Genzyme Corporation and Transkaryotic Therapies Inc have entered into an agreement under which Genzyme will develop and commercialize iduronate-2-sulfatase (I2S), TKT's enzyme replacement therapy for the treatment of Hunter syndrome, in Japan and other Asia/Pacific territories and a broad litigation settlement agreement. TKT has retained all rights in North America, Europe, and Latin America, and intends to commercialize I2S directly in those territories.

Under the terms of the agreement, Genzyme will pay TKT approximately $3.0 million in upfront payments and other consideration. TKT also has the potential to receive up to an additional $8 million relating to certain regulatory and commercial milestones, primarily related to a regulatory submission and approval in Japan. TKT will manufacture the bulk drug substance for commercial sale in Genzyme's territories and will receive payments that will equal approximately one-third of net sales in those territories. In addition, Genzyme has options to obtain rights to certain other research programs being developed by TKT in the territories where Genzyme holds rights to I2S.

Henri A. Termeer, Chairman and Chief Executive Officer of Genzyme Corporation, stated, "We look forward to working with TKT to improve the lives of these desperately ill patients with Hunter syndrome. While the two companies will continue to offer competing therapies for Fabry disease, we will work collaboratively to address the very serious unmet medical needs of Hunter patients."

In addition, Genzyme and TKT have signed a global legal settlement involving an exchange of non-suits between the companies. As part of this exchange, Genzyme will withdraw from the patent suit brought against TKT in July 2000 involving Replagal (agalsidase alfa), TKT's enzyme replacement therapy for the treatment of Fabry disease. TKT has agreed not to initiate any patent litigation relating to Aldurazyme (laronidase), Genzyme's enzyme replacement therapy for the treatment of MPS I, which is being commercialized in a joint venture between Genzyme and BioMarin Pharmaceutical Inc. However, in both situations, licensors of the patents at issue to Genzyme and TKT, respectively, could continue or commence legal actions despite Genzyme and TKT's legal settlement.