Genentech Inc. (DNA) and Roche Holding AG (ROG.VX) said a study examining the potential benefits of combining cancer drugs Tarceva and Avastin was stopped early because the treatment had clear benefits for patients.

The companies said a late-stage trial found that people with lung cancer who received the combination treatment lived longer without their cancer getting worse, compared with those who received Avastin alone.

Genentech, based in South San Francisco, Calif., and Roche, based in Basel, said this was the second late-stage study that demonstrated the benefits of daily pill Tarceva as an initial maintenance therapy, following inital treatment with Avastin. Genentech sells both drugs in the U.S., while Roche has the right to sell them in other markets. Avastin is one of the companies' fastest-growing products.

Shares of Genentech and OSI Pharmaceuticals Inc . (OSIP), which are selling Tarceva in the U.S. rose in after-hours trading Monday after Genentech gave details of the findings.

Roche shares, by contrast, declined, as market participants focused on Roche's plan to take full control of Genentech, which developed many of the successful cancer drugs that are driving Roche's growth.

Last Friday, Roche launched a hostile bid to buy the roughly 44% of the U.S. biotech company that it doesn't already own, after its earlier friendly offer was rejected.

At 1350 GMT, Roche shares were CHF1.60, or 1%, lower at CHF161.90, in a higher Swiss market, with the broader European healthcare sector also trading higher.

Analysts said the new data could help extending the use of Tarceva. The drug is currently prescribed only to patients who failed other treatment. Avastin already has permission to be used as initial therapy.

Deutsche Bank analysts said they currently expect Tarceva to eventually generate annual sales from use as initial treatment of CHF200 million, but this number could rise to up to CHF1 billion, if the drug becomes more widely used. Total sales of Tarceva amounted to CHF1.06 billion in 2007. More current numbers will be released Wednesday, along with Roche's full-year earnings.

Company Web Site: http://www.roche.com

-By Anita Greil, Dow Jones Newswires; +41-43-4438044; anita.greil@dowjones.com

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