SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
GENZYME CORPORATION
(Name of Registrant as Specified In Its Charter)
DR. STEVEN BURAKOFF
DR. ALEXANDER J. DENNER
MR. CARL C. ICAHN
DR. RICHARD MULLIGAN
DR. ERIC ENDE
HIGH RIVER LIMITED PARTNERSHIP
HOPPER INVESTMENTS LLC
BARBERRY CORP.
ICAHN PARTNERS LP
ICAHN PARTNERS MASTER FUND LP
ICAHN PARTNERS MASTER FUND II LP
ICAHN PARTNERS MASTER FUND III LP
ICAHN ENTERPRISES G.P. INC.
ICAHN ENTERPRISES HOLDINGS L.P.
IPH GP LLC
ICAHN CAPITAL L.P.
ICAHN ONSHORE LP
ICAHN OFFSHORE LP
BECKTON CORP.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
ICAHN CAPITAL LP
Dear Fellow Genzyme Shareholder,
Are you as tired as we are of seeing your investment in Genzyme erode because of
management's continuing track record of avoidable missteps and subpar
performance in dealing with manufacturing problems at the company? AS YOU KNOW,
SEVERE PROBLEMS IN MANUFACTURING HAVE RESULTED IN A SIGNIFICANT DESTRUCTION OF
NEAR-TERM AND LONG-TERM SHAREHOLDER VALUE. MANAGEMENT HAS BLATANTLY IGNORED
REPEATED WARNING LETTERS AND INSPECTION REPORTS FROM THE FDA. AS A RESULT, WE
BELIEVE IF ANY REAL PROGRESS IS TO BE MADE IN NORMALIZING RELATIONS WITH THE
FDA, WE MUST IMMEDIATELY CHANGE THE BOARD TO SHOW THAT TERMEER IS NO LONGER
"KING OF THE COMPANY" EVEN IF HE DOES REMAIN AS CEO. ADDITIONALLY, IT SHOULD BE
REMEMBERED THAT IF WE DO NOT GET OUR PLANTS BACK UP AND RUNNING TO FULL
CAPACITY, WE WILL NOT ONLY CONTINUE TO LOSE PROFITS BUT WE WILL CONTINUE TO LOSE
MARKET SHARE TO OUR COMPETITORS WHICH MAY NEVER BE REGAINED.
It is time to elect the four new highly qualified directors from the Icahn Slate
to replace four of the directors on the management slate, which is composed
mostly of longstanding directors who apparently were asleep at the wheel. It is
time for new oversight at your company.
During the last three years, entirely avoidable manufacturing problems have
sharply curtailed market supplies of Cerezyme, Fabrazyme and Myozyme, resulting
in drastically lower sales and profits as well contributing to the loss of $3.3
B of shareholder value. Yet during those same three years, CEO Henri Termeer
received cash and equity compensation from Genzyme of $35 MM. Furthermore,
instead of resolving the manufacturing issues that have plagued the company for
three years, Mr. Termeer has accumulated an array of unrelated businesses
instead of only focusing on the company's life-saving genetic disease
treatments.
This style of "management" has resulted in significant destruction of long-term
value which can be reversed through new oversight and new ideas.
The company has permanently lost revenues and profits to competitors from its
"cash cow" genetics disease franchise as a result of both manufacturing
mismanagement and poor strategic planning. In addition, the company has lost
significant credibility with patients, doctors and regulators, both in the U.S.
and in Europe, two of its most critical markets for its life-saving drugs.
It is time for a major overhaul of Genzyme's management oversight through a
reconstituted board that will work to resolve the manufacturing crisis and
re-establish trust and credibility with stakeholders. The Icahn Slate, members
of which have a proven track record of spearheading performance improvements at
other biotechnology companies, will be driven to accomplish this at your
company.
WHY NEW BOARD BLOOD IS NEEDED NOW
Management exposed the company to supply risk in its core genetic disease
division by failing to produce these key drugs across multiple manufacturing
sites. Instead, it chose to produce the vast majority at a single facility in
Allston, Mass. Even worse, at the single facility:
- it failed to plan effectively for operational redundancy to
prevent minor issues from becoming major crises.
- it failed to build adequate drug inventories to prevent supply
constraints, and
- it overburdened the plant's capacity by shifting Myozyme
production to the facility
As a result of management's failures in manufacturing and strategic planning,
Cerezyme, Fabrazyme and Myozyme sales fell significantly short of expectations
during 2009, permanently reducing future sales potential and profits.
Because of Genzyme's failure to meet demand for these life-saving products, the
FDA encouraged early access to and fast track approval of competitive drugs,
allowing doctors to become increasingly comfortable prescribing them.
The company is now faced with higher costs to defend its remaining market share,
lower gross margins due to its high cost of manufacturing, higher spending to
repair the facilities and impending disgorgement of past profits, all of which
have combined to further reduce the franchise's long-term value.
During this manufacturing debacle, management failed to adequately disclose FDA
warning letters and Form 483s (FDA inspection reports) regarding deficiencies at
its facilities, and understated the magnitude of the issues. It also
inaccurately predicted the time required to resolve these problems. Even
recently, when management claimed to have put its manufacturing troubles behind
it by hiring new people to "fix" the problems, additional complications
surfaced, furthering supply constraints. As the manufacturing debacle continues
to unfold seemingly without end, it is apparent that current management
inadequately addressed these damaging problems.
Members of the Icahn Slate will urgently work to repair the damage done by
current management by advocating and pressing for the following:
- Remove Termeer and several other directors to form a newly
reconfigured Board to achieve greater management accountability and
start repairing the company's tarnished image with crucially important
stakeholders, including patients, doctors, investors and, importantly,
regulators.
- Evaluate the current management team and their ability to deliver
value to shareholders and meet demands of patients served by our drugs
- Evaluate permanent solutions to manufacturing problems to help
prevent future crises from occurring
- Improve capital allocation by evaluating and possibly cutting
SG&A spending, improving gross margins through greater manufacturing
efficiencies, and implementing a focused M&A and licensing strategy,
and
- Divest certain non-core assets, which should improve focus within
individual businesses, provide greater financial transparency, reduce
overhead costs required to manage a biotech conglomerate, and increase
return on capital by eliminating businesses with poor returns.
Management seeks to persuade shareholders that Genzyme's weak and ineffectual
board should be reelected amid these challenging problems, even though the board
has abjectly failed to resolve them expeditiously.
Manufacturing issues have persisted for several years and have yet to be
resolved, resulting in the destruction of massive amounts of shareholder value.
Just this month, the FDA fined Genzyme $175 million for failing to mitigate
manufacturing issues and could face additional fines if they aren't resolved
under a consent decree.
By choosing a consent decree, the FDA has seemingly lost faith in the company's
ability to make important drugs for patients. Why should shareholders not look
to recharge the board with strong managerial talent and fresh ideas that can ask
the right questions and demand performance? Hold management accountable by
voting for the Icahn Slate. Members of the Icahn Slate who were directors of
ImClone spearheaded a series of initiatives that resulted in a 126 percent gain
in its share price from Oct. 2006 to Nov. 2008, when the company was sold to Eli
Lilly & Co.
The ImClone initiatives over a two-year period included recharging its
partnership with Bristol-Myers Squibb that spurred sales of its flagship drug
Erbitux; slashing expenses, reallocating resources and settling litigation. The
Icahn team was integrally involved in lining up a counter-bidder to
Bristol-Myers' $60 per-share offer, resulting in its sale at $70 per-share. All
this is part of the public record.
The current Genzyme board has granted too much independence to its management
team, which has made repeated value-depleting missteps and blunders that
threaten the entire franchise. The company needs a fresh board composed in part
of members of our Slate, who are pharmaceutical industry and business experts
who will take an active role in advocating for the needed changes at the
company.
Interestingly, management only began accelerated action to address its major
issues AFTER it became apparent that Icahn had taken a position in Genzyme. We
believe the election to the board of the Icahn Slate is imperative to keep
management focused on fixing current issues, preventing future problems and
thereby ultimately increasing shareholder value.
If this were your family-owned company, would you keep Termeer and his fellow
board members who have presided over such a mess?
Icahn Capital LP
June 1, 2010
* * * * *
All shareholders of Genzyme are advised to read the definitive proxy statement
and the gold proxy card filed with the SEC on May 4, 2010, and other documents
related to the solicitation of proxies by the Participants from the shareholders
of Genzyme for use at the 2010 annual meeting of shareholders of Genzyme because
they contain important information. The definitive proxy statement and form of
proxy along with other relevant documents are available at no charge on the
SEC's website at http://www.sec.gov or by contacting D.F. King & Co., Inc. by
telephone toll free at (800) 347-4750 or by visiting their website
www.dfking.com/genzyme. In addition, the Participants will provide copies of the
definitive proxy statement without charge upon request.