Roche's Genentech buy could kill a technology leader

Swiss pharma giant Roche has reached an agreement with Genentech (DNA) to acquire at $95 a share the other 44 percent of the company that Roche doesn't already own. But Genentech -- which had all the features of a Technology Leader (about which I wrote in my book of that name and posted here) -- may never be the same again as it gets swallowed by a big dinosaur.

Wh the deal? It's a time-sensitive bet on Genentech approval for a new use of one of its most popular drugs. Roche's bid for Genentech turned hostile in January 2009 after its offer of $86.50 a share, down from the $89 it first offered in July 2008, was rejected. Genentech had put the asking price at $112 back in December. But the deal is basically a big bet that Genentech's drug Avastin will soon be approved for treating colon cancer, opening up a big new market. If Avastin works in the trial, Genentech's stock could hit $100 -- making the $95 price it struck look like a bargain -- but if the Avastin trial fails, Genentech stock will likely tumble to $70.