By Randall Osborne

Sidestepping an initial public offering (IPO) because of the shaky market, Genzyme Corp. said its Genzyme Molecular Oncology division will begin trading on the Nasdaq stock exchange on or before Nov. 30.

"It's really cutting across the grain, to have a company go public by this route," said Bo Piela, spokesman for Cambridge, Mass.-based Genzyme.

The public market for the cancer division will be created by distributing shares of its stock as a tax-free dividend to Genzyme Corp. shareholders, at the same time releasing from escrow the Genzyme Molecular Oncology shares held by former shareholders of PharmaGenics Inc.

Genzyme took over PharmaGenics, a genomics firm in Allendale, N.J., in June 1997. (See BioWorld Today, Feb. 4, 1997, p. 1.)

"We compensated [PharmaGenics] shareholders by paying them shares of Genzyme Molecular Oncology," Piela said.

Also, 6 million "designated shares" of the cancer division were reserved for Genzyme Corp. shareholders, in exchange for the assets transferred by Genzyme Corp. to the cancer division.

In August 1997, the cancer division raised $20 million in a private placement of 6 percent convertible debentures, which investors were allowed to exchange for a Genzyme Corp. debenture.

As a result of that exchange, more designated shares will be created and distributed to convert the oncology division debenture into a Genzyme Corp. debenture and to repay $2.8 million more in debt due to Genzyme Corp.

"It's unusual," Piela said of the arrangement. "We wanted there to be a public market for this stock, and we're optimistic about it."

In April, Genzyme Molecular Oncology filed a registration statement for an IPO that aimed to raise about $30 million. That filing has been withdrawn. (See BioWorld Today, April 30, 1998, p. 1.)

More Clinical Trials Planned

Focused on gene-based approaches to cancer therapy and diagnosis, Genzyme Molecular Oncology has collaborations with Schering-Plough Corp., of Madison, N.J.; Merck & Co., of Whitehouse Station, N.J.; and Hexagen plc, of Cambridge, U.K.

The cancer division has completed two Phase I trials of a cancer vaccine for melanoma and plans three more clinical trials in melanoma, ovarian cancer and breast cancer in the next year.

Pending approval, the Nasdaq trading symbol for the cancer division will be GZMO.

"There's some pretty routine work that needs to be done," Piela said.

Genzyme Corp.'s stock (NASDAQ:GENZ) closed Monday at $32.125, down $0.875. *