FDA Panel Jabs Genentech

Updated from 3:16 p.m. EST

A Food and Drug Administration advisory panel voted 5-4 Wednesday to recommend against approval of Genentech's(DNA Quote) cancer drug Avastin for treating metastatic breast cancer.

The negative vote sent Genentech shares down $6.49, or 9%, to $66.29 before being halted into the session's close.

After a long day of data presentation and debate, cancer experts on the FDA's panel decided to recommend against approval because Avastin did not prolong survival in metastatic breast cancer patients, yet added significant side effects. This negative outweighed other apparent clinical benefits of the drug.

Genentech is the premier cancer-focused biotech company in the world, and Avastin is already a blockbuster drug used to primarily treat colon and lung cancer patients. The setback on Wednesday underscores the difficulty in getting even a cancer drug approved by the FDA.

It also will likely cement investors' minds the belief that U.S. regulators have been increasingly stubborn and risk-averse when it comes to drug approvals.

If approved in this setting, Genentech might have reaped upward of an additional $1 billion-plus in annual Avastin breast cancer sales. While the FDA still has until February to issue a final ruling, Wednesday's vote makes it more likely that the agency rejects Genentech's application.

The earnings hit to Genentech, and therefore the impact on the company's stock price, remains to be determined.