Bayer's contested kidney cancer drug shows benefit

* Regorafenib shrinks tumours in Phase II study

* Rights to new kidney cancer drug disputed by Bayer, Onyx

BERLIN, Sept 22 (Reuters) - Final results from a mid-stage clinical trial involving a sister compound to Bayer AG's BAYG.DE Nexavar have confirmed the drug's potential, raising the stakes in a legal tussle with development partner Onyx Pharmaceuticals Inc (ONXX.O).

Bayer said on Tuesday 31 percent of the 48 kidney cancer patients evaluated in the Phase II study since October 2008 saw their tumours shrink.

The cancer was kept stable in a further 50 percent of trial participants, according to clinical trial results presented at the ECCO-ESMO cancer conference in Berlin.

Preliminary outcomes from the study, which did not include a control group on placebo or a standard treatment for comparison, were released in May, showing a slightly lower response rate.

Bayer also said it was planning to take the compound into the third and last phase of testing usually required for regulatory approval.

The drug, dubbed regorafenib or BAY 73-4506 by Bayer, became a bone of contention between the German drugmaker and its U.S. biotech partner. Bayer is laying sole claim to the drug while Onyx contends the compound should be treated as an offshoot from their joint Nexavar project.

Onyx sued Bayer in May over the rights to regorafenib, which Onyx refers to as fluoro-sorafenib, claiming its molecular structure differs from Nexavar, or sorafenib, only in one atom. [ID:nN17389823]

Regorafenib is similar to Bayer's Nexavar drug, scientifically known as sorafenib, and both drugs are so-called multikinase inhibitors that quell cancer cell growth and prevent new blood vessels that could feed tumours.

Doctors use Nexavar, which is taken as a pill, to treat liver cancer and advanced kidney cancer and Bayer expects to generate more than 2 billion euros ($2.9 billion) in peak annual sales from it.

Study participants were suffering from previously untreated kidney tumours that could not be removed surgically or that had started spreading.

Bayer is testing regorafenib against bowel cancer as well. (Writing by Ludwig Burger; Editing by David Holmes) ($1=.6827 Euro)