1
EXHIBIT 99.2
------------
NEOZYME II CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED CUMULATIVE
SEPTEMBER 30, SEPTEMBER 30, FROM
------------------ ----------------- INCEPTION
1996 1995 1996 1995 (MARCH 2, 1992)
---- ---- ---- ---- -------------
Investment income ....................... $ 138 $ 321 $ 591 $ 1,141 $ 12,753
Costs and expenses:
Technology license fee ................ - - - - 5,000
Research and development .............. 5,897 5,549 16,493 17,201 76,072
General and administrative ............ 231 107 393 265 1,589
------- ------- -------- -------- --------
6,128 5,656 16,886 17,466 82,661
------- ------- -------- -------- --------
Net loss ................................ $(5,990) $(5,335) $(16,295) $(16,325) $(69,908)
======= ======= ======== ======== ========
Net loss per callable common share....... $ (2.48) $ (2.21) $ (6.75) $ (6.76) $ (30.09)
======= ======= ======== ======== ========
Weighted average callable
common shares outstanding............... 2,415 2,415 2,415 2,415 2,323
======= ======= ======== ======== ========
The accompanying notes are an integral part of these unaudited,
condensed financial statements.
F-18
2
NEOZYME II CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
1996 1995
---- ----
ASSETS
Current Assets:
Cash and cash equivalents .................................. $ 2,815 $ 5,546
Short-term investments ..................................... 5,069 21,501
Prepaid research and development to Genzyme Corporation..... 604 -
-------- --------
$ 8,488 $ 27,047
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Payable to Genzyme Corporation ............................. 37 2,469
Accrued expenses ........................................... 244 92
-------- --------
Total current liabilities ............................... 281 2,561
Note payable to Genzyme Corporation ........................... 100 100
Stockholders' Equity:
Callable common Stock, $1.00 par value; authorized 9,000,000
shares, 2,415,000 shares issued and outstanding ........... 2,415 2,415
Additional paid-in capital ................................. 75,620 75,620
Deficit accumulated during the development stage ........... (69,908) (53,613)
Unrealized loss on investments ............................. (20) (36)
-------- --------
8,107 24,386
-------- --------
$ 8,488 $ 27,047
======== ========
The accompanying notes are an integral part of these unaudited,
condensed financial statements.
F-19
3
NEOZYME II CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30, CUMULATIVE
----------------- FROM INCEPTION
1996 1995 (MARCH 2, 1992)
---- ---- -------------
Cash flow from operating activities:
Net loss ................................................ $(16,295) $(16,325) $ (69,908)
Reconciliation of net loss to net cash
used by operating activities:
(Gain)/loss on sale of investments ................... (25) 226 (1,919)
Accrued interest/amortization on investments ......... (242) 277 919
Prepaid research and development ..................... (604) (501) (604)
Payable to Genzyme Corporation ....................... (2,432) (729) 37
Accrued expenses ..................................... 152 (24) 244
-------- -------- ---------
Net cash used by operating activities ................... (19,446) (17,076) (71,231)
Cash flow from investing activities:
Purchases of short-term investments ..................... - - (31,216)
Purchase of long-term investment ........................ - - (109,521)
Sales and maturities of short-term investments .......... 16,715 25,683 63,959
Sales and maturities of long-term investments ........... - - 72,689
-------- -------- ---------
Net cash provided (used) by investing activities ........ 16,715 25,683 (4,089)
Cash flow from financing activities:
Issuance of note payable to Genzyme Corporation ......... - - 100
Issuance of callable common stock ....................... - - 78,035
-------- -------- ---------
Net cash provided by financing activities ............... - - 78,135
-------- -------- ---------
Increase in cash and cash equivalents ....................... (2,731) 8,607 2,815
Cash and cash equivalents at beginning of period ............ 5,546 135 -
-------- -------- ---------
Cash and cash equivalents at end of period .................. $ 2,815 $ 8,742 $ 2,815
======== ======== =========
The accompanying notes are an integral part of these unaudited,
condensed financial statements.
F-20
4
NEOZYME II CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
SEPTEMBER 30, 1996
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. BASIS FOR PRESENTATION:
Prior to acquisition by Genzyme, Neozyme II was a development stage
enterprise engaged in the research, development and clinical testing of
biotherapeutic products for the treatment of cystic fibrosis.
These unaudited condensed financial statements should be read in
conjunction with Neozyme II's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and the financial statements and footnotes
included therein. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
the Securities and Exchange Commission rules and regulations.
The financial statements for the three and nine months ended
September 30, 1996 and 1995 are unaudited but include, in Neozyme II's
opinion, all adjustments (consisting only of normally recurring accruals)
necessary for a fair presentation of the results for the periods presented.
2. ACCOUNTING POLICIES:
The accounting policies underlying the quarterly financial statements
are those set forth in Note A of the financial statements included in
Neozyme II's Annual Report on Form 10-K for the year ended December 31,
1995.
F-21
5
NEOZYME II CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
SEPTEMBER 30, 1996
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
3. TERMINATION OF LICENSE AND DEVELOPMENT AGREEMENT WITH NABI:
Under agreement with Genzyme, Neozyme II funds Genzyme's obligations
to provide development funding to NABI in exchange for the exclusive
rights that Genzyme has acquired to market, on a worldwide basis,
HyperGAM+[TM]CF, for the treatment of Pseudomonas lung infections in
Cystic Fibrosis patients. In June 1996, Neozyme II and NABI announced the
halt of their Phase II clinical trial for HyperGAM+[TM]CF after receiving
the results of an interim analysis of the data by an independent
statistician which showed no evidence of a reduction in the number of
acute pulmonary exacerbations in trial participants. No major issues with
the safety of the product were identified. On June 21, 1996, after review
of the interim analysis data, the Board of Directors of Neozyme II voted
unanimously to terminate the License and Development Agreement with NABI.
In the third quarter of 1996, Genzyme charged Neozyme II for $900,000 of
costs billed by NABI in connection with the wind down of the
HyperGAM+[TM]CF program, which is the agreed maximum payable to NABI under
the terms of the Agreement.
4. TENDER OFFER AND SUBSEQUENT EVENT:
On October 28, 1996, Genzyme, through Neozyme II Acquisition Corp.,
completed its tender offer for the outstanding Units of Neozyme II for $45
per Unit in cash. A total of 2,385,686 of the 2,415,000 Units outstanding
or 98.8% were tendered and accepted for payment. Each Neozyme II Unit
consists of one share of Callable Common Stock and one Callable Warrant to
purchase two shares of Genzyme General Division Common Stock ("General
Division Stock") and 0.135 share of Genzyme Tissue Repair Common Stock
("TR Stock").
The tender offer was made pursuant to an agreement entered into
between Neozyme II and Genzyme on September 23, 1996. The agreement
provided that Genzyme would acquire all of the shares of Callable Common
Stock not tendered in the tender offer through a merger of Neozyme II into
Acquisition Corp. The merger was consummated on December 6, 1996, at which
time holders of the Units who did not tender their Units received $29 in
cash for each share of Callable Common Stock and the Callable Warrants
included in the untendered Units became exercisable. The exercise price of
the Callable Warrants is $44.202 per Callable Warrant and was determined
by the average closing price of two shares of General Division Stock and
0.135 share of TR Stock for the twenty trading days prior to December 6,
1996.
F-22