French drugmaker Sanofi-Aventis and Genzyme Corp are discussing options for significantly raising Sanofi's bid for the the U.S. biotech company to about $80 per share, the Wall Street Journal reported, citing people familiar with the matter.

The $80 figure would include a structure known as a contingent value right, or CVR, according to the report. The CVR would be based on future sales of an experimental multiple sclerosis (MS) drug for which the two companies have made widely different sales forecasts.

Genzyme has been seeking a significantly higher price than the $69 per share that Sanofi has offered. Genzyme has said the bid that values the U.S. company at about $18.5 billion was not a starting point for serious discussions.

Multibillion-Dollar Drug?
At the heart of Genzyme's bid defense is its estimate that the new MS drug could generate peak annual sales of $3.5 billion, compared with a figure of around $700 million underpinning Sanofi's offer.

Sources familiar with the situation earlier told Reuters the companies were moving closer in their discussions about a possible takeover and a resolution to the situation would likely occur within weeks rather than months.

According to one source, Sanofi would be willing to increase its $69 a share cash offer by a nominal amount and include a CVR in a final deal, though the French company would be unlikely to strike a deal worth as much as $80 a share.

It is unclear how much any CVR would be worth and its potential value would, in any case, be discounted by investors based on their assumptions of whether the new drug will reach its milestones.

Genzyme's shareholders have until Jan. 21 to tender their shares to Sanofi, which has already extended its $69 a share offer once after an initial closing last month garnered less than 1% of Genzyme shares.

Industry analysts see no chance of Sanofi's current offer prevailing by the new deadline. They believe Chief Executive Chris Viehbacher's real aim is to buy time to get his opposite number Henri Termeer to the table.

Sanofi's offer could yet be extended again, if Viehbacher needs more time.

Financial advisers for the two companies are discussing the value of a CVR that would take the total Genzyme offer to around $80 per share if it meets certain sales milestones, potentially valuing the company at $20.7 billion, the Journal reported.

"Eighty dollars including a CVR is pretty attractive," said Michael Yee, a biotech analyst for RBC Capital Markets.

If true, he said, "this certainly puts the transaction in a much higher likelihood of getting completed."

Termeer and Viehbacher will have an opportunity to meet face-to-face next week at a major investor conference in San Francisco, where they will both be making presentations, if they so choose.

There have virtually been no reported direct talks between the two companies since Sanofi went hostile with its offer to buy Genzyme in early October. Viehbacher and Termeer have so far sat down together only once, on Sept. 20, to discuss the bid situation.

When Sanofi last month extended its $69 offer by six weeks only 0.9% of Genzyme shares had been tendered by shareholders.

There is still no final agreement and a deal may not happen, these people told the Journal. But the differences between the two sides have begun to narrow, they said. Neither Genzyme nor Sanofi was immediately available for comment.