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Ironwood Pharmaceuticals Provides Third Quarter 2013 Investor Update

  Ironwood Pharmaceuticals Provides Third Quarter 2013 Investor Update

– Third quarter LINZESS^® (linaclotide) net product sales of $34.4 million, as
                   reported by Forest Laboratories, Inc. –

Business Wire

CAMBRIDGE, Mass. -- October 22, 2013

Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) today provided an update on its
third quarter 2013 and recent business activities.

“This quarter, we continued to make good progress across our key value
drivers. LINZESS is performing well across the key leading indicators,
reinforcing the significant opportunity we see ahead. Our scientists continue
to advance the pharmacology of linaclotide and explore its utility more
broadly while also progressing our broader pipeline, and our global partners
are making important strides in bringing linaclotide to appropriate patients
worldwide,” said Peter Hecht, chief executive officer of Ironwood
Pharmaceuticals, Inc.

Third Quarter 2013 and Recent Highlights

LINZESS^® (linaclotide)

  *LINZESS net product sales, as reported by Forest Laboratories, Inc., were
    $34.4 million in the third quarter of 2013.
  *More than 178,000 LINZESS prescriptions were filled in the third quarter
    of 2013, resulting in more than 40% growth in total prescriptions compared
    to the previous quarter, and more than 539,000 LINZESS prescriptions have
    been filled since the launch of LINZESS on December 17, 2012, according to
    IMS Health.
  *To date, more than 80% of high prescribing gastroenterologists and more
    than 50% of high prescribing primary care physicians have prescribed
    LINZESS; approximately 1,000 physicians are writing their first LINZESS
    prescription each week.
  *As of September 2013, approximately 80% of adult irritable bowel syndrome
    with constipation (IBS-C) or chronic idiopathic constipation (CIC)
    patients with commercial insurance had unrestricted access to LINZESS and
    greater than 60% of adult patients with commercial insurance have access
    to LINZESS at a copay of $30 per month or less through formulary coverage
    or the LINZESS Instant Savings Program.
  *Ironwood received positive top-line data from a Phase IIIb clinical trial
    conducted with Forest to evaluate the effect of LINZESS on abdominal
    symptoms in patients with CIC and prominent abdominal bloating. The
    average bloating score reported by these patients at baseline was 7.1 on a
    0 to 10 point scale. Data from the clinical trial demonstrated that
    LINZESS dosed at 145 mcg in adult CIC patients resulted in a statistically
    significant increase in bowel movements, achieving the trial’s primary
    endpoint. Data from the trial also indicate that all 27 pre-specified
    secondary endpoints, including a statistically significant reduction in
    abdominal bloating relative to baseline in adult patients suffering from
    CIC, were achieved. Diarrhea was the most commonly reported adverse
    reaction reported in the study. Data showed a diarrhea rate of 5.9% and
    16.9% in patients treated with LINZESS at the 145 mcg and 290 mcg doses,
    respectively, versus 2.3% in placebo-treated patients, and a 1.3% and 5.0%
    discontinuation rate due to diarrhea in patients treated with LINZESS at
    the 145 mcg and 290 mcg dose, respectively, versus 0.6% in placebo-treated
    patients.
  *Ironwood and Forest continue to explore additional development
    opportunities to work with the FDA to strengthen the clinical profile of
    LINZESS within its indicated population and to expand the product label
    for additional approved patient populations and indications, as well as to
    explore the potential for linaclotide-based combination products. The
    companies expect to initiate a Phase IIa clinical trial of LINZESS in
    adult patients with opioid-induced constipation during the first half of
    2014, and to continue working with the FDA to establish an appropriate
    plan to study LINZESS in the pediatric population.

Linaclotide (Rest of World)

  *CONSTELLA^® (linaclotide) is currently available to adult IBS-C patients
    in multiple countries in Europe, and Ironwood’s European partner,
    Almirall, S.A., will continue to launch CONSTELLA in additional European
    countries.
  *Ironwood and AstraZeneca AB began enrolling patients in a Phase III
    clinical trial of linaclotide in adult patients with IBS-C in China. The
    trial is expected to be completed in the first half of 2015.
  *Astellas Pharma Inc. completed enrollment in a double-blind,
    placebo-controlled, dose-ranging Phase II clinical trial of linaclotide in
    adult patients with IBS-C in Japan.

Research & Development

  *In addition to exploring additional linaclotide development opportunities,
    Ironwood is leveraging its pioneering understanding of linaclotide’s
    pharmacology and mechanism of action, guanylate cyclase-C (GC-C) agonists,
    cyclic GMP, and symptomatic diseases to advance other programs in its
    pipeline, which include early development candidates and discovery
    research efforts focused on gastrointestinal disease, central nervous
    system disorders, allergic conditions and cardiovascular disease.

Corporate and Financials

  *Total Revenues. Revenues were approximately $4.9 million in the third
    quarter of 2013. This consisted of $3.4 million in sales of active
    pharmaceutical ingredient (API) and $1.5 million in the amortization of
    deferred revenue associated with consideration received from Ironwood’s
    collaborations with Astellas and AstraZeneca. LINZESS net product sales
    are recorded by Forest and are not included in Ironwood’s total revenues
    (refer to the LINZESS U.S. Collaboration Expense Calculation at the end of
    this press release).
  *Operating Expenses. Operating expenses were approximately $53.3 million in
    the third quarter of 2013. This consisted of $23.0 million of research and
    development expenses, which included approximately $2.3 million in
    non-cash share-based compensation expense, and $30.3 million of selling,
    general and administrative expenses, which included approximately $2.9
    million of non-cash share-based compensation expense.
  *Collaboration Expense. Ironwood reported $6.2 million in collaboration
    expense in the third quarter of 2013. Ironwood records its share of the
    net profits and losses from the sales of LINZESS in the U.S. on a net
    basis and presents the settlement payments as collaborative arrangements
    revenue or collaboration expense, as applicable.
  *Interest Expense. Interest expense was $5.3 million in the third quarter
    of 2013 in connection with the $175 million debt financing executed in
    January 2013.
  *Net Loss. Ironwood reported a net loss of $61.8 million, or $0.51 per
    share, in the third quarter of 2013.
  *Cash Position. Ironwood ended the third quarter of 2013 with approximately
    $242 million of cash, cash equivalents and available-for-sale securities.
    Ironwood used approximately $58 million of net cash for operations during
    the quarter.
  *Financial Guidance. Ironwood today reiterated its financial guidance for
    the Forest and Ironwood total 2013 sales and marketing expense for LINZESS
    to be in the range of $250 to $300 million. Ironwood also reiterated its
    guidance for its 2013 non-linaclotide research and development expense to
    be in the range of $60 to $75 million.
  *Ironwood will host an Investor Day on December 12, 2013 to further discuss
    its corporate strategy, including an update on the commercialization of
    LINZESS, a discussion around linaclotide opportunities in additional
    populations and indications, and its overall R&D efforts.

Conference Call Information

Ironwood will host a conference call and webcast at 8:30 a.m. Eastern Time, on
Tuesday, October 22, to discuss its third quarter 2013 and recent business
activities. Individuals interested in participating in the call should dial
(877) 643-7155  (U.S. and Canada) or (914) 495-8552 (international) using
conference ID number 75229614. To access the webcast, please visit the
Investors section of Ironwood’s website at www.ironwoodpharma.com at least 15
minutes prior to the start of the call to ensure adequate time for any
software downloads that may be required. The call will be available for replay
via telephone starting today at approximately 11:30 a.m. Eastern Time, running
through 11:59 p.m. Eastern Time on October 29, 2013. To listen to the replay,
dial (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (international) using
conference ID number 75229614. The archived webcast will be available on
Ironwood’s website for 14 days beginning approximately one hour after the call
has completed.

About LINZESS (linaclotide)

LINZESS is the first and only guanylate cyclase-C (GC-C) agonist approved by
the FDA for the treatment of both irritable bowel syndrome with constipation
(IBS-C) and chronic idiopathic constipation (CIC) in adults. LINZESS is a
once-daily capsule that helps relieve the abdominal pain and constipation
associated with IBS-C, as well as the constipation, infrequent stools, hard
stools and incomplete evacuation associated with CIC. The recommended dose is
290 mcg for IBS-C patients and 145 mcg for CIC patients. LINZESS should be
taken at least 30 minutes before the first meal of the day.

LINZESS is thought to work in two ways based on nonclinical studies. LINZESS
binds to the GC-C receptor locally, within the intestinal epithelium.
Activation of GC-C results in increased intestinal fluid secretion and transit
and a decrease in the activity of pain-sensing nerves in the intestine. The
clinical relevance of the effect on pain fibers, which is based on nonclinical
studies, has not been established.

In placebo-controlled Phase III clinical trials of more than 2,800 adults,
LINZESS was shown to reduce abdominal pain in IBS-C patients and increase
bowel movement frequency in both IBS-C patients and CIC patients. Improvement
in abdominal pain and constipation occurred in the first week of treatment and
was maintained throughout the 12-week treatment period. Maximum effect on
abdominal pain was seen at weeks 6-9 and maximum effect on constipation
occurred during the first week. When a subset of LINZESS-treated patients in
the trials were switched to placebo, they reported their symptoms returned
toward pretreatment levels within one week, while placebo-treated patients
switched to LINZESS reported symptom improvements. LINZESS is contraindicated
in pediatric patients up to 6 years of age. The use of LINZESS in pediatric
patients 6 through 17 years of age should be avoided. In nonclinical studies,
administration of a single, clinically relevant adult oral dose of linaclotide
caused deaths in young juvenile mice. LINZESS has not been studied in
pediatric patients. In adults with IBS-C or CIC treated with LINZESS, the most
commonly reported adverse event was diarrhea.

Ironwood and Forest Laboratories, Inc. are co-promoting LINZESS in the United
States. Linaclotide was also approved by the European Commission for the
treatment of adults in the European Union with IBS-C and is marketed under the
brand name CONSTELLA^® through a license agreement between Ironwood and
Almirall, S.A. Ironwood also has partnered linaclotide with Astellas Pharma
Inc. for development and commercialization in Japan and with AstraZeneca for
development and commercialization in China.

About CONSTELLA (linaclotide)

Linaclotide is a Guanylate Cyclase-C receptor agonist (GCCA) with visceral
analgesic and secretory activities. Linaclotide is a 14-amino acid synthetic
peptide structurally related to the endogenous guanylin peptide family. Both
linaclotide and its active metabolite bind to the Guanylate Cyclase-C
receptor, on the luminal surface of the intestinal epithelium. Through its
action at GC-C, linaclotide has been shown to reduce visceral pain and
increase GI transit in animal models and increase colonic transit in humans.
Activation of GC-C results in an increase in concentrations of cyclic
guanosine monophosphate (cGMP), both extracellularly and intracellularly.
Extracellular cGMP decreases pain-fiber activity, resulting in reduced
visceral pain in animal models. Intracellular cGMP causes secretion of
chloride and bicarbonate into the intestinal lumen, through activation of the
cystic fibrosis transmembrane conductance regulator (CFTR), which results in
increased intestinal fluid and accelerated transit.

Linaclotide was discovered by scientists at Ironwood and is marketed in Europe
by Almirall through a license agreement between the two companies.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals (NASDAQ:IRWD) is committed to the art and science of
making medicines, from discovery through commercialization. We’re focused on
three goals: transforming knowledge into medicines that make a difference for
patients, creating value that will inspire the continued support of our fellow
shareholders, and building a team that passionately pursues excellence. Our
first product, linaclotide, is approved in the United States and Europe. Our
pipeline priorities include exploring further opportunities for linaclotide,
leveraging our deep expertise in functional gastrointestinal disorders, and
advancing programs in other areas such as allergic conditions, cardiovascular
disease, central nervous system disorders and other conditions defined by
patient symptoms.Ironwood was founded in 1998 and is headquartered in
Cambridge, Mass. Connect with us at www.ironwoodpharma.com or on Twitter at
www.twitter.com/ironwoodpharma to learn more about Ironwood. Information that
may be important to investors will be routinely posted in both these
locations.

LINZESS® and CONSTELLA® are trademarks owned by Ironwood Pharmaceuticals, Inc.

Important Safety Information


WARNING: PEDIATRIC RISK
LINZESS is contraindicated in pediatric patients up to 6 years of age. Use
should be avoided in pediatric patients 6 through 17 years of age. In
nonclinical studies, administration of a single, clinically relevant adult
oral dose of linaclotide caused deaths in young juvenile mice.

Contraindications

  *LINZESS is contraindicated in pediatric patients up to 6 years of age.
  *LINZESS is contraindicated in patients with known or suspected mechanical
    gastrointestinal obstruction.

Warnings and Precautions

Pediatric Risk

  *LINZESS is contraindicated in pediatric patients up to 6 years of age. In
    nonclinical studies, deaths occurred within 24 hours in young juvenile
    mice (1 to 3 week-old mice; approximately equivalent to human pediatric
    patients less than 2 years of age) following administration of one or two
    daily oral doses of linaclotide.
  *Use of LINZESS should be avoided in pediatric patients 6 through 17 years
    of age. Linaclotide did not cause deaths in older juvenile mice
    (approximately equivalent to humans age 12 to 17 years). Although there
    were no deaths in older juvenile mice, given the deaths in young juvenile
    mice and the lack of clinical safety and efficacy data in pediatric
    patients, use of LINZESS should be avoided in pediatric patients 6 through
    17 years of age.

Diarrhea

  *Diarrhea was the most common adverse reaction of LINZESS-treated patients
    in the pooled IBS-C and CIC double-blind placebo-controlled trials. Severe
    diarrhea was reported in 2% of LINZESS-treated patients. The incidence of
    diarrhea was similar in the IBS-C and CIC populations.
  *Patients should be instructed to stop LINZESS if severe diarrhea occurs
    and to contact their healthcare provider, who should consider dose
    suspension.

Adverse Reactions

  *In IBS-C clinical trials, the most common adverse reactions in
    LINZESS-treated patients (incidence ≥2% and greater than placebo) were
    diarrhea (20% vs 3% placebo), abdominal pain (7% vs 5%), flatulence (4% vs
    2%), headache (4% vs 3%), viral gastroenteritis (3% vs 1%) and abdominal
    distension (2% vs 1%).
  *In CIC clinical trials, the most common adverse reactions in
    LINZESS-treated patients (incidence ≥2% and greater than placebo) were
    diarrhea (16% vs 5% placebo), abdominal pain (7% vs 6%), flatulence (6% vs
    5%), upper respiratory tract infection (5% vs 4%), sinusitis (3% vs 2%)
    and abdominal distension (3% vs 2%).

Please see full Prescribing Information including Boxed Warning:
http://www.frx.com/pi/linzess_pi.pdf.

This press release contains forward-looking statements. Investors are
cautioned not to place undue reliance on these forward‐looking statements,
including, but not limited to, the potential for LINZESS as a treatment option
for adults in the United States suffering from IBS-C and CIC, the addition of
new physicians who are prescribing LINZESS, Ironwood’s and its partners’
anticipated non-clinical and clinical development activities for linaclotide
and their associated timelines, Ironwood’s intended activities for the product
candidates and early development programs in its pipeline, the anticipated
launch timeline for CONSTELLA in Europe, Ironwood’s and its partners’ ability
to bring linaclotide to appropriate patients worldwide, the amount Ironwood
and Forest anticipate spending on sales and marketing expenses for LINZESS in
2013 and the amount Ironwood anticipates spending on non-linaclotide research
and development expenses in 2013. Each forward‐looking statement is subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in such statement. Applicable risks and
uncertainties include the risks that the market acceptance of LINZESS in the
U.S. is not as anticipated, Ironwood or its partners are unable to manufacture
or distribute a sufficient commercial supply of linaclotide, the rate of new
physician adoption of LINZESS begins to decrease, Ironwood and Forest increase
or modify their plans for the sales and marketing campaigns for LINZESS in the
U.S. and such modifications result in an increase or a decrease in the
associated expenses, Almirall is unable to obtain sufficient pricing or
reimbursement for CONSTELLA in countries in Europe or it chooses to launch
CONSTELLA on a different timeline, serious adverse events arise in patients
that are deemed to be related to linaclotide treatment, the incidence or
severity of diarrhea in patients treated with linaclotide is higher than
expected, efforts to strengthen the clinical profile of linaclotide within its
indicated population and advancements in the further development of
linaclotide in additional patient populations or indications or in
linaclotide-based combination products do not proceed as expected, or the
development of other products or early development programs in Ironwood’s
pipeline do not proceed as expected, as well as risks related to the
difficulty of predicting regulatory approvals and the acceptance of and demand
for new pharmaceutical products. Applicable risks also include those that are
listed in Ironwood’s Quarterly Report on Form 10‐Q for the quarter ended June
30, 2013, in addition to the risk factors that are listed from time to time in
Ironwood’s Annual Reports on Form 10‐K, Quarterly Reports on Form 10‐Q and any
subsequent SEC filings. Ironwood undertakes no obligation to update these
forward‐looking statements to reflect events or circumstances occurring after
this press release. These forward‐looking statements speak only as of the date
of this press release. All forward‐looking statements are qualified in their
entirety by this cautionary statement.


Condensed Consolidated Balance Sheets

(in thousands)
(unaudited)
                                                             
                                                September 30,     December 31,

                                                2013              2012
Assets
Cash, cash equivalents and                      $   242,390       $   168,228
available-for-sale securities
Accounts receivable, net                            3,086             1,487
Inventory                                           20,561            6,699
Prepaid expenses and other current assets          9,789            8,026
Total current assets                                275,826           184,440
Property and equipment, net                         37,231            37,537
Other assets                                       12,786           7,930
Total assets                                    $   325,843       $   229,907
                                                                  
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses           $   30,736        $   48,561
Current portion of capital lease                    1,115             261
obligations
Current portion of deferred rent                    2,776             2,735
Current portion of deferred revenue                5,074            3,381
Total current liabilities                           39,701            54,938
Capital lease obligations                           3,427             308
Deferred rent                                       9,519             11,593
Deferred revenue                                    12,684            18,024
Notes Payable                                       174,650           —
Other liabilities                                   1,653             992
Total stockholders’ equity                         84,209           144,052
Total liabilities and stockholders’ equity      $   325,843       $   229,907
                                                                  


Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)
(unaudited)

                                                    
                   Three Months Ended                    Nine Months Ended

                   September 30,                         September 30,
                   2013              2012              2013              2012
Revenue            $ 4,932             $ 96,413          $ 17,850            $ 123,265
Cost and
expenses:
Cost of              2,021               —                 6,670               —
revenue
Research and
development          23,016              23,453            79,862              85,201
(1)
Selling,
general and          30,264              22,846            94,508              59,264
administrative
(1)
Collaboration       6,182             2,506            42,074            7,662       
expense
Total cost and      61,483            48,805           223,114           152,127     
expenses
Loss from            (56,551     )       47,608            (205,264    )       (28,862     )
operations
Other income        (5,224      )      27               (15,562     )      93          
(expense), net
Net income         $ (61,775     )     $ 47,635          $ (220,826    )     $ (28,769     )
(loss)

Net income
(loss) per         $ (0.51       )     $ 0.44            $ (1.93       )     $ (0.27       )
share—basic
Net income
(loss) per         $ (0.51       )     $ 0.42            $ (1.93       )     $ (0.27       )
share—diluted
Weighted
average number                                                            
of common
shares
used in net
income (loss)        120,768,893         107,266,823       114,140,821         106,036,522
per share
—basic
Weighted
average number
of common
shares
used in net
income (loss)        120,768,893         114,337,327       114,140,821         106,036,522
per share
—diluted
                                                                             
                                                                             
                                                                             
(1) Non-cash
share-based
compensation
expenses
included
reflected in
the condensed
consolidated
statements of
operations are
as follows:
Research and       $ 2,349             $ 2,648           $ 7,274             $ 6,676
development
Selling,
general and          2,850               2,487             8,017               6,236
administrative
                                                                             


LINZESS U.S. Collaboration Expense Calculation^1

(in thousands)
(unaudited)
                                             
                                                  
                   Three Months Ended             Nine Months Ended

                   September 30,                  September 30,
                   2013          2012           2013           2012
LINZESS net        $ 34,444        $ -            $ 67,709         $ -
sales
Commercial
costs and           63,276        7,420        201,945        22,314  
expenses^2
Net profit
(loss) on          $ (28,832 )     $ (7,420 )     $ (134,236 )     $ (22,314 )
sales of
LINZESS
                                                                   
Ironwood’s
share of net       $ (14,416 )     $ (3,710 )     $ (67,118  )     $ (11,157 )
profit (loss)
Ironwood’s
selling &          $ 8,234        $ 1,204       $ 25,044        $ 3,495   
marketing^3
Ironwood’s
collaboration      $ 6,182        $ 2,506       $ 42,074        $ 7,662   
expense
                                                                   


^1 Ironwood collaborates with Forest on the development and commercialization
of linaclotide in North America. Under the terms of the collaboration
agreement, Ironwood receives 50% of the net profits and bears 50% of the net
losses from the commercial sale of LINZESS in the U.S. The purpose of this
table is to present calculations of the Ironwood’s share of net profit (loss)
generated from the sales of LINZESS in the U.S. and the Ironwood’s
collaboration expense; however, the table does not present the research and
development expenses related to LINZESS in the U.S. that are shared equally
between the parties under the collaboration agreement.
^2 Includes cost of sales incurred by Forest as well as selling and marketing
costs incurred by Forest and Ironwood that are attributable to the
cost-sharing arrangement between the parties.
^3 Includes Ironwood’s selling and marketing costs attributable to the
cost-sharing arrangement with Forest.

Contact:

Ironwood Pharmaceuticals, Inc.
Media Relations
Lisa Buffington, 617-374-5103
Vice President, Corporate Communications
lbuffington@ironwoodpharma.com
or
Investor Relations
Meredith Kaya, 617-374-5082
Director, Investor Relations
mkaya@ironwoodpharma.com
 
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