Roche had indicated peak sales of the drug for the disease could have hit between 500 million and 1 billion Swiss francs ($466-$933 million), according to Deutsche Bank analysts.

The miss could take 0.5 to 2 percent off consensus sales estimates and around 1 to 4 percent from core earnings per share, Deutsche Bank said.

Avastin failed to meet its target of extending overall survival in patients treated with the drug in combination with chemotherapy when compared with the same chemotherapy treatment plus placebo in the trial, Roche said.

Roche, the world's largest maker of cancer drugs, said no new safety issues were observed in the AVAGAST Phase III trial and Avastin's broad development programme in other tumour types would continue.

We are disappointed with these results because treatment options for stomach cancer are limited, Chief Medical Officer Hal Barron said in a statement.

At 0833 GMT, Roche's stock was trading 1.1 percent lower at 179.80 Swiss francs, underperforming a near flat DJ Stoxx European healthcare index.

We note that this is the first of three new indications for Avastin reporting in 2010/2011, all of which are higher risk than previous usages of the drug. Next up in 1H10 we expect data from Avastin in ovarian cancer, they said.

Roche will present the data at the American Society of Clinical Oncology annual meeting in June and Kepler Capital Market analyst Martin Voegtli said the failure in this trial could still be partly covered if Avastin is able to meet secondary endpoints, such as progression-free survival.

Avastin, which works by starving tumors of blood and is made by the recently acquired Genentech unit, is already used to treat lung, colon and breast cancers, and had 2009 annual global sales of 6.2 billion Swiss francs ($5.77 billion).

Around 1 million people are diagnosed with stomach cancer each year, making it the fourth most common cancer and the second leading cause of cancer-related death worldwide, Roche said, adding the median survival time after diagnosis of advanced stomach cancer is around 10 months with conventional chemotherapy.

Medicine Cancer