Genzyme Corporation Former Employee Investigation

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Company Name(s): 
Genzyme Corporation
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An investigation on behalf of former and current employees of Genzyme Corporation (Public, NASDAQ: GENZ) concerning potential Employee Retirement Income Security Act (“ERISA”) Breach of Fiduciary Duty was announced.

Genzyme Corporation has been accused of securities fraud and according to a an investigation by a law firm under ERISA employees (former and current) of Genzyme Corporation (Public, NASDAQ: GENZ) may be eligible to file a ERISA complaint for putting stock options at risk if they can prove their employer violated its fiduciary duty to them. The Fiduciary duty refers to a company’s responsibility to the people who invest in it and if an employer puts the company’s interest ahead of the investors’, it has broken its fiduciary duty, so the investigation.

Genzyme Corp faces a securities class action lawsuit on behalf of all investors who purchased or otherwise acquired Genzyme Corporation (Nasdaq: GENZ) common stock between June 26, 2008 and July 21, 2009 over alleged violations of Federal Securities Laws. An investor in Genzyme Corp has filed a proposed securities class action lawsuit in the United States District Court for the District of Massachusetts and alleges that Genzyme and Henri A. Termeer (President and CEO) issued a series of materially false and misleading statements in violation of Section 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5. According to the complaint the plaintiff alleges that that defendants concealed deficiencies at two of its manufacturing facilities, which caused a shortage in one of its top-selling products (a drug called Myozyme) and delayed approval of a new formulation of that product (a drug known as Lumizyme). The manufacturing problems also forced Genzyme to halt production of two other top-selling products (drugs called Cerezyme and Fabrazyme) due to contamination at one of the manufacturing facilities. A prior investigation by another law firm focused on potential state and federal securities claims against Genzyme Corporation in connection with allegations that the company failed to promptly disclose that the Food and Drug Administration delayed approval for Lumizyme, which is one of the Genzyme Corp’s key products.

The company provided a progress update on February 23, 2009, confirming that all corrective actions had either been completed or were on schedule to be completed by the original commitment date of March 31, 2009. But on February 27, 2009, so the investigation, Genzyme Corp. received two letters from the Food and Drug Administration. The first letter stated that the Food and Drug Administration agency would not approve Lumizyme, to treat a rare genetic disorder called Pompe disease, before a deadline of February 28, 2009, as expected. The second letter stated that the Food and Drug Administration. still had significant problems with the manufacturing plant where Lumizyme is made, which Genzyme Corp. had not corrected.
According to the Food and Drug Administration warning letter Genzyme did not update its computerized manufacturing system for Fabrazyme, a treatment for Fabry disease, and ran an aseptic filling line at an unvalidated line speed. The letter cites operations at Genzyme’s plant in Allston, Massachusetts, which manufactures several of the company’s best-selling biologics, like Gaucher’s disease treatment Cerezyme (imiglucerase), Myozyme (alglucosidase alfa) for Pompe disease and Fabrazyme.

According to the investigation Genzyme Corp. failed to disclose this information until after the close of trading on March 2, 2009 and that Genzyme Corp. stated that the delay would lower its 2009 profit by about 12 cents per share. As a result of this news the price of Genzyme Corp. shares fell to $53.66 on March 3, 2009, a three-day decline of over 23%, so the investigation.

The plaintiff alleges now that the company took too long to disclose “serious issues” that federal inspectors first found last fall at the company’s drug-making plants in Boston and Belgium. On July 22, 2009, Genzyme announced a reduction of its earnings and revenue forecasts for 2009, including its revenue projections for Myozyme, Cerezyme and Fabrazyme, due to the impact of the facility shutdown and between June 26, 2008 and July 21, 2009, Genzyme's stock has fallen over 35%, resulting in a loss of over $8 billion to investors.

Genzyme Corporation, based in Cambridge, Massachusetts, is a biotechnology company. Genzyme operates in four segments: Genetic Diseases, Cardiometabolic and Renal, Biosurgery and Hematologic Oncology. Genzyme Corp reported in 2007 Total Revenue of $3.81352billion with a Net Income of $480.19million and in 2008 Total Revenue of $4.60504Billion with a Net Income of $421.08Million. Shares of Genzyme Corp (NASDAQ: GENZ) traded at $54.94 per share, down from a 52weekHigh of $83.97 per share.