Genzyme to Acquire Novazyme Pharmaceuticals
August 7, 2001by studiopie in Novazyme
Proprietary Glycoprotein Technology Platform Will Advance
Lysosomal Storage Disorder Programs
CAMBRIDGE MA, and PRINCETON NJ, August 7, 2001—Genzyme Corp. and privately held Novazyme Pharmaceuticals Inc. today announced a definitive merger agreement under which Novazyme will be acquired by Genzyme and operate as part of Genzyme General (Nasdaq: GENZ). Genzyme expects that the acquisition will significantly advance its leadership position in the development of enzyme replacement therapies for lysosomal storage disorders, a group of genetic diseases caused by the absence of certain cellular enzymes.
Novazyme has developed a series of novel protein engineering technologies that have been shown in pre-clinical studies to greatly enhance the targeting and uptake of replacement enzymes. Genzyme believes that these technologies could potentially lead to improved, second-generation versions of its marketed products and optimal first-generation products for the treatment of various lysosomal storage disorders. Novazyme's technologies may also have application for developing advanced monoclonal antibodies and gene therapies. The most advanced of Novazyme's product candidates is NZ-1001, an enzyme replacement therapy for Pompe disease that is on track to enter clinical trials by the end of 2001. The product—a highly phosphorylated and properly glycosylated form of recombinant human alpha-Glucosidase—has demonstrated encouraging results in pre-clinical studies. Genzyme will move forward aggressively with the development of NZ-1001, while it simultaneously completes the ongoing Phase 2 clinical trial of its own enzyme replacement therapy for Pompe disease, being developed in collaboration with Pharming Group N.V.
Novazyme has a strong proprietary position covering its products and technologies, with patents pending in the United States and worldwide.
"The acquisition of Novazyme is consistent with our commitment to develop the best possible products for patients," said Henri A. Termeer, chairman and chief executive officer of Genzyme. "Novazyme has created a promising protein technology platform that complements our own and that could have a profound impact on our efforts to develop improved therapies for patients with lysosomal storage disorders."
John F. Crowley, president and chief executive officer of Novazyme, said: "Novazyme and Genzyme have a shared vision of bringing the very best medicine to very sick patients as quickly as possible. Genzyme's infrastructure, resources, and extensive experience in the area of genetic disorders can powerfully support and accelerate the development of our technology and products. This merger is an important event for patients, provides an excellent return for our shareholders, and further advances our mission."
Under terms of the agreement, Genzyme will acquire Novazyme for $137.5 million, payable in shares of Genzyme General stock. Novazyme shareholders are also eligible to receive two subsequent payments totaling $87.5 million, payable in stock, contingent on U.S. marketing approval for the first two products employing certain of Novazyme's technologies.
The boards of directors of Genzyme Corp. and Novazyme have approved the transaction, which is subject to customary closing conditions. The transaction is expected to close in the third quarter.
The acquisition of Novazyme will be accounted for as a purchase transaction and may result in a one-time charge for in-process research and development. Genzyme General expects the transaction to have an impact of approximately $.03 (excluding amortization) on its earnings-per-share for 2001, reflecting the issuance of approximately 2.5 million new shares at closing and an expected increase in research and development spending of approximately $7 million. Genzyme now anticipates earnings in the range of $1.12 – $1.17 per share for the year, compared to previous guidance of $1.15 – $1.20 per share. The total number of Genzyme General shares outstanding is expected to increase to approximately 211 million by the end of this year. Genzyme's operating expenses are expected to remain consistent with previous guidance.
Novazyme's laboratories, offices and manufacturing facility will remain in operation following the completion of the merger. John Crowley, Novazyme's president and chief executive officer, has agreed to serve as a senior vice president of Genzyme Therapeutics and will assume overall responsibility for the company's Pompe disease programs. He will continue to serve as president of Novazyme, a wholly owned subsidiary of Genzyme. William Canfield, M.D., Ph.D., Novazyme's founder, chairman and chief scientific officer, has accepted the position of senior vice president for glycobiology and will continue to lead a first-class team of approximately 70 scientists located at Novazyme's Oklahoma City facilities, which will serve as a glycobiology center of excellence for Genzyme.
In addition to its pipeline and proprietary technology platform, Novazyme has assets that include important intellectual property; approximately $7 million in cash; usable net operating loss tax carry forwards; laboratory facilities; and a 3,000-square-foot cGMP manufacturing plant.
Protein Remodeling and Lysosomal Storage Disorders
Lysosomal storage disorders are caused by a deficiency of one or more enzymes responsible for the breakdown of lipids or other molecules in the cells. Molecules that are normally broken down into smaller building blocks instead accumulate inside a compartment of the cell called the lysosome, affecting the cell's overall functioning. Novazyme's products in development are based on the company's proprietary technologies for the targeted delivery of the missing enzymes critical for the treatment of lysosomal storage disorders.
Under the direction of Dr. Canfield, one of the world's leading glycobiologists, Novazyme has developed methods for modifying recombinantly produced enzymes to enhance their uptake by the body. The ability to target lysosomal enzymes to affected cells is enhanced by a carbohydrate structure with two or more phosphates attached to each enzyme. Addition of these phosphates enables the lysosomal enzyme to interact efficiently with receptors on cells that target them to the lysosome. Since this receptor is present on most human cells, this modification should enable the enzymes to enter cells throughout a patient's body.
By increasing the phosphorylation of lysosomal enzymes and allowing them to be taken up more efficiently by the cells, these technologies could potentially lead to products with dramatic advantages over first-generation therapies in development.
Genzyme was the first to successfully employ protein remodeling technology in the 1980s when it used a different process to produce Ceredase® (alglucerase) and Cerezyme® (imiglucerase for injection) for Type 1 Gaucher disease. The products are, respectively, natural and recombinant forms of glucocerebrosidase for which the glycosylation of the enzyme has been modified so that it is mannose terminated and therefore more easily recognized and taken up by the macrophage cells that accumulate lipids. Applying Novazyme's technology to create highly phosphorylated glucocerebrosidase, could represent a next-generation version of Cerezyme.
Genzyme General develops and markets therapeutic products and diagnostic products and services. Genzyme General has four 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.
Novazyme is a pharmaceutical company developing biotherapies for the treatment of lysosomal storage disorders. These biotherapies are based on Novazyme's proprietary technologies for the targeted delivery of the missing enzymes critical for the treatment of these diseases. The technologies were developed by William M. Canfield, M.D., Ph.D., in his laboratories at the University of Oklahoma Health Sciences Center. Dr. Canfield, formerly an associate professor of medicine at the university, founded Novazyme in 1999. Dr. Canfield currently serves as the company's chairman and chief scientific officer. Novazyme's headquarters are located in Oklahoma City, Oklahoma and its business and executive offices are located in Princeton, NJ. The company's principal investors include: Catalyst Health & Technology Partners (Boston); HealthCare Ventures (Princeton); the Perseus-Soros Biopharmaceutical Fund (New York); Morgan Stanley Dean Witter Equity Funding, Inc. (New York) and Neose Technologies, Inc. (NasdaqNM: NTEC).
This press release contains forward-looking statements based on management's current expectations, including statements about: the anticipated consummation, timing and benefits of the acquisition; the potential development of products using Novazyme's technology and potential indications therefor; plans concerning clinical trials; the expected impact and benefits of Novazyme's technology; potential additional payments to Novazyme shareholders; the anticipated impact of the acquisition on Genzyme's development programs and financial performance in 2001, including without limitation its shares outstanding, earnings per share, and expenses; and Genzyme's plans concerning the operation of Novazyme's business after the acquisition. Actual results may materially differ due to numerous factors, including without limitation: conditions in the financial markets relevant to the proposed acquisition; the satisfaction of the conditions to closing the transaction and the timing thereof; the operational integration risks associated with the transaction and other risks generally associated with such transactions; 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 actual results of Genzyme's operations in 2001; and the risks and uncertainties described in Genzyme 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.
Genzyme®, Ceredase® and Cerezyme® are registered trademarks of Genzyme Corporation. All rights reserved.