Ironwood Pharmaceuticals, Inc.
) recently priced a public offering of 10.5 million shares of
Class A common stock at $13.00 per share. Ironwood expects to
raise $136.5 million through this offering, slated to close on
May 24, 2013. The company has provided the underwriters with a 30
day over-allotment option for an additional 1.575 million shares.
Ironwood Pharma intends to use the funds from the issuance of
shares to support the launch of its sole marketed product Linzess
in the US, pipeline development and other corporate activities.
Earlier this year, Ironwood Pharma raised funds by offering $175
million Linaclotide PhaRMA 11% notes.
We note that Linzess was launched in Dec 2012 in collaboration
Forest Laboratories, Inc.
) for patients suffering from irritable bowel syndrome with
constipation (IBS-C) or chronic idiopathic constipation (CIC).
Net sales of Linzess, as reported by Forest Labs came in at $4.5
million in the first quarter of 2013 as compared to $19.2 million
in the fourth quarter of 2012. We note that in the final quarter
of 2012, Linzess sales primarily consisted of initial trade
stocking. For 2013, Ironwood expects total investment in sales
and marketing for Linzess in the range of $250-$300 million.
The company is looking to expand Linzess' label into additional
patient populations and indications. To further analyze the
effect of Linzess on abdominal symptoms in patients suffering
from CIC, Forest Labs and Ironwood Pharma are conducting a phase
IIIb clinical trial. Results from the trial are expected in the
second half of 2013. Ironwood Pharma plans to conduct additional
trials to evaluate Linzess for additional gastrointestinal
Ironwood Pharma carries a Zacks Rank #3 (Hold). Though encouraged
by the company's efforts to develop and commercialize Linzess, we
are concerned about the company's over dependence on Linzess for
growth. It remains to be seen how the product performs in the
Currently, companies like
) look attractive with both being Zacks Rank #1 (Strong Buy)
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