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Bayer offers $2.4bn to buy Xofigo partner Algeta

Norwegian firm says negotiations still at 'an early stage'

Bayer

Bayer has made a $2.4bn offer to buy Norwegian company Algeta in a deal that would give it total control over newly-approved prostate cancer therapy Xofigo.

Bayer's bid is NOK 336 (around $55) per share, according to Algeta, which said in a statement that negotiations between the two companies are "at an early stage" and "may or may not lead to a transaction".

Algeta made the announcement after reports in the media suggested Bayer was offering NOK 306 per share for the company. At the time of writing the stock was trading at around NOK 345, up more than 30 per cent on its close yesterday.

Xofigo (radium Ra 223 dichloride) was approved in the EU earlier this month for the treatment of men with castration-resistant prostate cancer (CRPC) who also have symptomatic bone metastases and no known visceral metastases. When cancer spreads to the bone, patients are much more vulnerable to skeletal events, which are the main cause of morbidity and death in men with CRPC.

The radiopharmaceutical is already available in the US having been approved by the FDA in May some three months ahead of schedule, and is one of a number of key products Bayer suggests have blockbuster sales potential. In the third quarter Bayer said the drug made €12m ($17m) in US sales.

Bayer acquired Xofigo from Algeta in 2009 in a deal that granted full commercialisation rights in Europe, as well as co-marketing rights to the drug in the US with the two companies sharing profits there. Acquiring the Norwegian company would boost Bayer's earnings from Xofigo at a stroke.

Early comments on the deal from analysts revealed a mixed response, with some saying it was a good way for Bayer to maximise the return on Xofigo - given that its peak sales are expected to top $1bn a year - while others baulked at what they considered a high purchase price given uncertainties, such as the number of clinics approved to deliver radiotherapeutics.

One unanswered question is whether Algeta has some other hidden gems in its pipeline. Xofigo certainly has potential in other indications - including breast cancer - while Algeta also has a research programme looking at another radioactive isotope - thorium-227 - that could have utility in a broader range of cancers.

26th November 2013

From: Sales

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