U.S. biotechnology company Genzyme Corp and Sanofi-Aventis have executed a nondisclosure agreement, effectively giving the French company the ability to examine Genzyme's books as they continue talks on a possible merger.

While the two companies previously disclosed they are in talks, Genzyme will be sharing certain nonpublic information with Sanofi, leading to the need for the agreement, according to a U.S. securities filing.

Sanofi previously launched an $18.5 billion hostile offer to acquire Genzyme, which rejected the bid as too low.

This is a critical step that will allow Sanofi to conduct official diligence, ISI Group analyst Mark Schoenebaum said.

(Reporting by Lewis Krauskopf and Toni Clarke; Editing by Lisa Von Ahn)