ParfumGigi@aol.com

By Sam Cage

ZURICH (Reuters) - Biotechnology company Genentech Inc. said on Thursday that a low dose of its cancer drug Avastin worked just as well as a more expensive high dose in a clinical trial of patients with lung cancer.

Genentech's shares fell nearly 3 percent amid concern the company, as well as its majority owner, Roche Holding AG, will receive less revenue from the drug if doctors choose the low-dose version.

"The risk and concern that investors have is that the similar findings from the two dose arms, and the still undisclosed adverse event rates from the two arms, may result in dose and effectively price reductions for Avastin," Geoffrey Porges, an analyst at Sanford Bernstein, said in a research report.

Participation certificates in Roche, its most widely traded form of equity, fell 1.7 percent to 224.20 Swiss francs.

Results from a late-stage clinical trial showed that both 7.5 mg/kg and 15 mg/kg doses of Avastin significantly lengthened the time patients with advanced non-small cell lung cancer (NSCLC) lived without the disease progressing significantly when compared with chemotherapy alone.

"This means that future prescribing is likely to be done with the low dose of Avastin instead of the high dose," said bank Vontobel analyst Karl-Heinz Koch. "The impact is that the monthly price for Avastin in non-small cell lung cancer drops to $4,400 from $8,800."

Analysts expect full data to be presented in May.

Dresdner Kleinwort analyst Ben Yeoh said prescription of low-dose Avastin in lung cancer would be an effective price cut.

"We view the trial as double-edged in that respect although proponents of the higher dose will use the lack of power of the trial to argue that no firm conclusions can be drawn," Yeoh said in a note. "We need to see the detailed data but remain cautious."

Despite the near-term reduction, Avastin sales are still "highly likely" to exceed 10 billion Swiss francs ($8.05 billion) in the longer term as it gains approval in more indications, Vontobel's Koch said.

The lower pricing could also attract more patients, offsetting some of the lost revenue, Morgan Stanley said, especially given the promising data from the trial.

No new safety issues associated with the use of Avastin were observed in either dose used, Roche said.

Avastin is one of a new family of drugs that work by starving tumours of their blood supply.

Roche and Genentech are banking on increased sales of Avastin to fuel future growth and are testing the drug in multiple different types of cancer.

U.S. sales of Avastin, which is approved for colon cancer and NSCLC and is being studied for a range of solid tumours, were $1.13 billion last year.

Shares of Genentech fell $2.60, or 3 percent, to $85.14 in midday trading on the New York Stock Exchange. ($1=1.243 Swiss Franc)

(Additional reporting by Toni Clarke in Boston)