Bayer and Onyx Pharmaceuticals (ONXX) announced Monday morning that a Phase III study of lung cancer treatment Nexavar did not meet its primary endpoint -- improving overall survival. The two pharmaceutical firms said they were "disappointed" with the failure of the trial and that they will evaluate the findings to see if the data may have any impact on other Nexavar trials.

This trial was measuring Nexavar plus the standard treatment chemotherapy drugs against the chemo drugs alone in patients with newly diagnosed non-small cell lung cancer. Non-small cell lung cancer comprises roughly 85% to 90% of diagnosed lung cancers. Nexavar is already used to treat kidney and liver cancer.

News from the pharmaceutical giant Pfizer (PFE) could quickly stop the downward slide of that company's shares.

Early tests of Pfizer's cancer drug crizotinib, while only preliminary, have generated a fair amount of excitement among cancer treatment researchers. The drug, which targets a genetic factor among specific lung cancer patients, has reportedly been shown to reduce the size of tumors caused by that disease.

As class action lawsuits go, I have never encountered one any more questionable than the recent complaint issued against Medivation Inc. (MDVN), via the law firm Izard Nobel LLP.

Readers of this space may recall that just a few days ago I decried the sell off of shares that occurred on the heels of Medivation's ill-fated phase 3 drug trial of the potential Alzheimer's treatment dimebon. At that time, I pointed out that one failed drug trial is not equal to the failure of a company. I still stand by that common sense determination.

Gilead Sciences (GILD - option chain) stock is trading lower today after the company announced last night that its hypertension treatment darusentan missed the primary goal of a Phase III trial. As a result, GILD says it has ended development of the drug in favor of spending resources on other products in its pipeline. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on GILD.

This morning, GILD opened at $45.90. So far today the stock has hit a high of $46.28 and a low of $45.01. As of 12:15, GILD is trading at $45.18, down $1.78 (-3.8%). The chart for GILD looks bullish and S&P gives GILD a positive 5 STARS (out of 5) strong buy ranking.

AstraZeneca (NYSE: AZN - option chain) shares are rising today after the company said its experimental heart pill, Brilinta, was more effective at preventing heart attacks and strokes in a large clinical trial than Plavix, a drug made by competitors Sanofi-Aventis (NYSE: SNY) and Bristol-Myers Squibb (NYSE: BMY). If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on AZN.

AZN opened this morning at $38.16. So far today the stock has hit a low of $37.83 and at 11:25 is trading at the days high of $38.21, up 2.07 (5.7%). The chart for AZN looks neutral and S&P gives AZN a neutral 3 STARS (out of 5) hold ranking.

Cephalon (NASDAQ: CEPH - option chain) shares are headed higher today after the company reported its positive results from a phase two clinical trial of its bipolar I disorder drug NUVIGIL. The company plans to advance the drug to phase three trials, and hopes to launch the drug in the third-quarter of 2009. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CEPH.

CEPH opened this morning at $66.50. So far today the stock has hit a low of $65.66 and a high of $68.13. As of 12:00, CEPH is trading at $67.51, up 4.32 (6.8%). The chart for CEPH looks bullish and S&P gives CEPH a positive 4 STARS (out of 5) buy ranking.

Amgen Inc. (NASDAQ: AMGN) reported Friday after market close positive initial results from its tests of denosumab, a drug designed to increase bone density in breast cancer patients. AMGN stock is down this morning, however, as analysts await larger trials of the drug as the company has come under fire due to safety, reimbursement and label concerns about its anemia drug franchise. There are some indications of a higher rate of infections with AMGN's drug, but due to the relatively small sample size it would be tough to draw conclusions. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMGN.

After hitting a one-year high of $76.95 in January, the stock hit a one-year low of $48.25 last week, which it has broken this morning. This morning, AMGN opened at $48.02. So far today the stock has hit a low of $47.67 and a high of $48.13. As of 11:30, AMGN is trading at $47.92, down $0.48 (-1.0%). The chart for AMGN looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $60 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four months as long as AMGN is below $60 at April expiration. Amgen would have to rise by more than 25% before we would start to lose money.