FRANKFURT—Germany's Bayer AG said Monday that cancer treatment Nexavar failed to reach its primary goal of extending the lives of patients with a certain advanced form of lung cancer in a late-stage clinical trial.

Codeveloped with U.S.-based Onyx Pharmaceuticals Inc., the oral drug did reach its secondary goal of so-called progression-free survival—where the disease didn't get worse—in patients with nonsquamous, nonsmall-cell lung cancer, Bayer said.

Nexavar is already approved world-wide for the treatment of advanced kidney cancer and liver cancer, and is expected to generate peak annual sales of €2 billion ($2.42 billion).

The drug aims to stop cancer cells from proliferating and block the formation of new blood vessels that feed tumors. Nexavar, which is also known as sorafenib, was compared in the study with a placebo in combination with chemotherapy.

The result was "disappointing," said Dimitris Voliotis, vice president in global clinical oncology at Bayer HealthCare.

Bayer estimates that 1.4 million people world-wide are diagnosed with lung cancer every year, and about 160,000 in the U.S. and 342,000 in Europe die from nonsmall-cell lung cancer annually.

Bayer and Onyx said they would continue to test the drug in lung cancer, on its own as well as in combination with other treatments. The drug is also being tested in patients with other cancers, including thyroid, breast, ovarian, and colon cancers.

MM Warburg Analyst Ulrich Huwald said the trial results were neutral, since competing products have also fell short in lung-cancer trials. Only Tarceva, co-marketed by OSI Pharmaceuticals Inc. and Switzerland's Roche Holding AG, has been approved in the U.S. and Europe as a maintenance treatment for non-small cell lung cancer.

Shares of Bayer fell on the Nexavar news but recovered slightly to trade down 0.9% at €47.37