Hot Picks: Investors eye biotech stocks as trial results loom

Biotech stocks are drawing renewed attention as investors track a wave of upcoming clinical trial data and regulatory decisions across autoimmune and rare disease treatments. Analysts are watching how dosing convenience, known biological targets and late-stage pipelines could shape sentiment in the sector.

BNN Bloomberg spoke with David Nierengarten, senior analyst at Wedbush, about biotech stocks he sees as well positioned, including companies developing therapies for autoimmune conditions, blood disorders and recurrent pericarditis.

Key Takeaways

• Biotech investors are watching multiple near-term clinical data readouts that could act as catalysts across the sector.
• Autoimmune drug development is increasingly focused on well-understood targets paired with improved dosing convenience.
• Rare disease therapies can face short-term volatility around regulatory reviews without materially changing long-term value.
• Commercial-stage drugs with growing cash flow can provide stability within small- and mid-cap biotech names.
• Follow-on assets and wholly owned next-generation therapies may significantly expand margins and acquisition appeal.

Read the full transcript below:

ANDREW: It’s time for Hot Picks. Our next guest has Spyre Therapeutics as a top selection. He says the company is working on treatments for autoimmune diseases. Joining us right now is David Nierengarten, senior analyst at Wedbush. David, thank you very much indeed for joining us. Just remind us — we all know about multiple sclerosis as an autoimmune disease. Typically, they’re called the immune system attacking our own body. Is that correct?

DAVID: Autoimmune diseases are caused by multiple genes and multiple environmental factors. One of the common autoimmune diseases is multiple sclerosis. Spyre is working on several others, including ulcerative colitis, Crohn’s disease and rheumatoid arthritis, and other related rheumatoid diseases. Psoriatic arthritis is an example of that also.

ANDREW: And they have some possible catalysts coming up — three data events in Q2. Can you tell us about one or two of those?

DAVID: That’s right. So they have “six for ’26,” as we’re calling it. They have three actual data releases for their monotherapy studies, Phase 2 in ulcerative colitis — three different drug candidates — but they’re targeting known targets in ulcerative colitis. So we think it’s a high possibility of success for those studies. Importantly, those studies should show that the drugs can be dosed once every three to six months, making it a lot more convenient than the current therapies out there for patients with this disease. And in the second half of the year, we’ll see additional data for those other rheumatology diseases, such as rheumatoid arthritis and psoriatic arthritis that I mentioned earlier.

ANDREW: Apparently this whole autoimmune area is being shaken up by this microchimerism, whereby the body has cells from other people in it, and maybe they’re part of the problem. I know it’s very early days.

DAVID: That is a theory that’s been posited as a cause for autoimmune diseases for quite some time, particularly in women when they’re pregnant. Women do have cells from a new person, of course, in utero. And there tends to be, in a lot of autoimmune diseases, higher rates of those diseases in women, particularly women of childbearing and post-childbearing age — early post-childbearing age — so in their mid-30s to mid-50s is a frequent increase in incidence for those diseases, again, in those women.

ANDREW: You have another idea for us — Disc Medicine. The symbol is IRON on the Nasdaq. What are they working on?

DAVID: So they’re working on rare diseases of the blood system. They have a product candidate that’s in review right now with the FDA, bitopertin, for a rare disease called EPP. It causes a buildup of a metabolite that reacts with the sun to cause pain — actually significant pain — in patients’ skin, and can cause liver problems also. That’s under review right now. And then they have a couple of other drug candidates for either iron deficiency, causing anemia, or iron overload, causing too high levels of iron in the blood, and other rare diseases and related diseases of myelofibrosis and other disorders of the blood system.

ANDREW: And then finally, Kiniksa Pharma. It’s working on recurrent pericarditis — I’m very sorry — what is that ailment, please?

DAVID: It’s very painful inflammation of the heart. So patients will have an inflammation of the pericardium — it’s a sac surrounding the heart — and that inflammation, as you can imagine, can cause severe pain. Patients might feel like they’re having a heart attack, with frequent trips to the emergency room with severe pain. Kiniksa has a drug called Arcalyst that treats it very well. It reduces recurrences by 90-plus per cent. Patients are on the drug for quite some time, typically, and that’s really driven sales here. We estimate $900 million-plus in sales in ’26, and the company is a rare mid-cap or small-cap biotech that’s profitable. They will have positive EPS. And what is really going to trigger upside, in my opinion, for the shares will be their less frequently dosed, wholly owned asset, where we’ll see some data for that in the second half of the year. That could literally double their profits if it were successful and approved eventually.

ANDREW: Because right now, I think you mentioned they’re in a partnership with Regeneron, which stands to get some of the earnings from that drug you mentioned, correct?

DAVID: Regeneron gets approximately half of the profits. There are some adjustments for expenses here and there, but it’s roughly half of the profits. So obviously they have a wholly owned replacement, hopefully with positive data in the second half of the year. That could lead to a drug approved with literally double the profit margin.

ANDREW: And there could be an acquisition in the cards if that all works out.

DAVID: I would expect that. Again, it’s a profitable franchise. It’s well-contained, meaning you have a relatively limited sales force that can go out there and sell the drug, and limited additional infrastructure required. It would be a great bolt-on acquisition for a mid- or larger-size pharma.

ANDREW: I’ve got to ask you — when you look at DNA and evolution, do you find yourself learning new things all the time? It’s pretty amazing.

DAVID: There are a lot of new things out there. The most exciting thing for me is really when we do see some of these new mechanisms get developed. I’ve been doing this long enough where I’ve seen some targets that were mere ideas 10 years ago, and now they’re getting into late stages of approval or already approved drugs. And it’s really gratifying to see that.

ANDREW: That’s pretty amazing. Whenever I read something, it looks like they’re finding DNA is more complex in its mechanisms than they thought before.

DAVID: There are a lot of complexities — autoimmune in particular. Some of the mechanisms for causing those diseases that we just talked about are very complex. I don’t think there’s a single target, for example, for ulcerative colitis that will be the cure-all for everyone. I think we’re going to need combination studies and combination therapies for that. But there’s a lot of complexity in those diseases. Maybe we will find a single target that really leads to a much better drug candidate and approval.

ANDREW: Thank you very much. David, thank you very much indeed. David Nierengarten, senior analyst at Wedbush.

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This BNN Bloomberg summary and transcript of the Jan. 26, 2026 interview with David Nierengarten 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.