UPDATE 1-Norway's Algeta says prostate cancer drug makes solid U.S. debut

Wed Aug 28, 2013 11:13am EDT

(Updates with quotes, background, share price and valuation)

* Prostate drug Xofigo makes strong U.S. start

* U.S. sales totalled $600,000 in the last two weeks of June

* Europe approval process could take one year

* Sales of $1 billion seen for potential blockbuster drug

* Stock up 3.5 percent, up 74 pct year to date

By Ole Petter Skonnord

OSLO, Aug 28 (Reuters) - Norway's Algeta ASA, which has developed a prostate cancer drug with Germany's Bayer AG, said the treatment had made a solid start in the United States and hoped for European approval later this year.

Algeta - whose shares have risen 30 percent since the drug called Xofigo won U.S. approval on May 15 - developed the drug, while Bayer has taken care of the application process. Revenue and costs will be shared 50/50 in the U.S. market.

"So far so good, the launch is on track", Chief Executive Officer Andrew Kay told a news conference on Wednesday.

The drug is produced in Norway before being sent to the United States, where Algeta has set up 320 sites from which to market it. Xofigo, also called Radium-223 dichloride, is designed to target bone metastases from prostate cancer that cannot be treated by standard hormone therapy.

One dose of Xofigo costs $11,500 dollars and one full treatment includes six doses. U.S. sales of Xofigo, which started around June 15, totalled $600,000 in the last two weeks of June, Chief Financial Officer Oystein Soug said.

Algeta also said it had swung to a pretax profit of 277 million Norwegian crowns ($46 million) in the second quarter, from a 31 million loss a year earlier, and beat expectations for 262 million.

Revenue totalled 444 million crowns including a 50 million euro ($67 million) milestone payment from Bayer. Milestone payments will become less important as normal sales start driving earnings.

Algeta declined to give revenue guidance for the drug but previously said Xofigo has the potential to be a blockbuster, which would mean sales of $1 billion a year.

Bayer filed for European Union approval for Xofigo in December and Algeta hopes to have the outcome of that process in the next few months.

Xofigo competes with prostate cancer drugs like Dendreon Corp's Provenge, Medivation Inc's Xtandi and Johnson & Johnson's Zytiga.

Algeta shares were up 3.5 percent at 270 crowns, giving the company a stock market value of 11.8 billion crowns. In the year to date, the stock has gained about 74 percent and trades at a price/book ratio of nearly 15, making it the most highly valued stock among Norwegian blue chips. ($1 = 6.0187 Norwegian krones) (Editing by Geert De Clercq)