Genentech shares drop on news of halted cancer study

Genentech Inc. said Friday that researchers had halted a trial of its second-biggest cancer drug and that first-quarter sales had stalled.

The clinical trial of the drug, Avastin, was stopped in patients with a form of lung cancer after two patients developed holes in their gastrointestinal tract and windpipe. One patient died, Genentech spokeswoman Kristina Becker said.

Avastin, already approved for colon cancer and a more common form of lung cancer, generated $1.7 billion in sales last year, behind $2.1 billion from the arthritis and cancer drug Rituxan. The disclosure of the failed study, during a company meeting with investors, worsened a slide in the stock price that began after Genentech reported no pickup in sales for this quarter from $2.1 billion in the final quarter of 2006.

Shares of Genentech, which is based in South San Francisco, fell $2.72, or 3.2%, to $82.56.

The study, based at Sarah Cannon Cancer Center in Nashville, tested Avastin in combination with radiation and chemotherapy, an unapproved use, Becker said.

Holes in the windpipe can cause a patient to choke on inhaled saliva and other fluids, according to the National Institutes of Health.

The study involved 29 patients with small-cell lung cancer, the rarer of two forms of the disease. Avastin was approved for the more common, non-small-cell kind in October.