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Genzyme Completes Acquisition of Novazyme Pharmaceuticals

Genzyme Completes Acquisition of Novazyme Pharmaceuticals
CAMBRIDGE, MA, September 27, 2001—Genzyme Corp. announced today that it has completed the acquisition of Novazyme Pharmaceuticals Inc., which will operate as a business unit of Genzyme General (Nasdaq: GENZ).  The acquisition, which closed yesterday, is expected to significantly enhance Genzyme’s leadership position in the development of enzyme replacement therapies for lysosomal storage disorders.

Under terms of the merger agreement, Genzyme made an initial payment of approximately 2.6 million shares of Genzyme General stock to Novazyme’s private shareholders, representing approximately .5714 of a share of Genzyme stock for each Novazyme share held.  Genzyme also assumed all outstanding Novazyme options, warrants and stock purchase rights.  Novazyme shareholders are also eligible to receive two subsequent payments totaling $87.5 million, payable in Genzyme General stock, contingent on U.S. marketing approval for the first two products for the treatment of a lysosomal storage disorder that employ certain of Novazyme’s technologies.  Genzyme General stock closed at $45.65 per share yesterday.
Novazyme’s novel protein engineering technologies—intended to enhance the targeting and uptake of replacement enzymes—are expected to help Genzyme develop improved, second-generation versions of its marketed products and optimal new first-generation products.  These technologies may also have application in the development of monoclonal antibodies and gene therapies.

 

“We are eager to start working closely with the Novazyme team to develop the best possible products for patients,” said Jan van Heek, executive vice president of Genzyme Corp.  “Novazyme’s technology platform, drug development team, and first-class group of scientists will complement and significantly expand our product development capabilities.”
Genzyme will move forward aggressively with the development of Novazyme’s lead product candidate, NZ-1001, an enzyme replacement therapy for Pompe disease.  The product is a highly phosphorylated and properly glycosylated form of recombinant human alpha-Glucosidase.  The initial clinical trial of NZ-1001 is expected to begin in the first half of 2002.  Genzyme is currently conducting a Phase 2 clinical trial of its own enzyme replacement therapy for Pompe disease.
John F. Crowley, president and chief executive officer of Novazyme, will serve as a senior vice president of Genzyme’s Therapeutics unit, assuming overall responsibility for Pompe disease programs.  He will continue to serve as president of Novazyme, which is now a wholly owned subsidiary of Genzyme.  William M. Canfield, M.D., Ph.D., Novazyme’s founder, chairman and chief scientific officer, will continue to lead the team of approximately 70 scientists located at Novazyme’s Oklahoma City facilities.
“We are pleased to join with Genzyme in the quest to develop improved therapies for those patients with rare, devastating diseases such as Pompe disease,” said Mr. Crowley.  “We are proud of all that we have accomplished in just two years, and we look forward to applying our technologies to accelerate the development of treatments for these patients.”
The acquisition of Novazyme will be accounted for under the purchase method of accounting.  The 2.6 million shares of Genzyme General stock issued will be valued for accounting purposes using an average trading price of Genzyme General stock over the three days before and the day of closing.  The aggregate consideration— including the value assigned to the Genzyme shares issued, the fair value of the assumed options, warrants and stock purchase rights, and acquisition costs—is estimated to be approximately $117-$122 million.  Genzyme anticipates the in-process research and development write-off for the transaction will be between 70-75 percent of the total consideration.  Tangible assets and usable net tax operating losses are expected to be approximately 10 to 15 percent of the total consideration.  The remaining portion of the consideration will be accounted for as goodwill, which will not be amortized in accordance with new regulations for business combinations.

 

As previously stated, Genzyme General expects the transaction to have an impact of approximately $.03 on its earnings per share for 2001, which are now expected to be in the range of $1.12 – $1.17 per share, excluding amortization.  This reflects the issuance of approximately 2.6 million new shares of Genzyme General stock and an expected increase in research and development spending of approximately $7 million for the year.

 

Genzyme General develops and markets therapeutic products and diagnostic products and services.  Genzyme General has five therapeutic products on the market and a strong pipeline of products in development focused on the treatment of genetic disorders and other chronic debilitating diseases with well-defined patient populations.  Genzyme General is a division of the biotechnology company Genzyme Corporation.

 

This press release contains forward-looking statements, including statements about: the anticipated benefits of the acquisition; the anticipated impact of the merger on Genzyme’s financial performance in 2001, including without limitation its shares outstanding, earnings per share, and expenses; the potential development of products using Novazyme’s technology and potential indications thereof; plans and timing concerning clinical trials; expectations concerning Novazyme’s product candidates and technologies and their anticipated impact on Genzyme’s development programs; potential additional payments to Novazyme stockholders; and Genzyme’s plans concerning the operation of Novazyme’s business. Actual results may materially differ due to numerous factors, including without limitation: enrollment rates for clinical trials; the actual timing and results of pre-clinical and clinical studies; the efficacy and safety of products in humans; the content and timing of submissions to and decisions by the FDA and other regulatory authorities; the ability to manufacture sufficient quantities of products for development and commercialization activities; Genzyme’s ability to successfully develop and receive FDA approval for products utilizing certain of Novazyme’s technology; the availability and extent of reimbursement from third-party payers; the ability of Genzyme to successfully commercialize its products; and the risks and uncertainties described in Genzyme’s reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including without limitation Exhibit 99.2 to Genzyme’s Annual Report on Form 10-K for the year ended December 31, 2000, as amended. Genzyme General Division common stock is a series of common stock of Genzyme Corporation. Therefore, holders of Genzyme General Division common stock are subject to the risks and uncertainties described in the aforementioned reports.

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Genzyme’s press releases and other company information are available at www.genzyme.com or by calling Genzyme’s investor information line at
1-800-905-4369 within the U.S. or 1-703-797-1866 outside the U.S

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