Subpoena May Spoil Genentech's Earnings Party

A recent report by the SG Cowen brokerage said the "Dear Doctor" letter "appears to have had some impact already on Avastin sales in August." Cowen, which doesn't provide stock ratings, added that "although Avastin appears to be tracking ahead of expectations, we believe the potential for future sales revisions to spark upside in Genentech shares is modest."

A Cowen survey of physicians showed that 50% used Avastin as a first-line therapy in August, down from 54% in July, suggesting that the "Dear Doctor" letter had some effect. However, the percentage of doctors using the drug as a second-line therapy grew to 25% in August from 16% in July, and the percentage of physicians using the drug as a third-line therapy advanced to 10% from 7%.

The survey found that physicians concerned about these side effects cut their use of Avastin by 18% and that physicians less concerned about the side effects increased their usage. The Cowen report acknowledged that extrapolating the views of 27 oncologists to the total market "holds much potential for error." The firm added that it still believes Avastin will continue to grab more market share in the colorectal cancer market, and "could provide further upside" to Wall Street estimates. (None of Cowen's health care analysts owns shares of Genentech; the firm says it seeks to do business with companies featured in its research reports.)