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As most knowledgeable biotech traders know, there are a lot of money making volatility plays surrounding the FDA's decisions as to whether to approve or deny/delay approval for new drug candidates. It is common for investors to flock to or fly from stocks leading up to decision dates.

I have compiled a list of five 2012 biotech speculation plays and potentially undervalued stocks that have pending FDA decisions in or around the first half of 2012 including the product candidate name, approximate FDA decision date, current stock price, and highest analyst price target. There are also links to the companies' respective pipelines.

1. Onyx Pharmaceuticals (NASDAQ:ONXX)

Onyx is set for an FDA decision on its multiple myeloma product candidate, Carfilzomib, around 03/30/2012. Carfilzomib is a selective next-generation proteasome inhibitor with a mechanism of action aimed at increasing therapeutic efficacy and limiting the side effects associated with currently available therapies. ONXX currently trades around $44 with the highest sell-side analyst one year price target being $62.

ONXX Pipeline

ONXX Pipeline
(Click to enlarge)

2. Chelsea Therapeutics (NASDAQ:CHTP)

Chelsea Therapeutics has a scheduled FDA decision date for its product candidate, Northera, for 03/28/2012. Northera is an orally active synthetic precursor of norepinephrine, for the treatment of neurogenic orthostatic hypotension. It is currently approved and marketed in Japan by Dainippon Sumitomo, Northera has accumulated over 15 years of proven safety and efficacy, generating annual revenue of approximately $50 million in Japan. CHTP currently trades around $5.50 with the highest sell-side analyst one year price target being $18.

CHTP Pipeline

CHTP Pipeline
(Click to enlarge)

3. Vertex Pharmaceuticals (NASDAQ:VRTX)

The FDA is scheduled to issue its decision on Vertex's product candidate, Kalydeco, on 04/19/2012. Kalydeco is a medicine that targets the defective protein that causes cystic fibrosis for people six years of age or older. The market for Kalydeco is relatively small, but Vertex already has an approved HCV treatment on the market and is expected by some analysts to become a profitable enterprise (for the first time) sometime in 2012. VRTX currently trades around $29 with the highest sell-side analyst one year price target being $81.

VRTX Pipeline

VRTX Pipeline
(Click to enlarge)

4. Cell Therapeutics (NASDAQ:CTIC)

Cell Therapeutics is up for its second go-around with the FDA for its product candidate, Pixantrone, sometime in April of 2012. Pixantrone dimaleate, for injection, is an antitumor aza-anthracenedione with a molecular structure similar to other topoisomerase II inhibitors, such as anthracyclines like doxorubicin. It is under development for the treatment of non-Hodgkin's lymphoma. CTIC currently trades around $1.10 with the highest sell-side analyst one year price target being $2.

CTIC Pipeline

CTIC Pipeline
(Click to enlarge)

5. Amarin Pharmaceuticals (NASDAQ:AMRN)

Amarin's product candidate, AMR101, is scheduled for an FDA ruling on 07/26/2012. AMR101 is prescription grade, ultra-pure (>96%) ethyl ester of eicosapentaenoic acid (ethyl-EPA; an omega-3 fatty acid). AMR101 is being positioned as a best-in-class prescription medicine for treating patients with high or very high triglycerides. AMRN currently trades around $7.75 with the highest sell-side analyst one year price target being $35.

AMRN Pipeline

AMRN Pipeline
(Click to enlarge)

While there is no certainty that any of the above names will sink or soar next year, they all have the potential to move big in one direction or another. It should be noted that they all carry high risk potential but, if played right, the reward may be yours to have.

Source: 5 High Risk/Reward Biotechs For 2012