery has
initiated discussions with the FDA regarding an application for
Epicel-Registered Trademark- skin grafts,
28
which has been on the market as an unregulated medical device. The FDA has
permitted Epicel-Registered Trademark- skin grafts to remain on the market until
its regulatory status is resolved.
The time and expense required to perform the clinical testing necessary to
obtain FDA approval can far exceed the time and expense of the research and
development initially required to create the product. Even after initial FDA
approval has been obtained, we could be required to conduct further studies to
provide additional data on safety or to gain approval for the use of a product
as a treatment for additional clinical indications. In addition, use of these
products during testing and after marketing approval has been obtained could
reveal side effects which, if serious, could delay, impede or prevent marketing
approval, limit uses, force a recall of the product or expose us to product
liability claims.
REGULATION OUTSIDE OF THE UNITED STATES
For marketing outside the United States, we are subject to foreign
regulatory requirements governing human clinical testing and marketing approval
for our products. These requirements vary by jurisdiction, differ from those in
the United States and may require us to perform additional pre-clinical or
clinical testing whether or not FDA approval has been obtained. The amount of
time required to obtain necessary approvals may be longer or shorter than that
required for FDA approval. In many foreign countries, pricing and reimbursement
approvals are also required.
Our initial focus for obtaining marketing approval outside the United States
is typically Europe. European Union Regulations and Directives generally
classify health care products either as medicinal products or medical devices.
For medicinal products, marketing approval may be sought using either the
centralized procedure of the CPMP or the decentralized, mutual recognition
process. The centralized procedure, which is mandatory for most biotechnology
derived products, results in a recommendation in all member states, while the
European Union multi-state process involves country by country approval.
European Union regulations for products classified as medical devices have been
implemented for some devices. Devices such as our Sepra products must receive
market approval through a centralized procedure, where the device receives a CE
Mark allowing distribution to all member states of the European Union. For those
devices where European Union regulations have not been implemented, marketing
approval must be obtained on a country by country basis. The CE mark
certification requires us to receive International Standards Organization
certification for each facility involved in the manufacture or distribution of
the device. This certification comes only after the development of an all
inclusive quality system, which is reviewed for compliance to International
Quality Standards by a licensed "Notified Body" working within the European
Union. After certification is received a product dossier is reviewed which
attests to the product's compliance with European Union directive 93/42/EEC for
medical devices. Only after this point is a CE Mark granted.
Autologous products are specifically exempt from the European Device
Directive and Pharmaceutical Directive promulgated by the European Union.
Therefore, each European country is free to impose its own regulations on the
marketing of these products. Genzyme Biosurgery has been informed that Sweden
intends to regulate these products and will require use of a clinical protocol
to use Carticel-Registered Trademark- chondrocytes until we receive an approved
license for Carticel-Registered Trademark- chondrocytes. During September 1997,
the Spanish national health system approved Carticel-Registered Trademark-
chondrocytes for use by public hospitals, representing the first broad approval
of the product by a reimbursement authority in Europe. Genzyme Biosurgery is
assessing the regulatory requirements for commercialization of
Carticel-Registered Trademark- chondrocytes in Japan.
OTHER GOVERNMENT REGULATION
GOOD MANUFACTURING PRACTICES. All facilities and manufacturing techniques
used for the manufacture of products for clinical use or for sale must comply
with applicable FDA regulations governing the production of pharmaceutical
products known as "Good Manufacturing Practices."
29
ORPHAN DRUG ACT. The Orphan Drug Act provides incentives to manufacturers
to develop and market drugs for rare diseases and conditions affecting fewer
than 200,000 persons in the United States at the time of application for orphan
drug designation. The first developer to receive FDA marketing approval for an
orphan drug is entitled to a seven-year exclusive marketing period in the United
States for that product. However, a drug that the FDA considers to be clinically
superior to or different from another approved orphan drug, even though for the
same indication, is not barred from sale in the United States during the
seven-year exclusive marketing period. Similar legislation was enacted in the
European Union in 2000, but the market exclusivity granted in Europe is for ten
years.
Legislation periodically has been introduced in recent years to change the
Orphan Drug Act to shorten the period of automatic market exclusivity and to
allow marketing rights to simultaneous developers of a drug. We cannot be sure
whether the Orphan Drug Act will be amended or, if amended, what effect the
changes would have on us. We believe that the commercial success of these
products, including Cerezyme-Registered Trademark- and
Ceredase-Registered Trademark- enzymes, will depend more significantly on the
associated safety and efficacy profile and on the price relative to competitive
or alternative treatments and other marketing characteristics of each product
than on the exclusivity afforded by the Orphan Drug Act. Additionally, these
products may be protected by patents and other means.
REGULATION OF DIAGNOSTIC SERVICES. The Clinical Laboratories Improvement
Act provides for the regulation of clinical laboratories by the U.S. Department
of Health and Human Services. Regulations promulgated under the act affect our
genetics laboratories. The Secretary of Health and Human Services Advisory
Committee on Genetic Testing recently published recommendations for increased
oversight by the Centers for Disease Control and the FDA for all genetic
testing. This oversight will be similar to that of the current non-genetic
diagnostic products.
REGULATION OF GENE THERAPY PRODUCTS. In addition to FDA requirements, the
National Institutes of Health has established guidelines providing that
transfers of recombinant DNA into human subjects at NIH laboratories or with NIH
funds must be approved by the NIH Director. The NIH has established the
Recombinant DNA Advisory Committee to review gene therapy protocols. We expect
that all of our gene therapy protocols will be subject to review by the
Recombinant DNA Advisory Committee. In the United Kingdom, our gene therapy
protocols will be subject to review by the Gene Therapy Advisory Committee.
The death of a patient undergoing gene therapy using an adenoviral vector to
deliver the therapeutic gene has been widely publicized. Although this patient
was not a part of a Genzyme clinical trial, deaths and any other adverse events
in the field of gene therapy that may occur in the future may result in greater
governmental regulation and potential regulatory delays relating to the testing
or approval of our gene therapy products. As a result of the death, the U.S.
Senate has commenced hearings to determine whether additional legislation is
required to protect volunteers and patients who participate in gene therapy
clinical trials. Additionally, the Recombinant DNA Advisory Committee has
extensively discussed the use of adenoviral vectors in gene therapy clinical
trials and recently issued a draft report on the safety of adenoviral vectors.
While this draft report recommends that clinical trials using adenoviral vectors
should continue with caution, it also suggested a number of changes in the way
gene therapy trials are conducted. If any new guidelines are adopted by the NIH,
our gene therapy trials could be delayed or become more expensive to conduct.
TISSUE AND ORGAN BANK LAWS. A federal criminal statute prohibits the
transfer of any human organ for valuable consideration for use in human
transplantation, but permits recovery of reasonable costs associated with
transplant activities. This statute has not been applied to
Carticel-Registered Trademark- chondrocytes or Epicel-Registered Trademark- skin
grafts. Certain states have laws requiring the licensure of tissue and organ
banks and laws governing the sale of human organs and the safety and efficacy of
drugs, devices and biologics, including skin. These state laws could be
interpreted to apply to Genzyme Biosurgery's production and distribution of
cultured tissue products. Provisions in certain states' statutes prohibit the
receipt of
30
valuable consideration in connection with the sale of human tissue by a tissue
bank, but permit licensed tissue banks, including companies, to recover their
reasonable costs associated with human tissue sales. The application of these or
other regulations to Genzyme Biosurgery could result in significant expense to
Genzyme Biosurgery, limit reimbursement for Genzyme Biosurgery's services and
otherwise materially adversely affect Genzyme Biosurgery's results of
operations.
OTHER LAWS AND REGULATIONS. Our operations are or may be subject to various
federal, state and local laws, regulations and recommendations relating to data
protection, safe working conditions, laboratory and manufacturing practices and
the purchase, storage, movement, use and disposal of hazardous or potentially
hazardous substances used in connection with our research work and manufacturing
operations, including radioactive compounds and infectious disease agents.
Although we believe that our safety procedures comply with the standards
prescribed by federal, state and local regulations, the risk of contamination,
injury or other accidental harm cannot be eliminated completely. In the event of
an accident, we could be held liable for any damages that result and any
liabilities could exceed our resources.
EMPLOYEES
As of December 31, 2000, we had approximately 4,400 employees, including all
of our consolidated subsidiaries and excluding Genzyme Transgenics Corporation.
None of our employees are covered by collective bargaining agreements. We
consider our employee relations to be excellent.
FINANCIAL INFORMATION REGARDING SEGMENT REPORTING
We have provided the information required by Item 101(b) of Regulation S-K
in Note Q., "Segment Information," to our Consolidated Financial Statements in
the 2000 Genzyme General Annual Report set forth in Exhibit 13.1 to this Annual
Report on Form 10-K. We are incorporating that information into this section by
reference.
RESEARCH AND DEVELOPMENT COSTS
We have provided the information required by Item 101(c)(1)(xi) of
Regulation S-K in Part II, Item 8 "Consolidated Financial Statements and
Supplementary Schedules" and specifically in the Genzyme Corporation and
Subsidiaries Consolidated Statements of Operations and in Note M., "Research and
Development Agreements," to our Consolidated Financial Statements in the 2000
Genzyme General Annual Report set forth in Exhibit 13.1 to this Annual Report on
Form 10-K. We are incorporating that information into this section by reference.
SALES BY GEOGRAPHIC AREA, SIGNIFICANT CUSTOMERS AND PRODUCTS
We have provided the information required by Items 101(c)(1)(i) and
(vii) and 101(d) of Regulation S-K in the 2000 Genzyme General Annual Report
under the heading "Management's Discussion and Analysis of Genzyme Corporation
and Subsidiaries' Financial Condition and Results of Operations" and in Note Q.,
"Segment Information," to our Consolidated Financial Statements set forth in
Exhibit 13.1 to this Annual Report on Form 10-K. We are incorporating that
information into this section by reference.
31
ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following people are our current executive officers:
NAME AGE TITLE
- ---- -------- ------------------------------------------
Henri A. Termeer.......................... 55 Chairman of the Board; President; and
Chief Executive Officer
Earl M. Collier, Jr....................... 53 Executive Vice President; President,
Genzyme Biosurgery
Zoltan A. Csimma.......................... 59 Senior Vice President, Human Resources
Richard A. Moscicki, M.D.................. 49 Chief Medical Officer; Senior Vice
President, Clinical, Medical and
Regulatory Affairs
Alan E. Smith, Ph.D....................... 55 Chief Scientific Officer; Senior Vice
President, Research
G. Jan van Heek........................... 51 Executive Vice President, Therapeutics,
Genetics and Pharmaceuticals
Peter Wirth............................... 50 Chief Legal Officer; Executive Vice
President, Corporate Development, Genzyme
Molecular Oncology, GelTex and Legal;
Clerk
Michael S. Wyzga.......................... 46 Chief Financial and Accounting Officer;
Senior Vice President, Finance
MR. TERMEER has served as our President and a Director since October 1983,
as Chief Executive Officer since December 1985 and as Chairman of the Board
since May 1988. For ten years prior to joining us, Mr. Termeer worked for Baxter
Travenol Laboratories, Inc., a manufacturer of human health care products.
Mr. Termeer is a director of ABIOMED, Inc., AutoImmune Inc., Diacrin, Inc. and
Genzyme Transgenics Corporation, and a trustee of Hambrecht & Quist Healthcare
Investors and Hambrecht & Quist Life Sciences Investors.
MR. COLLIER joined us in January 1997 as Senior Vice President, Health
Systems, and served as Executive Vice President, Surgical Products and Health
Systems from July 1997 until June 1999. He served as President of Genzyme
Surgical Products from June 1999 until December 2000. Mr. Collier was also
responsible for Genzyme Tissue Repair from December 1999 to December 2000. In
December 2000, Mr. Collier became President of Genzyme Biosurgery, which was
formed through the combination of Genzyme Surgical Products and Genzyme Tissue
Repair with Biomatrix, Inc. Prior to joining us, Mr. Collier was President of
Vitas HealthCare Corporation (formerly Hospice Care Incorporated), a provider of
health care services, from October 1991 until August 1995. Prior to that,
Mr. Collier was a partner in the Washington, D.C. law firm of Hogan & Hartson,
which he joined in 1981.
MR. CSIMMA joined us in July 2000 as Senior Vice President, Human Resources.
Prior to joining us, he served as Vice President, Human Resources of Wyeth
Ayerst Research, a pharmaceutical research organization, from August 1998 to
July 2000. During that time, Mr. Csimma also served as Site Head, Genetics
Institute, for Wyeth Ayerst. From May 1988 to August 1998, he served as Vice
President, Human Resources and Operations, of Genetics Institute, Inc., a
biotechnology company, which was integrated into Wyeth Ayerst in March 1998.
DR. MOSCICKI joined us in March 1992 as Medical Director, became Vice
President, Medical Affairs in early 1993 and was named Vice President, Clinical,
Medical and Regulatory Affairs in December 1993. In September 1996 he became
Senior Vice President, Clinical, Medical and Regulatory Affairs and Chief
Medical Officer. Since 1979, he has also been a physician staff member at the
Massachusetts General Hospital and a faculty member at the Harvard Medical
School.
32
DR. SMITH joined us in August 1989 as Senior Vice President, Research and
became Chief Scientific Officer in September 1996. Prior to joining us, he
served as Vice President-Scientific Director of Integrated Genetics, Inc. from
November 1984 until its acquisition by us in August 1989. From October 1980 to
October 1984, Dr. Smith was head of the Biochemistry Division of the National
Institute for Medical Research, Mill Hill, London, England, and from 1972 to
October 1980 he was a member of the scientific staff at the Imperial Cancer
Research Fund in London, England.
MR. VAN HEEK joined us in September 1991 as General Manager of our
wholly-owned subsidiary, Genzyme, B.V., and became a corporate Vice President
and President of our therapeutics business unit in December 1993. From
September 1996 through July 1997, he served as Group Senior Vice President,
Therapeutics and from July 1997 through December 1999 served as Executive Vice
President, Therapeutics and Genzyme Tissue Repair. Since January 2000 he has
served as Executive Vice President, Therapeutics and Genetics, with
responsibility for our therapeutics and genetics business units and
international operations. He is also responsible for our pharmaceuticals
business. Prior to joining us, Mr. van Heek was Vice President/General Manager
of the Fenwal Division of Baxter Healthcare Corporation.
MR. WIRTH joined us in January 1996 and has served as Executive Vice
President and Chief Legal Officer since September 1996. Mr. Wirth has
responsibility for Genzyme's corporate development and legal activities, Genzyme
Molecular Oncology and our GelTex Pharmaceuticals subsidiary. From January 1996
to September 1996, Mr. Wirth served as Senior Vice President and General
Counsel. Mr. Wirth was a partner of Palmer & Dodge LLP, a Boston, Massachusetts
law firm, from 1982 through September 1996. Mr. Wirth remains of counsel to
Palmer & Dodge LLP.
MR. WYZGA joined us in February 1998 as Vice President and Corporate
Controller, served as Senior Vice President, Corporate Controller and Chief
Accounting Officer since January 1999, and as Senior Vice President, Finance and
Chief Financial Officer since July 1999. Prior to joining us, from
February 1997 to February 1998, Mr. Wyzga served as Chief Financial Officer of
Sovereign Hill Software, Inc., a software company. From November 1995 to
February 1997, he served as Vice President of Finance and Chief Financial
Officer of CACHELINK Corporation, a client/server software company. From
October 1994 to November 1995 Mr. Wyzga served as Vice President of Finance for
Lotus Development Corporation and he also served from August 1993 to
October 1994 as Director of Plans and Controls and from April 1991 to
August 1993 as Manager of Plans and Controls for Lotus.
ITEM 2. PROPERTIES
Our operations are conducted in manufacturing, warehousing, pilot plant,
clinical laboratories, and research and office facilities that are located
principally in:
- the United States;
- the United Kingdom;
- the Netherlands;
- Canada;
- Switzerland; and
- Germany.
We lease all of our properties except for certain properties in:
- Quebec, Canada;
- Coventry, Connecticut;
- Haverhill and West Malling, England;
33
- Boston, Massachusetts;
- Fall River, Massachusetts;
- Framingham, Massachusetts;
- Ridgefield, New Jersey;
- Santa Fe, New Mexico; and
- Liestal, Switzerland.
Our principal properties are:
- for Genzyme General, our manufacturing facilities for the large-scale
production of our therapeutic proteins, diagnostic products and our
genetic diagnostic facilities; and
- for Genzyme Biosurgery, our manufacturing facilities for the large-scale
production of surgical instruments, sutures and biomaterials, including
Synvisc-Registered Trademark- and Seprafilm-TM- bioresorbable membrane,
and our cell processing facilities for Carticel-Registered Trademark-
chondrocytes and Epicel-Registered Trademark- skin grafts.
Our selling and marketing activities are concentrated at facilities we have
leased in Cambridge, Massachusetts and in the Netherlands. We conduct our
research and development activities primarily at our laboratory facilities in
the United States.
Leases for our facilities contain typical commercial lease provisions
including renewal options, rent escalators and tenant responsibility for
operating expenses. We believe that we have or are in the process of developing
or acquiring adequate manufacturing capacity to support our requirements for the
next several years.
GENZYME GENERAL
THERAPEUTICS
In October 1996, we received FDA approval to manufacture
Cerezyme-Registered Trademark- enzyme at our multi-product manufacturing
facility at Allston Landing in Boston, Massachusetts. The facility, which we own
and which contains extensive sterile filling capacity, is built on land that we
hold under a 60-year lease.
We manufacture a portion of our supply requirements for sevelamer
hydrochloride for use in Renagel-Registered Trademark- capsules and tablets, in
our facilities in Haverhill, England.
We manufacture Thyrogen-Registered Trademark- drug substance under Good
Manufacturing Practices conditions in our small-scale manufacturing facility in
Framingham, Massachusetts and final drug product in Allston Landing in Boston,
Massachusetts.
We use a multi-use pharmaceutical facility in Liestal, Switzerland to
produce peptides.
DIAGNOSTICS
Genzyme General's diagnostic test kits and reagents are produced in
manufacturing facilities in San Carlos, California, Cambridge, Massachusetts and
Russelsheim, Germany.
We produce diagnostic enzymes and other fermentation products in a
multi-purpose fermentation facility in Maidstone, England and a protein
purification plant in West Malling, England. In 1997, we completed construction
of a new fermentation facility and warehousing facility in West Malling,
England.
Our genetic testing business primarily conducts operations in clinical
laboratory and administrative facilities we own in Framingham, Massachusetts and
Santa Fe, New Mexico.
34
GELTEX PHARMACEUTICALS
In connection with our acquisition of GelTex in December 2000, we acquired
or assumed leases for office and laboratory space in Waltham, Massachusetts.
GENZYME BIOSURGERY
We have manufacturing capacity at two facilities in the United Kingdom to
produce commercial quantities of hyaluronan powder for the Sepra-TM- family of
products. Seprafilm-TM- bioresorbable membrane, CV Seprafilm-TM- II adhesion
barrier and Sepramesh-TM- biosurgical composite are produced at commercial scale
from the hyaluronan powder in our manufacturing facility in Framingham,
Massachusetts.
In July 1996, we acquired or assumed the leases for certain office,
laboratory and manufacturing facilities in Fall River, Massachusetts, Coventry,
Connecticut, Tucker, Georgia and Russelsheim, Germany for use in manufacturing
and warehousing our surgical products. As part of our divestiture of the
Snowden-Pencer-Registered Trademark- product lines, we intend to assign the
lease of our Tucker, Georgia facility to the purchaser of the business.
Production for Carticel-Registered Trademark- chondrocytes and
Epicel-Registered Trademark- skin grafts occurs primarily in our cell processing
facilities in Cambridge, Massachusetts. The facility has the capacity to provide
Carticel-Registered Trademark- chondrocytes to approximately 5,000 patients per
year. In 1996, we established a surgeon training center at our facility in the
Netherlands in conjunction with the Carticel-Registered Trademark- program.
In connection with our acquisition of Biomatrix in December 2000, we assumed
leases for office and laboratory space in Ridgefield, New Jersey. We also
acquired manufacturing facilities in Ridgefield, New Jersey and Pointe-Claire,
Quebec, Canada which are used to manufacture Synvisc-Registered Trademark- and
other hyaluronan-based products. We intend to terminate manufacturing of
Synvisc-Registered Trademark- at, and to sell, our Pointe-Claire facility in
2001.
GENZYME MOLECULAR ONCOLOGY
Genzyme Molecular Oncology provides SAGE-TM- services from facilities we own
in Framingham, Massachusetts.
ITEM 3. LEGAL PROCEEDINGS
We filed a lawsuit on July 25, 2000 seeking injunctive relief and damages
against Transkaryotic Therapies, Inc. in the U.S. District Court in Wilmington,
Delaware for patent infringement resulting from Transkaryotic Therapies'
manufacture and use of Replagal-TM-, its replacement therapy for Fabry disease.
The suit alleges infringement of U.S. Patent No. 5,356,804, which we exclusively
licensed from Mount Sinai School of Medicine. The patent is directed to methods
of making alpha-galactosidase in mammalian cells, as well as the genetically
engineered cells themselves.
On September 19, 2000, Transkaryotic Therapies filed a lawsuit against
Genzyme and Mount Sinai School of Medicine in U.S. District Court in Boston,
Massachusetts seeking declaratory judgments that the manufacture, use and sale
of Replagal-TM- does not infringe the patent we licensed from Mount Sinai and
that the Mount Sinai patent is invalid. On March 7, 2001, Transkaryotic
Therapies moved to transfer the Massachusetts litigation to the U.S. District
Court in Delaware for consolidation with the Delaware action we had initiated.
On November 14, 2000, we filed a lawsuit seeking injunctive relief and
damages against Atrium Medical Corporation for patent infringement based on
Atrium's manufacture and sale of its Express-Registered Trademark- and
Oasis-Registered Trademark- chest drainage devices. Our lawsuit, filed in the
U.S. District Court in Delaware, alleges infringement of U.S. Patent Nos.
4,544,370, 4,715,856, 4,747,844, 4,822,346 and 4,889,531. These patents
35
are directed to chest drainage devices that include, among other features, dry
suction technology and/or dry seal technology.
As a result of our acquisition of Biomatrix, Inc. in December 2000, we
became involved in lawsuits that were previously filed against Biomatrix. On
July 21 and August 7, 15 and 30, 2000, class action lawsuits requesting
unspecified damages were filed in the U.S. District Court in New Jersey against
Biomatrix and two of its officers and directors, Endre A. Balazs and Rory B.
Riggs. In these actions, the plaintiffs seek to certify a class of all persons
or entities who purchased or otherwise acquired Biomatrix common stock during
the period between July 20, 1999 and April 25, 2000. The plaintiffs allege,
among other things, that the defendants failed to accurately disclose
information relating to Synvisc-Registered Trademark- during the period between
July 20, 1999 and April 25, 2000, and assert causes of action under the
Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated under
the Exchange Act.
On March 14, 2001, Genentech, Inc. filed a complaint against us in U.S.
District Court in Delaware seeking declaratory judgments that the manufacture,
use and sale of TNKase-TM- does not infringe our U.S. Patent No. 5,344,773, and
that Genentech therefore does not owe us royalties under a license agreement we
entered into with Genentech in 1992. Genentech is also seeking declaratory
judgments that they have not breached the license agreement, and that the claims
of our patent are invalid.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We held a special meeting of our stockholders on December 15, 2000. We have
described below the results of voting on proposals submitted to our stockholders
for a vote at that meeting.
1. Proposal to amend our charter to create Biosurgery Stock as a new series
of common stock and to cancel Genzyme Surgical Products Division Common
Stock, which we refer to as Surgical Products Stock, and Genzyme Tissue
Repair Division Common Stock, which we refer to as Tissue Repair Stock:
NUMBER OF
NUMBER OF NUMBER OF NUMBER OF VOTES BROKER
VOTES FOR VOTES AGAINST ABSTAINING NON-VOTES
---------- ------------- --------------- ---------
Genzyme General Stock....... 56,471,637 304,923 1,195,229 --
Molecular Oncology Stock*... 569,777 9,462 3,479 --
Surgical Products Stock**... 5,494,754 788,463 9,326 --
Tissue Repair Stock***...... 970,532 58,052 5,112 --
Total....................... 63,506,700 1,160,900 1,213,146 --
- ------------------------
* Represents the actual number of shares of Molecular Oncology Stock voted
multiplied by 0.08.
** Represents the actual number of shares of Surgical Products Stock voted multiplied
by 0.61.
*** Represents the actual number of shares of Tissue Repair Stock voted multiplied by
0.06.
The proposal received the affirmative vote of a majority in interest of
all shares outstanding and entitled to vote and, therefore, was adopted.
36
2. Vote of holders of shares of Surgical Products Stock on the proposal to
approve the exchange of 0.6060 of a share of Biosurgery Stock for each
share of Surgical Products Stock and to transfer the assets of Genzyme
Surgical Products to Genzyme Biosurgery.
NUMBER OF
NUMBER OF NUMBER OF NUMBER OF VOTES BROKER
VOTES FOR VOTES AGAINST ABSTAINING NON-VOTES
--------- ------------- --------------- ---------
Surgical Products Stock...... 9,007,794 1,292,563 15,289 --
The proposal received the affirmative vote of a majority in interest of
all shares of Surgical Products Stock outstanding and entitled to vote
and, therefore, was adopted.
3. Vote of holders of shares of Tissue Repair Stock on the proposal to
approve the exchange of 0.3352 of a share of Biosurgery Stock for each
share of Tissue Repair Stock and to transfer the assets of Genzyme Tissue
Repair to Genzyme Biosurgery.
NUMBER OF
NUMBER OF NUMBER OF NUMBER OF VOTES BROKER
VOTES FOR VOTES AGAINST ABSTAINING NON-VOTES
---------- ------------- --------------- ---------
Tissue Repair Stock......... 16,175,534 967,543 85,204 --
The proposal received the affirmative vote of a majority in interest of
all shares of Tissue Repair Stock outstanding and entitled to vote and,
therefore, was adopted.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
We have three series of common stock:
- Genzyme General Stock;
- Biosurgery Stock; and
- Molecular Oncology Stock.
These stocks are intended to reflect the value and track the performance of our
Genzyme General, Genzyme Biosurgery and Genzyme Molecular Oncology divisions.
All three stocks are traded on the over-the-counter market and prices are quoted
on The Nasdaq National Market system under the symbols "GENZ," "GZBX" and
"GZMO."
On June 28, 1999, we distributed to the holders of record of Genzyme General
Stock on June 14, 1999, 0.17901 of a share of Surgical Products Stock for each
share of Genzyme General Stock held. Surgical Products Stock began trading on
June 28, 1999. On December 18, 2000, we created Biosurgery Stock in connection
with the formation of Genzyme Biosurgery, which we formed through the
combination of the businesses of Genzyme Surgical Products and Genzyme Tissue
Repair and the acquisition of Biomatrix. The last day of trading for Surgical
Products Stock and Tissue Repair Stock was December 18, 2000. On December 19,
2000, we exchanged 0.6060 of a share of Biosurgery Stock for each share of
Surgical Products Stock and 0.3352 of a share of Biosurgery Stock for each share
of Tissue Repair Stock. Biosurgery Stock began trading on December 19, 2000.
As of March 23, 2001, there were 2,175 stockholders of record of Genzyme
General Stock, 2,064 stockholders of record of Biosurgery Stock and 2,009
stockholders of record of Molecular Oncology Stock.
37
The following table sets forth, for the periods indicated, the high and low
sale price for each series of Genzyme stock as reported by Nasdaq.
HIGH LOW
-------- --------
GENZYME GENERAL STOCK
2000:
First Quarter........................................... $ 63 1/2 $39 11/16
Second Quarter.......................................... 60 3/4 40 3/8
Third Quarter........................................... 76 1/2 56 7/8
Fourth Quarter.......................................... 103 3/4 61 5/8
1999:
First Quarter........................................... $ 55 3/4 $41 5/8
Second Quarter.......................................... 53 5/8 36 3/8
Third Quarter........................................... 63 1/8 44 3/4
Fourth Quarter.......................................... 48 3/8 30 3/4
BIOSURGERY STOCK
2000:
Fourth Quarter (beginning December 19, 2000)............ $ 11 3/4 $ 7 11/16
MOLECULAR ONCOLOGY STOCK
2000:
First Quarter........................................... $ 40 $ 5 11/32
Second Quarter.......................................... 19 1/2 8 7/8
Third Quarter........................................... 16 25/94 6 3/4
Fourth Quarter.......................................... 17 1/8 8 5/8
1999:
First Quarter........................................... $ 5 1/2 $ 2 5/16
Second Quarter.......................................... 3 31/32 2 5/8
Third Quarter........................................... 10 5/8 2 5/8
Fourth Quarter.......................................... 7 3/8 4 3/16
We have never paid any cash dividends on any series of our common stock and
we do not anticipate paying cash dividends in the foreseeable future.
On October 17, 2000, we entered into an arrangement with Purdue Pharma L.P.
relating to the discovery and development of cancer antigens. As part of this
arrangement, we issued an aggregate of 532,066 shares of Molecular Oncology
Stock to two affiliates of Purdue. The aggregate consideration paid for these
shares was $7.5 million. We issued these shares in reliance on Section 4(2) and,
in the case of one of the purchasers, an entity located outside the United
States, Regulation S, under the Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
We incorporate our Selected Financial Data into this section by reference
from:
- the 2000 Genzyme General Annual Report under the headings "Genzyme
Corporation--Selected Financial Data" and "Genzyme General--Combined
Selected Financial Data;"
- the 2000 Genzyme Biosurgery Annual Report under the heading "Genzyme
Biosurgery--Combined Selected Financial Data;" and
- the 2000 Genzyme Molecular Oncology Annual Report under the heading
"Genzyme Molecular Oncology--Combined Selected Financial Data."
38
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
We incorporate our Management's Discussion and Analysis of Financial
Condition and Results of Operations into this section by reference from:
- the 2000 Genzyme General Annual Report under the headings "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Genzyme Corporation and Subsidiaries" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Genzyme General;"
- the 2000 Genzyme Biosurgery Annual Report under the heading "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Genzyme Biosurgery;" and
- the 2000 Genzyme Molecular Oncology Annual Report under the heading
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Genzyme Molecular Oncology."
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We incorporate our Quantitative and Qualitative Disclosures About Market
Risk by reference into this section from the section entitled "Management's
Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial
Condition and Results of Operations--New Accounting Pronouncements,"
"--Euro--The New European Currency," and "--Market Risk" in the 2000 Genzyme
General Annual Report included in Exhibit 13.1 to this Annual Report on
Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
We incorporate the financial statements filed as part of this Annual Report
on Form 10-K into this section by reference from:
- the Consolidated Financial Statements of Genzyme Corporation and
Subsidiaries and notes thereto included in Exhibit 13.1 to this Annual
Report on Form 10-K;
- the Combined Financial Statements of Genzyme General and notes thereto
included in Exhibit 13.2 to this Annual Report on Form 10-K;
- the Combined Financial Statements of Genzyme Biosurgery and notes thereto
included in Exhibit 13.3 to this Annual Report on Form 10-K; and
- the Combined Financial Statements of Genzyme Molecular Oncology and notes
thereto included in Exhibit 13.4 to this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During the period from January 1, 1999 to the filing date of this Annual
Report on Form 10-K, no independent accountant who was previously engaged as the
principal accountant to audit our financial statements has resigned, indicated
that it has declined to stand for re-election after the completion of the
current audit or was dismissed.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
We incorporate information regarding our directors and executive officers
into this section by reference from the section entitled "Executive Officers of
the Registrant" in Part I, Item 1A of this
39
Annual Report on Form 10-K and the sections entitled "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the proxy statement
for our 2001 annual meeting of stockholders.
ITEM 11. EXECUTIVE COMPENSATION
We incorporate information regarding the compensation of our directors and
executive officers into this section by reference from the sections entitled
"Election of Directors--Director Compensation" and "Executive Compensation" in
the proxy statement for our 2001 annual meeting of stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
We incorporate information regarding the ownership of our securities by our
directors, executive officers and 5% stockholders into this section by reference
from the section entitled "Share Ownership" in the proxy statement for our 2001
annual meeting of stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We incorporate information regarding transactions with related parties into
this section by reference from the section entitled "Certain Transactions" in
the proxy statement for our 2001 annual meeting of stockholders.
40
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1). FINANCIAL STATEMENTS
We are incorporating the following financial statements (and related notes)
of Genzyme General and Genzyme Corporation and subsidiaries into this section by
reference from the 2000 Genzyme General Annual Report:
PAGE*
--------------
GENZYME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations--For the Years
Ended December 31, 2000, 1999 and 1998................. GCS-39
Consolidated Balance Sheets--December 31, 2000 and
1999................................................... GCS-41
Consolidated Statements of Cash Flows--For the Years
Ended December 31, 2000, 1999 and 1998................. GCS-43
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 2000, 1999 and 1998........... GCS-45
Notes to Consolidated Financial Statements.............. GCS-50
Report of Independent Accountants....................... GCS-111
GENZYME GENERAL
Combined Statements of Operations--For the Years Ended
December 31, 2000, 1999 and 1998....................... GG-23
Combined Balance Sheets--December 31, 2000 and 1999..... GG-24
Combined Statements of Cash Flows--For the Years Ended
December 31, 2000, 1999 and 1998....................... GG-25
Notes to Combined Financial Statements.................. GG-27
Report of Independent Accountants....................... GG-57
- ------------------------
* References are to page numbers in the 2000 Genzyme General Annual Report.
The financial statements (and related notes) are incorporated by reference
from the 2000 Genzyme General Annual Report included in Exhibits 13.1 and
13.2 to this Annual Report on Form 10-K.
We are incorporating the following financial statements (and related notes)
of Genzyme Biosurgery into this section by reference from the 2000 Genzyme
Biosurgery Annual Report:
PAGE*
------------
GENZYME BIOSURGERY
Combined Statements of Operations--For the Years Ended
December 31, 2000, 1999 and 1998....................... GB-22
Combined Balance Sheets--December 31, 2000 and 1999..... GB-23
Combined Statements of Cash Flows--For the Years Ended
December 31, 2000, 1999 and 1998....................... GB-24
Notes to Combined Financial Statements.................. GB-26
Report of Independent Accountants....................... GB-49
- ------------------------
* References are to page numbers in the 2000 Genzyme Biosurgery Annual Report.
The financial statements (and related notes) are incorporated by reference
from the 2000 Genzyme Biosurgery Annual Report included in Exhibit 13.3 to
this Annual Report on Form 10-K.
41
We are incorporating the following financial statements (and related notes)
of Genzyme Molecular Oncology into this section by reference from the 2000
Genzyme Molecular Oncology Annual Report:
PAGE*
-------------
GENZYME MOLECULAR ONCOLOGY
Combined Statements of Operations--For the Years Ended
December 31, 2000, 1999 and 1998....................... GMO-14
Combined Balance Sheets--December 31, 2000 and 1999..... GMO-15
Combined Statements of Cash Flows--For the Years Ended
December 31, 2000, 1999 and 1998....................... GMO-16
Notes to Combined Financial Statements.................. GMO-17
Report of Independent Accountants....................... GMO-31
- ------------------------
* References are to page numbers in the 2000 Genzyme Molecular Oncology Annual
Report. The financial statements (and related notes) are incorporated by
reference from the 2000 Genzyme Molecular Oncology Annual Report included in
Exhibit 13.4 to this Annual Report on Form 10-K.
(A)(2). FINANCIAL STATEMENT SCHEDULES
The schedule listed below for Genzyme Corporation and Subsidiaries is filed
as part of this Annual Report on Form 10-K and is incorporated into this section
by reference:
PAGE*
--------------
GENZYME CORPORATION AND SUBSIDIARIES
Schedule II--Valuation and Qualifying Accounts.......... GCS-112
- ------------------------
* Reference is to a page number in the Genzyme Corporation and Subsidiaries
Consolidated Financial Statements or notes thereto included in Exhibit 13.1
to this Annual Report on Form 10-K.
All other schedules are omitted as the information required is inapplicable
or the information is presented in (i) the Genzyme Corporation and Subsidiaries
Consolidated Financial Statements or notes thereto, (ii) the Genzyme General
Combined Financial Statements or notes thereto, (iii) the Genzyme Biosurgery
Combined Financial Statements or notes thereto or (iv) the Genzyme Molecular
Oncology Combined Financial Statements or notes thereto.
(A)(3). EXHIBITS
The exhibits are listed below under Part IV, Item 14(c) of this Annual
Report on Form 10-K.
(B). REPORTS ON FORM 8-K
We filed a Current Report on Form 8-K dated November 20, 2000 on November
20, 2000 to announce our exercise of our option to purchase all of the
outstanding Class A limited partnership interests in Genzyme Development
Partners, L.P. pursuant to a Partnership Purchase Option Agreement dated as of
September 13, 1989.
We filed a Current Report on Form 8-K dated December 14, 2000 on
December 15, 2000 to announce the completion of our acquisition of GelTex
Pharmaceuticals, Inc.
42
We filed a Current Report on Form 8-K dated December 18, 2000 on
December 19, 2000 to announce:
(a) the filing with the Secretary of Commonwealth of Massachusetts, and
the effectiveness of, an amendment and restatement of our corporate charter
solely to:
(1) cancel our Surgical Products Stock and our Tissue Repair Stock and
create our Biosurgery Stock, and
(2) cancel our Series B Junior Participating Preferred Stock and
Series D Junior Participating Preferred Stock and create a new
Series B Junior Participating Preferred Stock;
(b) the adoption of a revised set of Management and Accounting Policies
Governing the Relationship of Genzyme Divisions to reflect the elimination
of the Genzyme Surgical Products Division and the Genzyme Tissue Repair
Division and the creation of the Genzyme Biosurgery; and
(c) the amendment of our Amended and Restated Renewed Rights Agreement
with American Stock Transfer & Trust Company, as Rights Agent, to reflect
the cancellation of the purchase rights associated with Surgical Products
Stock and Tissue Repair Stock and the creation of purchase rights associated
with Biosurgery Stock.
We filed a Current Report on Form 8-K dated December 18, 2000 on
December 28, 2000 to announce the matters described in the Current Report on
Form 8-K filed on December 19, 2000, adding a detailed description of our
capital stock. We filed copies of our Restated Articles of Organization,
Management and Accounting Policies and Second Amendment and Restated Renewed
Rights Agreement with the SEC with that Form 8-K.
43
(C). EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
*3.1-- Restated Articles of Organization of Genzyme, as amended.
Filed as Exhibit 1 to Genzyme's Registration Statement on
Form 8-A filed on December 19, 2000.
*3.2-- By-laws of Genzyme, as amended. Filed as Exhibit 3.2 to
Genzyme's Form 10-Q for the quarter ended September 30,
1999.
*4.1-- Second Amended and Restated Renewed Rights Agreement dated
as of December 18, 2000 between Genzyme and American Stock
Transfer & Trust Company, as Rights Agent. Filed as
Exhibit 4 to our Registration Statement on Form 8-A filed on
December 19, 2000.
*4.2-- Form of Genzyme General Division Convertible Debenture.
Filed as Exhibit 10.7 to Genzyme's Form 10-Q for the quarter
ended September 30, 1997.
*4.3-- Registration Rights Agreement dated as of August 29, 1997 by
and among Genzyme and the entities listed on the signature
pages thereto. Filed as Exhibit 10.8 to Genzyme's Form 10-Q
for the quarter ended September 30, 1997.
*4.4-- Warrant Agreement between Genzyme and Comdisco, Inc. Filed
as Exhibit 10.22 to a Form 10 of PharmaGenics, Inc. (File
No. 0-20138).
*4.5-- Indenture, dated as of May 22, 1998, between Genzyme and
State Street Bank and Trust Company, as Trustee, including
the form of Note. Filed as Exhibit 4.3 to Genzyme's
Registration Statement on Form S-3 (File No. 333-59513).
*4.6-- Registration Rights Agreement, dated as of May 19, 1998,
among Genzyme, Credit Suisse First Boston Corporation,
Goldman, Sachs & Co. and Cowen & Company. Filed as
Exhibit 4.4 to Genzyme's Registration Statement on Form S-3
(File No. 333-59513).
*4.7-- Purchase Agreement, dated as of May 19, 1998, among Genzyme,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co.
and Cowen & Company. Filed as Exhibit 4.5 to Genzyme's
Registration Statement on Form S-3 (File No. 333-59513).
*4.8-- Biomatrix, Inc. ("Biomatrix") 6.9% Convertible Subordinated
Note due May 14, 2003. Filed as Exhibit 4.1 to our Form 8-K
filed on January 2, 2001.
*10.1-- Leases by Whatman Reeve Angel Limited to Whatman
Biochemicals Limited dated May 1, 1981. Filed as
Exhibit 10.12 to Genzyme's Registration Statement on
Form S-1 (File No. 33-4904).
*10.2-- Lease dated as of September 15, 1989 for 95-111 Binney
Street, Cambridge, Massachusetts between Genzyme and the
Trustees of the Cambridge East Trust. Filed as Exhibit 10.2
to Genzyme's Form 10-K for 1992. First amendment of lease
dated February 28, 1994. Filed as Exhibit 10.2 to Genzyme's
Form 10-K for 1993.
*10.3-- Lease dated December 20, 1988 for Building 1400, One Kendall
Square, Cambridge, Massachusetts between Genzyme and the
Trustees of Old Binney Realty Trust, as amended by letters
dated December 20, 1988, January 19, 1989 and January 31,
1989. Filed as Exhibit 10.18 to Genzyme's Form 10-K for
1988. Addendum dated September 20, 1991 to Lease for
Building 1400, One Kendall Square, Cambridge, Massachusetts.
Filed as Exhibit 19.1 to Genzyme's Form 10-Q for the quarter
ended September 30, 1991. Addenda dated August 2, 1990 and
April 6, 1993 to Lease for Building 1400, One Kendall
Square, Cambridge, Massachusetts. Filed as Exhibit 10.3 to
Genzyme's Form 10-K for 1993.
*10.4-- Lease dated December 20, 1988 for Building 700, One Kendall
Square, Cambridge, Massachusetts between Genzyme and
Trustees of Old Kendall Realty Trust, as amended by letters
dated December 20, 1988 and January 31, 1989. Filed as
Exhibit 10.19 to Genzyme's Form 10-K for 1988.
44
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
*10.5-- Lease dated September 30, 1985 for 51 New York Avenue,
Framingham, Massachusetts. Filed as Exhibit 10.8 to
Genzyme's Form 10-K for 1990. Amendment No. 1, dated
October 11, 1990, and Amendment No. 2, dated May 12, 1993,
to lease for 51 New York Avenue, Framingham, Massachusetts.
Filed as Exhibit 10.5 to Genzyme's Form 10-K for 1993.
*10.6-- Lease dated April 30, 1990 for 64 Sidney Street, Cambridge,
Massachusetts between BioSurface Technology, Inc.
("BioSurface") and Forest City 64 Sidney Street, Inc. Filed
as Exhibit 10.22 to BioSurface's Registration Statement on
Form S-1 (File No. 33-55874).
*10.7-- Sublease Lease dated May 22, 1992 for three buildings at
74-84 New York Avenue, Framingham, Massachusetts between
Genzyme and Prime Computer, Inc. Filed as Exhibit 10.7 to
Genzyme's Form 10-K for 1993.
*10.8-- Lease dated May 22, 1992 for three buildings at 74-84 New
York Avenue, Framingham, Massachusetts between Genzyme and
Mark L. Fins, David J. Winstanley and Bruce A. Gurall,
tenants in common. Filed as Exhibit 10.8 to Genzyme's
Form 10-K for 1993.
*10.9-- Lease dated June 1, 1992 for land at Allston Landing,
Allston, Massachusetts between Allston Landing Limited
Partnership and the Massachusetts Turnpike Authority. Filed
as Exhibit 10.9 to Genzyme's Form 10-K for 1993.
*10.10-- Underlease for Block 13 building at Kings Hill Business Park
West Malling Kent among Rouse and Associates Block 13
Limited, Genzyme (UK) Limited and Genzyme. Filed as
Exhibit 10.11 to Genzyme's Registration Statement on
Form 8-B dated December 31, 1991, filed on March 2, 1992.
*10.11-- Lease dated November 12, 1998 for Metrowest Place, 15
Pleasant Street Connector, Framingham, Massachusetts,
between Consolidated Group Service Company Limited
Partnership and Genzyme. Filed as Exhibit 10.11 to Genzyme's
Form 10-K for 1998.
*10.12-- Agreement of Lease, dated April 18, 1996, between Ridgefield
Associates and Biomatrix. Filed as Exhibit 10.3 to
Biomatrix's Form 10-Q for the quarter ended June 30, 1996
(File No. 0-19373).**
*10.13-- Lease dated August 28, 2000 for Building D, Cambridge
Research Park, Cambridge, Massachusetts, between Genzyme and
Kendall Square LLC. Filed as Exhibit 10.1 to Genzyme's Form
10-Q for the quarter ended September 30, 2000.**
*10.14-- Lease dated August 4, 2000 for 11 Pleasant Street Connector,
Framingham, Massachusetts between Genzyme and Fafard Real
Estate Development Corp. Filed as Exhibit 10.2 to Genzyme's
Form 10-Q for the quarter ended September 30, 2000.
*10.15-- Lease Agreement dated February 28, 1997, between GelTex
Pharmaceuticals, Inc. ("GelTex") and J.F. White
Properties, Inc. Filed as Exhibit 10.16 to GelTex's Annual
Report on Form 10-K for 1996 (File No. 0-26872).
*10.16-- Purchase and Sale Agreement between Barry L. Solar and
Robert L. Solar as Trustees of 211 Second Avenue Realty
Trust and GelTex Pharmaceuticals, Inc., dated as of
July 26, 1999. Filed as Exhibit 10.4 to GelTex's Form 10-Q
for the quarter ended June 30, 1999 (File No. 0-26872).
*10.17-- Agency Agreement, dated October 21, 1998, between First
Security Bank, N.A. and GelTex. Filed as Exhibit 10.1 to
GelTex's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 (File No. 0-26872).
*10.18-- Lease Agreement, dated October 21, 1998, between First
Security Bank, N.A. and GelTex. Filed as Exhibit 10.2 to
GelTex's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 (File No. 0-26872).
*10.19-- Agreement of Limited Partnership dated as of September 13,
1989 between Genzyme Development Corporation II ("GDC II"),
as General Partner, and each of the Limited Partners named
therein. Filed as Exhibit 10(aa) to Genzyme's Registration
Statement on Form S-4 (File No. 33-32343).
45
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
*10.20-- Cross License Agreement dated as of September 13, 1989
between Genzyme and Genzyme Development Partners, L.P.
("GDP"). Filed as Exhibit 10(bb) to Genzyme's Registration
Statement on Form S-4 (File No. 33-32343).
*10.21-- Development Agreement dated as of September 13, 1989 between
Genzyme and GDP. Filed as Exhibit 10(cc) to Genzyme's
Registration Statement on Form S-4 (File No. 33-32343).
*10.22-- Amendment No. 1 dated January 4, 1994 to Development
Agreement dated as of September 13, 1989 between Genzyme and
GDP. Filed as Exhibit 10.14 to Genzyme's Form 10-K for 1993.
*10.23-- Partnership Purchase Option Agreement dated as of
September 13, 1989 between Genzyme, GDC II, GDP, each
Class A Limited Partner and the Class B Limited Partner.
Filed as Exhibit 10(dd) to Genzyme's Registration Statement
on Form S-4 (File No. 33-32343).
10.24-- Partnership Purchase Agreement dated as of November 20, 2000
between Genzyme, GDC II, GDP and each Class A Limited
Partner. Filed herewith.
*10.25-- Amended and Restated Joint Venture Agreement between Genzyme
and GDP. Filed as Exhibit 10.1 to GDP's Form 10-Q for the
quarter ended March 31, 1997 (File No. 0-18554).
*10.26-- Marketing and Distribution Agreement between Genzyme and
Genzyme Ventures II. Filed as Exhibit 10.3 to GDP's
Form 10-Q for the quarter ended March 31, 1997 (File
No. 0-18554).
*10.27-- Technology License and Supply Agreement dated as of
September 8, 1989 between Imedex and Genzyme. Filed as
Exhibit 10.30 to Genzyme's Form 10-K for 1990.**
10.28-- 1998 Director Stock Option Plan, as amended. Filed herewith.
*10.29-- 1990 Equity Incentive Plan, as amended. Filed as
Exhibit 99.1 to Genzyme's Form S-8 dated August 8, 1997
(File No. 333-33249).
*10.30-- 1999 Employee Stock Purchase Plan. Filed as Exhibit 10.24 to
Genzyme's Form 10-K for 1999.
*10.31-- 1996 Directors' Deferred Compensation Plan. Filed as
Exhibit 99.1 to Genzyme's Form S-8 dated August 8, 1997
(File No. 333-33251).
*10.32-- Executive Employment Agreement dated as of January 1, 1990
between Genzyme and Henri A. Termeer. Filed as
Exhibit 10.32 to Genzyme's Form 10-K for 1990.
*10.33-- Form of Severance Agreement between Genzyme and certain
senior executives, together with schedule identifying the
provisions applicable to each executive. Filed as
Exhibit 10.33 to Genzyme's Form 10-K for 1990. Current
schedule identifying the executives filed herewith.
*10.34-- Form of Indemnification Agreement between Genzyme and
certain senior executives, together with schedule
identifying the provisions applicable to each executive.
Filed as Exhibit 10.34 to Genzyme's Form 10-K for 1990.
Current schedule identifying the executives filed herewith.
*10.35-- Executive Employment Agreement dated as of January 1, 1996
between Genzyme and Peter Wirth. Filed as Exhibit 10.1 to
Genzyme's Form 10-Q for the quarter ended March 31, 1996.
*10.36-- Consulting Agreement dated December 14, 1998 between Genzyme
and Charles L. Cooney, Ph.D. Filed as Exhibit 10.30 to
Genzyme's Form 10-K for 1998.
*10.37-- Consulting Agreement dated December 31, 1998 between Genzyme
and Robert J. Carpenter. Filed as Exhibit 10.31 to Genzyme's
Form 10-K for 1998.
*10.38-- Consulting Agreement dated July 1, 1998 between Genzyme and
Henry E. Blair. Filed as Exhibit 10.32 to Genzyme's
Form 10-K for 1998.
46
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
*10.39-- Technology Transfer Agreement between Genzyme and Genzyme
Transgenics Corporation ("GTC") dated as of May 1, 1993.
Filed as Exhibit 2.1 to the Registration Statement on
Form S-1 of GTC (File No. 33-62872).
*10.40-- Research and Development Agreement between Genzyme and GTC
dated as of May 1, 1993. Filed as Exhibit 10.1 to the
Registration Statement on Form S-1 of GTC (File
No. 33-62872).
*10.41-- Services Agreement between Genzyme and GTC dated as of
May 1, 1993. Filed as Exhibit 10.2 to the Registration
Statement on Form S-1 of GTC (File No. 33-62872).
*10.42-- Series A Convertible Preferred Stock Purchase Agreement
between Genzyme and GTC dated as of May 1, 1993. Filed as
Exhibit 10.5 to the Registration Statement on Form S-1 of
GTC (File No. 33-62872).
*10.43-- Second Amended and Restated Convertible Debt Agreement dated
as of December 28, 1998 by and between Genzyme and GTC.
Filed as Exhibit 10.37 to GTC's Form 10-K for 1998 (File
No. 0-21794).
*10.44-- Amended and Restated Operating Agreement of ATIII LLC dated
as of January 1, 1998 by and among Genzyme and GTC. Filed as
Exhibit 10.52.1 to GTC's Form 10-K for 1997 (File
No. 0-21794).**
*10.45-- Purchase Agreement dated as of January 1, 1998 by and
between Genzyme and GTC. Filed as Exhibit 10.52.2 to GTC's
Form 10-K for 1997 (File No. 0-21794).**
*10.46-- Collaboration Agreement dated as of January 1, 1997 by and
among Genzyme, GTC and ATIII LLC. Filed as Exhibit 10.52.3
to GTC's Form 10-K for 1997 (File No. 0-21794).**
*10.47-- Amended and Restated Credit Agreement dated December 14,
2000 among Genzyme and those of its subsidiaries party
thereto, Fleet National Bank, as Administrative Agent. Filed
as Exhibit 99.2 to Genzyme's Form 8-K Filed on January 2,
2001.
*10.48-- Amended and Restated Collaboration Agreement dated as of
April 1, 2000 by and among Genzyme, GelTex and RenaGel LLC.
Filed as Exhibit 10.1 to GelTex's Form 10-Q for the quarter
ended June 30, 2000 (File No. 0-26872).**
*10.49-- Purchase Agreement dated as of June 17, 1997 by and between
Genzyme and GelTex. Filed as Exhibit 10.19 to GelTex's
Form 10-Q for the quarter ended June 30, 1997 (File
No. 0-26872).**
*10.50-- Amended and Restated Operating Agreement of RenaGel LLC
dated as of April 1, 2000 by and among Genzyme, GelTex and
RenaGel, Inc. Filed as Exhibit 10.2 to GelTex's Form 10-Q
for the quarter ended June 30, 2000 (File No. 0-26872).
*10.51-- Contract Manufacturing Agreement between GelTex and The Dow
Chemical Company. Filed as Exhibit 10.17 to GelTex's
Form 10-Q for the quarter ended March 31, 1997 (File
No. 0-26872).
*10.52-- License Agreement between GelTex and Nitto Boseki
Co., Ltd., dated as of June 9, 1997. Filed as Exhibit 10.21
to GelTex's Form 10-Q for the quarter ended June 30, 1997
(File No. 0-26872).
*10.53-- Manufacturing and Supply Agreement (United States) between
RenaGel LLC and Circa Pharmaceuticals, Inc., dated as of
July 31, 1998. Filed as Exhibit 10.4 to GelTex's Form 10-Q
for the quarter ended June 30, 1998 (File No. 0-26872).
*10.54-- Supply Agreement dated as of November 9, 1999 by and between
Salsbury Chemicals, Inc. and GelTex. Filed as Exhibit 10.32
to GelTex's Form 10-K for 1999 (File No. 0-26872).
*10.55-- GT 102-279 Collaboration Agreement between GelTex and Sankyo
Pharma, Inc. dated as of December 23, 1999. Filed as
Exhibit 10.34 to GelTex's Form 10-K/A for 1999 filed on
November 7, 2000 (File No. 0-26872).**
47
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
*10.56-- Collaboration Agreement between GelTex and Sankyo
Pharma, Inc. dated as of December 23, 1999. Filed as
Exhibit 10.34 to GelTex's Form 10-K/A for 1999 filed on
November 7, 2000 (File No. 0-26872).**
*10.57-- Purchase Agreement dated as of August 29, 1997 by and among
Genzyme Corporation and the entities listed on the signature
pages thereto. Filed as Exhibit 10.5 to Genzyme's Form 10-Q
for the quarter ended September 30, 1997.
*10.58-- Collaboration Agreement dated September 4, 1998 among
Genzyme, BioMarin Pharmaceutical, Inc. ("BioMarin") and
BioMarin/Genzyme LLC. Filed as Exhibit 10.24 to BioMarin's
Registration Statement on Form S-1 (File No. 333-77701).
*10.59-- Purchase Agreement dated September 4, 1998 between Genzyme
and BioMarin. Filed as Exhibit 10.25 to BioMarin's
Registration Statement on Form S-1 (File No. 333-77701).
*10.60-- Operating Agreement of BioMarin/Genzyme LLC. Filed as
Exhibit 10.30 to BioMarin's Registration Statement on
Form S-1 (File No. 333-77701).
*10.61-- United States Licensing Agreement dated February 7, 1997
between Biomatrix and American Home Products Corporation
("AHP"). Filed as Exhibit 10.1 to the Biomatrix's Form 10-Q
for the quarter ended March 31, 1997. **
*10.62-- International Licensing Agreement dated February 7, 1997
between Biomatrix and AHP. File as Exhibit 10.2 to
Biomatrix's Form 10-Q for the quarter ended March 31,
1997.**
*10.63-- Supply Agreement dated February 7, 1997 between Biomatrix
and AHP. Filed as Exhibit 10.3 to Biomatrix's Form 10-Q for
the quarter ended March 31, 1997.**
*10.64-- Trademark License Agreement dated February 7, 1997 between
Biomatrix and AHP. Filed as Exhibit 10.4 to Biomatrix's
Form 10-Q for the quarter ended March 31, 1997.
*10.65-- Agreement and Plan of Merger, dated as of March 6, 2000,
among Genzyme, Seagull Merger Corporation and Biomatrix, as
amended through October 25, 2000. Filed as Annex A to
Amendment No. 2 to Genzyme's Registration Statement on Form
S-4 (File No. 333-34972) filed on October 27, 2000.
*10.66-- Agreement and Plan of Merger, dated as of September 11,
2000, among Genzyme, Titan Acquisition Corp. and GelTex as
amended. Filed as Exhibit 99.1 to Genzyme's Current Report
on Form 8-K dated September 11, 2000.
13.1-- Portions of the 2000 Genzyme General Annual Report
incorporated by reference into Parts I, II and IV of this
Form 10-K. Filed herewith.
13.2-- Portions of the 2000 Genzyme General Annual Report
incorporated by reference into Parts I, II and IV of this
Form 10-K. Filed herewith.
13.3-- Portions of the 2000 Genzyme Biosurgery Annual Report
incorporated by reference into Parts I, II and IV of this
Form 10-K. Filed herewith.
13.4-- Portions of the 2000 Genzyme Molecular Oncology Annual
Report incorporated by reference into Parts I, II and IV of
this Form 10-K. Filed herewith.
21-- Subsidiaries of the Registrant. Filed herewith.
23.1-- Consent of PricewaterhouseCoopers LLP. Filed herewith.
23.2-- Consent of PricewatehouseCoopers LLP relating to the Annual
Report of Genzyme Corporation Retirement Savings Plan on
Form 11-K. To be filed by amendment.
*99.1-- Management and Accounting Policies Governing the
Relationship of Genzyme Divisions. Filed as Exhibit 3 to
Genzyme's Registration Statement on Form 8-A filed on
December 19, 2000 (File No. 333-31548).
99.2-- Factors Affecting Future Operating Results. Filed herewith.
- ------------------------
* Indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference. Exhibits filed with Forms
10-K, 10-Q, 8-K, 8-A, 8-B or Schedule 14A of Genzyme Corporation were filed
under Commission File No. 0-14680.
48
** Confidential treatment has been granted for the deleted portions of Exhibits
10.12, 10.13, 10.27, 10.44-10.46, 10.48, 10.49, 10.55, 10.56 and
10.61-10.63.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Exhibits 10.28 through 10.38 above are management contracts or compensatory
plans or arrangements in which our executive officers or directors participate.
49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GENZYME CORPORATION
DATED: APRIL 2, 2001 By: /s/ MICHAEL S. WYZGA
-----------------------------------------
Michael S. Wyzga
SENIOR VICE PRESIDENT, FINANCE AND CHIEF
FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the date indicated.
NAME TITLE DATE
---- ----- ----
/s/ HENRI A. TERMEER
------------------------------------------- Director and Principal Executive April 2, 2001
Henri A. Termeer Officer
/s/ MICHAEL S. WYZGA
------------------------------------------- Principal Financial and April 2, 2001
Michael S. Wyzga Accounting Officer
/s/ CONSTANTINE E. ANAGNOSTOPOULOS
------------------------------------------- Director April 2, 2001
Constantine E. Anagnostopoulos
/s/ DOUGLAS A. BERTHIAUME
------------------------------------------- Director April 2, 2001
Douglas A. Berthiaume
/s/ HENRY E. BLAIR
------------------------------------------- Director April 2, 2001
Henry E. Blair
/s/ ROBERT J. CARPENTER
------------------------------------------- Director April 2, 2001
Robert J. Carpenter
/s/ CHARLES L. COONEY
------------------------------------------- Director April 2, 2001
Charles L. Cooney
/s/ VICTOR J. DZAU
------------------------------------------- Director April 2, 2001
Victor J. Dzau
/s/ CONNIE MACK III
------------------------------------------- Director April 2, 2001
Connie Mack III
50