I'm a long-standing fan of biotech expert John McCamant, who is often featured on our site. However, I've been an even longer-term fan of his father, Jim McCamant, whose research I've followed since the early 1980s.

In a rare -- and fascinating -- interview in their Medical Technology Stock Letter, John turned to his father for his insights into the current state of the biotech market as well as some of his current favorite stocks in the sector.

"In volatile times like the ones we have been experiencing over the last few months, it is increasingly critical to draw upon experience. If at all possible, and it usually is, it is very important to put things into historical perspective.

"We recently sat down with James McCamant. Though he has since transitioned to the position of editor-at-large, Jim is still heavily involved in the biotech sector, and without question, we sleep easier at night with the knowledge that we have the full capacity to draw upon Jim's wisdom and experience, at any time.

"Jim pointed to the the enormous detrimental impact that short-selling has had on the sector. Hedge funds have been actively and rampantly shorting individual biotechs stocks, using manipulation to scare individual investors with the hope of increasing the profits on their short sale.

"Since the hedge funds that are primarily responsible have very large amounts of capital they can live with the frequent large losses. This pattern has led to in some cases catastrophic haircuts in individual biotech stock prices.

"The point here is not to dwell on short-selling, per se. We mention it again because it has played a key role in creating what has become the interesting and unusual biotech investment opportunity that Jim sees.

"That is, there has never been a period before in the history of the biotech sector where we have had so many cheap stocks. In fact, we are in an extremely attractive situation right now in which several companies could rise 50% from their current valuations and still be at just the beginning stages of a more major upward move.

"The process of shifting investor sentiment is often a difficult one, and usually takes a lot longer than we think it will, or even should, for that matter. However, keep in mind that when sentiment does shift, and it will, investors will likely be underestimating the upside.

"As Jim strongly pointed out, the stock market is presenting an unusual opportunity. There are currently more biotech stocks selling at prices which are dramatically below any real estimate of fair value than at any other time in the history of the industry.

"Within this context, we also asked Jim him what he viewed as some of his favorite investments within the biotech space. Two of Jim's favorites are names which have already been on our buy list  for some time.

"Isis Pharmaceuticals (NASDAQ: ISIS), in particular, is a company that we have recommended for several years. However, during that time, the company has made substantial fundamental progress, and yet their respective market cap does not come close to doing justice to this fact.

"This has been glaringly demonstrated most recently by the fact that ISIS' stock is now trading back below where it was before the company signed the monster partnership with Genzyme for the development of mipomersen-a potential blockbuster drug in the making.

"In addition, the company has received essentially no increase in valuation even though they have also been benefiting from the continued execution by their satellite partners and they have monetized their Ibis Therapeutics division through the deal with Abbott.

"What this all mean to Jim, and we are in full agreement, is that we have right now a golden opportunity to purchase ISIS' stock at highly inexpensive levels-an opportunity that has tremendous upside potential.

"The other one that ranks toward the top of Jim's list is GenVec (NASDAQ: GNVC). Owning this stock has been an excruciating task, but one well worth it in the long run, in Jim's view.

"Forget about the vaccines business, a real revenue contributor for the company which is getting virtually zero credit from The Street. At the end of the day, Jim believes that from these current stock price levels, the potential of TNFerade alone could lead to a move in GNVC's stock that surpasses 10 or even 20 times its current price.

"He is looking at the size of the different cancer markets within which it might ultimately be used, the eventual penetration of TNFerade in these markets, and the data which has been produced thus far.

"He believes the odds are very good, and we fully agree, that these data will hold up, and that GNVC will go on to deliver vast rewards to faithful shareholders who stick it out.

"As point of the stock has fallen on tougher times over the last several months. Yert, if you believe in a company's approach as Jim does (and we do) with GNVC, then the wait will be worth it, and these are exactly the times to be buying.

"From among our non-recommended companies, the one that stuck out the most to us was Ariad (NASDAQ: ARIA). This stock of this intriguing cancer company is now down over 50% from its highs from just last summer.

"The company's approximately $200 million market cap does not, in Jim's opinion, come close to representing the real value that lies within. He believes that they are a well-managed company.

"This is evidenced, specifically, through the deal that ARIA did last year with Merck to jointly develop, on a global basis, ARIA's novel mTOR inhibitor, deforolimus.

"As part of this deal, management made the smart move of keeping the rights to half of the profits from future U.S. sales. This oral drug candidate is currently being evaluated in a global Phase 3 trial in patients with metastatic soft-tissue and bone sarcomas.

"We wholeheartedly agree with Jim that the current environment is presenting an outstanding long-term growth opportunity. In addition, we are able to choose from a vast array of companies-from development stage to fully integrated biotech companies-that all should provide excellent long-tern returns."