(Editor's note: Come see Adam Feuerstein at the Money Show in San Francisco. Adam will be speaking to attendees on Friday, Aug. 8, at 2:15 p.m. ("Biotech Investing for Individuals: How to Turn Geeky Science Into Fat Profits"); on a lunch panel on Saturday, Aug. 9, at 12:35 p.m. ("Tech and Biotech: Picks and Pans for 2008 and Beyond"); and on Sunday, Aug. 10, at 8 a.m. ("Biotech Investing for Individuals: How to Turn Geeky Science Into Fat Profits").


When Roche eventually completes the job of gobbling up Genentech ( DNA), minority investors in the biotech sector's No. 1 company will have roughly $44 billion to re-invest somewhere else.

Where will all that money go?

The most obvious answer is right back into the other large-cap biotech firms like Celgene ( CELG), Gilead Sciences ( GILD) and Biogen Idec ( BIIB), which, in turn, bodes well for the sector as a whole. More on that in a second, but first, here's an intriguing, if not a fantastical, proposal: How about into a new, mini-Genentech?

A Mini-Genentech Spinoff?

Yes, it's probably too early to think about Roche spinning off a piece of the "old" Genentech into a new, publicly traded company, but the idea isn't totally far fetched. Moreover, it might solve the thorniest issue facing the Swiss drug giant outside of defending its $89-a-share takeover price: How to retain Genentech's best and brightest scientists so that they keep on discovering new blockbuster drugs for Roche and not for someone else.

Think about it, Roche is making its move now because it wants to control 100% of Genentech's commercial operations, namely the blockbuster products Avastin, Rituxan and Herceptin, before it has to renegotiate a new marketing agreement in 2015. The weakness in the U.S. dollar works to Roche's advantage today, and the company acknowledges that the environment for Big Pharma is changing, growing more competitive.

Genentech also has one of the deepest R&D pipelines in the industry, which should help Roche grow into the future, but if the company were interested in unlocking more of the value from that pipeline -- and could get investors to share the risk and reward of early-stage drug development -- a mini-Genentech spinoff (with Roche still controlling a majority stake, of course) makes a lot of sense.

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