Bayer settles with Onyx over regorafenib cancer treatment

Germany's Bayer and its U.S. development partner Onyx have reached a settlement over a contested sister compound to their potential blockbuster cancer drug Nexavar.

As part of the deal over cancer drug regorafenib, which is similar to Nexavar, Bayer will pay Onyx a royalty of 20% of future worldwide sales in oncology, Onyx said in a statement.

The U.S. biotech firm was also granted the right to co-promote regorafenib in the United States without having to pay for development costs.

Bayer will also pay Onyx a one-time lump sum of $160m.

Regorafenib became a bone of contention between the two companies in 2009. Bayer laid sole claim to the drug while Onyx contended the compound should have been treated as an offshoot from their joint Nexavar project.

Onyx claimed the second drug's molecular structure differed from Nexavar only in one atom.

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 tumors.

Doctors use Nexavar, which is taken as a pill, to treat liver cancer and advanced kidney cancer and Bayer expects to generate more than 2bn euros ($2.7bn) in peak annual sales from it.

Bayer is testing regorafenib against kidney cancer as well.

U.S. regulators in May granted regorafenib "fast-track" status for the treatment of gastrointestinal tumors.

Bayer said in a separate statement that the status of Nexavar under the revised agreement remains largely unchanged.

Bayer shares pared some gains and were up 1% at 44.04 euros at 1238 GMT (8:38 a.m. EDT).

(Published by Reuters - October 12, 2011)