Ironwood Pharmaceuticals Reports Third Quarter 2023 Results

Published

– LINZESS® (Iinaclotide) EUTRx prescription demand growth increased 8% year-over-year; LINZESS U.S. net sales of $279 million, an increase of 7% year-over-year –

Reported positive final data from STARS Nutrition, a Phase II study of apraglutide in short bowel syndrome with intestinal failure (SBS-IF) and colon-in-continuity (CIC) –

– Expects topline data for the Phase II study of CNP-104 in primary biliary cholangitis (PBC) in the third quarter of 2024 –

– Maintains Full Year 2023 Guidance –

BOSTON--(BUSINESS WIRE)-- Ironwood Pharmaceuticals, Inc. (Nasdaq: IRWD), a GI-focused healthcare company, today reported its third quarter 2023 results and recent business performance.

“We are proud of the progress we have made across our strategic priorities so far this year, as we believe we have strengthened our position to become the leading GI healthcare company in the industry,” said Tom McCourt, chief executive officer of Ironwood. “Our high conviction in the STARS clinical program was augmented by the positive final data from the STARS Nutrition study, reinforcing our belief in apraglutide’s potential to be a best-in-class GLP-2 analog for the whole spectrum of patients with short bowel syndrome with intestinal failure, including those with colon-in-continuity. In addition, we are encouraged to have seen T-cell immune responses in patients treated with CNP-104 for the potential treatment of primary biliary cholangitis and look forward to the topline results in the third quarter of 2024. Our commitment to developing and advancing innovative GI assets is as strong as it has ever been. We believe the positive momentum across our pipeline programs, combined with the continued strong performance of LINZESS, positions us well for success in our mission to be the leader in GI. We are looking forward to a strong finish to the year and meaningful pipeline catalysts ahead in 2024.”

Third Quarter 2023 Financial Highlights1 (in thousands, except for per share amounts)

 

 

Q3 2023

Q3 2022

Total revenues

$

113,739

$

108,637

Total operating expenses

 

73,716

 

40,164

GAAP net income

 

13,950

 

50,317

GAAP net income attributable to Ironwood Pharmaceuticals, Inc.

 

15,321

 

50,317

GAAP net income attributable to Ironwood Pharmaceuticals, Inc. per share – basic

 

0.10

 

0.33

GAAP net income attributable to Ironwood Pharmaceuticals, Inc. per share – diluted

 

0.09

 

0.28

Adjusted EBITDA

 

49,079

 

68,835

Non-GAAP net income

 

21,802

 

50,166

Non-GAAP net income per share – basic

 

0.14

 

0.33

Non-GAAP net income per share – diluted

 

0.12

 

0.28

1.

Refer to the Reconciliation of GAAP Results to Non-GAAP Financial Measures table and to the Reconciliation of GAAP Net Income to Adjusted EBITDA table at the end of this press release. Refer to Non-GAAP Financial Measures for additional information.

Third Quarter 2023 Corporate Highlights

U.S. LINZESS

  • Prescription Demand: Total LINZESS prescription demand in the third quarter of 2023 was 48 million LINZESS capsules, an 8% increase compared to the third quarter of 2022, per IQVIA.
  • U.S. Brand Collaboration: LINZESS U.S. net sales are provided to Ironwood by its U.S. partner, AbbVie Inc. (“AbbVie”). LINZESS U.S. net sales were $279.0 million in the third quarter of 2023, a 7% increase compared to $261.1 million in the third quarter of 2022.
  • Ironwood and AbbVie share equally in U.S. brand collaboration profits. See the LINZESS U.S. Commercial Collaboration table at the end of the press release. – LINZESS commercial margin was 72% in the third quarter of 2023, compared to 74% in the third quarter of 2022. See the U.S. LINZESS Full Brand Collaboration table below and at the end of this press release. – Net profit for the LINZESS U.S. brand collaboration, net of commercial and research and development (“R&D”) expenses, was $192.0 million in the third quarter of 2023, compared to $185.0 million in the third quarter of 2022. See U.S. LINZESS Full Brand Collaboration table below and at the end of this press release.
  • Collaboration Revenue to Ironwood: Ironwood recorded $110.1 million in collaboration revenue in the third quarter of 2023 related to sales of LINZESS in the U.S., a 5% increase compared to $105.2 million for the third quarter of 2022. See U.S. LINZESS Commercial Collaboration table at the end of the press release.

U.S. LINZESS Full Brand Collaboration

(in thousands, except for percentages)

Three Months Ended September 30,

 

2023

2022

LINZESS U.S. net sales as reported by AbbVie

$278,954

$261,131

AbbVie & Ironwood commercial costs, expenses and other discounts

77,736

68,499

Commercial margin

72%

74%

AbbVie & Ironwood R&D Expenses

9,264

7,620

Total net profit on sales of LINZESS

191,954

185,012

Full brand margin

69%

71%

  • In October 2023, Ironwood presented new data at the 2023 North American Society for Pediatric Gastroenterology, Hepatology & Nutrition (NASPGHAN) Annual Meeting reinforcing the impact of linaclotide on functional constipation in children and adolescents ages 6-17 years-old. The data demonstrated that linaclotide reduces the need for rescue medications in this patient population and further characterized the efficacy and safety profile of linaclotide as the only FDA-approved prescription therapy for this population. Additional details can be found here.

Pipeline Updates

Apraglutide

  • Ironwood is advancing apraglutide, a next-generation, synthetic glucagon-like peptide-2 (“GLP-2”) analog for short bowel syndrome with intestinal failure (“SBS-IF”), a severe malabsorptive condition. Ironwood believes apraglutide has the potential to be the new standard of care for the treatment of SBS-IF based on its potency and pharmacological properties. Ironwood is conducting a Phase III clinical trial, STARS, designed to evaluate clinical benefit for both SBS-IF stoma and colon-in-continuity (“CIC”) patients with unique convenience of weekly dosing. Topline results are expected in March of 2024.
  • In October 2023, Ironwood presented positive final data from the company’s Phase II STARS Nutrition program during United European Gastroenterology (UEG) Week. This multicenter, open-label study of nine patients was designed to evaluate the safety, pharmacokinetics, and efficacy of apraglutide on intestinal absorption in adult patients who have SBS-IF and CIC. Additional details can be found here.
  • Ironwood is also conducting a Phase II proof-of-concept clinical trial, STARGAZE, to evaluate apraglutide in patients with steroid-refractory gastrointestinal acute Graft versus Host Disease (aGvHD), a life-threatening condition that occurs when immune cells from the donor attack a recipient’s healthy cells after an allogeneic hematopoietic stem cell transplant. Enrollment is completed and data is expected for the STARGAZE Phase II clinical trial in the first quarter of 2024.

CNP-104

  • Ironwood has a collaboration and license option agreement with COUR Pharmaceuticals Development Company, Inc. (“COUR”). This agreement grants Ironwood an option to acquire an exclusive license to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104 (“CNP-104”), a tolerizing immune modifying nanoparticle, for the treatment of primary biliary cholangitis (“PBC”), a rare autoimmune disease targeting the liver. If successful, CNP-104 has the potential to be the first approved PBC disease modifying therapy.
  • COUR is currently conducting a clinical study for CNP-104 evaluating the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with topline data expected in the third quarter of 2024.

IW-3300

  • Ironwood is currently advancing IW-3300, a guanylate cyclase-C agonist being developed for the potential treatment of visceral pain conditions, such as interstitial cystitis / bladder pain syndrome (“IC/BPS”) and endometriosis. Ironwood is continuing the Phase II proof of concept study in IC/BPS.

Third Quarter 2023 Financial Results

  • Total Revenues. Total revenues in the third quarter of 2023 were $113.7 million, compared to $108.6 million in the third quarter of 2022.

– Total revenues in the third quarter of 2023 consisted of $110.1 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S. and $3.6 million in royalties and other revenue. Total revenues in the third quarter of 2022 consisted of $105.2 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S. and $3.4 million in royalties and other revenue.

  • Operating Expenses. Operating expenses in the third quarter of 2023 were $73.7 million, compared to $40.2 million in the third quarter of 2022.

– Operating expenses in the third quarter of 2023 consisted of $36.0 million in selling, general and administrative (“SG&A”) expenses, $33.0 million in R&D expenses and $4.7 million in restructuring expenses. Operating expenses in the third quarter of 2022 consisted of $28.6 million in SG&A expenses and $11.6 million in R&D expenses.

  • Interest Expense and Other Financing Costs. Interest expense was $9.8 million in the third quarter of 2023, in connection with Ironwood’s convertible senior notes and revolving credit facility. Interest expense recorded in the third quarter of 2023 included $9.2 million in cash expense and $0.6 million in non-cash expense. Interest expense was $1.5 million in the third quarter of 2022, in connection with Ironwood’s convertible senior notes. Interest expense recorded in the third quarter of 2022 included $1.1 million in cash expense and $0.4 million in non-cash expense.
  • Interest and Investment Income. Interest and investment income was $1.7 million in the third quarter of 2023. Interest and investment income was $2.8 million in the third quarter of 2022.
  • Gain on Derivatives. Ironwood recorded a gain on derivatives of $0.2 million in the third quarter of 2022 as a result of the change in fair value of its note hedge warrants. Ironwood’s note hedge warrants terminated unexercised upon expiration in April 2023.
  • Income Tax Expense. Ironwood recorded $18.0 million of income tax expense in the third quarter of 2023, the majority of which was non-cash, as Ironwood continues to utilize net operating losses to offset taxable income for federal purposes and in many states. Ironwood recorded $19.6 million of income tax expense in the third quarter of 2022.
  • GAAP Net Income Attributable to Ironwood. GAAP net income was $15.3 million, or $0.10 per share (basic) and $0.09 per share (diluted) in the third quarter of 2023, compared to GAAP net income of $50.3 million, or $0.33 per share (basic) and $0.28 per share (diluted) in the third quarter of 2022.
  • Non-GAAP Net Income. Non-GAAP net income was $21.8 million, or $0.14 per share (basic) and $0.12 (diluted) in the third quarter of 2023, compared to non-GAAP net income of $50.2 million, or $0.33 per share (basic) and $0.28 (diluted) in the third quarter of 2022.

– Non-GAAP net income excludes the impact of mark-to-market adjustments on the derivatives related to Ironwood’s 2022 Convertible Notes, amortization of acquired intangible assets, restructuring expenses and acquisition-related costs, all net of tax effect. See Non-GAAP Financial Measures below.

  • Adjusted EBITDA. Adjusted EBITDA was $49.1 million in the third quarter of 2023, compared to $68.8 million in the third quarter of 2022.

– Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, acquisition-related costs, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs, from GAAP net income. See Non-GAAP Financial Measures below.

  • Cash Flow Highlights. Ironwood ended the third quarter of 2023 with $110.2 million of cash and cash equivalents, compared to $656.2 million of cash and cash equivalents at the end of 2022.

– In September 2023, Ironwood repaid $75.0 million of the outstanding principal balance on its revolving credit facility used to partially finance the VectivBio acquisition. The outstanding principal balance on the revolving credit facility was $325.0 million as of September 30, 2023.

– Ironwood generated approximately $32.5 million in cash from operations in the third quarter of 2023, compared to $69.1 million in cash from operations in the third quarter of 2022.

  • Ironwood 2023 Financial Guidance. In 2023, Ironwood continues to expect:

 

2023 Guidance

U.S. LINZESS Net Sales Growth

6% to 8%

Total Revenue

$435 to $450 million

Adjusted EBITDA1

~ ($900) million2

Includes a one-time charge of approximately $1.1 billion from acquisition of VectivBio

1 Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs from GAAP net income.

2 2023 adjusted EBITDA guidance includes a one-time charge of approximately $1.1 billion related to acquired in-process research and development from the acquisition of VectivBio in the second quarter of 2023. For purposes of this guidance, Ironwood has assumed that it will not incur material expenses related to additional business development activities in 2023.

Non-GAAP Financial Measures

Ironwood presents non-GAAP net income and non-GAAP net income per share to exclude the impact, net of tax effects, of net gains and losses on derivatives related to Ironwood’s 2022 Convertible Notes that are required to be marked-to-market, amortization of acquired intangible assets, restructuring expenses, and acquisition-related costs. Non-GAAP adjustments are further detailed below:

  • The gains and losses on the derivatives related to Ironwood’s 2022 Convertible Notes were highly variable, difficult to predict and of a size that could have a substantial impact on the company’s reported results of operations in any given period.
  • Amortization of acquired intangible assets are non-cash expenses arising in connection with the acquisition of VectivBio and are considered to be non-recurring.
  • Restructuring expenses are considered to be a non-recurring event as they are associated with distinct operational decisions. Included in restructuring expenses are costs associated with exit and disposal activities.
  • Acquisition-related costs in connection with the acquisition of VectivBio are considered to be non-recurring and include direct and incremental costs associated with the acquisition and integration of VectivBio to the extent such costs were not classified as capitalizable transaction costs attributed to the cost of net assets acquired through acquisition accounting.

Ironwood also presents adjusted EBITDA, a non-GAAP measure, as well as guidance on adjusted EBITDA. Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs from GAAP net income. The adjustments are made on a similar basis as described above related to non-GAAP net income, as applicable.

Management believes this non-GAAP information is useful for investors, taken in conjunction with Ironwood’s GAAP financial statements, because it provides greater transparency and period-over-period comparability with respect to Ironwood’s operating performance. These measures are also used by management to assess the performance of the business. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. For a reconciliation of non-GAAP net income and non-GAAP net income per share to GAAP net income and GAAP net income per share, respectively, and for a reconciliation of adjusted EBITDA to GAAP net income, please refer to the tables at the end of this press release.

Ironwood does not provide guidance on GAAP net income or a reconciliation of expected adjusted EBITDA to expected GAAP net income because, without unreasonable efforts, it is unable to predict with reasonable certainty the non-GAAP adjustments used to calculate adjusted EBITDA. These adjustments are uncertain, depend on various factors and could have a material impact on GAAP net income for the guidance period.

Conference Call Information

Ironwood will host a conference call and webcast at 8:30 a.m. Eastern Time on Thursday, November 9, 2023 to discuss its third quarter 2023 results and recent business activities. Individuals interested in participating in the call should dial (888) 330-2384 (U.S. and Canada) or (240) 789-2701 (international) using conference ID number and event passcode 4671230. 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 at approximately 11:30 a.m. Eastern Time on November 9, 2023, running through 11:59 p.m. Eastern Time on November 23, 2023. To listen to the replay, dial (800) 770-2030 (U.S. and Canada) or (647) 362-9199 (international) using conference ID number 4671230. The archived webcast will be available on Ironwood’s website for 14 days beginning approximately one hour after the call has completed.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals (Nasdaq: IRWD), an S&P SmallCap 600® company, is a leading global gastrointestinal (GI) healthcare company on a mission to advance the treatment of GI diseases and redefine the standard of care for GI patients. We are pioneers in the development of LINZESS® (linaclotide), the U.S. branded prescription market leader for adults with irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC). LINZESS is also approved for the treatment of functional constipation in pediatric patients ages 6-17 years-old. Ironwood is also advancing apraglutide, a next-generation, long-acting synthetic GLP-2 analog being developed for rare gastrointestinal diseases, including short bowel syndrome with intestinal failure (SBS-IF) as well as several earlier stage assets. Building upon our history of GI innovation, we keep patients at the heart of our R&D and commercialization efforts to reduce the burden of GI diseases and address significant unmet needs.

Founded in 1998, Ironwood Pharmaceuticals is headquartered in Boston, Massachusetts, and has additional operations in Basel, Switzerland.

We routinely post information that may be important to investors on our website at www.ironwoodpharma.com. In addition, follow us on X and on LinkedIn.

About LINZESS (Linaclotide)

LINZESS® is the #1 prescribed brand in the U.S. for the treatment of adult patients with irritable bowel syndrome with constipation (“IBS-C”) or chronic idiopathic constipation (“CIC”), based on IQVIA data. LINZESS is a once-daily capsule that helps relieve the abdominal pain, constipation, and overall abdominal symptoms of bloating, discomfort and pain associated with IBS-C, as well as the constipation, infrequent stools, hard stools, straining, and incomplete evacuation associated with CIC. LINZESS relieves constipation in children and adolescents aged 6 to 17 years with functional constipation. The recommended dose is 290 mcg for IBS-C patients and 145 mcg for CIC patients, with a 72 mcg dose approved for use in CIC depending on individual patient presentation or tolerability. In children with functional constipation aged 6 to 17 years, the recommended dose is 72 mcg.

LINZESS is not a laxative; it is the first medicine approved by the FDA in a class called GC-C agonists. LINZESS contains a peptide called linaclotide that activates the GC-C receptor in the intestine. Activation of GC-C is thought to result in increased intestinal fluid secretion and accelerated 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 the United States, Ironwood and AbbVie co-develop and co-commercialize LINZESS for the treatment of adults with IBS-C or CIC. In Europe, AbbVie markets linaclotide under the brand name CONSTELLA® for the treatment of adults with moderate to severe IBS-C. In Japan, Ironwood's partner, Astellas, markets linaclotide under the brand name LINZESS for the treatment of adults with IBS-C or CIC. Ironwood also has partnered with AstraZeneca for development and commercialization of LINZESS in China, and with AbbVie for development and commercialization of linaclotide in all other territories worldwide.

LINZESS Important Safety Information

INDICATIONS AND USAGE

LINZESS® (linaclotide) is indicated for the treatment of both irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC) in adults and functional constipation (FC) in children and adolescents 6 to 17 years of age. It is not known if LINZESS is safe and effective in children with FC less than 6 years of age or in children with IBS-C less than 18 years of age.

IMPORTANT SAFETY INFORMATION

WARNING: RISK OF SERIOUS DEHYDRATION IN PEDIATRIC PATIENTS LESS THAN 2 YEARS OF AGE

 

LINZESS is contraindicated in patients less than 2 years of age. In nonclinical studies in neonatal mice, administration of a single, clinically relevant adult oral dose of linaclotide caused deaths due to dehydration.

Contraindications

  • LINZESS is contraindicated in patients less than 2 years of age due to the risk of serious dehydration.
  • LINZESS is contraindicated in patients with known or suspected mechanical gastrointestinal obstruction.

Warnings and Precautions

  • LINZESS is contraindicated in patients less than 2 years of age. In neonatal mice, linaclotide increased fluid secretion as a consequence of age-dependent elevated guanylate cyclase (GC-C) agonism, which was associated with increased mortality within the first 24 hours due to dehydration. There was no age dependent trend in GC-C intestinal expression in a clinical study of children 2 to less than 18 years of age; however, there are insufficient data available on GC-C intestinal expression in children less than 2 years of age to assess the risk of developing diarrhea and its potentially serious consequences in these patients.

Diarrhea

  • In adults, diarrhea was the most common adverse reaction in LINZESS-treated patients in the pooled IBS-C and CIC double-blind placebo-controlled trials. The incidence of diarrhea was similar in the IBS-C and CIC populations. Severe diarrhea was reported in 2% of 145 mcg and 290 mcg LINZESS-treated patients and in

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