* Bid at 27 percent premium to Algeta share price at Monday's close
* Algeta shares rise above Bayer offer price in early trade
* Takeover bid is latest in a spate of cancer-focused deals
* Bayer and Algeta jointly develop prostate cancer drug Xofigo
* Consensus forecast for Xofigo sales is $940 mln in 2018
(Adds Bayer and analyst comment, sales forecast, context on cancer deals)
OSLO/LONDON, Nov 26 (Reuters) - Bayer has offered to pay $2.4 billion for Norway's Algeta, its partner for a new prostrate cancer treatment, a 27 percent premium to the stock's last close, Algeta said on Tuesday.
The deal would give Bayer outright control over Xofigo, a drug the two have developed jointly since 2009 and started selling in the United States this year.
Investors, however, bet that the German drugs and chemicals group would have a fight on its hands and shares in Algeta jumped by a third to a record high of 349.7 Norwegian crowns in early trade, well above Bayer's bid of 336 crowns.
A Bayer spokesman confirmed that the German group had made an offer but said the company did not want to provide any details at this point.
The push by large pharmaceuticals companies to acquire smaller biotech businesses to gain new drugs that could bolster income is focusing increasingly on cancer therapy, a hot area for research.
Amgen struck the fifth-largest biotechnology deal in history in August by agreeing to buy Onyx Pharmaceuticals for $10.4 billion, while the Japan's Otsuka agreed in September to buy Astex Pharmaceuticals for $886 million.
Other recent cancer deals have included AstraZeneca buying privately-owned firms Amplimmune and Spirogen for up to $940 million.
While much of the work in modern cancer medicine is concentrated on the genetic basis of the disease and the role of the immune system in controlling tumour growth, Xofigo is a different type of radiation treatment.
It is a radioactive agent that migrates to parts of the body of prostate cancer patients with abnormal bone growth, thereby minimising damage to surrounding tissue.
Although sales reached only $17 million in the third quarter, Xofigo received marketing authorisation in the European Union this month and analysts expect sales to take off over the next several years.
Annual worldwide sales are expected to reach $940 million by 2018, according to consensus forecasts compiled by Thomson Reuters Pharma.
Despite the promise of Xofigo, analysts following Bayer said the German group appeared to be offering a high price for Algeta.
"We do not see potential at Algeta justifying such a high takeover price," DZ Bank analyst Peter Spengler said, adding that further information might yield "some hidden value".
Under the current deal between the companies, Bayer is responsible for developing the drug, applying for health authority approvals and commercialising. Algeta, meanwhile, receives royalties and milestone payments on hitting specified sales targets.
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 full treatment requires six doses.
Prior to the bid, Algeta was trading at close to 20 times its expected 2015 earnings. ($1 = 6.1345 Norwegian krones)
(Additional reporting by Frank Siebelt in Frankfurt; Editing by Mark Potter and David Goodman)