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The strengths of the rotary/Wankel engine seem perfectly suited for the needs of a motorcycle (small, lightweight, smooth, high revving). The main disadvantage (lousy fuel economy) also tends to be less important on a motorcycle. I know there were a few produced back in the 70's, such as the Suzuki RE5.
Surely there's good reason why they faded away. Why didn't they catch on?
I don't think this question needs to be limited to motorcycles; in fact, when you consider the plight of the Wankel with respect to cars, it answers the question for other applications as well.
I believe the last great production rotary was in the Mazda RX-8, and stopped about 4 years ago.
Apex sealing has always been troublesome, especially on cold starts. Rotor lubrication was also always an issue, and the Suzuki RE-5 you mentioned had a system to pump oil into the trochoid chamber.
Heat has been a real issue since day one in the late 50s. The exhaust stays in the chamber for a long time, transferring the heat to the rotor and trochoid chambers. Because of the shape and geometry inherent with a Wankel, it's difficult to get cooling passages where they need to be. Cooling systems tend to be complex and problematic.
The ignition system is usually complex, consisting of a minimum of two spark plugs per rotor. The compressed area is a long chord, and because of its shape does not promote a single-point ignition with a resultant efficient flame front.
Emissions from a rotary are not easily controlled to today's exacting standards. This may not be so much of an issue for a motorcycle, but I believe it was a strong influence of the demise of the RX-8 in Europe.
The bottom line is something @TMN referred to: return on investment, and just a plain "Why?" Modern motorcycle engines are making in excess of 200hp/liter. With reciprocating 4-stroke pistons. Why would anyone even consider a Wankel-engined motorcycle, when 500cc and 750cc monster beasts, (quite tractable, meeting all emissions, excellent fuel economy, gobs of torque) ... are available at every Honda, Yamaha, and Kawasaki dealer around??
What seemingly made conceptual sense and promised 12A or 13B utopia in the seventies didn't come to fruition, whether for cars or motorcycles.
Not a definitive answer, but I would guess it was strongly influenced by the requirement to have engineers who could successfully design a motorcycle engine using a Wankel rotor. It's completely different from an Otto-cycle piston engine (as I'm sure you know), so you need to have engineers who know (or can learn) the various stresses and fluid flows and other design centers that engine development requires. Plus, unless the company is going to invest in this engine design in a big way, you're going to wind up with a lot of unique engine parts that can't be shared across other models, so their development cost can't be amortized over larger production runs. So you wind up paying for specialized engineers to produce smaller runs of specialized parts, with no clear indication that you'll get any competitive economic advantage from it. A new manufacturer that planned to commit to a rotary-engined bike might make a go of it, but I don't think there's any compelling reason for a mainstream manufacturer to make the heavy investment in R&D required to bring what would basically be a novelty bike to market.
Considering a few characteristics of the Wankel engine, durability has been its Achilles heel. There simply would be no market big enough to justify it. It would be commercially unviable to further develop the tech given the other inherent issues (fuel consumption and emissions to name the big ones), even with the positives taken into account (simpler design, power/weight etc). The simple fact that piston engines just work, are a reliable, proven, world-wide standard that continues do prove itself and evolve kind of makes other engine designs unfeasible (that and the fact that electric has already positioned itself as the future of propulsion).
I had previously read an article many years ago which was explaining why the Suzuki RE5 did not become a complete success. The engine itself, which many people think is simple in design, is actually not so. While the engines core components contain few moving parts, the design is actually really complex. This lead to an extremely high price tag. (double what a similar piston engined bike would cost). This in turn was responsible for poor sales, which was responsible for its demise. The fact that many people were afraid to venture into unknown territory also played a factor. The high price stopped me from buying one. I could not afford it.
