Bayer has reached an agreement to buy Norwegian pharma company Algeta after raising its offer to around $2.9bn.
News of Bayer's interest in Algeta - which developed recently-approved prostate cancer therapy Xofigo (radium Ra 223 dichloride) - first emerged in November when the offer was reported be NOK 336 per share, valuing the company at around $2.4bn.
Management of the two companies have now agreed a NOK 362 per share deal for Algeta, which will now be offered on a voluntary basis to the Norwegian firm's shareholders. The bid represents a premium of 37 per cent over Algeta's closing price on November 25 when the initial offer was made. This morning Algeta was trading at around NOK 359.
Xofigo - which delivers localised radiotherapy to tumours via a calcium mimicking radioactive isotope that is taken up by cancer cells - was approved in the EU last month, having been given a green light in the US in May, three months ahead of schedule.
The therapy is used for the treatment of men with castration-resistant prostate cancer (CRPC) who also have symptomatic bone metastases and no known visceral metastases, and racked up third quarter sales of around €12m ($17m) in the third quarter. Algeta chief executive Andrew Kay said last month the drug had shown "excellent momentum" thanks to rapid endorsement by the US National Cancer Network.
Bayer has already predicted that Xofigo could develop into a blockbuster product if approved in additional indications, and chief executive Marijn Dekkers said today that the company is "absolutely convinced of the potential of this drug and the underlying technology to provide patients with innovative treatment options".
The statement reinforces the view that Bayer views the Algeta acquisition as a platform rather than a product purchase, with additional radiopharmaceuticals in its pipeline including a programme in breast cancer.
Bayer recently announced its intention to start a study looking at combining Xofigo with anti-androgens - such as Johnson & Johnson's Zytiga (abiraterone acetate) and Astellas/Medivation's Xtandi (enzalutamide) - and implementing therapy as soon as patients are diagnosed with CRPC.
In addition to radium 223 dichloride, the Norwegian company also has a research project looking at thorium-227, an isotope that could have utility in a broader range of cancers, with a lead candidate now approaching the clinic.
The deal is expected to close during the first quarter of 2014.