Biotech stocks to watch as drug trials near key data

Ritu Baral, managing director, health care & biotechnology at TD Cowen, joins BNN Bloomberg to share her Hot Picks in biotech.

Biotech investors are closely watching companies advancing treatments for cystic fibrosis, neurological disorders and rare diseases as clinical trial milestones and regulatory reviews approach.

BNN Bloomberg spoke with Ritu Baral, managing director covering health care and biotechnology at T-D Cowen, about three biotech companies she believes could see significant upside as drug development data and regulatory catalysts unfold.

Key TakeawaysNew experimental cystic fibrosis therapies aim to target the underlying CFTR mutation, potentially improving outcomes for patients who do not reach normal function with current treatments.Mid-stage clinical trial data expected this year could determine whether new drug approaches significantly improve performance compared with existing standard-of-care therapies.Biotech companies entering product cycles after successful late-stage trial results often shift investor focus from scientific risk to commercial potential.Regulatory engagement remains critical as drug developers navigate staffing challenges and shifting dynamics within the U.S. Food and Drug Administration.Positive late-stage clinical results in rare-disease therapies highlight growing opportunities for targeted treatments addressing small patient populations with high unmet need.Ritu Baral, managing director, health care & biotechnology at TD Cowen Ritu Baral, managing director, health care & biotechnology at TD Cowen

Read the full transcript below:

LINDSAY: Welcome back. It is time now for Hot Picks and today we are zeroing in on three plays in the biotech sector. Our next guest has Sionna Therapeutics as her top pick and she points to meaningful upside as Sionna delivers positive data from its ongoing cystic fibrosis drug trials. Let’s get more perspective from Ritu Baral, managing director, health care and biotechnology at TD Cowen. Good morning and thanks for joining us.

RITU: Good morning.

LINDSAY: Let’s start with Sionna Therapeutics. Talk to us about these drug trials. What are you watching for?

RITU: We’re watching for Phase 2 data. Sionna has a completely new drug class of cystic fibrosis drugs. The 500-pound gorilla in the space has always been Vertex Pharmaceuticals, one of the enduring large-cap legacy biotech companies that pioneered a class of drugs that has become the standard of care.

Now Sionna, almost like a David and Goliath, has come in with a new and possibly complementary but different class of drugs that goes to the heart of the mutation most cystic fibrosis patients have. It has the potential to boost the performance of the standard of care or do better on its own.

We’re waiting for Phase 2 data on a key biomarker around mid-year that could tell us whether this drug could be life-changing for many cystic fibrosis patients. About two-thirds of patients do not reach normal CFTR channel function on the current standard of care. We think this represents about 100 per cent upside, maybe even more. This is one of your classic binary biotech stocks.

LINDSAY: Wow, OK. Obviously there’s a market there. You said mid-year we’re waiting for the next phase of data. It sounds like you’re pretty optimistic.

RITU: I am very optimistic. The science supports it, the clinical trial conduct has been positive and it’s an excellent management team. All of those things together usually result in predictable alpha.

LINDSAY: Let’s go to your second Hot Pick. It is Praxis Precision Medicines. Why do you like this one?

RITU: This company is entering a product cycle. Product cycles are very important for emerging large-cap biotechs. Praxis not long ago was a small-cap company. They had excellent Phase 3 binary data and now that binary clinical data risk is behind us.

You can see it right there on the chart — no surprise where that data hit. Now we’re looking at an approval story and a drug launch story, likely in early 2027. So this is de-risked from a science perspective and now it’s much more about commercialization.

Their lead drug will be ulixacaltamide for a new indication called essential tremor. It affects more than two million patients in North America and it is a completely untapped market. There are no approved branded therapies that target it to a degree that makes a meaningful difference in patients’ lives.

This represents a greenfield opportunity for a market that could exceed $1 billion and we model about $6 billion in peak potential sales.

LINDSAY: You mentioned speaking with the CEO recently about navigating the FDA in unprecedented times. That likely applies to all three of your picks. What are you referring to when you talk about unprecedented times?

RITU: The FDA has had staffing issues. The division itself and HHS have had significant leadership turnover and staffing turnover. Investors are focused on timelines being met and the predictability of regulatory outcomes based on what has been publicly disclosed about clinical data.

We’ve had a number of surprises where what was communicated to management teams did not reflect the ultimate outcome. His advice at the end was talk early, talk often, establish a relationship and be patient.

LINDSAY: Let’s get to your third Hot Pick — Palvella Therapeutics. What do you like about this one?

RITU: The last time I was on here this was my favourite binary risk name and that binary risk did work out a couple of months ago. If you look at the stock price you can see where it happened.

This is now turning into the same type of story as Praxis. It produced an excellent data set, well above expectations, and now they are navigating the FDA.

In our experience, even with a slightly unpredictable FDA environment, when you have a simple data set with strong alignment with the agency and results that are clearly positive, regulatory approval becomes highly de-risked.

That makes approval more likely, which could drive further upside. Palvella would then enter its own product cycle post-approval with a deep pipeline built on its platform science.

LINDSAY: Palvella also said today it was granted a European patent for its skin disease treatment. I’m not sure if that’s the same gel you referenced, but how significant is a European patent?

RITU: A European patent would open up rest-of-world sales. Many companies reference European patents in their broader patent portfolios for international markets.

In rare diseases, rest-of-world markets can represent roughly equal portions to North America, including the U.S., for these types of rare genetic conditions, which is Palvella’s sweet spot.

LINDSAY: Very interesting. We’ll leave it there. Thanks so much for your time.

RITU: Thank you.

LINDSAY: That was Ritu Baral, managing director, health care and biotechnology at TD Cowen.

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This BNN Bloomberg summary and transcript of the March 16, 2026 interview with Ritu Baral are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.