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Buying Biotechs? Watch the Headlines

How should an investor play biotech stocks? Pay attention to individual events involving individual companies, according to Bear Stearns biotech analyst Mark Schoenebaum.

Genentech tops his list.

"Genentech is sort of the grandfather of biotech," he told CNBC. The reason he likes the company short-term involves the pending regulatory decision on its cancer drug Avastin.

"Most investors don't think this drug is going to get approved," he said. "If it doesn't, I don't think the stock falls all that much next week. If it does get approved, however, the stock's up a lot, and I think it's got a decent shot at getting approved."

Another company waiting for a big decision from regulators is Amgen.

"They've got to go back to the Food and Drug Administration...on March 13th to re-defend their [cancer] drug [Aranesp]," Schoenebaum said. "Most investors are understandably terrified...the outcome...is very difficult to predict."

But he likes the stock because of its price, and because of the company's impressive development pipeline.

Then, there's Human Genome Sciences.

"This is a company struggling to bring its very first drug to market." he said. "If they do, they become a real company. Over the next 12 months, we'll get an answer...I think it's going to be positive."

Schoenebaum owns shares of Amgen and Genetech. Those companies, plus Human Genome Services, all have been non-investment banking clients of his firm, and the firm or one of its affiliates holds a significant financial interest in the outstanding debt instruments of Human Genome Services.