Germany's leading drug and chemical maker, Bayer AG, said it will end development of Repinotan for stroke treatment.

The company is reportedly took the decision after the medicine failed to meet endpoints in a study.

Bayer is evaluating the next steps for the drug, which may be used in other areas, the Leverkusen, Germany-based company said in an e-mailed statement. Lehman Brothers, who thought Repinotan had only a 30 per cent chance of being introduced before today, estimated the drug could have generated sales of $500 million a year by 2012.

It is the second drug development setback this year for Bayer, which is scaling back research costs as it reorganizes to focus on health care, farm chemicals and plastics. Bayer, which has lost sales to generic competition for its top selling medicine, the antibiotic Cipro, doesn't expect to start selling major new drugs until 2006.

Bayer shares fell 16 cents, or 0.6 per cent, to 25.13 euros as of 12:46 p.m. in Frankfurt. They have increased 8.3 per cent this year.

The drug has reached phase II of clinical evaluation. Earlier trials showed Repinotan didn't work in traumatic brain injury patients, said Lehman Brothers analysts.

In September, Bayer stopped working on its experimental Taxane cancer medicine because it failed to meet the company's requirements for advancing into final-stage tests. The same month, Bayer formed a sales partnership with Schering-Plough Corp. of the US.

Bayer aims to cut its pharmaceutical research expenses to 20 per cent of drug sales to become more competitive.