"How does one go about investing in the antibody space?" asks biotech specialist John McCamant. In The Medical Technology Stock Letter, he eyes Immunogen (NASDAQ: IMGN), and offers an in-depth report for biotech-savvy readers.

"As background, T-DM1 is a second generation Herceptin that may even exceed the original in sales because the armed antibody has been more potent to date by showing effectiveness in mBC patients who have failed either Herceptin or Tykerb.

"The company will continue to benefit from Genetech's extensive antibody experience as they continue to run all development for Immunogen's T-DM1.

This morning's announcement that Roche wants to pay $43.7 billion for the 44.1% of Genentech (NASDAQ: DNA) it doesn't already own raises the question: "Why is Genentech worth so much to Roche?" The answer: it outperforms its competitors when it comes to innovation.

Roche is offering a 9% premium to Genentech's market value at Friday's close. Reuters reports that Roche wants Genentech's $2.6 billion (2008 estimated sales) Avastin, a colorectal cancer treatment, and Herceptin, a $1.3 billion (estimated 2008 sales) breast cancer drug, as well as Genentech's drug development portfolio.

Roche also expects to save $750 million to $850 million in pretax costs, but the long-term benefit would be for Genentech's innovative culture to take over the relatively dry drug development environment of Roche. If that doesn't happen, the deal could be unprofitable for both companies.

"Genentech (NYSE: DNA), the world leader in cancer treatment, has been weak following its third quarter earnings report," notes biotech sector expert John McCamant.

In his The Medical Technology Stock Letter, he explains, "What we are seeing with DNA's stock represents an irrational overreaction by Wall Street, and one that should be taken advantage of by investors."

The advisor notes, "Starting with their earnings, DNA reported non-GAAP operating revenues of $2.91 billion, and U.S. product sales of $2.2 billion, for the third quarter. These figures represent an increase of 22% and 18%, respectively, over the same figures reported during last year's third quarter.

"As such, we are pleased with the growth that DNA has continued to produce. However, because revenue came in a little shy of analysts' consensus expectation, the stock has sold off. We would note one glaring positive which DNA just isn't getting much credit for anymore. That is, even at its already huge size, the company still expects to produce impressive growth for the full year (and in the years to come)."

In a move that could complement its other recent acquisitions, Roche Holding Ltd (OTC: RHHBY) yesterday made a $75-a-share hostile bid for Ventana Medical Systems, Inc (NASDAQ: VMSI). The $3 billion cash offer would allow Roche to gain a test Ventana developed to screen patients who could respond to the Swiss pharmaceutical giant's breast cancer medicine, Herceptin. The main goal of acquiring Ventana would be to "move closer toward delivering tools to select the right drugs for the right patients, rather than saving costs," Roche CEO Franz Humer told the Wall Street Journal.

Roche has already agreed to three other diagnostic acquisitions this year: The company agreed to buy CuraGen Corporation's (NASDAQ: CRGN) 454 Life Sciences in March for $140 million, allowing it to gain the company's DNA-mapping technology, and later agreed to acquire BioVeris Corporation (NASDAQ: BIOV) for $600 million and NimbleGen Systems for $272.5 million. The acquisition of BioVeris will add a screening technology that stimulates cells to emit light, while the NimbleGen acquisition would add more genetic tools for drug research.

Should an acquisition be seen as a sure thing? No, executives at Ventana said. Although Roche has made several friendly efforts to engage in "meaningful discussions" with Ventana's chairman and board concerning a transaction, Ventana has so far rebuffed Roche. The company advised shareholders in taking any action in response to the offer, but said the Board would review Roche's offer and make a recommendation within 10 days. What may make this particular offer different is that the $75-per-share offer was nearly 45% higher than Ventana's closing price of $51.74 yesterday.

In the event of an acquisition, Roche said it would operate Ventana as a separate unit within its diagnostics division, allowing it to retain its management team and employees as well as its headquarters in Arizona. This would be a similar agreement to the one Roche maintains with U.S. biotech company Genentech Inc (NYSE: DNA), which is majority-owned by Roche but is managed as an independent company.

Based on a potential acquisition, analysts believe that biotechnology companies Gen-Probe Incorporated (NASDAQ: GPRO), Luminex Corporation (NASDAQ: LMNX) and Cepheid Inc (NASDAQ: CPHD) could be potential acquisition targets based on their technology platforms and product offerings.