Huge biotech firm Genentech, Inc. (NASDAQ: DNA) had high hopes that its drug Avastin would be effective in treating breast cancer patients. The product is currently used for colon and lung cancer and brought the company about $1.7 billion last year. One source said that the drug has brought in almost $2.65 billion so far this year.

The FDA turned Genentech down. According to The Wall Street Journal, an agency panel "on a 5 to 4 vote, said the data provided by the company wasn't sufficient to provide a favorable risk benefit analysis for Avastin." Many on Wall Street had expected the drug to get the green light. Jim Reddoch of Friedman Billings Ramsey looked particularly foolish when he predicted this morning that "a Food and Drug Administration panel will recommend Genentech Inc.'s drug Avastin be approved as a breast cancer treatment." Hopefully, the firms clients did not follow his lead.

When the news hit, Genetech's shares dropped 9% to $66.29, a new 52-week low.

The lesson in all of this is that listening to guesses from research firms can be a dangerous game. Better to wait and see what the feds say.

Douglas A. McIntyre is an editor at 247wallst.com.