By Brady Huggett

Genzyme Corp. formed a strategic collaboration with Zentaris AG and expects to acquire a 5 percent stake in the company, worth up to $14.2 million, when it goes public in Germany.

The deal with the second-generation offspring of Degussa AG is part of a focused Genzyme strategy to grow across the Atlantic, said Bo Piela, manager of media relations at Cambridge, Mass.-based Genzyme.

¿Genzyme is interested in expanding our investment and corporate development activity in Europe,¿ Piela said. ¿We already have a strong infrastructure ¿ we have about 600 employees there.¿

Zentaris, of Frankfurt, Germany, is being spun out from Asta Medica AG, also of Frankfurt. Zentaris announced Tuesday its plans to become a public company in Germany. Asta Medica is the pharmaceutical unit of Degussa AG, a company with production facilities all over Germany.

Through the collaboration, Genzyme will receive 900,000 shares of Zentaris stock from Asta Medica at Zentaris¿ offering price, giving Genzyme 5 percent ownership of Zentaris. While the price for Zentaris¿ IPO has not been set, Genzyme has committed to pay not more than EUR16.2 million (US$14.2 million) for the shares, Piela said. Also, Genzyme gets limited rights of first refusal to future sales of shares from Asta Medica following the initial public offering.

The agreement is set to pop unless Zentaris does not close its offering by Aug. 31. And while that would spoil the deal, Piela said that was an unlikely event.

¿Our agreement is conditional on [the IPO] happening,¿ he said. ¿But we¿re pretty confident that it will.¿

Genzyme Corp. will allocate the equity stake in Zentaris to Genzyme General, Piela said. As part of the collaboration, Genzyme will make available certain manufacturing services for Zentaris¿ bulk pharmaceuticals. And while the collaboration and investment are certainly part of Genzyme growth plan, it wasn¿t a matter of any European company sufficing.

¿[Zentaris] is a company with numerous products in development, an extensive intellectual property portfolio and strong relationships in the medical community,¿ Piela said. ¿And it has focuses in areas where we have focuses.¿ Specifically, those areas are oncology and endocrinology.

Piela said that while the relationship is still early stage, the companies have formed a steering committee to help shape the path of the partnership. But above all, he said, the collaboration signified one thing: international expansion.

¿This agreement signals our strong interest in pursuing collaborations in Europe and forming relationships with companies that can give us access to important products and technology and support our growth,¿ Piela said. ¿It¿s very simple for Genzyme.¿

Genzyme General¿s stock (NASDAQ:GENZ) dipped 31 cents Tuesday to close at $101.81.

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