For a company that only has one drug on the market, stopping a failing phase 3 clinical trial that's designed to expand the market of that drug is usually a major blow. But Onyx Pharmaceuticals (NASDAQ:ONXX) was able to shrug it off and is down only about 3% from its close on Friday.

Frankly, I'm surprised the stock is down even that much. Investors shouldn't have been giving Onyx and marketing partner Bayer's Nexavar much hope in treating melanoma (skin cancer). After all, it failed a previous phase 3 trial for that cancer back in 2006. Melanoma is an extremely difficult cancer to treat and, given the previous failure, it would have been a surprise to see the drug working against melanoma this time in combination with the standard of care, Bristol-Myers Squibb's (NYSE:BMY) Taxol and Paraplatin.

Nexavar is still approved to treat liver and kidney cancer, so this failure is just another example of how an oncology drug can work well for one tumor type and not for another. For example, Pfizer's (NYSE:PFE) Sutent has been riding this rollercoaster recently. Within a month the drug was shown to help patients with pancreatic cancer and then failed to show an effect on breast cancer patients. Some cancer drugs, like Eli Lilly's (NYSE:LLY) Gemzar, are able to work on several different types of cancer and rake in billions in sales a year ($1.7 billion for Gemzar last year). But investors won't really know how much of a blockbuster up-and-coming drugs like Sutent, Nexavar, or Novartis' (NYSE:NVS) Afinitor can be until the companies actually run the trials on additional cancer types.

Onyx certainly isn't giving up hope. Nexavar is still in trials for breast, ovarian, and lung cancer -- three large markets -- and Onyx plans to start a phase 3 thyroid cancer trial this year. The next big results this year for Onyx will probably be from one or both of two breast cancer trials that are already fully enrolled.

Binary events like clinical trials are what make investing in biotechs so lucrative. But it's important to know the history of the drugs and the expected implications of the clinical trials so that you don't "sell the news" on a headline that sounds bad, but was far from unexpected.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.