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Genzyme, a U.S.-based biotech company that makes drugs for rare diseases, maintains that Campath, a drug it is testing for multiple sclerosis, could generate peak annual sales of $3.5 billion. It aims to strengthen that argument at an investor meeting in New York on Monday.

France's Sanofi sees peak annual sales closer to $700 million. The discrepancy is central to Genzyme's argument that it is worth more than the $69 a share being offered by Sanofi.

To break the deadlock, Genzyme and Sanofi advisers have discussed using contingent value rights (CVR) in a potential deal structure. The rights would give Genzyme investors an extra payout if the drug reached certain targets.

"I think that's the way it's going to go," said William Tanner, an analyst at Lazard Capital Markets, "I imagine there will be a figure in the low $70s with an earn-out based on how this drug actually does."

Few analysts believe the drug, which is already sold as a cancer treatment and known generically as alemtuzumab, will generate the kind of sales projected by Genzyme. Independent market research group BioMedTracker has forecast Campath sales of about $1.6 billion in 2019.

Nonetheless, the company is expected to cite conclusions from a consulting firm which canvassed hundreds of physicians and payors worldwide who estimated the drug could generate sales of about $3 billion.

A COMPLICATED DEAL

Genzyme first presented its argument at an investor event in New York two months ago. At the time, it forecast 2011 earnings of $4.30 to $4.60 a share and said Sanofi's offer was not based on up-to-date information.

Analysts had on average been expecting 2011 earnings of $3.57 a share. Sanofi's offer represented a multiple of just over 19 times that estimate.

Applying the same multiple to its own forecast, Genzyme said Sanofi would need to pay $89 a share -- a figure Sanofi dismissed as "totally unrealistic."

Investors and analysts had said a deal could be reached within a range of $75 to $80 per share.

But executing a deal involving CVR would be complicated and time-consuming. Shareholders would be unlikely to accept it unless Sanofi also increased its cash offer.

"They have to sweeten the underlying price," said Geoffrey Porges, an analyst at Sanford Bernstein. "If they sweeten the current price, a CVR could be a little extra to get a deal over the line."

Even if a CVR price were agreed, investors would likely discount it to a greater or lesser extent.