It's one thing to get beat by the newest product on the market. AltaVista, Yahoo! (NASDAQ:YHOO), and the rest must have felt like Google (NASDAQ:GOOG) stuck a dagger in their hearts when the superior search engine site crashed the scene in the late 1990s. But it's an entirely different story when a company's own partner tries to outdo it; that's like taking the dagger and giving it a twist.

Onyx Pharmaceuticals (NASDAQ:ONXX) is trying to keep that dagger in Brutus' -- er, I mean Bayer's hand and as far away from itself as possible; a blow to the company's only drug could mean the end for Onyx. The company is suing for the rights to a drug that marketing partner Bayer is developing. The drug, which Onyx claims was discovered jointly, differs from the duo's cancer compound, Nexavar, by a single atom. Small changes like that can result in higher efficacy, but even if the drug doesn't work any better, Bayer would likely promote a fully owned drug more intensely than Nexavar, from which it would only see half the revenue.

In addition, second-generation drugs can do serious damage to sales of the original product. That's why Schering-Plough (NYSE:SGP) fought to keep the foreign rights to Simponi, the follow-up to Johnson & Johnson's (NYSE:JNJ) Remicade. And Bristol-Myers Squibb (NYSE:BMY) is likely to fight for rights to Eli Lilly's (NYSE:LLY) follow-up to Erbitux.

How much Onyx's shareholders need to worry about this is debatable at the moment because Bayer's derivative isn't an immediate threat. It's likely to take years for this to play out in court, and, with the long clinical-trial development time, it will take a while for Bayer to get the drug to market, even if Onyx loses the court case. The medium-term future for Onyx is in whether it can get Nexavar approved to treat additional cancers. Thrusting a dagger into the competition is more important right now than fending off an attack from its partner.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a selection of the Income Investor newsletter. The Fool has a disclosure policy.