Use these links to rapidly review the document
TABLE OF CONTENTSPART IV(a)(2). FINANCIAL STATEMENT SCHEDULES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| (Mark One) | ||
ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | ||
Commission File No. 0-14680
GENZYME CORPORATION
(Exact name of registrant as specified in its charter)
| Massachusetts | 06-1047163 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
500 Kendall Street Cambridge, Massachusetts | 02142 | |
| (Address of principal executive offices) | (Zip Code) |
(617) 252-7500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered | |
|---|---|---|
| Genzyme Common Stock, $0.01 par value ("Genzyme Stock") | The Nasdaq Global Select Market | |
| Genzyme Stock Purchase Rights | The Nasdaq Global Select Market |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý
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 Exchange 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 ý No o
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. oý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No ý
Aggregate market value of voting stock held by non-affiliates of the Registrant as of June 30, 2007: $16,917,318,3682008: $19,124,677,445.
Number of shares of Genzyme Stock outstanding as of January 31, 2008: 267,628,4722009: 271,352,703
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2007 Annual Report 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 Shareholders scheduled to be held on May 22, 2008,21, 2009, are incorporated by reference into Part III of this Form 10-K.
NOTE REGARDING REFERENCES TO OUR COMMON STOCK
Throughout this Form 10-K, the words "we," "us," "our" and "Genzyme" refer to Genzyme Corporation as a whole, and "our board of directors" refers to the board of directors of Genzyme Corporation. We have one outstanding series of common stock, which we refer to as "Genzyme Stock."
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K contains forward-looking statements. These forward-looking statements includinginclude, among others, statements regarding:
existing products for use in new indications and for new and next-generation products, including GENZ-112638, our advanced phosphate binder, Hectorol, mipomersen, clofarabine, and alemtuzumab for multiple sclerosis;
These statements are subject to risks and uncertainties, and our actual results may differ materially from those that are described in this report. These risks and uncertainties include:
We have includedrefer to more detailed descriptions of these and other risks and uncertainties in Item 1A, "Risk Factors," of this report.Form 10-K. We encourage you to read those descriptions carefully. We caution investors not to place substantial reliance on the forward-looking statements contained in this report.
Form 10-K. These statements, like all statements in this report,Form 10-K, speak only as of the date of this report (unless another date is indicated), and we undertake no obligation to update or revise the statements.statements in light of future developments.
NOTE REGARDING INCORPORATION BY REFERENCE
The U.S.United States Securities and Exchange Commission, commonly referred to as the SEC, allows us to disclose important information to you by referring you to other documents we have filed or will file with them. The information that we refer you to is "incorporated by reference" into this Form 10-K. Please read that information.
NOTE REGARDING TRADEMARKS
Genzyme®, Cerezyme®, Ceredase®, Fabrazyme®, Thyrogen®, Myozyme®, Renagel®, Renvela®, Campath®, MabCampath®, Clolar®, Evoltra®, Thymoglobulin®, Synvisc®, Synvisc-One®, Sepra®, Seprafilm®, Sepraspray®, Carticel®, Epicel®, MACI®, Hylaform® and Hectorol® are registered trademarks, and Cholestagel™, Evoltra™, Lumizyme™, MabCampath™, Mozobil™ is a trademark,and Synvisc-One™ are trademarks, of Genzyme or its subsidiaries. WelChol® is a registered trademark of Sankyo Pharma, Inc. Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC. Elaprase® is a registered trademark of Shire Human Genetic Therapies, Inc. Prochymal® and Chondrogen® are registered trademarks of Osiris Therapeutics, Inc. All rights reserved.
| | | PAGE | |||
|---|---|---|---|---|---|
PART I | |||||
ITEM 1. | |||||
BUSINESS | |||||
Introduction | 6 | ||||
Products and Services | 7 | ||||
Competition | 13 | ||||
Patents, License Agreements and Trademarks | |||||
Government Regulation | |||||
Employees | 25 | ||||
Research and Development Costs | |||||
Financial Information | |||||
Available Information | |||||
ITEM | RISK FACTORS | 26 | |||
ITEM 1B. | UNRESOLVED STAFF COMMENTS | 26 | |||
ITEM 2. | PROPERTIES | 26 | |||
ITEM 3. | LEGAL PROCEEDINGS | 28 | |||
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | ||||
| 28 | |||||
Executive Officers of the Registrant | |||||
PART II | |||||
ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | ||||
| 31 | |||||
Issuer Purchases of Equity Securities | |||||
ITEM 6. | SELECTED FINANCIAL DATA | ||||
| 32 | |||||
ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||||
| 32 | |||||
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | ||||
| 32 | |||||
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | ||||
| 32 | |||||
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | ||||
ITEM 9A. | CONTROLS AND PROCEDURES | 32 | |||
Evaluation of Disclosure Controls and Procedures | |||||
| 32 | |||||
Management's Annual Report on Internal Control Over Financial Reporting | |||||
Changes in Internal Control over Financial Reporting | 33 | ||||
ITEM 9B. | OTHER INFORMATION | 33 | |||
PART III | |||||
ITEM | |||||
| DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | ||||
ITEM | EXECUTIVE COMPENSATION | 34 | |||
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | ||||
| 34 | |||||
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | ||||
| 34 | |||||
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES | ||||
PART IV | ||||
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | |||
| 35 | ||||
15(a)(1) Financial Statements | ||||
| 35 | ||||
15(a)(2) Financial Statement Schedules | ||||
15(a)(3) Exhibits | ||||
15(b) Exhibits | 35 | |||
We are a global biotechnology company dedicated to making a major impact on the lives of people with serious diseases. Our broad product and service portfolio is focused on rare disorders, renal diseases, orthopaedics, organcancer, transplant and immune disease, and diagnostic and predictive testing, and cancer.testing. We were formed as a Delaware corporation in June 1981 and became a Massachusetts corporation in 1991. We
In the fourth quarter of 2008, we changed our segment reporting structure to better reflect the way we manage and measure the performance of our businesses. Under the new reporting structure, we are organized into sixfour financial reporting units, which we also consider to be our reporting segments:
Our transplant business unit, which develops, manufactures and distributes therapeutic products that address pre-transplantation, prevention and treatment of graft rejection in organ transplantation and other hematologic and auto-immune disorders, and our genetics business unit, which provides testing services for the oncology, prenatal and reproductive markets, were formerly reported as separate reporting segments. Beginning with this report, we now include our transplant and genetics business units under the caption "Other." We also report the activities of our diagnostic products, bulk pharmaceuticals and cardiovascularimmune mediated disease business units under the caption "Other." These operating segments did not meet the quantitative threshold for separate segment reporting.
We report our corporate, general and administrative operations and corporate science activities under the caption "Corporate." Effective January 1, 2008, as a result of changes in how we review our business, certain general and administrative expenses that were formerly allocated amongst our reporting segments and "Other" are now allocated to Corporate.
We have reclassified our 2007 and 2006 segment disclosures to conform to our 2008 presentation.
Genetic Diseases
Our Genetic Diseases segment derives substantially all of its revenue from the following therapeutic products:
Product | Indication | Approvals | ||
|---|---|---|---|---|
| Cerezyme/Ceredase | Type 1 Gaucher disease; Type 3 Gaucher disease (Cerezyme/European Union only) | Ceredase sold commercially since 1991; Cerezyme marketed since 1994; marketing approval received in more than 60 countries and commercial sales in more than 55 countries | ||
| Fabrazyme | Fabry disease | Marketed in the European Union since 2001, the United States since 2003, and Japan since 2004; marketing approval received in 48 countries and commercial sales in approximately 40 countries; post-marketing commitments in Europe have been completed and full approval received; several post-marketing commitments on-going in the United States | ||
| Myozyme | Pompe disease | Received marketing approval in the European Union in March 2006, in the United States in April 2006, in Canada in August 2006 and in Japan in April 2007; marketing approval received in 44 countries and commercial sales in more than 30 countries; several post-marketing commitments ongoing; additional regulatory filings will be submitted in countries where we have an established presence | ||
| Aldurazyme | Mucopolysaccharidosis I (MPS I) | Marketed in the United States and the European Union since 2003; marketing approval received in 58 countries and commercial sales in approximately 40 countries; several post-marketing commitments on-going |
Cerezyme, Fabrazyme, Myozyme and Aldurazyme are each aimed at treating LSDs with patient populations of less than 10,000 worldwide. We market and sell these products directly to physicians, hospitals, treatment centers, pharmacies and government agencies worldwide. Sales are also made through distributors. Additional details on these products are set forth below.
Cerezyme (imiglucerase). We are marketing Cerezyme as an enzyme replacement therapy for the treatment of Gaucher disease, an LSD that can be life-threatening and that is caused by a deficiency in the enzyme glucocerebrosidase, which causes fatty deposits to build up in certain organs and bones leading to a wide variety of symptoms, including anemia, spleen and liver enlargement and bone deterioration. Treatment with Cerezyme enzyme replacement therapy currently represents the only safe and effective enzyme replacement therapy approved for treatment of Type 1 Gaucher disease. In the European Union, Cerezyme is also approved for the treatment of patients who exhibit clinically significant, non-neurological manifestations of the disease (Type 3 Gaucher disease).
Our results of operations are highly dependent on sales of Cerezyme, although our dependence is lessening as we diversify our product portfolio. Sales of Cerezyme totaled $1.2 billion, or 27% of our total revenue in 2008; $1.1 billion, or 30% of our total revenue in 2007; and $1.0 billion, or 32% of our total revenue in 2006.
We are preparing to initiate two phase 3 studies of Genz-112638, an oral therapy that could provide an additional treatment option for patients with Gaucher disease. Patient enrollment is expected to begin in the first half of 2009.
Fabrazyme (agalsidase beta). We developed Fabrazyme, a recombinant form of the human enzyme alpha- galactosidase, as a treatment for Fabry disease. Fabry disease is an LSD that is caused by a deficiency of the enzyme alpha-galactosidase A, which leads to the progressive accumulation of lipids within cells of the kidneys, heart and other organs. In agreement with the FDA and EMEA, we undertook a number of post-marketing commitments, and have completed a phase 4, multi-national, multi-center, double-blind placebo-controlled study in patients with advanced disease in addition to dose-maintenance and pediatric studies. The EMEA approved new labeling for Fabrazyme based largely on the results from the phase 4 study in mid-2005. In January 2007, the results of this trial were published in theAnnals of Internal Medicine. In May 2007, the data from a phase 3 extension trial were also published. This data showed that Fabrazyme stabilizes renal function in Fabry patients over a 54 month period. In early 2008, the EMEA granted full marketing authorization for Fabrazyme, making it the only product on the market for Fabry disease to earn this designation in the European Union. Because kidney failure is associated with Fabry disease, Fabrazyme is sold by our existing sales forces for our LSD and renal products.
Sales of Fabrazyme totaled $494.3 million, or 11% of our total revenue in 2008; $424.3 million, or 11% of our total revenue in 2007; and $359.3 million, or 11% of our total revenue in 2006.
Myozyme (alglucosidase alfa). We are marketing Myozyme as a therapy for Pompe disease, a progressive, debilitating and often fatal muscle disease resulting from an inherited enzyme deficiency. Pompe disease is an LSD that manifests as a broad spectrum of clinical symptoms, with variable rates of progression ranging from rapidly progressive and often fatal within the first year of life to relentlessly progressive resulting in significant morbidity and premature mortality. Myozyme is the first and only treatment approved for Pompe disease and is indicated for all patients with the disorder. Myozyme specifically targets the underlying cause of Pompe disease by replacing the enzyme that is absent or deficient.
We completed in late 2007 a Late Onset Treatment Study (LOTS) conducted in juvenile and adult patients with Pompe disease. The LOTS results are expected to be published in a major medical journal in the first half of 2009. The LOTS results were submitted to the EMEA for potential inclusion of the results in the Myozyme product labeling in Europe in the first half of 2009. The results of the LOTS study were also submitted to the FDA as the basis of a separate biologics license application, or BLA, in May 2008 to gain marketing approval in the United States for alglucosidase alfa produced at the 2000L scale at our Allston, Massachusetts manufacturing facility. In April 2008, the FDA concluded that alglucosidase alfa produced at the 160 liter bioreactor, or 160L, scale and 2000L scale should be classified as two different products because of analytical differences observed as part of comparability efforts supporting the manufacturing change. In October 2008, an FDA advisory committee affirmed by a vote of 16 to 1 that our LOTS results established the clinical effectiveness of alglucosidase alfa produced at the 2000L scale for the treatment of patients with late-onset Pompe disease.
On February 27, 2009, we received a complete response letter from the FDA regarding our application. In the letter, the FDA outlines the items that need to be addressed before the application can be approved. These items include finalizing agreement with the FDA on the design of a post-approval verification study to demonstrate the clinical benefit of alglucosidase alfa produced at the 2000L scale, as required under the FDA's accelerated approval process; finalizing agreement with the
FDA on a Risk Evaluation and Mitigation Strategy (REMS) for the product; finalizing labeling discussions with the FDA; and providing the FDA with information regarding specific chemistry, manufacturing and controls (CMC) questions and with a safety update. We also need to resolve issues identified in a warning letter relating to our Allston manufacturing facility that we received with the complete response letter. The warning letter is described in more detail below under the heading "Government Regulation." A satisfactory resolution of the FDA's warning letter is required before the agency will approve our application for alglucosidase alfa produced at the 2000L scale. If this application is approved by the FDA, the product produced using the 2000L scale process will be marketed as Lumizyme in the United States; the currently FDA-approved product produced using the 160L scale process will continue to be marketed as Myozyme.
In February 2009, we received approval from the European Commission to market Myozyme produced at our manufacturing facility in Belgium using the 4000L scale process. We anticipate filing for U.S. marketing approval of product produced using the 4000L scale process in the first half of 2009.
Aldurazyme (laronidase). In 1998, we formed a joint venture with BioMarin Pharmaceutical Inc., or BioMarin, to develop and market Aldurazyme, a recombinant form of the human enzyme alpha-L-iduronidase, to treat an LSD known as MPS I. MPS I is a progressive, debilitating, and often life-threatening disease that encompasses a wide and continuous spectrum of clinical presentations, historically classified as "Hurler," "Hurler-Scheie" and "Scheie" syndromes.
Through 2007, Aldurazyme revenues were recorded by the joint venture. We included our portion of the net income (loss) of BioMarin/Genzyme LLC in equity in income of equity method investments in our consolidated statements of operations. Effective January 1, 2008, we restructured the relationship regarding the manufacturing and commercialization of Aldurazyme by entering into several new agreements. Under the new agreements, BioMarin/Genzyme LLC no longer engages in commercial activities related to Aldurazyme and solely holds the intellectual property relating to Aldurazyme and other collaboration products and engages in research and development activities that are mutually selected and funded by BioMarin and us, the costs of which are shared equally. BioMarin/Genzyme LLC licenses all intellectual property relating to Aldurazyme and other collaboration products on a royalty-free basis to BioMarin and us. BioMarin holds the manufacturing rights and we hold the global marketing rights and pay BioMarin a tiered payment ranging from 39.5% to 50% of worldwide net product sales of Aldurazyme.
Cardiometabolic and Renal
Our Cardiometabolic and Renal segment derives substantially all of its revenue from the following products:
Renagel (sevelamer hydrochloride)/Renvela (sevelamer carbonate). Renagel is aand Renvela are non-absorbed, calcium-free, metal-free phosphate binderbinders indicated for the control of serum phosphorus in patients with chronic kidney disease (CKD) on hemodialysis. In October 2007, our labeldialysis.
Renagel was expanded for use in CKD patients on dialysis, which includes both hemodialysis and peritoneal dialysis. Three formulations of the product have been approved for sale in the United States—the 403 mg. capsules were launchedStates in the fourth quarter of 1998, and the 400 and 800 mg. tablets were launched in September 2000. We ceased marketing the 403 mg. capsules in 2004. Renagel was approved for sale in Israel in 1999, the European Union and Canada in 2000, Brazil in 2002, Japan in 2003, Argentina and
Australia in 2005, Chile and Peru in 2006, and Mexico in 2007.2007, and Russia and South Africa in 2008. In the United States, there are an estimated 374,000379,000 end-stage renal disease patients, approximately 90% of whom receive a phosphate control product. There are also an estimated 324,000350,000 end-stage renal disease patients in Europe, 65,000 in Brazil, 19,70020,000 in Canada and 258,000260,000 in Japan. We are now marketing the productRenagel in over 5060 countries. Renagel is available in 400 and 800mg tablets.
In the fourth quarter of 2007, the FDA granted marketing approval for Renvela, a second generation, buffered form of Renagel. In March 2008, we launched Renvela for dialysis patients in the United States. Renvela is available as 800mg tablets. Renvela offers all of the advantages of Renagel with the added benefit of a carbonate buffer. We are pursuing regulatory approvals for Renvela in
Europe, Latin America and other international markets. We anticipate approval of Renvela in the European Union, Canada and several Latin American countries in the first half of 2009. While Renagel will remain available for a period of time, our goal is to transition patients in the United States to Renvela by the fourth quarter of 2009.
In October 2007, an FDA advisory committee voted to recommend that the agency extend the indications for phosphate binder use in patients with hyperphosphatemia who have not progressed to dialysis. Based on this positive recommendation, we and two other companies submitted a position paper to the FDA in June 2008 regarding the expanded use of phosphate binders. We received written responses from the FDA and are in the process of responding to the agency. There is no PDUFA date associated with this expanded label approval process; however, we anticipate that this indication will be added to Renvela's label in the United States by the middle of 2009. We included this indication in our marketing application for Renvela in Europe, and anticipate approval in the first half of 2009. In addition, we have filed for approval of a powder form of Renvela to provide an additional option for physicians and patients that reduces pill burden and assists patients that have difficulty swallowing tablets.
In December 2008, we filed an investigational new drug application, or IND, for our advanced phosphate binder, Genz-644470, and we expect to begin a phase 2/3 trial in 2009. Genz-644470 is a non-absorbed polymer designed to more selectively bind phosphate for a substantial improvement in potency over existing therapies.
We market Renagel tabletsour sevelamer therapies in the United States, Europe, Canada, Latin America and Australia directly to nephrologists through a dedicated sales force. In the United States, approximately 85%—90% of our RenagelRenagel/Renvela sales are made to three large wholesalers. These wholesalers distribute RenagelRenagel/Renvela to retail pharmacies, hospitals and other providers of medication to patients. Chugai Pharmaceutical Co., Ltd. and its partner, Kyowa Hakko Kirin Brewery Co., Ltd., have rights to develop and market Renagel in Japan, China and other Pacific Rim countries.
Our sales of RenagelRenagel/Renvela (including sales of bulk sevelamer), totaled $677.7 million, or 15% of our total revenue in 2008; $602.7 million, or 16% of our total revenue in 2007,2007; and $515.1 million, or 16% of our total revenue in 2006, and $417.5 million, or 15% of our total revenue in 2005.
In early 2007,Kidney Internationalpublished findings from the Renagel in New Dialysis, or RIND, study that demonstrated a significantly lower rate of death among patients treated with Renagel from the time they began dialysis compared with those using calcium-based phosphate binders. Also published inKidney Internationalin August 2007, were the results of the Dialysis Clinical Outcomes Revisited study, or DCOR, a three-year trial involving more than 2,100 patients on hemodialysis. DCOR was conducted to compare the difference in outcomes for patients receiving Renagel with those using calcium-based phosphate binders. This is the largest prospective dialysis outcomes study conducted to evaluate the ability of Renagel to improve patient mortality and morbidity. While the study did not meet its primary endpoint of a statistically significant reduction in all cause mortality, in a pre-specified secondary analysis, Renagel demonstrated a significant reduction in all cause mortality in patients 65 years of age or older. Additionally, the mean number of hospitalizations and hospital days were lower in the Renagel-treated arm. For patients remaining on study for at least two years, a difference in mortality emerged favoring the Renagel patients. These studies, in combination with previously completed studies, provide a significant body of evidence helping to demonstrate the effectiveness of Renagel.
In the fourth quarter of 2007, the FDA granted marketing approval for Renvela tablets for the control of serum phosphorus in patients with CKD on dialysis, including both hemodialysis and peritoneal dialysis. Renvela is a next-generation version of Renagel and will initially be available as 800 mg tablets. Renvela offers all of the advantages of Renagel with the added benefit of a carbonate buffer. In a clinical study comparing Renvela to Renagel in patients on hemodialysis, both drugs demonstrated equivalent control of serum phosphorus to within Kidney Disease Outcomes Quality Initiative, or KDOQI, recommended ranges. Patients on Renvela, however, were more likely to maintain bicarbonate levels within the recommended KDOQI ranges, and had a lower incidence of gastrointestinal adverse events. We plan to pursue regulatory approvals for Renvela in Europe, Latin America and in other markets internationally. While Renagel will remain available for a period of time, our long-term goal is to transition patients to Renvela.
We also completed a study comparing a powder form of Renvela dosed three times per day to Renagel tablets dosed three times per day in patients on hemodialysis. This study met its primary endpoint of achieving equivalent phosphorus control in patients treated with both Renvela and Renagel. We expect to file for approval of the powder form of Renvela, which may represent a promising alternative for patients with CKD by making it easier for patients to comply with their prescribed treatment program, in the first half of 2008.
In the third quarter of 2007, we participated in the FDA's Cardiovascular and Renal Products Advisory Committee meeting. During this meeting, the committee recommended that the FDA extend the indications for phosphate binder use in pre-dialysis patients with hyperphosphatemia. We have successfully completed a study with Renvela in CKD patients not on dialysis, and we plan to continue
to work with the FDA on the appropriate regulatory path forward to achieve approval of Renvela for this patient population.2006.
Hectorol (doxercalciferol). We added Hectorol to our product portfolio in July 2005 through our acquisition of Bone Care International, Inc., or Bone Care. Hectorol is a line of vitamin D2 pro-hormone products that are indicated for the treatment of secondary hyperparathyroidism in patients with stages 3 and 4 CKD (0.5 mcg and 2.5 mcg capsules) and in patients with stage 5 CKD on dialysis (2.5 mcg capsules and injection). Hectorol provides significant parathyroid hormone (PTH) reductions with minimal impact on calcium and phosphorus levels. Three formulations of the product have been approved for commercial sale in the United States—thea 2.5 mcg capsules were approved in 1999, thecapsule, a 0.5 mcg capsules were approved in 2004capsule and an intravenous ("IV") formulation. In the intravenous formulation was approved in 2000. We receivedUnited States, we have filed for approval on Hectorol 2.5of a customer-preferred vial container to replace the current IV ampule and also for a 1.0 mcg and 0.5 mcg capsules in Argentina in 2007 and expectcapsule. Both of these line extensions are expected to launch in that country in early 2008.the first half of 2009.
We market Hectorol in the United States through a direct sales force focused on nephrologists. Approximately 85%—90% of our U.S. Hectorol capsule sales are made to three large wholesalers, who then sell and distribute the product to retail pharmacies, hospitals and other providers of medication to patients. For Hectorol IV, approximately 85%—90% of our sales are made to three primary wholesalers who then sell and distribute the product to dialysis chains and hospitals. In the United States, approximately 65% of end-stage renal disease patients receive Vitaminvitamin D. We estimate that there are more than 2.5 million patients in the United States with stage 3 and stage 4 CKD who have elevated PTH levels, although only a much smaller number of patients are being treated for the condition. In December 2006, Dr. Francesca Tentoriet al published data inKidney International distinguishing Vitamin D analogs. These findings suggest that treatment with Vitamin D analogs provides a significant advantage for dialysis patients and that the newer generation of D2 analogs, such as Hectorol, appear to have survival advantages over older analogs such as calcitriol.
In 2007, Genzyme filed an IND for the use of Hectorol in psoriasis patients. We plan to initiateinitiated a clinical trial in this indication in early 2008.2008, with Phase II results expected in the middle of 2009.
Therapeutics
Our Therapeutics segment currently has six therapeutic products on the market and several other therapeutic products in varying stagesTable of development. The chart set forth below provides summary information on five of these products as of February 1, 2008.
Cerezyme, Fabrazyme, Myozyme and Aldurazyme are each aimed at treating LSDs with patient populations of less than 10,000 worldwide. Additional details on our Therapeutic products are set forth below.
Cerezyme (imiglucerase). We are marketing Cerezyme as an enzyme replacement therapy for the treatment of Gaucher disease, an LSD that is caused by a deficiency in the enzyme glucocerebrosidase, which causes fatty deposits to build up in certain organs and bones leading to a wide variety of symptoms, including anemia, spleen and liver enlargement and bone deterioration. Treatment with Cerezyme enzyme replacement therapy currently represents the only safe and effective enzyme replacement therapy approved for treatment of Type 1 Gaucher disease. In the European Union,
Cerezyme is also approved for the treatment of patients who exhibit clinically significant, non-neurological manifestations of the disease (Type 3 Gaucher disease).
We market Cerezyme directly to physicians, hospitals and treatment centers worldwide through a highly specialized sales force. Our results of operations are highly dependent on sales of this product, although our dependence is lessening as we diversify our product portfolio. Sales of Cerezyme totaled $1.1 billion, or 30% of our total revenue in 2007, $1.0 billion, or 32% of our total revenue in 2006, and $932.3 million, or 34% of our total revenue in 2005.
Fabrazyme (agalsidase beta). We have developed Fabrazyme, a recombinant form of the human enzyme alpha-galactosidase, as a treatment for Fabry disease. Fabry disease is an LSD that is caused by a deficiency of the enzyme alpha-galactosidase A, which leads to the progressive accumulation of lipids within cells of the kidneys, heart and other organs. In agreement with the FDA and EMEA, we undertook a number of post-marketing commitments, and have completed a phase 4, multi-national, multi-center, double-blind placebo-controlled study. The EMEA approved new labeling for Fabrazyme based largely on the results from the phase 4 study in mid-2005. In January 2007, the results of this trial were published in theAnnals of Internal Medicine. In May 2007, the data from the phase 3 extension trial were also published. This data showed that Fabrazyme stabilizes renal function in Fabry patients over a 54 month period. In early 2008, the EMEA granted full marketing authorization for Fabrazyme, making it the only product on the market for Fabry disease to earn this designation in the European Union. Because kidney failure is associated with Fabry disease, Fabrazyme is sold by our existing LSD and Renal sales forces.
Thyrogen (thyrotropin alfa)alfa for injection). Thyrogen is an adjunctive diagnostic agent used in the follow-up of patients with well-differentiated thyroid cancer. We developed this product to allow patients to continue taking their thyroid hormone supplements while they are being screened for residual or recurring thyroid cancer. ThisThyrogen helps patients avoid the debilitating effects ofmorbidities associated with hypothyroidism, thus increasing the likelihood that they will seek follow-up treatment, andcare. This will ultimately improveincrease the likelihood of early detection of any recurrent disease, which can improve the success rate of subsequent treatment. InWe have been marketing Thyrogen for this indication in the United States since 1998, Brazil since 2000 and the European Union physicians order over 200,000 thyroid cancer screening tests per year.since 2001. In October 2008, we received marketing approval in Japan.
In December 2007, we received FDA approval to market Thyrogen as an adjunctive treatment for ablation or destruction of thyroid remnants in patients who have undergone removal of their thyroid for the treatment of well-differentiated thyroid cancer. This indication compliments the diagnostic use of Thyrogen in that it enables use for an additional stage of thyroid cancer management. As in its diagnostic use, Thyrogen allows patients to remain on thyroid hormone therapy while undergoing radioiodine ablation, thus helping prevent the debilitating effects ofmorbidities associated with hypothyroidism. Another advantage to Thyrogen use is that the patients taking itThyrogen clear radioiodine more rapidly from their systembodies than do patients receiving thyroid hormone withdrawal. Approximately 35,000 ablation proceduresWe received marketing approval for this indication in the European Union and Australia in 2005 and Brazil in 2006.
There are performedapproximately 65,000 new patients diagnosed with thyroid cancer annually in the United States and European Union combined, and we believe that Thyrogen has the potential to be used in up to 80%with approximately 70% of these procedures.
patients. We sell Thyrogen commercially in approximately 60 countries. Thyrogen is promoted by a dedicated sales force, and sold to hospitals and doctors' offices through distributors in the United States, the European Union, Latin America and Asia.Australia. Sato Pharmaceutical Co., Ltd, has rights to sell and distribute Thyrogen in Japan. We currently are pursuing additional market or expanded indication approvals for Thyrogen and anticipate approvals in Japan, Canada, Colombia, Peru, Uruguay, South Korea, Singapore, Taiwan, the Philippines, South Africa, Belarus, Chile and Thailand.
Myozyme (alglucosidase alfa). We are marketing Myozyme as a therapy for Pompe disease, a progressive and often fatal muscle disease resulting from an inherited enzyme deficiency. Pompe disease manifests as a broad spectrum of clinical symptoms, with variable rates of progression ranging from rapidly progressive and often fatal within the first year of life to relentlessly progressive resulting in significant morbidity and premature mortality. Myozyme is the first and only treatment approved for Pompe disease and is indicated for all patients with the disorder. Myozyme specifically targets the underlying cause of Pompe disease by replacing the enzyme that is absent or deficient.
A randomized, double blind, placebo controlled, multi-center, multi-national clinical trial on juvenile and adult patients was completed in late 2007 and met both of its co-primary efficacy endpoints. The co-primary endpoints were functional endurance as measured by the 6 minute walk and pulmonary function as measured by percent predicted forced vital capacity. We are completing the full analysis of the study results and plan to submit in the United States and European Union in the second half of 2008 for potential inclusion of the results in the Myozyme product labeling.
Aldurazyme (laronidase). In 1998, we formed a joint venture with BioMarin Pharmaceutical Inc., or BioMarin, to develop and market Aldurazyme, a recombinant form of the human enzyme alpha-L-iduronidase, to treat an LSD known as MPS I. MPS I is a progressive, debilitating, and often life-threatening disease, which encompasses a wide and continuous spectrum of clinical presentations, historically classified as "Hurler," "Hurler-Scheie" and "Scheie" syndromes. In 2003, Aldurazyme received marketing approval in both the United States and the European Union. We market Aldurazyme directly to physicians in the United States through our LSD sales force. In Europe, Latin America and Asia, sales of Aldurazyme are undertaken by the local sales and marketing teams and are being realized on a country-by-country basis as pricing and reimbursement approvals are obtained. Applications for Aldurazyme marketing approval are currently pending in several countries in Latin America, Central and Eastern Europe, and the Asia-Pacific rim. Through 2007, Aldurazyme revenues were recorded by the joint venture. We included our portion of the net income (loss) of BioMarin/Genzyme LLC in equity in income of equity method investments in our consolidated statements of operations.
Effective January 1, 2008, we restructured the relationship regarding the manufacturing and commercialization of Aldurazyme by entering into several new agreements. BioMarin/Genzyme LLC will no longer engage in commercial activities related to Aldurazyme and will solely hold the intellectual property relating to Aldurazyme and other collaboration products and engage in research and development activities that are mutually selected and funded by BioMarin and us, the costs of which will be shared equally.
Under the restructured relationship, BioMarin/Genzyme LLC will license all intellectual property relating to Aldurazyme and other collaboration products on a royalty-free basis to BioMarin and us. BioMarin will hold the manufacturing rights and we will hold the global marketing rights and we will pay BioMarin a tiered payment ranging from 39.5% to 50% of worldwide net product sales of Aldurazyme.
Transplant
This business segment includes three marketed products, as well as product candidates in the research and development stages that we acquired through our acquisition of SangStat Medical Corporation, or SangStat, in the third quarter of 2003 and our acquisition of AnorMED in the fourth quarter of 2006. Set forth below is a discussion of the marketed product that is the primary revenue driver for the Transplant segment.
Thymoglobulin (anti-thymocyte globulin, rabbit). Thymoglobulin is an immunosuppressive polyclonal antibody that suppresses certain types of immune cells responsible for acute organ rejection in transplant patients. Thymoglobulin was approved in the United States in December 1998, we market Thymoglobulin in the United States for the treatment of acute rejection of renal transplants. In Canada, we have marketed Thymoglobulin since 2003 for both the prevention and treatment of acute rejection of renal transplants. More kidney transplants are performed in the United States than any other organ transplant, with over 17,000 transplants performed in 2006. Of this number of renal transplants, the United Network for Organ Sharing estimates that acute immunosuppressant therapies such as Thymoglobulin were used in greater than 70% of such procedures.
In the European Union, Thymoglobulin has a broader approved label which allows us to market it for a wider variety of approved uses, including the prevention and treatment of rejection in solid organ transplants, the prevention and treatment of graft versus host disease, and the treatment of aplastic anemia, a disease that affects the production of mature, functional blood cells. Thymoglobulin also has a similarly broad label in several Asian and Latin American countries. Thymoglobulin was launched in Mexico and we have filed for marketing approval of Thymoglobulin in Japan, Costa Rica, Australia, New Zealand and the United Kingdom. We sell Thymoglobulin in 51 countries through a direct sales force or through distributors to transplant centers for use by transplant surgeons, nephrologists, hematologists and oncologists.
We are completing the one year follow-up of a phase 2 trial of Thymoglobulin in liver transplantation to prevent rejection and delay of the introduction of calcineurin inhibitors in patients with renal dysfunction prior to liver transplant. In collaboration with the Immune Tolerance Network, we have initiated a phase 2 trial to evaluate the effects of Thymoglobulin on preserving beta-cell function in patients with new onset Type 1 diabetes mellitus. We have initiated phase 2 clinical trials in North America and Europe evaluating the use of Thymoglobulin in the treatment of immune mediated bone marrow failure associated with myelodysplastic syndromes.Venezuela.
Biosurgery
Our Biosurgery segment derives substantially all of its revenue from the following products:
Synvisc (hylan G-F 20). Synvisc is a biomaterial-based product derived from hyaluronan that is used to treat the pain associated with osteoarthritis of the knee. An estimated 8 to 9 million of the approximately 14 million people in the United States with osteoarthritis of the knee may be candidates for treatment with Synvisc. Synvisc is sold commerciallyavailable for commercial sale in over 60 countries, both directlyand is sold through a direct sales force in the United States and Europe and other larger markets and through marketing and distribution arrangements.arrangements in our smaller markets.
We have been investing in research and clinical trials to expand the use of Synvisc to additional joints and through next-generation approaches. In Canada, Synvisc is approved for the treatment of pain associated with osteoarthritis of the hip in 24 countries outside of the United States, and in the European Union, Hong Kong, Israel and Malaysia, Synvisc is approved for the treatment of pain associated with osteoarthritis of the hip, ankle and shoulder.
In December 2007, we received approval to market Synvisc-One, a single-injection regimen of Synvisc, in the European Union. In November 2007,February 2009, we received a response letter from the FDA requesting additional analyses and data regarding our marketing applicationapproval for Synvisc-One in the United States. We planSynvisc-One is sold commercially in approximately twelve countries and we expect to respond tolaunch the FDAproduct in the first half of 2008 and expect regulatory action on our applicationan additional ten countries in the second half of 2008.2009.
Sepra Products. The Sepra family of products is aimed primarily at preventing adhesions (internal scar tissue) following various surgical procedures in areas of the body such as the abdomen and pelvis. These products are produced from biomaterials derived from hyaluronan. We market the Sepra products primarily through a direct sales force in the United States, France and Australia, and primarily through distribution
arrangements in Japan and the rest of the world. Our Sepramesh IP hernia mesh product is marketed by Davol, Inc., a subsidiary of C.R. Bard, Inc., under a license agreement.
Seprafilm, the first marketed product and largest by sales volume of the Sepra family, is the only FDA-approved product clinically proven to reduce the incidence, extent and severity of postsurgical adhesions in both the abdomen and pelvis. There are approximately 2 million applicable abdominal and pelvic procedures performed annually in the United States, including 1.1 million Caesarean sections, a largely untapped market.
Genetics The combined total market for these procedures outside of the United States is approximately equal to the United States market. Seprafilm is sold commercially in approximately 24 countries.
In 2008, we received approval to market Sepraspray, an easier to apply version of Seprafilm, in Europe and in certain countries in Asia. We developexpect to launch Sepraspray in several markets in Europe and provide complex reproductive testing services primarilyAsia in 2009. Sepraspray is currently in clinical development to support regulatory approval in the United States and Japan. In the United States, we also offer diagnostic services for reproductive markets (primarily
pre-natal, post-natal and infertility areas) and for the oncology market. We also offer genetic counseling services focused in the reproductive area. We offer several types of testing—the most significant are cytogenetic testing, molecular genetic (DNA) testing, immunohistochemistry testing, flow cytometry testing and biochemical testing. These services are promoted through a direct sales force in the United States, with testing performed in our eight major clinical laboratories located throughout the United States. We service the Japanese market through a direct sales force and distributors, with testing primarily performed in U.S. laboratories.
Hematologic Oncology
Our Hematologic Oncology segment includes the following products:
Campath (alemtuzumab). Campath is indicated as a single agent for the treatment of B-cell chronic lymphocytic leukemia (B-CLL). In September 2007, the FDA approved a supplemental biologics license application (sBLA) for Campath and approved expanded labeling for Campath to include first-line treatment of B-CLL. In December 2007, we also received European approval of an expanded indication. We estimate that there are over 13,000 patients in the United States and 16,000 outside of the United States now eligible to receive the product. In December 2007, we also received European approval of an expanded indication. Campath is marketed and distributed by Bayer HealthCare Pharmaceuticals Inc. (Bayer) in the United States as Campath and outside the United States by Bayer Schering Pharma AG as MabCampath. The product is sold commercially in over 60 countries.
Alemtuzumab for Multiple Sclerosis. Together with Bayer, we have begun enrolling patients in two phase 3 trials to measure alemtuzumab's comparative effect on disability accumulation and relapse rate versus Rebif across a two year period. One study includes previously untreated patients and one includes patients whose disease remains active following treatment with an approved therapy.
ClolarClolar/Evoltra (clofarabine). Clolar is indicated in the United States for the treatment of pediatric patients 1 to 21 years old with relapsed or refractory acute lymphoblastic leukemia (ALL) after at least two prior regimens. An estimated 300 children experience a second relapse and require therapy every year in the United States. We market clofarabine under the brand name Clolar in North America. In October 2007, with our acquisition of Bioenvision, we acquired worldwide rights to clofarabine. Clofarabine has approval in 27 European countries and Israel for the treatment of pediatric ALL patients who have relapsed or are refractory after receiving at least two prior regimens and where there is no other treatment option anticipated to result in a durable response. Clofarabine has also been approved in Mexico. We have filed for approval of clofarabine in Canada, Brazil and Argentina. We market clofarabine under the brand name Clolar in North and South America and as Evoltra elsewhere in the world. We market clofarabine primarily through a direct sales force focused on hematologists and oncologists in the hospital setting, except in Australia and New Zealand where the product is marketed by a distributor.setting.
We are developing the intravenous formulation of Clolar for significantly larger indications, including first-line and relapsed or refractory acute myeloid leukemia (AML) in adults. In November 2008, we filed a supplemental New Drug Application with the FDA for the use of Clolar to treat previously untreated adults age 60 years or older with AML who have at least one unfavorable prognostic factor. We are also developing an oral formulation of Clolar and have initiated clinical trials for the treatment of myelodysplastic syndrome (MDS). ClolarClofarabine has been granted orphan drug status for ALL and AML in both the United States and European Union.
Mozobil (plerixafor injection). Mozobil is indicated in the United States in combination with granulocyte-colony stimulating factor (G-CSF) to mobilize hematopoietic stem cells to the peripheral blood for collection and subsequent autologous transplantation in patients with non-Hodgkin's lymphoma (NHL) and multiple myeloma (MM). In December 2008, we received marketing approval for Mozobil in the United States. Prior to this approval, more than 1,000 patients had received Mozobil through a compassionate use program in the United States. An additional 250 patients received Mozobil through similar compassionate use programs in Europe since they began in the first half of 2008. Mozobil has been granted orphan drug status in the United States for use to improve the yield of progenitor cells in the apheresis product for subsequent stem cell transplantation following myelosuppressive or myeloablative chemotherapy. We market Mozobil in the United States primarily through a direct sales force focused on hematologists/oncologists and transplant specialists nationwide.
We have submitted an application in Europe for marketing approval of Mozobil with a proposed indication to enhance mobilization of hematopoietic stem cells to the peripheral blood for collection and subsequent autologous transplantation in patients with lymphoma and MM. We expect EMEA action on the application in the second half of 2009. We have also filed applications in Australia and Brazil with this proposed indication. We have approval to sell Mozobil in Mexico based on an exemption from registration related to Mozobil's orphan drug status in the United States. It is estimated that approximately 55,000 hematopoietic stem cell transplants are performed each year globally for MM, NHL, Hodgkin's lymphoma, and other conditions. We have begun early preclinical and clinical investigations to explore additional therapeutic indications for Mozobil, including mobilization of hematopoietic stem cells for allogeneic stem cell transplants and tumor sensitization in oncology/hematology treatments such as AML.
We are engaged in segments of the human healthcare products and services industry that are extremelyhighly competitive. Our competitors in the United States and elsewhere include major pharmaceutical, biotechnology, diagnostic testing and medical device companies.companies, and generic and biosimilar manufacturers. Some of these competitors may have more extensive research and development, regulatory, manufacturing, production, and sales and marketing capabilities. Some competitors may have greater financial resources. These companies may succeed in developing products and services that are more effective or more economical than any that we have or may develop and may also prove to be more successful than we are in manufacturing, marketing and selling products and services. In addition, technological advances or different approaches developed by one or more of our competitors may render our products and services obsolete, less effective or uneconomical. Each of our products and services faces different competitive challenges, and we describe many of them below.
Genetic Diseases
Cerezyme. Zavesca® is currently the only other marketed product aimed at treating Gaucher disease. Zavesca is a small molecule oral therapy marketed by Teva Pharmaceutical Industries Ltd. in Israel and Actelion Ltd. in the United States and the European Union. Zavesca has been approved for use in patients with mild to moderate Type 1 Gaucher disease for whom enzyme replacement therapy is unsuitable. To date, virtually all Gaucher disease patients who have received enzyme therapy have experienced strong clinical benefits with few side effects, so Zavesca has not had a significant impact on our sales of Cerezyme. We are aware of other on-going development efforts directed towards the treatment of the disease. Shire plc is conducting phase 3 clinical trials for its gene-activated human glucocerebrosidase (GA-GCB) product. In addition, Protalix Biotherapeutics Ltd. is conducting phase 3 trials with their plant-derived human glucocerebrosidase (prGCD) therapy. Lastly, Amicus Therapeutics, Inc. is conducting phase 2 trials using Plicera™, an experimental oral pharmacological chaperone for the treatment of Gaucher disease. Other competitors could develop competitive products based on protein replacement therapy, small molecule or gene therapy approaches. Orphan drug status for Cerezyme, which provided us with exclusive marketing rights for Cerezyme in the U.S. for seven years, expired in 2001.
Fabrazyme. Fabrazyme has marketing exclusivity in the United States until 2010 due to its orphan drug status. Replagal®, Shire's enzyme replacement therapy for Fabry disease, competes with Fabrazyme in the European Union, Australia, Canada, Japan, Iceland, Israel, New Zealand, Norway, Romania, Switzerland, Brazil and Taiwan. Amicus Therapeutics has completed phase 2 studies of Amigal™, its experimental small molecule pharmacological chaperone treatment for Fabry disease, and is in discussions with the FDA and EMEA regarding the conduct of phase 3 clinical trials.
Myozyme. Myozyme has marketing exclusivity in the United States until 2013 and in the European Union until 2016 due to its orphan drug status. Amicus Therapeutics has completed two
phase 1 clinical studies for a small molecule pharmacologic chaperone treatment for Pompe disease and initiated a phase 2 clinical trial in June 2008. In February 2009, Amicus announced that the company had suspended enrollment for its phase 2 clinical trial and that it had received verbal notice from the FDA that the trial is on clinical hold.
Aldurazyme. Aldurazyme has marketing exclusivity in the United States until 2010 and in the European Union until 2013 due to its orphan drug status. There are currently no other biopharmaceutical products on the market to treat MPS I. For some patients, particularly Hurler patients under two years of age, hematopoietic stem cell transplantation may be an appropriate treatment.
Cardiometabolic and Renal
Renagel/Renvela. Renagel and Renvela are phosphate binders for the treatment of hyperphosphatemia. Renagel is the most prescribed phosphate binder in the United States. Phosphate binders are currently the only available treatmenttherapeutic treatments for hyperphosphatemia, or elevated serum phosphorus levels, in CKD patients on dialysis. There are several phosphate binder options available, including PhosLo®, a prescription calcium acetate preparation sold by Fresenius Medical Care, and Fosrenol®, a prescription lanthanum carbonate sold by Shire. PhosLo is marketed in the United States as are other branded and generic calcium preparations available worldwide. A generic formulation of PhosLo manufactured by Roxane Laboratories, Inc. was launched in the United States in October 2008. Fosrenol is marketed in the United States, Europe, Canada and Latin America. Other products used as phosphate binders include over-the-counter calcium-based antacids such as TUMS® and metal-based options such as aluminum and magnesium.
The doses necessary for calcium products to achieve adequate reductions in phosphate absorption can lead to harmful side effects such as hypercalcemia. Evidence suggests that increasing doses of calcium-based binders may lead to cardiac calcification. Aluminum hydroxide, a metal-based treatment option, is more effective at lowering phosphorus, 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 dementia. AnotherLanthanum, the metal-based option Shire'smarketed by Shire as Fosrenol, marketed in the U.S. and some European countries, is an effective phosphate binder but with limited long-term safety data. Several animal studies suggest lanthanum absorption may lead to harmful toxicities.
Hectorol. Dialysis providers typically select which therapy a CKD patient receives to treat secondary hyperparathyroidism based on safety, efficacy and cost. The majority of patients on dialysis receive an IV form of therapy, and patients with secondary hyperparathyroidism who have not advanced to dialysis generally receive the oral form. Abbott Laboratories, Inc., or Abbott, markets intravenous calcitriol (brand name Calcijex®) and intravenous paricalcitol (brand name Zemplar®) for end-stage renal disease patients. Zemplar is viewed to offer similar efficacy and safety to Hectorol. Current intravenous versions of these drugs are approved to manage secondary hyperparathyroidism in end-stage renal disease patients in the United States, Europe, and in major Latin American markets. A number of companies have launched or are planning to launch generic intravenous calcitriol in the United States. In 2005, Abbott received approval to market oral paricalcitol (Zemplar) in the United States for patients with stages 3 and 4 CKD. Zemplar's 1.0 mcg dose has been the primary source of growth for the brand. Since 2004, Amgen, Inc. has been marketing in the United States an oral calcimimetic agent (brand name Sensipar® ) for the treatment of secondary hyperparathyroidism in patients with CKD on dialysis. The majority of patients studied on this calcimimetic agent were also taking Vitamin D hormone to treat secondary hyperparathyroidism. Roche Pharmaceuticals, a division of F. Hoffman-LaRoche Ltd. (Roche), markets oral calcitriol (brand name Rocaltrol®) and Teva Pharmaceuticals Industries Ltd., or Teva, markets generic oral calcitriol in the United States to manage secondary hyperparathyroidism in CKD patients. These two products are approved in the United States for the treatment of elevated parathyroid hormone in both end-stage renal disease and pre-dialysis CKD.CKD patients.
Therapeutics
Cerezyme. Zavesca® is currently the only other marketed product aimed at treating Gaucher disease. Zavesca is a small molecule oral therapy developed by CellTech Group plc, which was acquired by UCB S.A. in 2004, and marketed by Teva in Israel and Actelion Ltd. in the United States and the European Union. Zavesca has been approved for use in patients with mild to moderate Type 1 Gaucher disease for whom enzyme replacement therapy is unsuitable. To date, virtually all Gaucher disease patients who have received enzyme therapy have experienced strong clinical benefits with few side effects, so we do not expect the competition from Zavesca to have a significant impact on our salesTable of Cerezyme. We are aware of other on-going development efforts directed towards the treatment of the disease. Shire Pharmaceuticals Group plc is conducting a phase 3 clinical trial for its gene-activated human glucocerebrosidase (GA-GCB) product. In addition, Protalix Biotherapeutics Ltd. has initiated a phase 3 trial with their plant-derived human glucocerebrosidase (prGCB) therapy (expressed and purified in a bioreactor system from transformed carrot cells). Lastly, Amicus Therapeutics, Inc. is conducting two phase 2 trials using Plicera, an experimental oral pharmacological chaperone for the treatment of Gaucher disease. Other competitors could develop competitive products based on protein replacement therapy, small molecule or gene therapy approaches. Orphan drug status for Cerezyme, which provided us with exclusive marketing rights for Cerezyme in the U.S. for seven years, expired in 2001. However, we continue to have patents protecting our method of manufacturing Cerezyme until 2010 and the composition of Cerezyme as made by that process until 2013.
Fabrazyme. Fabrazyme has marketing exclusivity in the United States until 2010 due to its orphan drug status. Replagal®, Shire's enzyme replacement therapy for Fabry disease, competes with Fabrazyme in the European Union, Australia, Canada, Japan, Iceland, Israel, New Zealand, Norway, Romania, Switzerland, Brazil and Taiwan. Amicus Therapeutics is conducting phase 2 studies of Amigal, its experimental small molecule pharmacological chaperone treatment for Fabry disease.Contents
Thyrogen. Thyrogen has no competitive product in the market. The medical alternative to Thyrogen is to withdraw the patient from thyroid hormone replacement therapy, which makes the patient hypothyroid and may cause many of the co-morbidities associated with hypothyroidism.
Myozyme. Myozyme has marketing exclusivity in the United States until 2013 and in the European Union until 2016 due to its orphan drug status. Amicus Therapeutics has completed two phase 1 clinical studies for a small molecule treatment for Pompe disease and has announced their plans to initiate a phase 2 clinical trial in early 2008.
Aldurazyme. Aldurazyme has marketing exclusivity in the United States until 2010 and in the European Union until 2013 due to its orphan drug status.
Transplant
Thymoglobulin. Several companies market products used for the prevention and treatment of acute rejection in renal transplant. These products include Novartis AG's Simulect®, Pfizer Inc.'s ATGAM®, Ortho Biotech's Orthoclone OKT®3, Fresenius Biotech GmbH's ATG-Fresenius S® and the Roche Group's Zenapax®. Competition in the transplant graft rejection market is largely driven by product efficacy due to the potential for decreased long term survival of transplanted organs as the result of an acute organ rejection episode.
Biosurgery
Synvisc. Synvisc and Synvisc-One face competition from other viscosupplementation products in the United States and international markets. These other products compete with Synvisc and Synvisc-One based on price and product performance. Current competition for Synvisc and Synvisc-One includes Supartz®, a product manufactured by Seikagaku Kogyo that is sold in the United States by Smith & Nephew Orthopaedics and in Japan by Kaken Pharmaceutical Co. under the name Artz®; Hyalgan®, produced by Fidia Farmaceutici S.p.A. and marketed in the United States by Sanofi-Aventis; Orthovisc®, produced by Anika
Therapeutics, Inc., and marketed in the U.S.United States by Johnson & Johnson and marketed outside the United States through distributors; Euflexxa™, a product manufactured and sold by Ferring Pharmaceuticals in the United States and Europe; and Durolane®, manufactured by Q-Med AB and marketed outside the United States by Smith & Nephew Orthopedics.
Durolane and Euflexxa, the most recently approved products in Europe and the United States, respectively, are produced by bacterial fermentation, as opposed to Synvisc and Synvisc-One, which isare avian-sourced. Production via bacterial fermentation may represent a competitive advantage for these products. In addition, the treatment protocol for Durolane is single-injection. We have received approval to market Synvisc-One in the European Union and are pursuing its approval in the United States. Production via bacterial fermentation may representWe believe that single injection products will have a competitive advantage for theseover multiple injection products. We are aware of various viscosupplementation products on the market or in development, including some that are pursuing single injection delivery, but are unaware of any products that have physical properties of viscosity, elasticity or molecular weight comparable to those of Synvisc.Synvisc and Synvisc-One. Single injection products include Anika's Monovisc™, which is marketed in Europe, and Seikagaku Kogyo's Gel-200, which is under PMA review with the FDA. We are also unaware of any products that achieve our duration of efficacy with only three injections.injections or any other single injection products with duration of efficacy comparable to Synvisc-One.
Sepra Products. The Sepra products face competition from other adhesion prevention technologies. Another competitive factor affecting the adoption of Sepra products is the extent to which surgeons continue to treat patient conditions using procedures for which the Sepra products are indicated. For example, Seprafilm adhesion barrier is not indicated for use in laparoscopic procedures, so adoption by surgeons of new laparoscopic procedures could have the effect of limiting Seprafilm adhesion barrier adoption. Sepraspray, however, can be used in laparoscopic procedures in those markets where it is approved.
Seprafilm does not have significant on labelon-label direct competition in the area of abdominaldigestive surgery in the United States, but does compete with other products in othergynecologic surgery indications. Baxter Healthcare currently markets Adept® Adhesion Reduction Solution, which is a liquid solution approved in the United States for gynecologic laparoscopic adhesiolysis. The labeled indications for Seprafilm and Adept are mutually exclusive, though off-label use of each may result in limited competition. Gynecare Worldwide, a division of Ethicon, Inc., a Johnson & Johnson company, markets Interceed®, a sheet adhesion barrier similar in intended use to Seprafilm but iswith an indicated use only for open gynecological procedures. In Japan, Seprafilm competes with Interceed. We are aware of additional products that are in early clinical development. Outside the United States and Japan, Seprafilm competes with several adhesion prevention products. Baxter Healthcare'sproducts, primarily Adept solution is approved in the European Union for abdominal and gynecological surgeries. FzioMed, Inc. has received CE Mark approval in the European Union for Oxiplex®/AP Gel, an adhesion barrier for abdominal/pelvic surgery, and has announced a global distribution agreement with Ethicon for distribution of Oxiplex/AP Gel. Covidieu's Spraygel™, an adhesion barrier used in abdominopelvic procedures, is approved for sale in Europe. MAST Biosurgery AG's bioresorbable film product, SurgiWrap™, is also CE marked with an indication for abdominal and pelvic adhesion prevention, but holds an FDA clearance as a surgical mesh in the U.S. Life Medical Sciences, Inc. is developing several adhesion prevention products, including REPEL™ for gynecologic surgery and REPEL-CV™ to reduce adhesions following pediatric cardiac procedures. In addition, FzioMed's Oxiplex®/SP Gel, an adhesion barrier for spine surgery, is approved for sale in the European Union and in other countries outside the United States.
Genetics
The U.S. market for genetic and complex testing is highly competitive and is divided among many laboratories, the largest of which are Quest Diagnostics and Laboratory Corporation of America Holdings (LabCorp). In addition, many hospitals provide some or all of these services through their in-house laboratories. Competitive factors in the genetic and complex testing and diagnostic services business generally include reputation of the laboratory, range of services offered, pricing, managed care contracts, convenience of sample collection and pick-up, quality of analysis and reporting, timeliness of delivery of completed reports and levels of automation and information technology solutions.Interceed.
Hematologic Oncology
Campath. Campath has become a well-established therapy for the treatment of relapsed or refractory B-cell chronic lymphocytic leukemia (CLL)(B-CLL) patients since its initial FDA approval in May 2001 as the only monoclonal antibody therapy indicated for the treatment of CLL.B-CLL. Other therapies administered to patients with relapsed or refractory CLLB-CLL include single agent and combination chemotherapy regimens and rituxamab,rituximab, which is marketed as Rituxan® by Biogen Idec, Inc. and Genentech, Inc. in the United States and as MabThera® by Roche outside of the United States. In March 2008, Cephalon, Inc. began marketing Treanda (bendamustine) in the United States, as Rituxan and MabThera, respectively.a chemotherapy approved for the treatment of B-CLL. The use of Campath as an initial therapy for CLLB-CLL has increased following the FDA approval expanding Campath's indication to include all lines of CLLB-CLL therapy. Other therapies under clinical study for the treatment of CLLB-CLL include bendamustine, oblimersen, ofatumumab, lumiliximab and lenalidomide.
Clolar.Clolar/Evoltra. Since FDA approval in December 2004, Clolar has penetrated significantly into its labeled indication for the treatment of pediatric patients 1 to 21 years old with relapsed or refractory ALL after at least two prior regimens. Other therapies available for patients in second relapse include cytarabine and mitoxantrone. These agents are available as generics with no significant commercial promotion. ArranonArranon® (nelarabine), marketed by GlaxoSmithKline, is indicated for the treatment of patients with T-cell ALL whose disease has not responded to or has relapsed following treatment with at least two chemotherapy regimens. T-cell ALL is estimated to represent less than 20% of pediatric ALL patients. There are a limited number of anti-cancer agents in clinical trials for the treatment of relapsed pediatric ALL patients, including epratuzamab, which is being developed by Immunomedics, Inc.
Mozobil. The primary competition for Mozobil is existing methodologies for mobilizing stem cells, which include the use of various chemotherapy agents in combination with growth factors and the use of growth factors alone. Mozobil is the first known small molecule indicated in combination with G-CSF to mobilize hematopoietic stem cells to the peripheral blood for collection and subsequent autologous transplantation in patients with NHL and MM. Mozobil competes with existing methodologies because, for certain patients, Mozobil will allow them to mobilize a sufficient number of stem cells to proceed to autologous stem cell transplant, which they may not have been able to achieve with the existing methodologies. For a larger segment of the patient population, in contrast to existing methodologies, Mozobil may decrease the number of apheresis sessions required to collect a sufficient number of stem cells. Accordingly, the predictability of stem cell mobilization associated with the use of Mozobil may result in more efficient use of a transplant center's apheresis machines and staff time. We are aware of other stem cell mobilization agents under preclinical or clinical development. The companies pursuing development include Chemokine Therapeutics Corp. and Novartis AG.
Patents, License Agreements and Trademarks
In general, we pursue a policy of obtaining patent protection both in the United States and in selected countries outside the United States for subject matter we consider patentable and important to our business. Patents owned by us that we consider materialimportant to our business include the following:
Renal
Renagel is protected by U.S. Patent Nos. 5,667,775 which expires on September 16, 2014; 5,496,545, 6,509,013 and 7,014,846 which expire on August 11, 2013; 6,733,780, which expires on October 18, 2020; and corresponding international counterparts. Renvela is protected by U.S. Patent Nos. 5,667,775 which expires on September 16, 2014; 5,496,545, 6,509,013 and 7,014,846 which expire on August 11, 2013; 6,858,203 which expires on September 20, 2013 and corresponding international counterparts. Hectorol is protected by U.S. Patent Nos. 6,903,083 which expires on July 18, 2021; 5,602,116 which expires on February 11, 2014; 5,707,980 and 5,869,473 which expire on August 2, 2008; 5,869,472 which expires on February 9, 2016, and corresponding international counterparts.
TherapeuticsGenetic Diseases
Cerezyme is protected by U.S. Patent Nos. 5,236,838 which expires on August 17, 2010; 5,549,892 which expires on August 27, 2013; 6,451,600 which expires on September 17, 2019; and corresponding international counterparts. Myozyme is protected by U.S. Patent No.Nos. 6,118,045 which expires on August 18, 2018; and 7,351,410 which expires on October 29, 2020.
Cardiometabolic and Renal
Renagel and Renvela are protected by U.S. Patent Nos. 5,667,775 which expires on September 16, 2014; 5,496,545, 6,509,013, 7,014,846 and 7,459,151 which expire on August 11, 2013; and corresponding international counterparts. Renagel is also protected by U.S. Patent No. 6,733,780, which expires on October 18, 2020; and corresponding international counterparts. Renvela is also protected by U.S. Patent No. 6,858,203 which expires on September 20, 2013; and corresponding international counterparts. Hectorol is protected by U.S. Patent Nos. 6,903,083 which expires on July 31,18, 2021; 5,602,116 which expires on February 11, 2014; 5,869,472 which expires on February 9, 2016; 7,148,211 which expires on September 14, 2023; and corresponding international counterparts. Thyrogen is protected by U.S. Patent Nos. 5,240,832 and 5,674,711 which expire on August 31, 2010; 5,602,006 which expires on February 11, 2014; 5,658,760, which expires on August 19, 2014; and corresponding international counterparts.
Biosurgery
Synvisc is protected by U.S. Patent Nos. 5,143,724 which expires on August 8, 2011; 5,399,351 which expires on March 21, 2012; and corresponding international counterparts. Seprafilm is protected
by U.S. Patent Nos. 5,017,229 which expires on May 21, 2008;No. 5,527,893 which expires on June 18, 2013; and corresponding international counterparts.
GeneticsHematologic Oncology
Genetic testing services, e.g. for Cystic Fibrosis, areMozobil is protected by U.S. Patent Nos. 5,589,330, 5,834,181 and 5,849,4835,583,131 which expireexpires on December 10, 2013; 6,987,102 which expires on July 28, 2014; 5,882,856 and 6,207,372 which expire on March 16, 2016;22, 2023; and corresponding international counterparts.
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, includingagreements. These licenses generally are worldwide, exclusive, for a fixed duration and require us to use reasonable or diligent efforts to develop and commercialize the relevant product and to pay on-going royalties on product sales. Our licensed patents relating to:that we consider important to our business include the following:
These collaboration and license agreements generally require us to share profits with our collaborative partners or pay royalties to our licensors upon commercialization
Table of products covered by the licensed technology.Contents
Generally, patents issued in the United States are effective for:
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 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 partnerscollaborators 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 in Item 1A., "Risk Factors," of this report. We encourage you to read that discussion, which we are incorporating into this section 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 it's registered. Registrations generally are for fixed, but renewable, terms. We consider our registered trademarks Genzyme®, Cerezyme®, Ceredase®, Fabrazyme®, Thyrogen®, Myozyme®, Renagel®, Renvela®, Hectorol®, Thymoglobulin®, Campath®, MabCampath®, Clolar®, Evoltra®, Synvisc®, Carticel®, MACI®, GlucaMesh®, GlucaTex®, Sepra®, Seprafilm®, Sepragel®, Seprapack®, Sepramesh®, Sepraspray®, Hylaform®, Hylashield®, Lipobridge® Captique®, Epicel®, OSOM®, N-geneous®, Direct LDL®, GlyPro®, InSight®, AFP3®, and AFP4®, together with our trademarks, Lumizyme™, Synvisc-One™, Evoltra™, MabCampath™, Lymphoglobuline™, Mozobil™, Cholestagel™, Hylashield Nite™, SAGE™, LongSAGE™
and SPHERE™, and BioMarin/Genzyme LLC's registered trademark, Aldurazyme®, in the aggregate, to be of material importance to our business.
Regulation by governmental authorities in the United States and other countries is a significant factor in the development, manufacture, commercialization, pricing and reimbursement of our products and services.
FDA RegulationApproval
Most of our products and services require approval from the FDA and corresponding agencies in other countries before they can be marketed. In the United States, we market products that the FDA classifies as either "drugs," "biologics" or "devices." The activities required before drugs or biologics may be marketed in the United States include:
As part of product approval, the manufacturer of the product must 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 may necessitate additional FDA review and approval.
In addition, the The FDA may grant accelerated approval for drugs and biologics on the basis of a surrogate endpoint reasonably likely to predict clinical benefit. In such cases, we are required to conduct post-approval clinical studies to confirm the clinical benefit of the surrogate endpoint that was the basis of the accelerated approval. These clinical studies require the collection of additional data before full approval will be given and can often be long-term commitments. Although the FDA has not historically invoked its authority to withdraw an accelerated approval, it may do so. We currently have a number of products approved under the accelerated approval mechanism.
Products that are classified as devices also require some form of 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, are of substantial importance in preventing impairment to health or pose an unreasonable risk of adverse effect. They are 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:
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) that 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 clearance of a 510(k) application rather than the filing of an IDE application and a PMA. 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.
The time and expense required to perform the clinical testing necessary to obtain FDA approval for regulated products can frequently 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 very likely be required to conduct further studies to provide additional data on safety or efficacy or, should we desire, 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 limit uses, require a Risk Evaluation & Mitigation Strategy or in the most serious cases, result in a market withdrawal of the product or expose us to product liability claims. We are also subject to monetary penalties if we do not meet the timelines agreed to with the FDA for these post-approval requirements.
RegulationApproval 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 regardless of whether 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 countries outside of the United States, coverage, pricing and reimbursement approvals are also required.
Our initial focus for obtaining marketing approval outside the United States is typically the European Union. European Union regulations and directives generally classify health care products either as medicinal products, medical devices orin vitro diagnostics. For medicinal products, marketing approval may be sought using eitherone of three main procedures: the centralized procedure of the EMEA, the mutual recognition procedure or the decentralized mutual recognition process. Theprocedure.
Under the centralized procedure, which is mandatory for biotechnology derived products, resultsapplications are made to the EMEA for an authorization which is valid for the European Community. The EMEA conducts a thorough evaluation of the application, drawing from its scientific resources across Europe. If the drug product is proven to fulfill the requirements for quality, safety and efficacy, the EMEA's Scientific Committee, the CMHP, adopts a positive opinion that is transmitted to the European Commission for the marketing authorization to be granted.
Under the mutual recognition procedure, a company first obtains a marketing authorization from a single EU member state. In the decentralized procedure, the application is submitted simultaneously in a recommendation inselected or all member states. After a marketing authorization has been granted, a company must submit periodic safety reports to the EMEA (for the centralized procedure) or to the national health authorities (for the mutual recognition procedure). These marketing authorizations must be reviewed every five years. Since the EU does not have jurisdiction over patient reimbursement or pricing matters in its member states, whileit is necessary to deal with individual countries on such matters.
In July 2007, the European Union mutual recognition process involves country-by-country approval.Commission's Regulation on Penalties entered into force. This regulation enables the European Commission to impose sanctions on companies for non-completion of post-marketing commitments. These range from a fine of 10% of global revenue to removal of the product from the market.
European Union regulations for products classified as medical devices have been implemented. Devices, such as our Sepra products, must receive marketing approval through a centralized procedure in which the device receives a CE Mark allowing distribution to all member states of the European Union. 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 that 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.
Other Government Regulation
Good Manufacturing Practices. The FDA, the EMEA and other regulatory agencies regulate and inspect equipment, facilities and processes used in the manufacture of pharmaceutical and biologic products prior to approving a product. If, after receiving approval from regulatory agencies, a company makes a material change in manufacturing equipment, location or process, additional regulatory review and approval may be required. All facilities and manufacturing techniques used for the manufacture of Genzyme's products must comply with applicable FDA regulations governing the production of
pharmaceutical products known as "Good Manufacturing Practices." The FDA, the EMEA and other regulatory agencies also conduct regular, periodic visits to re-inspect equipment, facilities and processes following initial approval of a product.
In September and October 2008, FDA officials conducted a Good Manufacturing Practices, or GMP, inspection of licensed therapeutic drug products, bulk drug substances and drug components manufactured at our Allston, Massachusetts facility. We manufacture Cerezyme, Fabrazyme and Myozyme and perform fill/finish for Aldurazyme and Thyrogen at this facility. After this inspection, the FDA officials issued a list of inspection observations known as a Form FDA 483. The form detailed inspectional observations considered by the FDA to be significant deviations from GMP compliance, including observations relating to our procedures designed to prevent microbiological contamination of sterile drug products; controls for in-process monitoring during bulk drug substance manufacturing, including our controls for bioburden monitoring; and maintenance of equipment and computer systems validation. We responded to the Form FDA 483 on October 31, 2008 with a plan and timeline to address the inspectional observations and provided a progress update on February 23, 2009 to the FDA. On February 27, 2009, we received a warning letter from the FDA that requested supplemental information in order to fully evaluate the adequacy of our corrective actions with respect to nine of the FDA's sixteen observations in the Form FDA 483. We currently are reviewing the warning letter and plan to respond to the FDA in writing within fifteen business days of receipt of the letter as is required. We are committed to working cooperatively with the FDA regarding this matter. The issuance of the warning letter does not affect the continued distribution of our Genetic Diseases products currently on the market or our inventory currently on hand. We believe that the products produced at our Allston facility continue to meet the highest quality and safety standards.
Failure to correct the deviations cited in the FDA's warning letter could result in further regulatory action, including suspension of our license to manufacture products at the facility, or lead to a delay in the approval of new products. The FDA will not approve our application to market alglucosidase alfa produced at the 2000L scale at our Allston facility until the issues identified in the warning letter are resolved to the FDA's satisfaction.
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, may also obtain approval in the United States during the seven year exclusive marketing period. We believe that the commercial success of our orphan drug products depends 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.
Legislation similar to the Orphan Drug Act has been enacted in other countries outside of the United States, including the European Union. The orphan legislation in the European Union is available for therapies addressing conditions that affect five or fewer out of 10,000 persons. The market exclusivity period is for ten years, although that period can be reduced to six years if, at the end of the fifth year, available evidence establishes that the product is sufficiently profitable not to justify maintenance of market exclusivity.
Regulation of Genetic Testing Services and Diagnostic Testing Services.Products. The Clinical Laboratories Improvement Act of 1967, as amended in 1988 (CLIA) provides for the regulation of clinical laboratories by the U.S. Department of HealthOur genetic testing services are subject to various federal and Human Services (HHS). All ofstate laws and regulations, which among other things, require that our clinical laboratories are licensed by CLIA, approved by the College of American Pathologists and licensed by the appropriate state agencies. CLIA regulates all clinical laboratories by requiring they be licensed with the Centers for Medicare and Medicaid Services (CMS) and comply with various operational, personnel and quality requirements intended to ensure that their clinical laboratory testing services are accurate, reliable and timely. CLIA does not preempt state laws that are more stringent than federal law. For example, state laws may require additional personnel qualifications, quality control, validation, record maintenance and/or proficiency testing.
The FDA has regulatory authority over laboratory-developed tests, but has exercised enforcement discretion. In 2000, the HHS's Secretary's Advisory Committee on Genetic Testing identified gaps in the current oversight systems that play a role in genetic testing. In late 2002, a new HHS Secretary's Advisory Committee on Genetics, Health and Society was appointed to replace the prior Advisory Committee(SACGHS). In November 2007, SACGHS issued a draft report for public comment "U.S. SystemTable of Oversight of Genetic Testing: A Response to the Charge of the Secretary of HHS".Contents
In September 2007, the FDA issued a final guidance regarding the manufacturing of Analyte Specific Reagents (ASR) for use in laboratory developed tests. The guidance clearly defined requirements for quality systems, labeling, registering and marketing of ASRs. Increased FDA enforcement regarding the manufacturing and sale of ASR reagents and increased enforcement regarding the sale of Research Use Only (RUO) and Investigational Use Only (IUO) reagents and instruments for clinical diagnostic purposes could potentially lead to significant increased costs for manufacturing, and possible supply interruptions as suppliers attempt to comply with these newly defined requirements. Collectively, these activities may impact the ability for a clinical laboratory to introduce new tests or new technologies.
In addition, the Medicare and Medicaid programs provide a substantial portion of reimbursement for With respect to our diagnostic products. Whether these programs pay for any particular test, andproducts, the amounts that they pay, may be unilaterally changed at any time.
Regulation of Diagnostic Products. The FDA has regulatory responsibility over instruments, test kits, reagents and other devices used to perform diagnostic testing by clinical laboratories. Like other medical devices, in vitro diagnostic (IVD) products are divided into three classes according to the level of regulatory control needed to assure safety and effectiveness. Genzyme's current IVD products are either Class I or Class II, and are either exempt from pre-market notification or require a 510(k) submission.
Regulation of Gene Therapy Products. In addition to FDA requirements, the National Institutes of Health have 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 many 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 and in Germany, these protocols will be subject to review by the Commission for Somatic Cell Therapy. Greater government regulation of gene therapy products may lead to regulatory delays, increased development costs, and negative public perception of the gene therapy products we are developing.
Clinical Trial Registries and Results Databases. Consistent with its long-standing commitment to transparency of relevant information about its products, Genzyme has exceeded previous legal requirements to register clinical trials. Since 2005, the company has posted information about ongoing and completed clinical trials on its own Web site and other widely accessible sites, including the NIH-sponsored http://www.clinicaltrials.gov.
In 2007, changes in both federal and state laws expanded the scope of trials requiring registration, increased the amount of information required to be included with the registration, and established new requirements for disclosing the results of completed trials. Although Genzyme has voluntarily provided a substantial portion of the newly required information, the recently enacted legislation (Food and Drug Administration Amendment Act of 2007, or the FDAAA of 2007) has triggered a revision of internal procedures to ensure compliance.
Specifically, the federal legislation requires disclosure of ongoing applicable clinical trials (including, for the first time, specified device trials as well as drug trials) in http://www.clinicaltrials.gov within 21 days of first patient enrolled and of all pediatric post market device surveillance studies. In addition, beginning September 2008, the existing clinical trials registry will bewas expanded to include a clinical trials results database. Full expansion is to be completed by September 2010. Results of completed applicable clinical trials must be disclosed in the results database within 1 year of trial completion, unless an extension is granted for pending regulatory action. The company will continue to reassess its policies to seek to ensure that all applicable trials are registered and results disclosed. Failure to meet the requirements cancould result in penalties including civil monetary penalties.
Pediatric Regulation. The FDAAA of 2007 reauthorized the Best Pharmaceuticals for Children Act (BPCA) and the Pediatric Research Equity Act (PREA). BPCA continues to offer manufacturers a 6-month market exclusivity incentive to conduct pediatric clinical studies at the request of the FDA. PREA requires manufacturers to file pediatric assessments, which may include actual pediatric data, a deferral of the pediatric obligation, or a waiver of the pediatric requirement, at the time of filing for all new drug and biologic submissions, as well as for certain supplemental applications. Pursuant to PREA, the FDA has the authority to require sponsors to conduct pediatric research as a contingency of the approval of an application or supplement or as a post-approval commitment. Under both BPCA and
PREA, the FDA has the authority to mandate a pediatric label change subsequent to the filing of pediatric clinical data as well as publicly disseminate FDA reviews of pediatric clinical study data. The FDA's increased oversight and authority regarding pediatric studies and subsequent labeling changes may result in regulatory delays and additional development costs for Genzyme.
In 2007, the EU Regulation on Medicines for Pediatric Use became effective. This regulation introduced new obligations on pharmaceutical companies to conduct research on their medicines in children, and subject to various conditions, offers the possibility of incentives for doing so, including exclusivity extensions.
Other Laws and Regulations. Our operations are or may be subject to various federal, state and local laws, regulations and recommendations relating to the marketing of products and relationships with treating physicians, data protection, safe working conditions, laboratory and manufacturing practices, the export of products to certain countries, 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.
Sales and Marketing
We are subject to various federal and state laws pertaining to health care "fraud and abuse," including anti-kickback and false claims statutes. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. The federal government has published regulations that identify "safe harbors" or exemptions for certain payment arrangements that do not violate the federal anti-kickback statutes.statute. Genzyme seeks to comply with the safe harbors where possible. Due to the breadth of the statutory provisions, and the lack of guidance in the form of regulations or court decisions addressing some industry activities, it is possible that our practices might be challenged under anti-kickback or related laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third-party payors, including Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Promotion of drugs for uses outside their labeled indications, so called "off-label" promotion, recently has led to several financially significant settlement agreements by companies under the False Claims Act.
Our activities relating to the sale and marketing of, and price reporting for, our products are subject to scrutiny under these fraud and abuse laws. Violations of these laws may result in criminal and/or civil sanctions, including fines and civil monetary penalties, as well as possible exclusion from federal health care programs, including Medicare and Medicaid. Federal and state authorities are paying increased attention to the pharmaceutical and biotechnology industries in enforcement of these laws, and we have been named in several legal proceedings alleging violations. We are subject to similar fraud and abuse laws outside of the United States.
Legislation and regulations have been enacted by, or are pending in, various states to regulate sales and marketing practices of pharmaceutical, biotechnology and medical device manufacturers. These initiatives generally involve limitations or prohibitions on, and reporting to state agencies of, financial interactions between manufacturers and health care practitioners. Similar initiatives have recently been introduced in Congress. We have dedicated resources that monitor these developments and work to comply appropriately with them.
In addition, federal and state laws have been enacted that require public disclosure on an internet-accessible registry of information describing human clinical trials of drugs, devices and biologics and a summary We are subject to similar regulations outside of the results of those company-sponsored studies. We previously disclosed voluntarily information about our ongoing clinical studies and have committed resources to comply with new clinical trial registry requirements.United States.
Laws and regulations have been promulgated at federal and state levels in the United States and in foreign countries intended to combat counterfeit drug products or, in some foreign jurisdictions, to facilitate foreign country-specific pharmaceutical reimbursement programs. We comply with those federal, state and foreign "pedigree" or similar laws or rules to the extent currently in effect. We have
allocated resources to develop interoperable electronic systems to comply with forthcoming product serialization and track and trace requirements.
Product Pricing
We participate in the Medicaid rebate program. Under the Medicaid rebate program, we pay a quarterly rebate for each unit of drug product that is reimbursed by Medicaid. The amount of the rebate for each product is set by law as a minimum 15.1% of the average manufacturer price (AMP) of that product, or if it is greater, the difference between AMP and the best price (BP) available from Genzyme to any customer. The rebate amount also includes an inflation adjustment if AMP increases greater than inflation. The inflation adjustment can cause the rebate amount to be significantly higher than the minimum 15.1% rebate mentioned above, particularly following our periodic price increases. The rebate amount is recomputed each quarter based on our reports of our current AMP and best price for each of our products. In addition, we are required to report AMP on a monthly basis. Computations are based on complex rules issued by the Medicaid program informally in the past and formalized in 2007 by regulations that went into effect October 2007. We have policies and procedures in place that we update as Medicaid guidance changes and we have updated our policies and procedures to be consistent with the new2007 regulations. We follow those policies and procedures when calculating our AMPs and BPs. The terms of our participation in the Medicaid program impose an obligation to correct the prices reported in previous months and quarters, if necessary. Any such corrections could result in an overage or underage in our rebate liability for past quarters, depending on the nature of the correction. In addition to retroactive rebates (and interest, if any), if we were found to have knowingly submitted false information to the government, in addition to other penalties available to the government, the statute provides for civil monetary penalties for each claim containing false information. In addition, the minimum discount of 15.1% could be increased by Congress in the future, thereby increasing our discounts to the Medicaid program and to other entities that receive discounts comparable to the Medicaid rebate.
Participation in the Medicaid rebate program has included extending comparable discounts under the Public Health Service (PHS) pharmaceutical pricing program. The PHS pricing program extends discounts to community health clinics and other entities that receive health services grants from the PHS, as well as hospitals that serve a disproportionate share of poor patients. Failure to extend mandated discounted pricing to eligible providers exposeswould expose us to retroactive pricing corrections and penalties.
Medicare Part B covers drugs that are administered by physicians, including our injected and infused drugs. Currently, Medicare reimburses physicians and others who purchase our Part B covered drugs an amount equal to the drug's average sales price (ASP) plus 6% (ASP+6%)and hospitals that use our Part B drugs in the outpatient setting an amount equal to ASP+4%. Medicare has issued regulations and other guidance on how manufacturers are to calculate ASP. We have policies and procedures in place that are consistent with the Medicare rules and we calculate ASPs every quarter in accordance with those policies and procedures. Medicare uses our calculated ASPs to set reimbursement. If we were to miscalculate ASP, then Medicare reimbursement also would be incorrect and we would be exposed to potential penalties such as those described in the Medicaid rebate program description above.
Part D of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, or Medicare Part D, provides coverage for self-administered drugs such as pills, tablets and creams, that do not need to be injected or infused by a physician, includingphysician. These include our products Renvela, Renagel and oral Hectorol. However, Medicare Part D is administered by private vendors under contract with the U.S. government and each
vendor establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the vendor may modify from time-to-time. RenagelRenagel/Renvela and Hectorol currently are well-positioned on the majority of formularies of nation-wide prescription drug plans participating in the Medicare Part D program as well as many of the large regional plans. The U.S. Congress could also significantly change the Medicare Part D program in the future, including requiring the federal government to negotiate discounts for our drugs or matching mandatory discounts to those required in other federal programs.
GenzymeWe also isare required to offer discounted pricing to federal agencies via the Federal Supply Schedule (FSS). FSS pricing is negotiated periodically with the Department of Veterans Affairs (VA). Although FSS pricing is negotiated, it is intended to not exceed the price that we charge our most-favored non-federal customer for the drug. The minimum discount is statutorily set at approximately 24%. However, an inflation penalty applies and can cause the discount to increase significantly, particularly following our periodic price increases. The VA has issued complex regulations and other guidance on how manufacturers are to calculate annual increases in the FSS prices. We have policies and procedures in place that are consistent with these complex VA rules and we calculate FSS prices every quarter in accordance with those policies and procedures. If we were to miscalculate FSS prices, then federal agencies would pay incorrect amounts for our drugs and we would be exposed to potential penalties, including ineligibility of our drugs for reimbursement by any federal agency,agencies, state Medicaid programs and the PHS, and possibly false claims liability.
In December 2007, Congress passed legislation extending FSS pricing to the TriCare retail program, which provides reimbursement for military personnel and their dependents when they purchase drugs from retail pharmacies instead of at military pharmacies. Previously, The Department of Defense was eligible for FSS pricing only on drugs dispensed by their military pharmacies and not on drugs dispensed by retail pharmacies. FSS pricing for the TriCare retail program has not yet been implemented pending publication of final regulations by the Federal government. When it is implemented, it is expected to affect only our oral products because our injectable products would rarely, if ever, be purchased by patients at a retail pharmacy.
Outside the United States our products are paid for by a variety of payers.payers, with governments being the primary source of payment. In many countries governments are primarily responsible for reimbursing for our products. Governmentsthe government closely regulates drug pricing and reimbursement and often havehas significant discretion in determining whether a product will be reimbursed at all and, if it is, how much will be paid. Further, many countries reference prices in other countries and use those reference prices to set their own price. This international patchwork of price regulation has led to different prices across countries and some cross-border trade in our products from markets with lower prices.
As of December 31, 2007,2008, we, together with all of our consolidated subsidiaries, had approximately 10,00011,000 employees worldwide.
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 2007 Genzyme Corporation Annual Report set forth in Exhibit 13 to this Annual Report on Form 10-K. We are incorporating that information into this section by reference.
Research and Development Costs
We have providedOur research and development costs were $1.3 billion in 2008, $737.7 million in 2007 and $650.0 million in 2006. These costs consist of the information required by Item 101(c)(1)(xi)cost of Regulation S-K in Part II, Item 8, "Financial Statementsour own independent research and Supplementary Data,"development efforts and specifically in the Genzyme Corporationcosts associated with collaborative research and Subsidiaries Consolidated Statements of Operationsdevelopment and Comprehensive Incomein-licensing arrangements. Research and in Note I., "Investments in Marketable Securitiesdevelopment costs, including upfront fees and Strategic Equity Investments" to our Consolidated Financial Statements in the 2007 Genzyme Corporation Annual Report set forth in Exhibit 13 to this Annual Report on Form 10-K. We are incorporating that information into this section by reference.milestones paid
to collaboration partners, are expensed as incurred if the underlying products have not received regulatory approval and have no future alternative use.
Sales byFinancial Information about Segments and Geographic Area, Significant Customers and ProductsAreas
We have provided the information required by Items 101(c)(1)(i) and (vii)101(b) and 101(d) of Regulation S-K in the 2007 Genzyme Corporation 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 in the 2007 Genzyme Corporation Annual Report set forth in Exhibit 13 to this Annual Report on Form 10-K. We are incorporating that information into this section by reference.
We file electronically with the SEC our annual report on Form 10-K, our quarterly reports on Form 10-Q, and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. You may read or copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information about issuers that file reports electronically with the SEC. The address of that site is http://www.sec.gov.
You may obtain a free copy of our annual report on Form 10-K, our quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we file them with the SEC, on our website at http://www.genzyme.com or by contacting our Investor Relations department at 1-617-252-7570. The reference to our website is not intended to incorporate information on our website into this document by reference.
We incorporate our disclosure related to risk factors into this section by reference from the 2007 Genzyme CorporationExhibit 13 to this Annual Report on Form 10-K under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Risk Factors,Factors." which is included in Exhibit 13 to this Annual Report on Form 10-K.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Our operations are conducted in manufacturing, warehousing, development/clinical plant, clinical laboratories, and research and office facilities that are located principally in: the United States; the United Kingdom; the Republic of Ireland; The Netherlands; Belgium; France; Canada; Switzerland; Germany; and Australia.
We lease all of our facilities except for certain facilities in:
Our principal manufacturing facilities are used for the large-scale production of therapeutic proteins and enzymes, including Cerezyme, Fabrazyme, Myozyme and Thyrogen; renal products,
including RenagelRenagel/Renvela and Renvela; andHectorol; immunosuppressive agents, including Thymoglobulin,Thymoglobulin; biomaterials, including SynviscSynvisc/Synvisc-One and the Sepra family of anti-adhesion products,products; bulk hyaluronic acid,acid; human-cell processing services, including Carticel, MACI, and EpicelEpicel; and genetic testing services. The facilities also are used for the receipt of contract manufactured products and materials for Hectorol, Renagel, Campath, Clolar, Cholestagel and Mozobil. We are also producing late-stage clinical materials, using gene therapy, at our gene therapy operations facility in San Diego,
California. We believe that we have, or are in the process of developing, acquiring or acquiring,contracting for, adequate manufacturing capacity to support our requirements for the next several years.
Our administrative activities are concentrated at facilities we have leased in Cambridge and Framingham, Massachusetts and San Antonio, Texas in the United States; Naarden, The Netherlands, Tokyo, Japan, and Rio de Janeiro, Brazil. Our sales and marketing activities are principally located in Cambridge, Massachusetts and in sales offices located in major cities throughout the world. We conduct our product research and development activities primarily at our laboratory facilities in Framingham and Waltham, Massachusetts; San Antonio, Texas; and San Diego, California in the United States, and at our Cambridge, United Kingdom facility. Leases for our facilities contain typical commercial lease provisions, including renewal options, rent escalators and tenant responsibility for operating expenses.
Genetic Diseases
We manufacture Cerezyme, Fabrazyme and Myozyme at our multi-product manufacturing facility in Allston, Massachusetts. This facility, which we own and which contains extensive sterile filling capacity, is built on land that we hold under a 65-year lease, which expires in May 2057. We manufacture Fabrazyme and Myozyme in our small-scale manufacturing facility in Framingham, Massachusetts and final drug product at our Allston facility. In addition, we fill Aldurazyme at our Allston facility. We are in the process of expanding this facility to house power generation, laboratory and administrative space to support the utilization of the facility. In 2005, we commenced the design and build-out of perfusion capacity at our Geel, Belgium facility to provide back-up and expansion to our Allston bulk capacity and purification systems. In February 2009, we received European Commission approval to produce Myozyme at the 4000L scale in Geel.
At our Waterford, Ireland facility, we have installed new fill-finish capabilities for therapeutic proteins and have approval to fill-finish Thymoglobulin, Cerezyme and Myozyme at this facility. We are expanding capacity at our Waterford facility to meet projected demand for these products.
Cardiometabolic and Renal
We manufacture the majority of our supply requirements for sevelamer hydrochloride, the active ingredient in Renagel, at our facilities in Haverhill, England. We also operate a manufacturing facility in Waterford, Ireland for use in manufacturing the tablet formulation of Renagel. All of our Renagel manufacturing facilities are operational, and have received all European and U.S. approvals material to such operations. A second tablet formulation facility is under constructioncompleting validation runs in Waterford to provide additional capacity and security of supply, which is expected to come on line in 2008.the second quarter of 2009. We are currently convertinghave converted one of the bulk Renagel plants in Haverhill, England to enable it to also produce bulk Renvela, which is anticipated to be on lineapproved in early 2008.2009. Renvela tableting operations will beare conducted in our Waterford, Ireland facility.
We contract out the manufacturing and fill-finish work for the capsule formulation of Hectorol. We are in the process of evaluating options to obtainIn 2008, we obtained regulatory approval and secure the supply of Hectorol filled in vials instead of ampules. In addition, we are in the process of constructing our own manufacturing capacity for filling Hectorol in vials in Ridgefield, New Jersey, which we expect will come on line in 2008.
TherapeuticsJersey.
We manufacture Cerezyme, Fabrazyme and Myozyme at our multi-product manufacturing facility in Allston, Massachusetts. This facility, which we own and which contains extensive sterile filling capacity, is built on land that we hold under a 65-year lease, which expires in May 2057. We manufacture Thyrogen Fabrazyme and Myozyme in our small-scale manufacturing facility in Framingham, Massachusetts and final drug product at our Allston facility. In addition, we fill Aldurazyme at our Allston facility. We are in the process of expanding this facility to house power generation, laboratory and administrative space to support the utilization of the facility. We are also in discussions with the FDA regarding approval of a larger-scale (2000 liter) manufacturing process for Myozyme at our Allston facility. In 2005, we commenced the design and build-out of perfusion capacity at our Geel, Belgium facility to provide back-up and expansion to our Allston bulk capacity and purification systems. In 2008, we are planning to produce the process validation lots for Myozyme at the 4000 liter scale in Geel, with approval anticipated in 2009.
At our Waterford, Ireland facility, we have installed new fill-finish capabilities for therapeutic proteins. We completed the qualification batches for the first product to be manufactured at the facility
and received approval for manufacture of the first product, Thymoglobulin, from the FDA in 2006, followed by approvals for Cerezyme and Myozyme in 2007.
Transplant
We manufacture Thymoglobulin at a leased facility in Lyon, France, and maintain administrative offices nearby. All of our fill-finish of Thymoglobulin is now done at our Waterford facility. We completed the acquisition of land in Lyon in 2007. We are in the process of permitting and design, prior to commencing the construction of a new Thymoglobulin manufacturing facility with increased capacity in 2008. We have experienced production issues at our current Lyon facility and have been working with the FDA to resolve those issues. Our construction of a new production facility for Thymoglobulin in Lyon is expected to support the long-term growth of this product.
Biosurgery
We produce Synvisc and other hyaluronan-based products in aour manufacturing facility located in Ridgefield, New Jersey. We produce bulk hyaluronic acid and the Sepra family of products at commercial scale in our manufacturing facility in Framingham, Massachusetts.
GeneticsTable of Contents
Our genetic and oncology testing business primarily conducts operations in clinical laboratory and administrative facilities we own in Santa Fe, New Mexico and lease in Westborough, Massachusetts; New York, New York; Tampa, Florida; Phoenix, Arizona, Philadelphia, Pennsylvania, Vienna, Virginia; and Los Angeles, Orange, and Monrovia, California.
Hematologic Oncology
We contract out the manufacturing and fill-finish work for Campath and Clolar. We are working towards establishing manufacturing capabilitiescapability for Campath toat our facilities in Geel, Belgium and Waterford, Ireland.expect approval in 2010.
We periodically become subject to legal proceedings and claims arising in connection with our business.
Through June 30, 2003, Although we had three outstanding seriescannot predict the outcome of common stock, which we referred to as tracking stocks; Genzyme General Stock (which we now refer to as Genzyme Stock), Biosurgery Stock and Molecular Oncology Stock. In 2003, four lawsuits were filed against us regarding the exchange of all of the outstanding shares of Biosurgery Stock for shares of Genzyme Stock in connection with the elimination of our tracking stocks in July 2003. Each of the lawsuits was a purported class action on behalf of holders of Biosurgery Stock. Three cases were filed in Massachusetts state court, and one case was filed in the United States District Court for the Southern District of New York, which we refer to as the U.S. District Court. On June 4, 2007, the Massachusetts Supreme Judicial Court reversed an order of the Massachusetts Appeals Court and affirmed dismissal of the first of the state court actions. The remaining two state court actions remained stayed while the action filed in the U.S. District Court progressed. In that action, the U.S. District Court had denied our motion to dismiss the successive amended complaints and granted plaintiffs' motion to certify a class. On August 6, 2007, we reached an agreement in principle with counsel for the plaintiff class to settle and dismiss that case for $64.0 million. The U.S. District Court entered an order approving the settlement on December 30, 2007. Because the members of the class in the New York action released all claims, the settlement and its approval, as a practical matter, resolved the two remaining actions in Massachusetts state court. Those two cases have been dismissed. As a result, we recorded a liability for the settlement payment of
$64.0 million as a charge to selling, general and administrative charges, or SG&A, in our consolidated statement of operations in June 2007, which we subsequently paid in August 2007. We have submitted claims to our insurers for reimbursement of portions of the expenses incurred in connection with these cases; the insurer has purported to deny coverage. We intend to vigorously pursue our rights with respect to insurance coverage.
We periodically become subject to legal proceedings and claims, arising in connection withwe do not believe the ultimate resolution of any of these existing matters would have a material adverse effect on our business. We believe we have meritorious arguments in our current litigation matters and our view as of this report is that any outcome, either individually or in the aggregate, is not expected to be material to ourconsolidated financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Executive Officers of the Registrant
Set forth belowThe following is a list of individuals that are currently serving as our executive officers, or who served in such capacity during the fiscal year ended December 31, 2007:their ages as of February 1, 2009 and their positions with Genzyme:
Name | Age | Title | |||
|---|---|---|---|---|---|
Henri A. Termeer | 62 | Chairman of the Board of Directors; President and Chief Executive Officer | |||
Mark R. Bamforth | 46 | Senior Vice President, Corporate Operations and Pharmaceuticals | |||
Earl M. Collier, Jr. | 61 | Executive Vice President | |||
Zoltan A. Csimma | 67 | Senior Vice President; Chief Human Resources Officer | |||
Thomas J. DesRosier | 54 | Senior Vice President; General Counsel; Chief Legal Officer | |||
James A. Geraghty | 54 | Senior Vice President | |||
David P. Meeker, M.D. | 54 | Executive Vice President, | |||
Richard A. Moscicki, M.D. | 56 | ||||
Alan E. Smith, Ph.D. | 63 | ||||
Sandford D. Smith | 61 | Executive Vice President; President, International Group | |||
Peter Wirth | 58 | ||||
Michael S. Wyzga | 53 | ||||
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 of Directors since May 1988. For ten years prior to joining Genzyme, Mr. Termeer worked for Baxter International Laboratories, Inc., a manufacturer of human health care products. Mr. Termeer is a director of ABIOMED, Inc. and Deputy Chairman of the Federal Reserve Bank of Boston.
Mr. Bamforth has served as Senior Vice President, Corporate Operations and Pharmaceuticals since May 2004. He joined Genzyme in 1988 as Vice President and General Manager of Genzyme's
operations in the United Kingdom. From May 2001 until May 2004, Mr. Bamforth served as Senior Vice President, Corporate Operations. Before joining Genzyme, Mr. Bamforth worked as a drilling engineer in the North Sea offshore oil industry and then as a chemical engineer in the whisky industry in Scotland.
Mr. Collier has served as Executive Vice President since July 1997, with responsibility for our Oncology and Cardiovascular businesses since August 2003 and our Genetics business since January 2007.1997. He joined Genzyme 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 our former Genzyme Surgical Products division from June 1999 until December 2000. Mr. Collier was also responsible for our former Genzyme Tissue Repair division from December 1999 to December 2000. From December 2000 until August 2003, Mr. Collier served as President of our Genzyme Biosurgery business unit. 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. He also serves on the board of deCODE genetics, a biotechnology company that applies gene discovery to the development of drugs and diagnostics for common diseases.
Mr. Csimma has held the title Senior Vice President and Chief Human Resources Officer since March 1, 2006. He joined us in July 2000 as Senior Vice President, Human Resources. Prior to joining Genzyme, 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. Gemayel Mr. DesRosier has served as Senior Vice President and General Counsel since October 2000 and as Chief Legal Officer since May 2008. Mr. DesRosier joined Genzyme in 1999 as Senior Vice President and Chief Intellectual Property Counsel. Before he joined Genzyme, Mr. DesRosier was assistant general counsel for patents at American Home Products Corp. Mr. DesRosier has also served as Vice President and Chief Patent Counsel for Genetics Institute Inc. and held several intellectual property positions at E.I. DuPont de Nemours and Company and New England Nuclear Corp.
Mr. Geraghty has served as a Senior Vice President of Genzyme since May 2003 and, prior to that, as Vice President since May 2001. He was President of Genzyme Europe from 1998 to 2002 and served as General Manager of Genzyme's cardiovascular business from 2004 to 2008. He currently oversees Genzyme's strategic initiatives in emerging markets and global health. He serves as a Director of GTC Biotherapeutics (formerly Genzyme Transgenics Corporation) where he was Chairman from 1998 to 2001, and President and C.E.O. from its founding in 1993 until 1997. Prior to joining Genzyme, Mr. Geraghty was Vice President of Marketing and Strategic Planning for Baxter/Caremark International. He has also worked as a consultant on international health care strategy at Bain and Company.
Dr. Meeker has served as Executive Vice President since May 2008, with responsibility for our Renal, Therapeutics (excluding ourGenetic Diseases, Biosurgery and Transplant businesses. From March 2003 until May 2008, he served as Senior Vice President and President, LSD business unit), Transplant and Biosurgery business units. HeTherapeutics. Dr. Meeker joined usGenzyme in August 20031994 and served until February 2007 as Executive Vice President, with responsibility for our Renal, Therapeutics (including our LSD business unit)Medical Affairs from October 1996 until June 1998; as Senior Vice President Medical Affairs from June 1998 through May 2000; and Transplant business units. For sixteen years prioras Senior Vice President Genzyme Europe from May 2000 until March 2003. Prior to joining Genzyme, Dr. Gemayel worked for Hoffmann-LaRoche, a leading healthcare company, where he served most recently from July 2000 until August 2003 as Vice PresidentMeeker was director of the United States SpecialtyPulmonary Critical Care unit, and from January 1998 until July 2000 as General ManagerFellowship at the Cleveland Clinic Foundation. He was also an assistant professor of Hoffmann-LaRoche Portugal.medicine at Ohio State University.
Dr. Moscicki has served as Senior Vice President, Biomedical & Regulatory Affairs since May 2008 and Chief Medical Officer since September 1996. From September 1996 until May 2008, he served as
Senior Vice President, Clinical, Medical and Regulatory Affairs. Dr. Moscicki joined us in March 1992 as Medical Director, became Vice President, Medical Affairs in early 1993 and was namedserved as Vice President, Clinical, Medical and Regulatory Affairs infrom December 1993. In1993 until September 1996 he became Senior Vice President, Clinical, Medical and Regulatory Affairs and Chief Medical Officer.1996. Since 1979, he has also been a physician staff member at the Massachusetts General Hospital and a faculty member at the Harvard Medical School.
Dr. Alan Smith joined us in August 1989 as Senior Vice President, Research, and became Chief Scientific Officer in September 1996. Prior to joining Genzyme, 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. Sandford Smith has held the title of Executive Vice President since June 2006, Senior Vice President since January 2003 and President of our International Group since January 2000, with responsibility for the commercial activities for our LSD, renal, transplant and biosurgery products outside of the United States, including in the Europe, Middle East, Asia-Pacific and Latin America regions, as well as Canada.States. He joined us in April 1996 and served as Vice President and General Manager of our International Group and President of our Therapeutics business. Prior to joining Genzyme, Mr. Smith served as President and Chief Executive Officer of Repligen Corporation. Before joining Repligen Corporation, Mr. Smith also served as Vice President of Business Development and Strategic Planning for the Pharmaceutical Group of Bristol-Myers Squibb Company.
Mr. Wirth joined us in January 1996 and has served as Executive Vice President and Chief Legal Officer since September 1996 with responsibility for our corporate development and legal activities. From September 1996 until May 2008, he also served as our Chief Legal Officer. From 2001 through October 2005, Mr. Wirth had responsibility for our drug discovery and development business. In addition, from September 1996 until June 2003, Mr. Wirth was responsible for our Oncology business. Prior to joining Genzyme, Mr. Wirth was a partner at Palmer and Dodge, a Boston law firm, where he was head of the firm's technology group.
Mr. Wyzga has served as Executive Vice President, Finance since May 2003 as Chief Accounting Officer since January 1999 and as Chief Financial Officer since July 1999. He joined us in February
1998 as Vice President and Corporate Controller and served as Senior Vice President, Corporate Controller from January 1999 until July 1999. He served as Senior Vice President, Finance from July 1999 until May 2003.2003 and as Chief Accounting Officer from January 1999 until November 2008. From February 1997 to February 1998, Mr. Wyzga served as Chief Financial Officer of Sovereign Hill Software, Inc., a software company, and from 1991 to 1997 held various senior management positions with CACHELINK Corporation and Lotus Development Corporation. Mr. Wyzga is also a director of Altus Pharmaceuticals Inc., a developer of protein therapeutics.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock which we refer to as Genzyme Stock, is traded on The Nasdaq Global Select Market ("NASDAQ®") system under the symbol "GENZ".
As of February 27, 2008,26, 2009, there were 3,2903,344 stockholders of record of Genzyme Stock.our common stock.
The following table sets forth, for the periods indicated, the high and low sale price of Genzyme Stockour common stock as reported by NASDAQ.
| | | High | Low | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008: | 2008: | ||||||||||||||
First Quarter | $ | 82.08 | $ | 67.38 | |||||||||||
Second Quarter | 76.76 | 65.21 | |||||||||||||
Third Quarter | 83.97 | 67.00 | |||||||||||||
| | | High | Low | Fourth Quarter | 81.16 | 57.61 | |||||||||
| 2007: | 2007: | 2007: | |||||||||||||
| First Quarter | $ | 68.77 | $ | 59.07 | First Quarter | $ | 68.77 | $ | 59.07 | ||||||
| Second Quarter | 67.89 | 59.79 | Second Quarter | 67.89 | 59.79 | ||||||||||
| Third Quarter | 66.00 | 58.71 | Third Quarter | 66.00 | 58.71 | ||||||||||
| Fourth Quarter | 76.90 | 62.30 | Fourth Quarter | 76.90 | 62.30 | ||||||||||
| 2006: | |||||||||||||||
| First Quarter | $ | 75.34 | $ | 65.49 | |||||||||||
| Second Quarter | 68.47 | 54.64 | |||||||||||||
| Third Quarter | 70.31 | 57.74 | |||||||||||||
| Fourth Quarter | 70.50 | 59.71 | |||||||||||||
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.
Issuer Purchases of Equity Securities
Stock Repurchase Program
In May 2007, our board of directors authorized a stock repurchase program to repurchase up to an aggregate maximum amount of $1.5 billion or 20,000,000 shares of our outstanding common stock over a three year period beginning with the next three years.commencement of the program. The program commenced in June 2007. The repurchases are being made from time to time and can be effectuated through open market purchases, privately negotiated transactions, transactions structured through investment banking institutions, or by other means, subject to management's discretion and as permitted by securities laws and other legal requirements. The manner of the purchase, the amount that we spend and the number of shares we ultimately purchase will vary based on a range of factors, including share price. The program does not obligate us to acquire any particular amount of common stock and the program may be suspended at any time at our discretion.
InSince June 2007, when we repurchased a total of 3,500,000first began repurchasing shares of our common stock under the repurchase planthis program, we have repurchased a cumulative total of 5,500,000 shares of our common stock at an average price of $68.09 per share for a total of $231.6$374.6 million ofin cash, including fees. The following table provides information about certainWe recorded the repurchases of equity securities that are registered under Section 12in our consolidated balance sheets as a reduction to our common stock account for the par value of the Exchange Act during the quarter ended December 31, 2007:
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| October 1, 2007-October 31, 2007 | 169 | (1) | $ | 70.21 | — | $ | 1,318,846,790 | ||||
| November 1, 2007-November 30, 2007 | 267,300 | $ | 72.35 | 267,300 | $ | 1,299,508,743 | |||||
| December 1, 2007-December 31, 2007 | 423,962 | $ | 73.15 | 423,962 | $ | 1,268,494,422 | |||||
| Total | 691,431 | $ | 72.84 | (3) | 691,262 | (2) | |||||
Table of ContentsStock Performance Graph
The graph below compares the five-year cumulative total shareholder returns for our common stock to that of the S&P 500 Composite Index and the NASDAQ® Pharmaceutical Index. The cumulative returns are based on a $100 investment on January 1, 2003, with all dividends being reinvested. The comparisons shown in the graph are based upon historical data and we caution that the stock price performance shown in the graph is not indicative of, nor intended to forecast, the potential future performance of our stock. Prior to December 31, 2003, the Genzyme Stock prices used in this table reflect Genzyme General Stock before the elimination of our tracking stock structure. Information used in the graph was obtained from Standard and Poor's and the Nasdaq Global Select Stock Market®, sources we believe to be reliable, but we are not responsible for errors or omissions in such information.
Comparison of 5 Year Cumulative Total Return
ITEM 6. SELECTED FINANCIAL DATA
We incorporate our Selected Financial Data into this section by reference from the 2007 Genzyme CorporationExhibit 13 to this Annual Report on Form 10-K under the heading "Genzyme Corporation and Subsidiaries—Consolidated Selected Financial Data,Data." which is included in Exhibit 13 to this Annual Report on Form 10-K.
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 2007 Genzyme CorporationExhibit 13 to this Annual Report on Form 10-K under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations,Operations." which is included in Exhibit 13 to this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We incorporate our disclosure related to market risk into this section by reference from the 2007 Genzyme CorporationExhibit 13 to this Annual Report on Form 10-K under the headings "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Market Risk," "—Equity Price Risk," "—Interest Rate Risk," and "—Foreign Exchange Risk" which is included in Exhibit 13 to this Annual Report on Form 10-K.Risk."
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 Genzyme Corporation and Subsidiaries Consolidated Financial Statements and notes thereto included in Exhibit 13 to this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
AtAs of December 31, 2008, we evaluated, with the directionparticipation of our Chief Executive Officer and Chief Financial Officer, we evaluatedthe effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and internal control over financial reporting15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that: (1)that our disclosure controls and procedures were effective as of December 31, 2007; and (2) no change in internal control over financial reporting occurred during the quarter ended December 31, 2007 that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.2008.
Management's Annual Report on Internal Control Over Financial Reporting
The full disclosureOur management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as the process designed by, or under the supervision of, our management's assessmentChief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal controlscontrol over financial reporting based on the framework provided inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2007 is set forth in the 2007 Genzyme Corporation Annual Report under the heading "Management's Report on Internal Controls Over Financial Reporting," which is included in Exhibit 13 to this Annual Report on Form 10-K.
Attestation Report of Independent Registered Public Accounting Firm
2008.
The effectiveness of our internal controls over financial reporting as of December 31, 20072008 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm. The attestationfirm, as stated in their report of PricewaterhouseCoopers LLP is set forth in the 2007 Genzyme Corporation Annual Report under the heading "Report of Independent Registered Public Accounting Firm," which is included in Exhibit 13 to this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We have adopted a Corporate Code of Conduct, which applies to our directors and all of our employees, including our principal executive officer, principal financial officer, andprincipal accounting officer and controller. A copy of our Code of Conduct is available to you, freeposted on our website, www.genzyme.com, under the "Corporate Governance—Our Commitment" section of charge, upon written request to the legal department at our corporate offices located at Genzyme Center, 500 Kendall Street, Cambridge, Massachusetts 02142.site. We intend to make all required disclosures concerning amendments to, or waivers from, this code onin the governance pageCorporate Governance section of our website, http://www.genzyme.com.website. Information contained on our website is not part of this document or the documents incorporated by reference into this document.
We incorporateCertain information regarding our directors and executive officers into this section by reference fromis set forth at the section entitled "Executive Officersend of the Registrant" in Part I of this Annual Report on Form 10-K andunder the heading, "Executive Officers of the Registrant." The other information required by this item is incorporated by reference from the sections entitled "Election of Directors," "Board Meetings and Committees" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the proxy statementProxy Statement for our 2008 annual meeting2009 Annual Meeting of shareholders.Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
We incorporateThe information regarding the compensation of our directors and executive officers intorequired by this sectionitem is incorporated by reference from the sections entitled "Election of Directors," "Director Compensation," "Compensation Discussion and Analysis"Analysis," "Summary Compensation Table," "Grants of Plan-Based Awards," "Outstanding Equity Awards at Fiscal Year-End," "Option Exercises and related tablesStock Vested," "Potential Payments Upon Termination or Change in Control," "Board Meetings and narrativesCommittees—Compensation Committee," and "Board Meetings and Committees—Compensation Committee Report" in the proxy statementProxy Statement for our 2008 annual meeting2009 Annual Meeting of shareholders.Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
We incorporateThe information regarding the ownership of our securitiesrequired by our directors, executive officers and 5% stockholders into this sectionitem is incorporated by reference from the sections entitled "Stock Ownership" and "Equity Plans" in the proxy statementProxy Statement for our 2008 annual meeting2009 Annual Meeting of shareholders.Shareholders.
We incorporate information regarding the securities authorized for issuance under our equity compensation plans into this section by reference from the section entitled "Equity Plans" in the proxy statement for our 2008 annual meeting of shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We incorporateThe information regarding transactions with related parties intorequired by this sectionitem is incorporated by reference from the sectionsections entitled "Certain Relationships and Related Persons Transactions" and "Board Meetings and Committees" in the proxy statementProxy Statement for our 2008 annual meeting2009 Annual Meeting of shareholders.Shareholders.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
We incorporateThe information regarding our audit committee's pre-approval policies and procedures and the fees paid to our auditorsrequired by this item is incorporated by reference from the section entitled "Independent Auditors" in the proxy statementProxy Statement for our 2008 annual meeting2009 Annual Meeting of shareholders.Shareholders.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
We are incorporating the following financial statements (and related notes) of Genzyme Corporation and Subsidiaries into this section by reference from the 2007 Genzyme CorporationExhibit 13 to this Annual Report:Report on Form 10-K:
| | Page* | |
|---|---|---|
Report of Independent Registered Public Accounting Firm | F-65 | |
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2008, 2007 | ||
Consolidated Balance Sheets as of December 31, | ||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 | ||
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2008, 2007 | ||
Notes to Consolidated Financial Statements |
(a)(2).FINANCIAL STATEMENT SCHEDULES
The scheduleschedules listed below for Genzyme Corporation and Subsidiaries isare filed as part of Exhibit 13 to this Annual Report on Form 10-K and isare incorporated into this section by reference:
| | Page* | |
|---|---|---|
Report of Independent Registered Public Accounting Firm | ||
Schedule II—Valuation and Qualifying Accounts |
All other schedules are omitted as the information required is inapplicable or the information is presented in the Genzyme Corporation and Subsidiaries' Consolidated Financial Statements or notes thereto.
The exhibits are listed below under Part IV, Item 15(b) of this Annual Report on Form 10-K.
All other schedules are omitted as the information required is inapplicable or the information is presented in the Genzyme Corporation and Subsidiaries' Consolidated Financial Statements or notes thereto. The exhibits are listed below under Part IV, Item 15(b) of this Annual Report on Form 10-K.
| EXHIBIT NO. | DESCRIPTION | ||
|---|---|---|---|
| *3.1 | Restated Articles of Organization of Genzyme, as amended. Filed as Exhibit 3.1 to Genzyme's Form 10-Q for the quarter ended June 30, 2006. | ||
| *3.2 | By-laws of Genzyme, as amended. Filed as Exhibit 3.1 to Genzyme's Form 8-K filed May 25, 2007. | ||
| EXHIBIT NO. | DESCRIPTION | ||
|---|---|---|---|
| *4.1 | Fourth Amended and Restated Renewed Rights Agreement dated May 28, 2004 between Genzyme and American Stock Transfer & Trust Company, as Rights Agent. Filed as Exhibit 4.1 to Genzyme's Registration Statement on Form 8-A/A filed on May 28, 2004. | ||
| *4.2 | |||
Registration Rights Agreement, dated December 9, 2003, between Genzyme and UBS Securities LLC on behalf of itself and several other Initial Purchasers. Filed as Exhibit 10.1 to Genzyme's Form 8-K filed December 10, 2003. | |||
| *10.1 | Lease, dated April 30, 1990, for 64 Sidney Street, Cambridge, Massachusetts between BioSurface Technology, Inc. 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). | ||
| *10.1.1 | Amendment to Lease, dated September 11, 1995, to the Lease Agreement dated April 30, 1990 by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.1 to Genzyme's Form 10-K for 2003. | ||
| *10.1.2 | Second Amendment to Lease, dated March 1, 1996, to the Lease Agreement dated April 30, 1990 by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.2 to Genzyme's Form 10-K for 2003. | ||
| *10.1.3 | Letter Amendment, dated December 30, 1999, to the Lease Agreement dated April 30, 1990, by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.3 to Genzyme's Form 10-K for 2003. | ||
| *10.1.4 | Fourth Amendment to Lease, dated March 23, 2001, to the Lease Agreement dated April 30, 1990, by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.4 to Genzyme's Form 10-K for 2003. | ||
| *10.1.5 | Lease Agreement dated November 30, 2005, by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.5 to Genzyme's Form 10-K for 2006. | ||
| *10.2 | 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. | ||
| *10.2.1 | First Amendment to Lease, dated July 26, 1995, to Lease dated June 1, 1992, between Allston Landing Limited Partnership and the Massachusetts Turnpike Authority. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended June 30, 2005. | ||
| *10.2.2 | Second Amendment to Lease, dated December 22, 1997, to Lease dated June 1, 1992, between Allston Landing Limited Partnership and the Massachusetts Turnpike Authority. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended June 30, 2005. | ||
| *10.3 | Commercial Lease, dated December 24, 1998, by and between Aventis Pasteur SA and Imtix-SangStat S.A.S. for Building C5 located at Marcy L'Etoile, Lyon, France. Filed as Exhibit 10.4 to Genzyme's Form 10-K for 2003. | ||
| *10.3.1 | Amendment to Commercial Lease, dated September 30, 2000, to the Lease dated December 24, 1998, by and between Aventis Pasteur SA and Imtix-SangStat S.A.S. Filed as Exhibit 10.4.1 to Genzyme's Form 10-K for 2003. | ||
| *10.4 | Lease, dated August 28, 2000, for Building D, Cambridge Research Park, Cambridge, Massachusetts, between Genzyme and Kendall Square LLC. Filed as Exhibit 10.4 to Genzyme's Form 10-K for 2005. | ||
| *10.4.1 | First Amendment to Lease, dated August 1, 2003, to the Lease dated August 28, 2000, by and between Genzyme and Kendall Square LLC. Filed as Exhibit 10.5.1 to Genzyme's Form 10-K for 2004. | ||
| *10.5 | Underlease of 50 Gibson Drive, Kings Hill Business Park, West Malling, Kent, U.K., dated January 19, 2001, by and among Genzyme Limited, Liberty Property Limited Partnership and Kings Hill Estate Management Company Limited. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended September 30, 2005. |
| EXHIBIT NO. | DESCRIPTION | ||
|---|---|---|---|
| *10.5.1 | Deed of Variation of Underlease dated January 19, 2001, and Agreement for Lease, each dated August 22, 2005, by and between Genzyme Limited and Kent City Council (successors to Liberty Property Limited Partnership). Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended September 30, 2005. | ||
| *10.6 | Lease, dated September 3, 1990, for the land located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4917 & 324IF County Waterford), by and between the Industrial Development Authority and Bausch & Lomb Ireland. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended September 30, 2001. | ||
| *10.7 | Contract for Sale, dated June 25, 2001, for the premises located at the Industrial Development Authority Industrial Park, County Waterford, Ireland, (comprised in folio 4141L County Waterford) by and between Luxottica Ireland Limited and Genzyme Ireland Limited (f/k/a Gosfend Limited). Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended September 30, 2001. | ||
| *10.8 | Deed of Transfer, dated July 2, 2001, between Luxottica Ireland Limited and Genzyme Ireland Limited, related to the Lease dated September 3, 1990 for the premises located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4141L County Waterford). Filed as Exhibit 10.3 to Genzyme's Form 10-Q for the quarter ended September 30, 2001. | ||
| *10.9 | Contract for Sale, dated August 2, 2001, for the land located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4917 County Waterford), by and between the Industrial Development Authority and Genzyme Ireland Limited. Filed as Exhibit 10.4 to Genzyme's Form 10-Q for the quarter ended September 30, 2001. | ||
| *10.10 | Lease, dated August 24, 2001, for the land located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4917 County Waterford) by the Industrial Development Authority and Genzyme Ireland Limited. Filed as Exhibit 10.5 to Genzyme's Form 10-Q for the quarter ended September 30, 2001. | ||
| *10.11 | 1997 Equity Incentive Plan, as amended. Filed as Exhibit 10.12 to Genzyme's Form 10-K for 2006. | ||
| *10.12 | 1998 Director Stock Option Plan, as amended. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended June 30, 2006. | ||
| *10.12.1 | Form of | ||
| *10.12.2 | 2007 Director Equity | ||
| *10.12.3 | Form of | ||
| *10.12.4 | Form of Restricted Stock Unit Award Agreement for grants under Genzyme's 2007 Director Equity Plan. Filed as Exhibit 10.4 to Genzyme's | ||
| *10.13 | 2001 Equity Incentive Plan, as amended. Filed as Exhibit 10.14 to Genzyme's 10-K for 2006. | ||
| *10.13.1 | |||
| *10.13.2 | |||
| EXHIBIT NO. | DESCRIPTION | ||
|---|---|---|---|
| *10.14 | 2004 Equity Incentive Plan, as amended. Filed as Appendix A to Genzyme's Proxy Statement on Schedule 14A filed April 10, 2008 for the 2008 Annual Meeting of Shareholders. | ||
| 10.14.1 | |||
| 10.14.2 | Forms of Nonstatutory Stock Option Agreement for grants to executive officers under Genzyme's 2004 Equity Incentive Plan. Filed herewith. | ||
| *10.14.3 | Forms of Restricted Stock Unit Award Agreement for grants to executive officers under Genzyme's 2004 Equity Incentive Plan. Filed as Exhibit | ||
*10.15 | 1999 Employee Stock Purchase Plan, as amended. Filed as Exhibit 10.3 to Genzyme's Form 10-Q for the quarter ended June 30, 2007. | ||
| 10.16 | 1996 Directors' Deferred Compensation Plan, as amended. Filed | ||
| *10.17 | Amended and Restated Executive Employment Agreement | ||
| *10.18 | Amended and Restated Executive Employment Agreement | ||
| *10.19 | Form of Indemnification Agreement between Genzyme and its executive officers. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended September 30, 2004. | ||
| *10.20 | Form of Severance Agreement between Genzyme and its executive officers. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended September 30, 2007. | ||
| *10.21 | Form 8-K filed | ||
*10.22 | Amended and Restated Collaboration Agreement, effective as of January 1, 2008, among Genzyme, BioMarin and BioMarin/Genzyme LLC. Filed as Exhibit | ||
| *10.22.1 | Manufacturing, Marketing and Sales Agreement among Genzyme, BioMarin and BioMarin/Genzyme LLC, effective as of January 1, 2008. Filed as Exhibit | ||
| *10.23 | Supply Agreement, dated January 24, 2006, by and between Cambrex Charles City, Inc. and Genzyme. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended September 30, 2006.** | ||
| *10.24 | Contract Manufacturing Agreement dated September 14, 2001, as amended, between GelTex and The Dow Chemical Company. Filed as Exhibit 10.35 to Genzyme's Form 10-K for 2002.** | ||
| *10.24.1 | Second Amendment, dated October 9, 2002, to Contract Manufacturing Agreement dated September 14, 2001, between GelTex and The Dow Chemical Company. Filed as Exhibit 10.34.1 to Genzyme's Form 10-K for 2003.** | ||
| *10.24.2 | Third Amendment, dated December 8, 2003, to Contract Manufacturing Agreement dated September 14, 2001, between GelTex and The Dow Chemical Company. Filed as Exhibit 10.34.2 to Genzyme's Form 10-K for 2003.** | ||
| *10.24.3 | Fourth Amendment, dated July 1, 2004, to Contract Manufacturing Agreement dated September 14, 2001, between GelTex and The Dow Chemical Company. Filed as Exhibit 10.29.3 to Genzyme's Form 10-K for 2004.** | ||
| *10.24.4 | Amended and Restated Contract Manufacturing Agreement signed as of December 15, 2006, between Genzyme (as successor to GelTex) and The Dow Chemical Company. Filed with Genzyme's Form 8-K filed on December 15, 2006.** |
| EXHIBIT NO. | DESCRIPTION | ||
|---|---|---|---|
| *10.25 | Credit Agreement, dated July 14, 2006, among Genzyme and those of its subsidiaries party thereto, the lenders listed therein, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, ABN AMRO Bank N.V., Citizens Bank of Massachusetts and Wachovia Bank, National Association, as co-documentation agents. Filed with Genzyme's Form 8-K filed on July 19, 2006. | ||
| *10.26 | North American Termination and Transition Agreement, dated November 3, 2004, by and between Genzyme and Wyeth. Filed as Exhibit 10.31 to Genzyme's Form 10-K for 2004.** | ||
| *10.27 | Purchase and Supply Agreement, effective as of January 1, 2005, by and between Genzyme and Invitrogen Corporation. Filed as Exhibit 10.3 to Genzyme's Form 10-Q for the quarter ended June 30, 2005.** | ||
| *10.27.1 | Amendment No. 2 effective as of January 1, 2007 to Purchase and Supply Agreement, effective as of January 1, 2005, by and between Genzyme and Invitrogen Corporation. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended June 30, 2007.** | ||
| *10.27.2 | Amended and Restated Contract Purchase and Supply Agreement between Invitrogen Corporation and Genzyme Corporation effective December 31, 2007. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended September 30, 2007.** | ||
| *10.28 | License and Co-Development Agreement between Genzyme and Isis Pharmaceuticals, Inc. dated June 24, 2008. Filed as Exhibit 10.7 to Genzyme's Form 10-Q for the quarter ended June 30, 2008.** | ||
| 13 | |||
| 21 | Subsidiaries of Genzyme. Filed herewith. | ||
| 23 | Consent of PricewaterhouseCoopers LLP. Filed herewith. | ||
| 31.1 | Certification of the Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | ||
| 31.2 | Certification of the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | ||
| 32.1 | Certification of the Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. | ||
| 32.2 | Certification of the Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. | ||
| 99 | Financial statements and notes thereto of BioMarin/Genzyme LLC as of December 31, 2007 and 2006, and for the years ended December 31, 2007 |
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Exhibits 10.11 through 10.21.110.21 above are management contracts or compensatory plans or arrangements in which our executive officers or directors participate.
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: February | By: | /s/ MICHAEL S. WYZGA Michael S. Wyzga Executive Vice President, Finance And Chief Financial | ||
Pursuant to the requirements of the Securities Exchange 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 Henri A. Termeer | Director and Principal Executive Officer | February | ||
/s/ MICHAEL S. WYZGA Michael S. Wyzga | Principal Financial | February | ||
/s/ JASON A. AMELLO Jason A. Amello | Corporate Controller and Principal Accounting Officer | February 27, 2009 | ||
/s/ DOUGLAS A. BERTHIAUME Douglas A. Berthiaume | Director | February | ||
/s/ GAIL K. BOUDREAUX Gail K. Boudreaux | Director | February | ||
/s/ ROBERT J. CARPENTER Robert J. Carpenter | Director | February | ||
/s/ CHARLES L. COONEY Charles L. Cooney | Director | February | ||
/s/ VICTOR J. DZAU Victor J. Dzau | Director | February | ||
/s/ CONNIE MACK III Connie Mack III | Director | February | ||
/s/ RICHARD F. SYRON Richard F. Syron | Director | February |