Bayer chemists developed Nexavar based on proteins Onyx identified that showed promise for halting tumor growth.
This could cut into sales for Onyx Pharmaceuticals and Bayer 's Nexavar drug for kidney cancer.
There are two other non-small cell lung cancer trials of Nexavar listed on clinicaltrials.gov.
Meanwhile Bayer is fending off another competitor, Cipla, which has sold generic Nexavar in India for years.
India's patent office ordered Bayer, a German drugmaker, to license a cheaper version of Nexavar, an anti-cancer drug.
Recently, Bayer lost its patent rights in this country for its kidney and liver cancer drug, Nexavar .
Nexavar is still a breakthrough medicine for liver and kidney cancer, but that will be cold comfort for Onyx shareholders.
Indeed, the watchdog NICE (National Institute for health and Clinical Excellence) rejected Nexavar for NHS use based on its cost-benefit calculation.
The patent authority's March 2012 order on Nexavar represented the first instance of a compulsory license being granted in the country.
Nexavar was supported by 41 grants in the NIH in its discovery.
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In 2008 it won an Indian patent for Nexavar, a kidney-cancer drug.
Bayer's and Onyx's press release states that higher mortality was observed for the subset of patients with squamous cell carcinoma who received Nexavar.
Last year, India allowed Natco Pharma to produce Nexavar and, on Monday, the patent appeals office rejected Bayer's plea to overturn that ruling.
They were tears of joy: A study had found that Nexavar, a drug Bayer invented and developed with tiny biotech Onyx Pharmaceuticals of Emeryville, Calif.
For many patients with the advanced form of the disease, Nexavar will now become the standard treatment, eventually generating hundreds of millions in sales for the partners.
But Bayer has refused to provide details on how much it invested in Nexavar's research and development, the cost of which was partly subsidised by the US government.
No drug has ever extended survival in very sick liver cancer patients, but Bayer and Onyx Pharmaceuticals will present data showing that their Nexavar pill does just that.
Other losers included Cell Therapeutics, which had its cancer drug rejected by the FDA, and Onyx Pharmaceuticals, which has struggled to find new growth for the cancer drug Nexavar.
Nexavar is routinely offered to cancer patients elsewhere in the world, and Mike Hobday, head of campaigns at Macmillan Cancer Support, said he was "extremely disappointed" at NICE's decision.
"Bayer is committed to protecting its patents for Nexavar and will rigorously continue to defend our intellectual property rights within the Indian legal system, " the company said in a statement.
The Indian Controller General of Patents, Designs and Trademarks allowed Natco to make copies of the liver- and kidney-cancer drug on the grounds that Nexavar was too expensive for most people in India.
Do Bayer and Onyx have the option of modifying these studies so that they might, given this new information, stand a better chance of proving a benefit for Nexavar in non-small cell lung cancer?
"Bayer is committed to protecting its patents for Nexavar and will rigorously continue to defend our intellectual property rights within the Indian legal system, " the company said in a statement quoted by the Associated Press.
The appellate board, which is based in the southern city of Chennai, said the patent authority was right in allowing a compulsory license for Nexavar as Bayer hadn't priced the drug at "reasonably affordable" rates.
But study results for Sutent on liver cancer look less promising, and an abstract already presented here seems to point to a far worse side-effect profile for Sutent than Nexavar in treating that form of the disease.
However, in the case of Nexavar, Phase III clinical trials with 602 patients showed that it extended the life of the average patient by 2.8 months to 10.7 months, as compared to patients who received a placebo.
No drug has ever extended survival in very sick liver cancer patients, but Bayer (nyse: BAY - news - people ) and Onyx Pharmaceuticals will present data showing that their Nexavar pill does just that.
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