Germany's Bayer AG (BAYN.XE) said Monday that cancer treatment Nexavar failed to reach its primary goal of extending the lives of patients with a certain advanced form of lung cancer in a late-stage clinical trial.

Co-developed with U.S.-based Onyx Pharmaceuticals Inc. (ONXX), the oral drug did reach its secondary endpoint of progression-free survival, where the disease didn't get worse, in patients with non-squamous, non-small cell lung cancer, Bayer said.

Nexavar is already approved worldwide for the treatment of advanced kidney cancer and liver cancer and is expected to generate peak annual sales of EUR2 billion.

Merck Finck & Co. Analyst Carsten Kunold said in a note Monday that it's now "rather unlikely that Nexavar will become approved for the treatment of lung cancer."

The drug, which is also known as sorafenib, was compared in the study with a placebo in combination with chemotherapy.

The result was "disappointing", Dimitris Voliotis, Vice President, Global Clinical Development Oncology, Bayer HealthCare, said in a statement.

Bayer estimates 1.4 million people worldwide are diagnosed with lung cancer every year, and about 160,000 in the U.S. and 342,000 in Europe die from non-small cell lung cancer annually.

Nexavar aims to stop cancer cells from proliferating and block the formation of new blood vessels that feed tumors.

The NExUS trial began in February 2007, but was amended in 2008 to exclude squamous cell patients, who were shown to have a higher mortality rate in the trial than non-squamous cell patients.

The companies said they would continue to test the drug in lung cancer, on its own as well as in combination with other treatments. The drug is also being tested in patients with other cancers, including thyroid, breast, ovarian, and colon cancer.

MM Warburg Analyst Ulrich Huwald interpreted the results of the NExUS lung cancer study as neutral, given competing products have also fell short in lung cancer trials. Only Tarceva, co-marketed by OSI Pharmaceuticals Inc. (OSIP) and Switzerland's Roche Holding AG (RHHBY), has been approved in the U.S. and Europe as a maintenance treatment for non-small cell lung cancer.

"Clearly at a first glance it's disappointing, but we've seen several signs that lead us to be cautious," Huwald said. He therefore hasn't included the lung cancer indication in his forecast model for Nexavar, in favor of more positive trial data for other types of cancer, including breast cancer.

Last year Nexavar earned EUR604 million in sales.

Bayer's share price fell on the Nexavar news but later recovered somewhat. At 1009 GMT, it was trading down EUR0.45 or 0.9% at EUR47.37 while the overall DAX index was up 1.2%. The stock has lost nearly 17% of its value so far this year.

-By Allison Connolly, Frankfurt Bureau; +49 69 29725513, allison.connolly@dowjones.com
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