The reporting season is here again and Genentech has kicked it off by posting a 6.4% increase in fourth-quarter net income to $632 million but sales of its cancer blockbuster Avastin, while still strong, disappointed analysts.

Group turnover was up 9.4% to $2.97 billion, while US product sales climbed 7.1% to $2.20 billion. These figures were again driven by Avastin (bevacizumab), which shot up 23% to $603 million, due to increased penetration in the non-small cell lung cancer market, but analyst consensus estimates had expected sales to be in the region of $615 million.

As for Genentech's other key products, the arthritis and non-Hodgkin's lymphoma drug Rituxan (rituximab) was again a big earner, up 6% to $596 million, and US sales of the breast cancer drug Herceptin (trastuzumab) edged up just 2% to $327 million. These two drugs also came in below analysts’ estimates, as did Lucentis (ranibuzumab) for wet age-related macular degeneration, which fell 9% to $197 million. This was due to competition from Avastin, which has been used off-label in very small doses at a much cheaper price than the former treatment.

Sales of Tarceva (erlotinib) for lung and pancreatic cancers sneaked up 5% to $112 million, while Xolair (omalizumab) for severe asthma increased 3% to $120 million. Overall, however, the results failed to impress analysts and the stock took a bit of a dip. All eyes are now on Genentech’s bid to get approval for Avastin as a treatment for breast cancer but last month the US Food and Drug Administration’s Oncologic Drugs Advisory Committee voted five to four against backing the treatment. An action date has been set for February 23.

For 2008, Genentech said it expects earnings excluding special items of $3.30- $3.45 per share, within analysts’ expectations.