Bayer, Algeta sign oncology drug development deal potentially worth $800 million

Bayer and Algeta announced Thursday the signing of a global deal to develop and commercialise Algeta's Alpharadin (radium-223 chloride), an experimental alpha-emitting radiopharmaceutical being developed to treat bone metastases. The agreement for the drug, which is currently in late-stage testing for hormone-refractory prostate cancer (HRPC) that has spread to the bone, is potentially worth more than 560 million euros ($800 million) for Algeta.

Under the terms of the agreement, which includes an upfront payment of 42.5 million euros ($61 million) to Algeta, the companies will jointly develop Alpharadin, with Bayer contributing "a substantial majority of the costs of future development." Algeta will receive payments upon the achievement of certain development, production and commercialisation milestones, and the company also has the option to co-promote the drug in the US under a profit-sharing arrangement. The Norwegian company could also receive tiered double-digit royalties on sales if the drug reaches the market.

Bayer Schering Pharma's head of global development, Kemal Malik, said "we recognise the tremendous potential of Algeta's Alpharadin as a possible treatment for bone metastases in cancer patients," and added that "the data we have seen suggest that Alpharadin may represent a highly targeted treatment option that could potentially extend overall survival." A spokesperson for Bayer indicated that initial results from the trial in patients with HRPC are expected in late 2011.

Commenting on the agreement, DnB NOR Markets analyst Espen Joergensen remarked that "this is an extremely positive deal, the size is significant and far larger than what we had expected."

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