Bayer said today it will proceed with plans to buy Algeta over the next few weeks after its NOK 16.2 billion (about $2.6 billion) bid for shares in the Norwegian biotech surpassed expectations. The deal will unite the German pharma-and-chemical conglomerate with its partner in developing the recently-launched prostate cancer drug Xofigo (alpharadin or radium Ra 223 dichloride).

Bayer said the transfer of Algeta shares, and payout to its shareholders, will occur no later than March 12. In launching its NOK 362 ($59.76) per-share tender offer, Bayer set a minimum acceptance level of 90%, but obtained 97.28% or 42,731,347 shares.

Bayer confirmed its interest in Algeta in November, making an initial $2.4 billion offer that it sweetened a month later.

Following completion of the deal, Bayer would have sole control of Xofigo, which last year was launched in the U.S. following FDA approval, and also won European Commission approval. A Bayer takeover of Algeta will free the pharma giant from having to pay its partner a share of profits and royalties under their up-to-€560 million ($767.8 million) collaboration deal inked in 2009, through which they teamed up to develop Xofigo, an alpha particle emitting radiopharmaceutical delivered once a month via injection. At the time, the companies announced that Algeta had an option for up to 50% co-promotion with Bayer in the United States under a profit-share arrangement.

“We are absolutely convinced of the potential of this drug and the underlying technology to provide patients with innovative treatment options,” Bayer CEO Marijn Dekkers said in a statement.

Xofigo is indicated for men with castration-resistant prostate cancer (CRPC), symptomatic bone metastases and no known visceral metastatic disease. FDA approved Xofigo in June under its priority-review program, allowing decisions up to six months faster on new drugs that appear to provide safe and effective treatment when no other satisfactory treatment exists, or offer a significant improvement over existing treatments.

Algeta is also attractive to Bayer because of its pipeline of radiation therapy candidates. Algeta specializes in developing anticancer therapeutics based on alpha particle emitting radionuclides, whose short range (typically less than 0.1 mm) and high linear energy transfer enables them to be used in molecular targeted radiation of tumors. When selectively delivered to tumor tissue, the alpha particles kill the tumor cells, leaving surrounding normal tissues unharmed.

“This transaction will strengthen our oncology business and support our efforts to provide patients with innovative treatment options. We plan to work together with the Algeta team to leverage the full value of this business,” said Olivier Brandicourt, CEO of Bayer HealthCare.

Bayer said Xofigo is expected to generate at least €1 billion (about $1.4 billion) in annual sales “if it receives marketing authorization in further indications.” Xofigo is one of five recently-launched treatments Bayer says have combined total peak sales potential of more than €5.5 billion per year.

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