Binary events, FDA decisions, and clinical trial results, are the lifeblood -- and death wish -- of the biotech industry. They're a necessary part of the drug-development process. They don't always fall your way, but they're always fun to watch, even if you're sitting on the sidelines, which is often the most appropriate place to be for many binary events.

Since drugs have FDA review times of six or 10 months and the approximate end of clinical trials is known after the last patient is enrolled, investors get forewarning that the binary events are going to happen. There are a lot of drugs that will face binary events in 2012, but here are three I think you should watch.

Third time's the charm?
On Jan. 27, Amylin Pharmaceuticals (Nasdaq: AMLN) and Alkermes (Nasdaq: ALKS) will get a third shot at trying to get Bydureon, their extended-release version of Byetta, approved by the FDA. The drug was turned down once for something minor, followed by an unexpected request for heart-safety data. With that cleared up, an approval seems likely -- assuming no other major issues.

Bydureon should be able to succeed where Byetta failed because it has to be injected only once a week instead of twice daily. Amylin will be sans Eli Lilly (NYSE: LLY) during the process though, after the two ended their marketing pact. Considering how much the companies seemed to dislike each other, that might not be the worst thing in the world.

My prediction: approval (but then I said that last time).

One of these trials is not like the other
Sometime in the first quarter of next year, the phase 3 trial for Aeterna Zentaris (Nasdaq: AEZS) and Keryx Biopharmaceuticals' (Nasdaq: KERX) perifosine will read out. Unlike FDA decisions that usually happen on or around the decision dates that the agency assigns, the timing of clinical trial results -- especially those that use survival as an endpoint -- isn't as exact, because the end of the trial is dependent on how patients in the drug and control groups fare.

While this is a phase 3 trial and all the companies will need for approval, it feels a lot more like a phase 2 trial given the limited data available about the drug so far and changes from the phase 2 to phase 3 trial. Calling this binary event risky would be an understatement.

My prediction: too much uncertainty to make a definitive call, but with both companies so cheap, they might be worth an investment, especially if you can pick up some shares on a dip.

Can you approve me now?
On April 24, Cell Therapeutics (Nasdaq: CTIC) will get a decision from the FDA about its non-Hodgkin's lymphoma treatment pixantrone. The drug was already turned down once, but Cell Therapeutics appealed to the higher-ups at the agency, which agreed that the drug should be reviewed again. A Hail Mary for sure, but occasionally the play results in a touchdown. Occasionally.

Pixantrone is also under review in Europe, and the company could hear back as early as Jan. 19, so this is really a two-for-one binary event. Either approval will raise the stock price substantially, but the U.S. decision is considerably more important because of the size of the market and price the drug can fetch here.

My prediction: I have a hard time seeing the FDA reversing course and approving pixantrone, but weirder things have happened. European regulators can be more lenient -- InterMune (Nasdaq: ITMN) got Esbriet approved in Europe despite an FDA rejection -- but I suspect they'll want more clinical data just like the FDA did.

Flip a coin?
Holding shares -- or shorting them, for that matter -- through a binary event is appropriate only for investors with strong stomachs and the ability to sustain substantial losses. That might mean sitting on the sidelines or substantially cutting back on the amount you invest.

Also keep in mind that FDA dates are goals that the FDA sets for itself. Recently, decisions, especially for cancer drugs, have been coming early, but it's also possible for the agency to miss the deadline, which might be announced or not. Day-trading the events is highly discouraged.

If you're looking for something a little less dependent on binary events for next year, check out the Fool's new free report, where Fool analysts report their top pick for 2012.