-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NwutMafrohpiYRJ5wPUP1QE1/zZ0F/xE58Vr37j5Vp7Wt3QlrV7m6I22e1Ka3gTo re1dQn6xDzLT5UCceZrDLA== 0000950135-96-004534.txt : 19961029 0000950135-96-004534.hdr.sgml : 19961029 ACCESSION NUMBER: 0000950135-96-004534 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961028 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NEOZYME II CORP CENTRAL INDEX KEY: 0000884392 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42416 FILM NUMBER: 96648519 BUSINESS ADDRESS: STREET 1: TODMAN BLDG MAIN ST ROAD TOWN CITY: TORTOLA BRITISH VIRG STATE: D8 BUSINESS PHONE: 8094942065 MAIL ADDRESS: STREET 1: ONE KENDALL SQUARE CITY: BRIDGE STATE: MA ZIP: 02139 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GENZYME CORP CENTRAL INDEX KEY: 0000732485 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 061047163 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: ONE KENDALL SQ CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6172527500 MAIL ADDRESS: STREET 1: ONE KENDALL SQUARE CITY: CAMBRIDGE STATE: MA ZIP: 02139 SC 13E3/A 1 NEOZYME II SCHEDULE 13E-3 AMENDMENT 1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ SCHEDULE 13E-3 RULE 13E-3 TRANSACTION STATEMENT (PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934) (AMENDMENT NO. 1 ) NEOZYME II CORPORATION AND GENZYME CORPORATION - -------------------------------------------------------------------------------- (NAME OF ISSUER) NEOZYME II CORPORATION, GENZYME CORPORATION AND NEOZYME II ACQUISITION CORP. - -------------------------------------------------------------------------------- (NAME OF PERSON(S) FILING STATEMENT) UNITS, EACH CONSISTING OF ONE SHARE OF CALLABLE COMMON STOCK, $1.00 PAR VALUE, OF NEOZYME II CORPORATION AND ONE CALLABLE WARRANT TO PURCHASE TWO SHARES OF GENERAL DIVISION COMMON STOCK, $.01 PAR VALUE, AND 0.135 OF A SHARE OF TISSUE REPAIR DIVISION COMMON STOCK, $.01 PAR VALUE, OF GENZYME CORPORATION - -------------------------------------------------------------------------------- (TITLE OF CLASS OF SECURITIES) G6420H146 - -------------------------------------------------------------------------------- (CUSIP NUMBER OF CLASS OF SECURITIES) PETER WIRTH, ESQ. STEVEN D. SINGER, ESQ. MAUREEN P. MANNING, ESQ. EXECUTIVE VICE PRESIDENT AND HALE AND DORR PALMER & DODGE LLP CHIEF LEGAL COUNSEL 60 STATE STREET ONE BEACON STREET GENZYME CORPORATION BOSTON, MA 02109 BOSTON, MA 02108 ONE KENDALL SQUARE (617) 526-6000 (617) 573-0100 CAMBRIDGE, MA 02139 (617) 252-7500
- -------------------------------------------------------------------------------- (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT) This statement filed in connection with (check the appropriate box): a. / / The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities Exchange Act of 1934. b. / / The filing of a registration statement under the Securities Act of 1933. c. /X/ A tender offer. d. / / None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies. / / CALCULATION OF FILING FEE - ------------------------------------------------------------------------------------------------------ Transaction Valuation1: $108,675,000 Amount of Filing Fee: $21,735 - ------------------------------------------------------------------------------------------------------
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount previously paid: $21,735 Filing party: Neozyme II Acquisition Corp. and Genzyme Corporation Form or registration no.: Schedule 14D-1 Date filed: September 27, 1996
2 This Amendment No. 1 to Rule 13e-3 Transaction Statement on Schedule 13E-3 ("Amendment") relates to the offer by Neozyme II Acquisition Corp. (the "Purchaser"), a British Virgin Islands ("BVI") international business company and a wholly-owned subsidiary of Genzyme Corporation ("Genzyme"), a Massachusetts corporation, to purchase all of the outstanding units ("the Units"), each consisting of one share of Callable Common Stock, par value $1.00 per share, of Neozyme II Corporation (the "Company"), a BVI international business company, and one Callable Warrant to purchase two shares of General Division common stock, par value $.01 per share, and 0.135 share of Tissue Repair Division common stock, par value $.01 per share, of Genzyme at a purchase price of $45.00 per Unit, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated September 27, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal (the "Letter of Transmittal," which, together with the Offer to Purchase, as each may be amended or supplemented, constitute the "Offer"). The Offer to Purchase and Letter of Transmittal were filed as Exhibits (d)(1) and (d)(2), respectively, to the Rule 13e-3 Transaction Statement on Schedule 13E-3 filed by the Company, Genzyme and the Purchaser on September 27, 1996. ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS. The response to Item 3 is hereby amended by adding the following information regarding the background of the transaction: In connection with negotiations of the price to be paid for the Shares in the Second Step Transaction, Mr. McLachlan and other representatives of Genzyme met on September 17, 1996 with representatives of Robertson, Stephens & Company to review the valuation analysis performed by Robertson, Stephens & Company and to discuss possible ranges of value for Neozyme II and the Callable Warrants. Following these discussions, Genzyme determined to make a proposal to pay $29.00 per Share in cash in the Second Step Transaction. At Mr. McLachlan's request, representatives of Robertson, Stephens & Company communicated this proposal to representatives of Hambrecht & Quist, who indicated on a preliminary basis, subject to review of the proposal with the Special Committee, that they believed the proposal would be acceptable. As described more fully in the Offer to Purchase, on September 20, 1996, the Special Committee unanimously determined that the Offer and the Second Step Transaction were fair to, and in the best interests of, the Holders and recommended that the Neozyme II Board of Directors approve the Offer and the Second Step Transaction. ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS. The response to Item 7 is hereby amended by adding the information set forth under Item 3 of this Amendment. 2 3 ITEM 17. MATERIAL TO BE FILED AS EXHIBITS. (a) -- Not applicable. (b)(1) -- Report of Robertson, Stephens & Company LLC.* (b)(2) -- Opinion of Robertson, Stephens & Company LLC. Set forth in Annex II to the Offer to Purchase dated September 27, 1996 filed as Exhibit (a)(1) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (b)(3) -- Report of Hambrecht and Quist LLC.* (b)(4) -- Opinion of Hambrecht and Quist LLC. Filed herewith. (c)(1) -- Purchase Agreement dated as of September 20, 1996 by and among Genzyme Corporation, Neozyme II Acquisition Corp. and Neozyme II Corporation. Filed as Exhibit A to Amendment No. 2 to the Schedule 13D filed by Genzyme Corporation on September 24, 1996 and incorporated herein by reference. (c)(2) -- Technology License Agreement dated April 28, 1992 between Genzyme Corporation and Neozyme II Corporation. Filed as Exhibit 28.7 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(3) -- Research and Development Agreement dated as of April 28, 1992 between Genzyme Corporation and Neozyme II Corporation. Filed as Exhibit 28.8 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(4) -- Purchase Option Agreement dated April 28, 1992 between Genzyme Corporation and certain other parties named therein. Filed as Exhibit 28.9 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(5) -- Administrative Agreement dated April 28, 1992 between Genzyme Corporation and Neozyme II Corporation. Filed as Exhibit 28.10 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference.
3 4 (c)(6) -- Series 1992 Note of Neozyme II Corporation dated April 28, 1992. Filed as Exhibit 28.11 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(7) -- Services Agreement dated April 28, 1992 between Genzyme Corporation and Neozyme II Corporation. Filed as Exhibit 10.5 to the Genzyme Corporation Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. (c)(8) -- Amendment No. 1 dated as of August 11, 1993 to Technology License Agreement and Research and Development Agreement between Neozyme II Corporation and Genzyme Corporation. Filed as Exhibit 10.42 to the Genzyme Corporation Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. (c)(9) -- License and Development Agreement dated as of August 11, 1993 between Genzyme Corporation and Univax Biologics, Inc. Filed as Exhibit 10.19 to the Form 10-Q of Univax Biologics, Inc. for the quarter ended September 30, 1993 (File No. 0-19748) and incorporated herein by reference. Confidential treatment has been granted for the deleted portions of this Exhibit. (d)(1) -- Offer to Purchase dated September 27, 1996. Filed as Exhibit (a)(1) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(2) -- Letter of Transmittal. Filed as Exhibit (a)(2) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(3) -- Notice of Guaranteed Delivery. Filed as Exhibit (a)(3) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(4) -- Letter from Robertson, Stephens & Company L.P. to Brokers, Dealers, Banks, Trust Companies and Other Nominees. Filed as Exhibit (a)(4) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(5) -- Letter to Clients for Use by Brokers, Dealers, Banks, Trust Companies and Other Nominees. Filed as Exhibit (a)(5) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. Filed as Exhibit (a)(6) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(7) -- Press Release of Genzyme Corporation dated September 6, 1996. Filed as Exhibit G to Amendment No. 1 to the Schedule 13D filed by Genzyme Corporation on September 6, 1996 and incorporated herein by reference. (d)(8) -- Press Release of Genzyme Corporation dated September 23, 1996. Filed as Exhibit B to Amendment No. 2 to the Schedule 13D filed by Genzyme Corporation on September 24, 1996 and incorporated herein by reference. (d)(9) -- Summary Advertisement dated September 27, 1996. Filed as Exhibit (a)(10) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(10) -- Press Release of Genzyme Corporation dated September 27, 1996. Filed as Exhibit (a)(9) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisiton Corp. on September 27, 1996 and incorporated herein by reference. (e) -- Description of appraisal rights and procedures. Set forth in Annex III to the Offer to Purchase filed as Exhibit (a)(1) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference.
4 5 (f) -- Not applicable. (g)(1) -- Audited financial statements (and related notes) for Neozyme II Corporation as of December 31, 1994 and 1995 and for the years ended December 31, 1993, 1994 and 1995, and unaudited financial statements (and related notes) for Neozyme II Corporation as of June 30, 1996 and for the six months ended June 30, 1995 and 1996. Filed herewith. (g)(2) -- Audited financial statements (and related notes) for Genzyme Corporation, Genzyme General Division and Genzyme Tissue Repair Division as of December 31, 1994 and 1995 and for the years ended December 31, 1993, 1994 and 1995, and unaudited financial statements (and related notes) for Genzyme Corporation, Genzyme General Division and Genzyme Tissue Repair Division as of June 30, 1996 and for the six months ended June 30, 1995 and 1996. Filed as Exhibit (g)(1) to the Schedule 13E-4 filed by Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (g)(3) -- Pro forma financial statements (and related notes) for Genzyme Corporation and Genzyme General Division as of June 30, 1996 and for the year ended December 31, 1995 and for the six months ended June 30, 1996. Filed as Exhibit (g)(2) to the Schedule 13E-4 filed by Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. - --------------- * Previously filed.
5 6 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. October 28, 1996 NEOZYME II CORPORATION By: /s/ PAUL M. EDWARDS ------------------------------ PAUL M. EDWARDS President and Treasurer GENZYME CORPORATION By: /s/ PETER WIRTH ------------------------------ PETER WIRTH Executive Vice President, Legal Affairs and Chief Legal Counsel NEOZYME II ACQUISITION CORP. By: /s/ PETER WIRTH ------------------------------ PETER WIRTH Secretary 6 7 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO. - ----------- ------------------------------------------------------------------ -------- (b)(1) -- Report of Robertson, Stephens & Company LLC. * (b)(2) -- Opinion of Robertson, Stephens & Company LLC Set forth in Annex -- II to the Offer to Purchase filed as Exhibit (a)(1) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (b)(3) -- Report of Hambrecht and Quist LLC. * (b)(4) -- Opinion of Hambrecht and Quist LLC. Filed herewith. -- (c)(1) -- Purchase Agreement dated as of September 20, 1996 by and among -- Genzyme Corporation, Neozyme II Acquisition Corp. and Neozyme II Corporation. Filed as Exhibit A to Amendment No. 2 to the Schedule 13D filed by Genzyme Corporation on September 24, 1996 and incorporated herein by reference. (c)(2) -- Technology License Agreement dated April 28, 1992 between Genzyme -- Corporation and Neozyme II Corporation. Filed as Exhibit 28.7 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(3) -- Research and Development Agreement dated as of April 28, 1992 -- between Genzyme Corporation and Neozyme II Corporation. Filed as Exhibit 28.8 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(4) -- Purchase Option Agreement dated April 28, 1992 between Genzyme -- Corporation and certain other parties named therein. Filed as Exhibit 28.9 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(5) -- Administrative Agreement dated April 28, 1992 between Genzyme -- Corporation and Neozyme II Corporation. Filed as Exhibit 28.10 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(6) -- Series 1992 Note of Neozyme II Corporation dated April 28, 1992. -- Filed as Exhibit 28.11 to the Genzyme Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference. (c)(7) -- Services Agreement dated April 28, 1992 between Genzyme -- Corporation and Neozyme II Corporation. Filed as Exhibit 10.5 to the Genzyme Corporation Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. (c)(8) -- Amendment No. 1 dated as of August 11, 1993 to Technology License -- Agreement and Research and Development Agreement between Neozyme II Corporation and Genzyme Corporation. Filed as Exhibit 10.42 to the Genzyme Corporation Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. (c)(9) -- License and Development Agreement dated as of August 11, 1993 -- between Genzyme Corporation and Univax Biologics, Inc. Filed as Exhibit 10.19 to the Form 10-Q of Univax Biologics, Inc. for the quarter ended September 30, 1993 (File No. 0-19748) and incorporated herein by reference. Confidential treatment has been granted for the deleted portions of this Exhibit. (d)(1) -- Offer to Purchase dated September 27, 1996. Filed as Exhibit -- (a)(1) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference.
7 8
EXHIBIT NO. DESCRIPTION PAGE NO. - ----------- ----------- -------- (d)(2) -- Letter of Transmittal. Filed as Exhibit (a)(2) to the Schedule -- 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(3) -- Notice of Guaranteed Delivery. Filed as Exhibit (a)(3) to the -- Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(4) -- Letter from Robertson, Stephens & Company L.P. to Brokers, -- Dealers, Banks, Trust Companies and Other Nominees. Filed as Exhibit (a)(4) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(5) -- Letter to Clients for Use by Brokers, Dealers, Banks, Trust -- Companies and Other Nominees. Filed as Exhibit (a)(5) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(6) -- Guidelines for Certification of Taxpayer Identification Number on -- Substitute Form W-9. Filed as Exhibit (a)(6) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(7) -- Press Release of Genzyme Corporation dated September 6, 1996. -- Filed as Exhibit G to Amendment No. 1 to the Schedule 13D filed by Genzyme Corporation on September 6, 1996 and incorporated herein by reference. (d)(8) -- Press Release of Genzyme Corporation dated September 23, 1996. -- Filed as Exhibit B to Amendment No. 2 to the Schedule 13D filed by Genzyme Corporation on September 24, 1996 and incorporated herein by reference. (d)(9) -- Summary Advertisement dated September 27, 1996. Filed as Exhibit -- (a)(10) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (d)(10) -- Press Release of Genzyme Corporation dated September 27, 1996. -- Filed as Exhibit (a)(9) to the Schedule 140-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (e) -- Description of appraisal rights and procedures. Set forth in Annex -- III to the Offer to Purchase filed as Exhibit (a)(1) to the Schedule 14D-1 filed by Genzyme Corporation and Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (g)(1) -- Audited financial statements (and related notes) for Neozyme II -- Corporation as of December 31, 1994 and 1995 and for the years ended December 31, 1993, 1994 and 1995, and unaudited financial statements (and related notes) for Neozyme II Corporation as of June 30, 1996 and for the six months ended June 30, 1995 and 1996. Filed herewith. (g)(2) -- Audited financial statements (and related notes) for Genzyme -- Corporation, Genzyme General Division and Genzyme Tissue Repair Division as of December 31, 1994 and 1995 and for the years ended December 31, 1993, 1994 and 1995, and unaudited financial statements (and related notes) for Genzyme Corporation, Genzyme General Division and Genzyme Tissue Repair Division as of June 30, 1996 and for the six months ended June 30, 1995 and 1996. Filed as Exhibit (g)(1) to the Schedule 13E-4 filed by Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. (g)(3) -- Pro forma financial statements (and related notes) for Genzyme -- Corporation and Genzyme General Division as of June 30, 1996 and for the year ended December 31, 1995 and for the six months ended June 30, 1996. Filed as Exhibit (g)(2) to the Schedule 13E-4 filed by Neozyme II Acquisition Corp. on September 27, 1996 and incorporated herein by reference. - ------------ * Previously filed.
8 EX-99.B4 2 OPINION OF HAMBRECHT & QUIST 1 EXHIBIT (b)(4) [HAMBRECHT & QUIST LLC LETTERHEAD] September 20, 1996 Confidential The Special Committee of The Board of Directors The Board of Directors Neozyme II Corporation Todman Building Main Street Road Town, Tortola British Virgin Islands Gentlemen: You have requested our opinion as to the fairness from a financial point of view to the holders of the outstanding shares of callable common stock, par value $1.00 per share ("Common Stock"), of Neozyme II Corporation ("Neozyme" or the "Company") of the consideration to be received by such holders in connection with a proposed transaction (the "Proposed Transaction") pursuant to which an affiliate of Genzyme Corporation ("Genzyme") will offer to purchase the outstanding units of Neozyme (the "Units") at a purchase price of $45.00 per Unit in cash (the "Offer"). As of the date hereof, all of the outstanding Common Stock is owned as part of a Unit, each of which consists of (i) one share of Common Stock and (ii) one callable warrant to purchase two shares of Genzyme General Division Common Stock and 0.135 shares of Genzyme Tissue Repair Division Common Stock. The Offer will be made by means of offering documents (the "Offer Documents") to be filed with the Securities and Exchange Commission. If the Offer is consummated, but not all of the Units are tendered and accepted or, if the Offer is terminated in accordance with Section 1.1(b)(ii) of the Purchase Agreement, Genzyme has, pursuant to a Purchase Agreement (the "Purchase Agreement") dated as of September 20, 1996, agreed to effect a second step transaction (the "Second Step Transaction") in which Genzyme will acquire, directly or indirectly, all of the remaining Common Stock in exchange for cash in an amount equal to $29.00 per share of Common Stock. Hambrecht & Quist LLC ("Hambrecht & Quist"), as part of its investment banking services, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. We have acted as a financial advisor to the Special Committee of the Board of Directors of Neozyme in connection with the Proposed Transaction, and we will receive a fee for our services, which include the rendering of this opinion. 2 The Special Committee of the Board of Directors The Board of Directors Neozyme II Corporation Page 2 We are familiar with Genzyme and have, from time to time, provided financial advisory services to Genzyme, and we have received fees for rendering these services. In July 1996, we acted as managing underwriter for a public offering of Genzyme Transgenics Corporation, an affiliate of Genzyme. In the ordinary course of business, Hambrecht & Quist acts as a market maker and broker in the publicly traded securities of Neozyme and Genzyme and receives customary compensation in connection therewith, and also provides research coverage for Genzyme. In the ordinary course of business, Hambrecht & Quist actively trades in the equity securities of Neozyme and Genzyme for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities. Hambrecht & Quist may in the future provide additional investment banking or other financial advisory services to Genzyme. In connection with our review of the Proposed Transaction, and in arriving at our opinion, we have, among other things: (i) reviewed the publicly available consolidated financial statements of Neozyme for recent years and interim periods to date and certain other relevant financial and operating data of Neozyme made available to us from published sources and from the internal records of Neozyme; (ii) discussed with certain members of the managements of Neozyme and Genzyme the business, financial condition and prospects of Neozyme; (iii) reviewed the publicly available consolidated financial statements of Genzyme for recent years and interim periods to date; (iv) reviewed certain internal financial and operating information, including certain projections, relating to Neozyme prepared by the management of Genzyme; (v) reviewed the recent reported prices and trading activity for the Common Stock and compared such information and certain financial information of Neozyme with similar information for certain other companies engaged in businesses we considered comparable to that of Neozyme; (vi) reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions; (viii) reviewed drafts of the Purchase Agreement, the Offer Documents and certain other materials to be filed with the Securities and Exchange Commission in connection with the Offer; and (ix) performed such other analyses and examinations and considered such other information, financial studies, analyses and investigations and financial, economic and market data as we deemed relevant. In rendering our opinion, we have assumed and relied upon the accuracy and completeness of all of the information concerning Neozyme and Genzyme considered in connection with our review of the Proposed Transaction, and we have not assumed any responsibility for independent verification of such information. We have not prepared any independent valuation or appraisal of any of the 3 The Special Committee of the Board of Directors The Board of Directors Neozyme II Corporation Page 3 assets or liabilities of Neozyme, nor have we conducted a physical inspection of the properties and facilities of the Company. With respect to the financial forecasts and projections made available to us and used in our analysis, we have assumed that they reflect the best currently available estimates and judgments of the expected future financial performance of Neozyme. For purposes of this opinion, we have assumed that Neozyme is not a party to any pending transactions, including external financings, recapitalizations or material merger discussions, other than the Proposed Transaction and those activities undertaken in the ordinary course of conducting its business. Our opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date of this letter and any change in such conditions would require a reevaluation of this opinion. We were not requested to, and did not, formally solicit indications of interest from any other parties in connection with a possible acquisition of, or business combination with, Neozyme. It is understood that this letter is for the information of the Special Committee and the Board of Directors and may not be used for any other purpose without our prior written consent; provided, however, that this letter may be reproduced in full in any filing with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, including Schedules 14D-1, 14D-9 and 13E-3 to be filed in connection with the Offer. This letter does not constitute a recommendation to any Neozyme stockholder as to whether such stockholder should accept the Offer. In addition, we express no opinion, however, as to the adequacy of any consideration received in the Proposed Transaction by Genzyme or any of its affiliates. Based upon and subject to the foregoing and after considering such other matters as we deem relevant, we are of the opinion that as of the date hereof the consideration to be received by the holders of the Units pursuant to the Offer and the consideration to be received by the holders of the Common Stock pursuant to the Second Step Transaction is fair to such holders from a financial point of view. Very truly yours, HAMBRECHT & QUIST LLC By /s/ David G. Golden ------------------------ David G. Golden Managing Director EX-99.G1 3 CONSENT OF COOPERS & LYBRAND 1 EXHIBIT(g)(1) REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Neozyme II Corporation (A Development Stage Enterprise): We have audited the accompanying balance sheets of Neozyme II Corporation (a development stage enterprise) as of December 31, 1995 and 1994, and the related statements of operations and cash flows for each of the three years in the period ended December 31, 1995 and cumulative from March 2, 1992 (date of inception) to December 31, 1995. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Neozyme II Corporation (a development stage enterprise) as of December 31, 1995 and 1994 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 and cumulative from March 2, 1992 (date of inception) to December 31, 1995 in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Boston, Massachusetts March 1, 1996 2 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF OPERATIONS (in thousands, except per share data)
FOR THE YEARS ENDED CUMULATIVE DECEMBER 31, FROM MARCH 2, ----------------------------- 1992 (DATE OF 1995 1994 1993 INCEPTION) -------- -------- ------- ------------- Investment income (Note A)............................. $ 1,497 $ 2,522 $ 5,567 $ 12,162 Costs and expenses (Note C): Technology license fee............................ -- -- -- 5,000 Research and development.......................... 24,128 17,785 12,483 59,579 General and administrative........................ 327 227 324 1,196 -------- -------- ------- -------- Total costs and expenses..................... 24,455 18,012 12,807 65,775 -------- -------- ------- -------- Net loss............................................... $(22,958) $(15,490) $(7,240) $(53,613) ======== ======== ======= ======== Net loss per callable common share (Note A)............ $ (9.51) $ (6.41) $ (3.00) $ (23.26) ======== ======== ======= ======== Weighted average number of callable common shares outstanding (Note A)................................. 2,415 2,415 2,415 2,305
The accompanying notes are an integral part of these financial statements. -2- 3 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) BALANCE SHEETS (In thousands)
DECEMBER 31, ------------------- 1995 1994 -------- -------- ASSETS Current assets: Cash and cash equivalents.......................................... $ 5,546 $ 135 Short-term investments (Notes A and D)............................. 21,501 13,116 Prepaid research and development to Genzyme Corporation............ -- 186 -------- -------- Total current assets.......................................... 27,047 13,437 Long-term investments (Notes A and D)................................... -- 32,958 -------- -------- Total assets............................................................ $ 27,047 $ 46,395 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Payable to Genzyme Corporation (Note C)............................ $ 2,469 $ 729 Accrued expenses................................................... 92 117 -------- -------- Total current liabilities..................................... 2,561 846 Note Payable to Genzyme Corporation (Note C)............................ 100 100 Commitments and contingencies (Note E) Stockholders' equity (Note B): Callable common stock, $1.00 par value; authorized 9,000,000 shares, 2,415,000 shares issued and outstanding................... 2,415 2,415 Additional paid-in capital......................................... 75,620 75,620 Deficit accumulated during the development stage................... (53,613) (30,655) Unrealized loss on investments (Note A)............................ (36) (1,931) -------- -------- Total stockholders' equity.................................... 24,386 45,449 -------- -------- Total liabilities and stockholders' equity.............................. $ 27,047 $ 46,395 ======== ========
The accompanying notes are an integral part of these financial statements. -3- 4 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF CASH FLOWS (In thousands)
FOR THE YEARS ENDED CUMULATIVE DECEMBER 31, FROM MARCH 2, ----------------------------- 1992 (DATE OF 1995 1994 1993 INCEPTION) -------- -------- ------- ------------- Cash flows from operating activities: Net loss.......................................... $(22,958) $(15,490) $(7,240) $(53,613) Reconciliation of net income to net cash used by operating activities: (Gain) loss on sale of investments........... 218 (8) (2,104) (1,894) Amortization of premium...................... 559 602 -- 1,161 Prepaid research and development............. 186 (186) -- -- Payable to Genzyme Limited................... -- (7) (51) -- Payabl to Genzyme Corporation................ 1,740 286 443 2,469 Accrued expenses............................. (25) 6 (39) 92 -------- -------- ------- -------- Net cash used by operating activities........ (20,280) (14,797) (8,991) (51,785) Cash flows from investing activities: Purchases of short-term investments............... -- -- (20,160) (31,216) Purchases of long-term investments................ -- -- (50,839) (109,521) Sales of short-term investments................... 16,109 12,743 14,313 47,244 Sales of long-term investments.................... 9,582 -- 63,107 72,689 -------- -------- ------- -------- Net cash provided (used) by investing activities................................. 25,691 12,743 6,421 (20,804) Cash flows from financing activities: Issuance of note payable to Genzyme Corporation... -- -- -- 100 Issuance of common stock.......................... -- -- -- 78,035 -------- -------- ------- -------- Net cash provided by financing activities.... -- -- -- 78,135 -------- -------- ------- -------- Increase (decrease) in cash and cash equivalents....... 5,411 (2,054) (2,570) 5,546 Cash and cash equivalents, beginning of period......... 135 2,189 4,759 0 -------- -------- ------- -------- Cash and cash equivalents, end of period............... $ 5,546 $ 135 $ 2,189 $ 5,546 ======== ======== ======= ======== Supplemental disclosure: Classification of investments -- Note A
The accompanying notes are an integral part of these financial statements. -4- 5 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share data)
DEFICIT UNREALIZED ACCUMULATED COMMON STOCK ADDITIONAL GAIN/(LOSS) DURING THE -------------------- PAID-IN ON DEVELOPMENT SHARES AMOUNT CAPITAL INVESTMENTS STAGE --------- -------- --------- ----------- ----------- Shares issued upon incorporation............................... 100 $ -- $ -- $ -- $ -- Shares canceled upon public offering................................. (100) -- -- -- -- Issuance of Common Stock...................... 2,415,000 2,415 75,620 -- -- Net loss...................................... -- -- -- -- (7,925) --------- ------ ------- ------- -------- Balance, December 31, 1992.................... 2,415,000 2,415 75,620 -- (7,925) Net loss...................................... -- -- -- -- (7,240) --------- ------ ------- ------- -------- Balance, December 31, 1993.................... 2,415,000 2,415 75,620 -- (15,165) Unrealized loss on investments................................. -- -- -- (1,931) -- Net Loss...................................... -- -- -- -- (15,490) --------- ------ ------- ------- -------- Balance, December 31, 1994.................... 2,415,000 2,415 75,620 (1,931) (30,655) Unrealized appreciation on investments................................. -- -- -- 1,895 -- Net Loss...................................... -- -- -- -- (22,958) --------- ------ ------- ------- -------- Balance, December 31, 1995.................... 2,415,000 $2,415 $75,620 $ (36) $(53,613) ========= ====== ======= ======= ========
The accompanying notes are an integral part of these financial statements. -5- 6 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS: Neozyme II Corporation was incorporated in March 1992 to develop products for the treatment of cystic fibrosis by gene therapy or protein replacement (the "Field"). In 1993 Neozyme II's research program was expanded to include the products to be developed by Genzyme in collaboration with North American Biologics, Inc. ("NABI," formerly Univax Biologics, Inc.) The Company began operations on May 5, 1992 and is classified as a development stage enterprise. The Company will experience significant losses as substantially all of its capital will be spent to fund development of its products. It is not anticipated that the Company will receive any significant revenues unless and until it successfully commercializes any of its programs upon expiration of the Purchase Option (see Note C). EXHAUSTION OF AVAILABLE FUNDS Under the Development Agreement, Neozyme II is obligated to engage Genzyme to perform all of its research, development and clinical testing activities related to the Products. It is expected that Available Funds to pay for such activities will be substantially exhausted by December 31, 1996. There can be no assurance that, at such time, the development of the Products will have progressed to a point where Genzyme will have enough information to determine whether to exercise the Purchase Option. EXERCISE OF PURCHASE OPTION Genzyme may purchase all (but not less than all) of the Neozyme II Callable Common Stock at any time through December 31, 1996. Genzyme is not obligated to exercise the Purchase Option and will do so only if Genzyme perceives that such exercise is in its best interest. There can be no assurance that Genzyme's best interest in this regard will coincide with the best interest of Neozyme II's shareholders. If Genzyme does not exercise the Purchase Option, Neozyme II will need to find other ways to complete clinical testing and commercialize the Products. Neozyme II will have working capital of at least $1 million to fund these commercialization efforts. If Genzyme does not exercise the Purchase Option and Neozyme II decides to complete development, manufacture or market the products itself, Neozyme II will need substantial additional funds. Genzyme is not obligated to provide these funds and there can be no assurance that such funds will be available from others on attractive terms, if at all. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS: Cash equivalents, consisting primarily of U.S. Treasury bills and commercial paper purchased with initial maturities of three months or less, are valued at cost plus accrued interest, which approximates market. INVESTMENTS: Short-term investments include all investments with remaining maturities of twelve months or less. Long-term investments include all investments with remaining maturities greater than twelve months. As of December 31, 1995 the Company's investment portfolio, consisting primarily of debt securities classified as available for sale, is shown at market value and classified as current assets. It is management's intention to sell these securities in fiscal 1996. In computing realized gains or losses on the sale of securities, the Company determines cost on a specific identification basis. In 1994, the Company adopted Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"). The adoption of SFAS 115 did not have a material effect on the financial position or results of operations of the Company. SFAS 115 requires that, except for debt securities classified as held-to-maturity which are reported at amortized cost, investments in debt and equity securities be reported at fair value. The Company classifies its investments in debt securities as either held-to-maturity or available-for-sale based on facts and circumstances present -6- 7 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS - (CONTINUED) at the time the investments are purchased. As of December 31, 1995, the Company classified all investments in debt securities as available-for-sale. (See Note D - -Investments). LOSS PER SHARE: Loss per share is based upon the weighted average number of shares of Callable Common Stock outstanding during the period. From March 2, 1992 (date of inception) through May 4, 1992 (immediately prior to the initial public offering), there were 100 shares outstanding. UNCERTAINTIES: The Company is subject to risks common to companies in the Biotechnology industry, including but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with FDA government regulations. NOTE B. INITIAL PUBLIC OFFERING In May 1992, the Company completed an initial public offering of 2,415,000 shares of Callable Common Stock for net proceeds of $78.0 million. Each share of Callable Common Stock was accompanied by a warrant to purchase one share of Genzyme common stock and a callable warrant to purchase one share of Genzyme common stock. Neozyme II received all of the net proceeds of the offering and paid all of the offering costs, fees and expenses. All of the shares of Callable Common Stock are subject to an outstanding purchase option to Genzyme which expires on December 31, 1996. (See Note C). Effective December 1994, the stockholders of Genzyme approved the Genzyme Stock Proposal as described in Genzyme's Prospectus/Proxy Statement dated November 10, 1994 to redesignate Genzyme's Common Stock as General Division Common Stock on a share-for-share basis and a second class of common stock, designated as Tissue Repair Division Common Stock. Each warrant when exercised will grant the holder one share of General Division common stock and .135 of one share of Tissue Repair common stock. NOTE C. ARRANGEMENTS WITH GENZYME CORPORATION Neozyme II has entered into the following arrangements with Genzyme: DEVELOPMENT AGREEMENT: Under the Development Agreement, Genzyme has been engaged to conduct research and development of the products and the Company is required to pay Genzyme, based on Genzyme's costs of conducting the research and development, all of the net proceeds of the initial public offering plus any interest or other income earned thereon, less amounts for the Company's working capital ($1.0 million) and administrative expenses and $5.0 million paid to Genzyme under a technology license agreement. During 1995, 1994 and 1993, Neozyme II incurred $24,128,000, $17,785,000, and $12,483,000, respectively, of expenses related to this agreement. At December 31, 1995 and 1994 the Company had a payable to Genzyme under the agreement of $2,469,000 and $729,000, respectively. TECHNOLOGY LICENSE AGREEMENT: The Company has an exclusive, worldwide license to Genzyme's technology relating to the products for use in the Field. Under this agreement, Neozyme II paid a nonrefundable fee of $5,000,000 to Genzyme in 1992. PURCHASE OPTION AGREEMENT: Under the Purchase Option Agreement, Genzyme has the option, exercisable not later than December 31, 1996, to purchase all, but not less than all, of the Callable Common Stock, at stated prices which increase over time. The purchase price increases based on a formula which pro rates evenly by month the difference between a given and a prior year purchase price plus the prior year purchase price. -7- 8 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
IF THE STOCK PURCHASE OPTION EXERCISE TOTAL OPTION IS EXERCISED PRICE PER SHARE PAYMENT - --------------------- --------------- ------------ During 1995..................... $ 83 $200,445,000 During 1996..................... $117 $282,555,000
The Purchase Option Agreement terminates following a material incurred breach of the development agreement or the Technology License Agreement by one of the parties and the option exercise period may accelerate in the event of exhaustion of funds. SERVICES AGREEMENT: Under the Services Agreement, Genzyme's wholly-owned subsidiary Genzyme Limited is paid for providing certain management and administrative services to the Company, based upon actual costs. The Company incurred expenses of $79,000, $78,000, and $88,000 in 1995, 1994 and 1993, respectively, under this agreement. SERIES 1992 NOTE: In 1992, the Company issued a promissory note to Genzyme in the principal amount of $100,000, bearing interest at 7% annually. The note is due on the day following termination of the Purchase Option Agreement and may not be prepaid. While the note is outstanding, Neozyme II may not issue additional capital stock, borrow more than $1 million in the aggregate, declare or pay dividends utilizing funds committed to be paid to Genzyme under the Development Agreement, merge, liquidate or sell all or substantially all of its assets without Genzyme's approval. NOTE D. INVESTMENTS Investments in marketable securities at December 31 consisted of the following:
1995 1994 ------------------------------------- MARKET MARKET (DOLLARS IN THOUSANDS) COST VALUE COST VALUE - ---------------------------------------------------------- ------- ------- ------- ------- Short Term: Corporate notes......................................... $21,537 $21,501 $13,226 $13,116 ======= ======= ======= ======= Long Term: Corporate notes......................................... $ 0 $ 0 $34,779 $32,958 ======= ======= ======= =======
Gross realized holding losses included in interest income for 1995 were $218,000. In 1994, investment income included gross realized holding gains and losses of $17,000 and $9,000, respectively. Net realized gains included in investment income for 1993 were $2,104,000. Gross unrealized gains and losses included in stockholders equity at December 31, 1995 were $45,000 and $81,000, respectively, as compared to gross unrealized holding gains and losses at December 31, 1994 of $36,000 and $1,931,000, respectively. NOTE E COMMITMENTS AND CONTINGENCIES In August 1993, Genzyme entered into a license and development agreement with NABI whereby Genzyme received a license to the vaccine and passive immunization antibody products being developed by NABI primarily for use in treating Pseudomonas infections in cystic fibrosis patients. In connection with the NABI license and development agreement, Neozyme II and Genzyme agreed to expand the field of the Technology License Agreement and the Development Agreement to include the products to be developed with NABI for any clinical indication. Neozyme II also agreed to (i) assume Genzyme's obligation to make milestone payments to NABI, (ii) fund Genzyme's share of the development costs of the products being developed with NABI, (iii) appoint NABI as its agent for the manufacture of such products and (iv) share the profits resulting from commercialization of such products with NABI. -8- 9 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) FORM 10-Q, JUNE 30, 1996 TABLE OF CONTENTS PAGE NO. -------- PART I. FINANCIAL INFORMATION ITEM 1. Unaudited Condensed Financial Statements Statements of Operations for the Three Months and Six Months Ended June 30, 1996 and 1995 and Cumulative from Inception (March 2, 1992) ............... 4 Balance Sheets as of June 30, 1996 and December 31, 1995 ....................................... 5 Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995 and Cumulative from Inception (March 2, 1992) ............................... 6 Notes to Unaudited Condensed Financial Statements ....... 7 3 10 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED CUMULATIVE JUNE 30, JUNE 30, FROM --------------------- ---------------------- INCEPTION 1996 1995 1996 1995 (MARCH 2, 1992) ---- ---- ---- ---- -------------- Investment income .............. $ 209 $ 340 $ 453 $ 820 $ 12,615 Costs and expenses: Technology license fee ....... - - - - 5,000 Research and development ..... 5,217 5,949 10,596 11,652 70,175 General and administrative ... 83 98 162 158 1,358 ------- ------- -------- -------- -------- 5,300 6,047 10,758 11,810 76,533 ------- ------- -------- -------- -------- Net loss ....................... $(5,091) $(5,707) $(10,305) $(10,990) $(63,918) ======= ======= ======== ======== ======== Net loss per callable common share .................. $ (2.11) $ (2.36) $ (4.27) $ (4.55) $ (27.59) ======= ======= ======== ======== ======== Weighted average callable common shares outstanding ..... 2,415 2,415 2,415 2,415 2,317 ======= ======= ======== ======== ========
The accompanying notes are an integral part of these unaudited, condensed financial statements. 4 11 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) BALANCE SHEETS (UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31, 1996 1995 ---- ---- ASSETS Current Assets: Cash and cash equivalents ....................... $ 8,636 $ 5,546 Short-term investments .......................... 5,178 21,501 Prepaid research and development ................ 527 - -------- -------- $ 14,341 $ 27,047 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Payable to Genzyme Corporation .................. 29 2,469 Accrued expenses ................................ 129 92 -------- -------- Total current liabilities .................... 158 2,561 Note payable to Genzyme Corporation ................ 100 100 Stockholders' Equity: Callable common Stock, $1.00 par value; authorized 9,000,000 shares, 2,415,000 shares issued and outstanding .................. 2,415 2,415 Additional paid-in capital ...................... 75,620 75,620 Deficit accumulated during the development stage .............................. (63,918) (53,613) Unrealized loss on investments .................. (34) (36) -------- -------- 14,083 24,386 -------- -------- $ 14,341 $ 27,047 ======== ========
The accompanying notes are an integral part of these unaudited, condensed financial statements. 5 12 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
SIX MONTHS ENDED JUNE 30, CUMULATIVE -------------------- FROM INCEPTION 1996 1995 (MARCH 2, 1992) ---- ---- --------------- Cash flow from operating activities: Net loss ............................................ $(10,305) $(10,990) $ (63,918) Reconciliation of net loss to net cash used by operating activities: (Gain)/loss on sale of investments ............... (25) 226 (1,919) Accrued interest/amortization on investments ..... (365) 276 796 Prepaid research and development ................. (527) (374) (527) Due from Genzyme Corporation ..................... - - - Payable to Genzyme Limited ....................... - - - Payable to Genzyme Corporation ................... (2,440) (729) 29 Accrued expenses ................................. 37 41 129 -------- -------- --------- Net cash used by operating activities ............... (13,625) (11,550) (65,410) Cash flow from investing activities: Purchases of short-term investments ................. - - (31,216) Purchase of long-term investment .................... - - (109,521) Sales and maturities of short-term investments ...... 16,715 22,638 63,959 Sales and maturities of long-term investments ....... - - 72,689 -------- -------- --------- Net cash provided (used) by investing activities .... 16,715 22,638 (4,089) Cash flow from financing activities: Issuance of note payable to Genzyme Corporation ..... - - 100 Issuance of callable common stock ................... - - 78,035 -------- -------- --------- Net cash provided by financing activities ........... - - 78,135 -------- -------- --------- Increase in cash and cash equivalents ................... 3,090 11,088 8,636 Cash and cash equivalents at beginning of period ........ 5,546 135 - -------- -------- --------- Cash and cash equivalents at end of period .............. $ 8,636 $ 11,223 $ 8,636 ======== ======== =========
The accompanying notes are an integral part of these unaudited, condensed financial statements. 6 13 NEOZYME II CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) JUNE 30, 1996 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS 1. BASIS FOR PRESENTATION: Neozyme II Corporation ("Neozyme II" or the "Company") is a development stage enterprise engaged in the research, development and clinical testing of biotherapeutic products for the treatment of cystic fibrosis. These unaudited condensed financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and the financial statements and footnotes included therein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission rules and regulations. The financial statements for the three and six months ended June 30, 1996 and 1995 are unaudited but include, in the Company's opinion, all adjustments (consisting only of normally recurring accruals) necessary for a fair presentation of the results for the periods presented. 2. ACCOUNTING POLICIES: The accounting policies underlying the quarterly financial statements are those set forth in Note A of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. As of June 30, 1996, investments totaling $5,178,000 were classified as available for sale and, accordingly, unrealized holding losses totaling $34,000 have been recognized in a separate component of stockholders' equity. 3. PURCHASE OPTION AGREEMENT WITH GENZYME CORPORATION: Under the Purchase Option Agreement, Genzyme has the option (the "Purchase Option"), exercisable not later than December 31, 1996, to purchase all, but not less than all, of the Callable Common Stock, at stated prices which increase over time. The purchase price increases based on a formula which prorates evenly by month the difference between a given and prior year purchase price plus the prior year purchase price.
IF THE STOCK PURCHASE OPTION EXERCISE TOTAL OPTION IS EXERCISED: PRICE PER SHARE PAYMENT ------------------- --------------- ------------ On or before December 31, 1995... $ 83 $200,445,000 December 31, 1996................ 117 282,555,000
The purchase price, if exercised at June 30, 1996, was $100.00 per share for a total payment of $241,500,000. The Purchase Option Agreement may be terminated by Neozyme II following expenditure of the funds available for its development program unless Genzyme funds or obtains funding to continue the development program. 4. TERMINATION OF LICENSE AND DEVELOPMENT AGREEMENT WITH NABI Under agreement with Genzyme, Neozyme II funds Genzyme's obligations to provide development funding to NABI in exchange for the exclusive rights that Genzyme has acquired to market, on a worldwide basis, HyperGAM+[Trademark]CF, for the treatment of Pseudomonas lung infections in Cystic Fibrosis patients. In June 1996, Neozyme II and NABI announced the halt of their Phase II clinical trial for HyperGAM+[Trademark]CF after receiving the results of an interim analysis of the data from the trial by an independent statistician which showed no evidence of a reduction in the number of acute pulmonary exacerbations in trial participants. No major issues with the safety of the product were identified. On June 21, 1996, after review of the interim analysis data, the Board of Directors of Neozyme II voted unanimously to terminate the License and Development Agreement with NABI. Under the terms of this Agreement, Neozyme II is required to reimburse NABI for certain costs incurred in connection with the wind down of the HyperGAM+[Trademark]CF program up to maximum of $900,000. 7 -----END PRIVACY-ENHANCED MESSAGE-----