I do think the confirmatory Phase 3 trial of carfilzomib, named "Aspire", will confirm the drug's efficacy when data are reported in 2013, so all is not lost if the accelerated approval pathway doesn't succeed.

Nexavar's potential as a lung cancer treatment is something else to consider when thinking about Onyx.

Nexavar has had a long and complicated history in lung cancer. Two Phase III trials in first-line non-small cell lung cancer (NSCLC) failed to show any benefit. In contrast, Phase II studies in late-stage NSCLC have shown more intriguing results.

One of these phase II studies employed a unique biopsy and biomarker-driven design to examine Nexavar's use in patients with NSCLC that had a specific genetic mutation known as KRAS. The rate of disease control -- defined as complete and partial responses plus disease stabilization -- was an impressive 61% at eight weeks. Unfortunately, this phase II study did not have a clear control arm for comparison.

Onyx's other phase II study of Nexavar in NSCLC used an increasingly popular design called randomized discontinuation. This type of Phase II trial treats all patients up-front with the experimental drug. Patients who respond remain on the experimental drug. Patients who don't respond exit the study so they can try other therapies. Lastly and most importantly, patients whose tumors are stabilized (neither grow nor shrink) after treatment with the experimental drug are randomized to either remain on the drug or switch to a placebo.

In this trial, patients with initial stable disease following Nexavar treatment who then continued on Nexavar showed a modest but clearly discernable benefit compared to patients who were randomized to placebo.

Twice before Onyx has tried to replicate Nexavar's positive phase II signals in lung cancer with larger, more definitive phase III studies. The company failed both times.

Onyx is now trying a third and perhaps final time to expand Nexavar into the lucrative lung cancer treatment market. The company is currently running a randomized, placebo-controlled phase III study of Nexavar in NSCLC, codenamed "Mission." The 700-patient study is expected to read out results by the middle of the year. Given the previous phase III failures, almost no one expects the Mission trial to succeed in demonstrating a Nexavar survival benefit. But hints of efficacy from the Phase II studies warrants some optimism, particularly since like the on-time carfilzomib approval, investor expectations are low.

Positive results from the Nexavar lung cancer study would drive meaningful upside for Onyx shares.

Disclosure: Sadeghi-Nejad has no position in Onyx Pharmaceuticals.

--Written by Nathan Sadeghi-Nejad in New York.

Follow Nathan Sadeghi-Nejad on Twitter.
Nathan Sadeghi-Nejad has 15 years experience as a professional health-care investor, most recently as a sector head for Highside Capital. He has worked on the sell side (with independent research boutiques Sturza's Medical Research and Avalon Research) and the buyside (at Kilkenny Capital prior to Highside). Sadeghi-Nejad is a graduate of Columbia University and lives in New York. You can follow him on Twitter @natesadeghi.

If you liked this article you might like

Biotech Stock Mailbag: Rebounding From Hillary's Drug Tweet; Global Blood Weighs on Bluebird

The Street Can't Help but Love Amgen

Biotech Stock Bubble Talk Deflated By Cost-Conscious Buyers

Trade-Ideas: Onyx Pharmaceuticals (ONXX) Is Today's "Water-Logged And Getting Wetter" Stock

Jim Cramer's 'Mad Money' Recap: Next Week's Game Plan