Ironwood Pharma Beats on All Fronts - Analyst Blog

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Ironwood Pharmaceuticals, Inc.'s ( IRWD ) third-quarter 2012 earnings of 42 cents per share compared favorably with the year-ago loss of 21 cents per share and the Zacks Consensus Estimate of 15 cents. Results were boosted by higher revenues.

Total revenues in the reported quarter jumped to $96.4 million from $12.2 million in the year-ago quarter. Revenues were above the Zacks Consensus Estimate of $78 million. Revenues were boosted by an $85 million milestone payment from Forest Laboratories, Inc. ( FRX ) on the US approval of Linzess (linaclotide).

We remind investors that in August 2012, Ironwood Pharma and its US partner Forest Labs received approval from the US Food and Drug Administration (FDA) for Linzess. Linzess is expected to be launched in the US in December 2012 at an initial price of $7.10 per day.

Linzess is approved in the US for the once-daily treatment of adults suffering from irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC). However, the label carries a boxed warning stating that Linzess is contraindicated in pediatric patients up to 6 years of age. Moreover, Linzess' use in pediatric patients 6 to 17 years of age should be avoided.

In Europe, Ironwood has partnered with Almirall, S.A. for linaclotide (proposed brand name Constella). In September 2012, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) provided a positive opinion in favor of approving Constella.

The companies are looking to get Constella approved in the EU for the symptomatic treatment of adult patients suffering from moderate to severe IBS-C.

We note that in September 2011, Almirall had submitted a Market Authorization Application (MAA) to the EMA for Constella. As per the license agreement, Almirall has exclusive marketing rights to Constella in the EU. Upon approval and launch of the drug in five key European territories (Germany, the UK, Italy, Spain and France), Ironwood Pharma would receive milestone payments up to $20 million.

Ironwood Pharma is also working with its Japanese partner, Astellas Pharma Inc. for the development of linaclotide in Japan and other Asian countries. Currently, a phase II trial is ongoing evaluating the use of linaclotide in patients with IBS-C.

We currently have a Neutral recommendation on Ironwood Pharmaceuticals, Inc. Ironwood Pharmaceuticals carries a Zacks #3 Rank (Hold rating) in the short run. We expect investor focus to remain on the successful commercialization of the lead product, Linzess.



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CHMP , FRX , IRWD , MAA

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