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Bayer bids $2.4 billion for Norway's Algeta

John Macdougall | AFP/Getty Images

German pharmaceutical group Bayer offered to buy Norway's Algeta, its partner for a new prostate cancer treatment, for $2.4 billion, a 27 percent premium to the stock's last close, Algeta said on Tuesday.

If successful, the deal would give Bayer outright control over Xofigo, a drug the two have jointly developed since 2009 and started selling in the United States earlier this year.

Though the drug only sold $17 million in the third quarter, it received marketing authorization in the European Union this year and analysts expect sales of the drug to take off over the next several years.

(Read more: Drug sales to hit lowest growth rate in decades)

Under the current deal between the firms, Bayer is responsible for developing the drug, applying for health authority approvals and commercializing. Algeta meanwhile receives royalties and milestones on sales.

Algeta shares have soared this year on the early success of the drug and the offer price is 125 percent above the stock's level 12 months ago.

One dose of Xofigo, used for castration-resistant prostate cancer, costs $11,500 dollars and one full treatment includes six doses.

Prior to the bid, Algeta was trading at close to 20 times its expected 2015 earnings.

(Read more: FDA approves Bayer pill for thyroid cancer)

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