As widely expected, a pair of phase 3 trials showed Tarceva in combination with chemotherapy to be ineffective as a first-line treatment for non-small cell lung cancer (NSCLC).

Wednesday, Tarceva's developers -- Genentech (NYSE:DNA), OSI Pharmaceuticals (NASDAQ:OSIP), and Swiss drug maker Roche -- acknowledged that the drug failed to improve survival rates. A secondary endpoint -- time to progression of the cancer's symptoms -- was statistically insignificant.

Tarceva is one of a new class of cancer drugs, known as EGFR inhibitors, which seek to stop the spread of cancer cells by blocking a protein associated their growth. Again, while disappointing, the results were somewhat expected in light of prior results for a similar drug for the same indication.

AstraZeneca's (NYSE:AZN) Iressa, another EGFR inhibitor, also failed as a first-line treatment for NSCLC; however, Iressa received approval as a last resort treatment in May. Genentech, OSI, and Roche are hoping that Tarceva will be effective as a second or third course of treatment for NSCLC.

According to the World Health Organization, 1.2 million cases of lung and bronchial cancer are diagnosed every year. Lung cancer accounts for 30% of all cancer deaths in the U.S., while 80 percent of lung cancer cases are NSCLC-related.

Moreover, Tarceva isn't dependent on NSCLC for success. In addition to NSCLC, Tarceva also has FDA orphan drug status for glioblastoma (brain tumors). Trials for that indication are currently in Phase 2.

Yes, Tarceva's failure for NSCLC is a disappointment, but it was also widely expected and hope remains. Shares of Genentech and OSI are down slightly 1% in early afternoon trading.