Shares of one-drug wonder Onyx Pharmaceuticals (NASDAQ:ONXX) fell 30% yesterday as the drug developer announced disappointing news for its cancer treatment Nexavar. Nexavar is partnered with Bayer (NYSE:BAY).

Nexavar is already approved to treat advanced kidney cancer, and has been in testing as a potential treatment for numerous other types of cancers at various stages. Shares declined yesterday on the news that, in its most advanced phase 3 trial, the drug failed to show any survival benefit versus a placebo for patients as a treatment for advanced melanoma.

This failure is strike one for Onyx's late-stage clinical trials for Nexavar. The other two important -- and possible label-expanding -- phase 3 trials for the drug are for lung and liver cancer. The liver cancer study results are expected by the end of 2007, and the lung cancer trial is currently still enrolling patients, so there are plenty of opportunities for Nexavar to be approved in new indications.

With so many trials being run for the drug, research and development expenses have outpaced revenues during Nexavar's first year on the market; therefore, Onyx hasn't brought in any profits from the drug. Sales are growing rapidly even in the face of competition from a similar drug by Pfizer (NYSE:PFE) that was approved in January of this year.

Sales*,**

Q-O-Q Growth

Q3 2006

$45

41%

Q2 2006

$32

36%

Q1 2006

$24

-
*Onyx receives roughly half of sales; revenue is recorded by Bayer.
**Figures in millions.

Bayer gave no estimates for what fourth-quarter sales of the drug will look like, except to say that 2006's sales will be upward of $130 million. Fortunately, 90% of Nexavar sales are for on-label usage, so this negative announcement today shouldn't hurt near-term sales growth.

Details were light on the results of the failed melanoma trial, since Onyx was waiting to present the data at a scientific meeting. Regardless, the takeaway from today is that Nexavar is not dead as a treatment for melanoma, since the drug is in another phase 3 and phase 2 trials for the disease, but its chances of becoming a successful treatment in this indication are greatly diminished.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy .