UPDATE 2-Bayer, Algeta's prostate cancer drug boosts survival

Mon Jun 6, 2011 3:42am EDT

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* Median overall survival 14.0 months vs 11.2 for placebo

* Clinical trial stopped early due to positive effect

* Algeta shares up 36 pct, Bayer up 2 pct

(Updates with shares, comments by analyst and Algeta CEO)

By Ben Hirschler and Mikael Holter

LONDON/OSLO, June 6 (Reuters) - A experimental prostate cancer drug from Bayer (BAYGn.DE) and its Norwegian biotech partner Algeta ALGETA.OL helped patients live longer a study showed, sending Algeta's share price up 36 percent on Monday.

Because of the substantial positive effect, the Phase III clinical trial of the medicine in men with castration-resistant prostate cancer is being stopped early so that patients on placebo can be offered the new drug, the companies said.

The median overall survival period for patients on the new drug was 14 months compared with 11.2 months for the placebo, while safety and tolerability were consistent with previous trial outcomes.

The results are particularly important for Algeta, whose fortunes are tied closely to the success of Alpharadin. Its stock was up 36 percent at 199 crowns by 0738 GMT after hitting a record high of 201.50 earlier.

Shares in Bayer, for which the product is one of a number of new treatments in development, rose 2 percent to 56.62 euros.

"It's splendid news," said Robin Davison, a biotech analyst at Edison in London who follows Algeta.

"There's almost no doubt that the product will now be approved. There's a very large increase of survival in the context of this particular cancer," Davison said.

"It certainly adds 30 to 50 percent to the value of Algeta. It's gonna be a $2 billion-a-year product, very easily."

The complete results from the study will be presented at an upcoming scientific meeting.

Kemal Malik, Bayer's head of global development, said he was "extremely encouraged" by the overall survival and his company was now evaluating the filing strategy for Alpharadin.

Andrew Kay, chief executive of Algeta, said he still anticipated a submission to regulatory authorities in 2012 but the positive data could only help in terms of timing.

The success of Alpharadin was a "transforming moment" for the company, he told Reuters. [ID:nWEB5779]

The drug is designed for treating patients with advanced disease whose cancer has spread to their bones. Alpharadin, or radium-223 chloride, works by mimicking many of the behaviours of calcium in the bone. (Editing by Greg Mahlich)

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