– Ironwood launches as GI-focused healthcare company following
separation of Cyclerion Therapeutics on April 1, 2019 –
– First quarter 2019 revenue of $69 million driven primarily by
LINZESS® (linaclotide) collaboration revenue;
reiterates full year 2019 revenue guidance –
– LINZESS prescription demand grew 14% year-over-year in first
quarter 2019 –
– Late-stage GI pipeline continues to progress; IW-3718 is enrolling
patients in phase III trials and MD-7246 phase II trial expected to
initiate in May 2019 –
CAMBRIDGE, Mass.–(BUSINESS WIRE)–Ironwood
Pharmaceuticals, Inc. (Nasdaq:IRWD), a GI-focused healthcare
company, today provided an update on its first quarter 2019 results and
recent business activities.
“Following the completion of the separation of Cyclerion in early April,
Ironwood turned its focus exclusively to the development and
commercialization of medicines that make a difference for people living
with GI diseases,” said Mark Mallon, chief executive officer of
Ironwood. “We are already executing on our strategy, which is centered
on driving commercial performance of LINZESS, advancing our late-stage
GI pipeline, and strengthening our corporate and financial profile. We
also expect to transition to profitability from continuing operations in
2019 for the first time in the company’s history, an important step that
we believe will create significant value for our shareholders.”
Mark Mallon continued, “LINZESS demand growth accelerated in the first
quarter, increasing 14% year-over-year, with LINZESS net sales largely
offset by lower net price and a reduction in channel inventory.
Additionally, our pivotal Phase III program with IW-3718 for persistent
GERD continues to progress, and we are on track to initiate our Phase
IIb trial with MD-7246 in patients with abdominal pain associated with
IBS-D in the next few weeks. If data are positive, we believe there is a
substantial opportunity in this patient population, as well as in
additional GI disorders where abdominal pain is a predominant symptom.”
First Quarter 2019 Financial Highlights1
| (in thousands, except for per share amounts) | |||||||||||||||
| 1Q 2019 | 1Q 2018 | ||||||||||||||
| Total revenues | $ | 68,730 | $ | 69,155 | |||||||||||
| Total costs and expenses | 123,102 | 105,023 | |||||||||||||
| GAAP net loss | (59,284 | ) | (43,144 | ) | |||||||||||
| GAAP net loss per share | (0.38 | ) | (0.29 | ) | |||||||||||
| Non-GAAP net loss | (40,546 | ) | (37,847 | ) | |||||||||||
| Non-GAAP net loss per share | (0.26 | ) | (0.25 | ) | |||||||||||
1. Refer to the reconciliation of GAAP results to Non-GAAP Financial
Measures appearing on page 14 of this press release.
First Quarter 2019 and Recent Corporate Highlights
U.S. LINZESS
-
LINZESS U.S. net sales, as reported by Ironwood’s U.S. collaboration
partner Allergan plc, were $161.3 million in the first quarter of
2019. Ironwood and Allergan share equally in U.S. brand collaboration
profits.– Total LINZESS prescription demand in the first quarter of 2019
included approximately 30 million LINZESS capsules, a 14% increase
compared to the first quarter of 2018, per IQVIA.– Higher year-over-year growth in LINZESS prescription demand
compared to LINZESS U.S. net sales was primarily due to lower net
price and a modest reduction in channel inventory.– Ironwood recorded $64.3 million in collaboration revenue in the
first quarter of 2019 related to sales of LINZESS in the U.S. See
U.S. LINZESS Commercial Collaboration table at the end of the press
release.– Net profit for the LINZESS U.S. brand collaboration, net of
commercial and research and development (R&D) expenses, was $94.4
million in the first quarter of 2019, compared to $88.8 million in
the first quarter of 2018. See U.S. LINZESS Full Brand Collaboration
table below and at the end of this press release.
|
U.S. LINZESS Full Brand Collaboration |
Three Months Ended |
||||||||||
| 2019 | 2018 | ||||||||||
| LINZESS U.S. net sales | $161,348 | $159,334 | |||||||||
| Allergan & Ironwood commercial costs and expenses | 53,315 | 58,890 | |||||||||
| Commercial margin | 67% | 63% | |||||||||
| Allergan & Ironwood R&D Expenses | 13,616 | 11,597 | |||||||||
| Total net profit on sales of LINZESS | $94,417 | $88,847 | |||||||||
| Full brand margin | 59% | 56% | |||||||||
– In January 2019, Ironwood and Allergan announced the third patent
infringement settlement with respect to LINZESS with Mylan
Pharmaceuticals, Inc. Pursuant to the terms of the settlement, Ironwood
and Allergan will grant Mylan a license to market its generic version of
LINZESS 145 mcg and 290 mcg in the U.S. beginning February 5, 2030, and
its generic version of LINZESS 72 mcg in the U.S. beginning August 5,
2030 (both subject to U.S. FDA approval), unless certain limited
circumstances, customary for settlement agreements of this nature, occur.
GI Pipeline
-
Linaclotide. Ironwood and Allergan have completed dosing in the
Phase IIIb trial evaluating the efficacy and safety of linaclotide 290
mcg on multiple abdominal symptoms including pain, bloating and
discomfort in patients with irritable bowel syndrome with constipation
(IBS-C). Ironwood expects to report top-line data in mid-2019.
If data are positive, the companies intend to begin communicating the
additional benefits to patients as soon as possible.– Approximately 95% of surveyed IBS-C patients reported
experiencing abdominal pain, bloating and/or discomfort at least
once-a-week or more. -
IW-3718. Ironwood is currently enrolling patients in two
pivotal Phase III trials of IW-3718, its gastric retentive formulation
of a bile acid sequestrant for the potential treatment of persistent
GERD. Data from the Phase III trials are expected in the second half
of 2020.– The Phase III trials are identical, randomized, double-blind,
placebo-controlled, multicenter trials that target enrolling
approximately 1,320 total patients (660 in each trial) with
persistent GERD who demonstrate evidence of pathological acid reflux.– Persistent GERD affects an estimated 10 million Americans who
continue to suffer from heartburn and regurgitation despite
receiving treatment with proton pump inhibitors (PPIs), the current
standard of care. -
MD-7246. MD-7246 is being evaluated by Ironwood and Allergan as
an oral, intestinal, non-opioid, pain-relieving agent for patients in
the U.S suffering from abdominal pain associated with certain GI
diseases.– Ironwood expects to initiate a randomized, double-blind,
placebo-controlled Phase II trial of MD-7246 in patients with
abdominal pain associated with IBS with diarrhea (IBS-D) in May
2019. The Phase II trial is designed to evaluate the safety,
tolerability, and treatment effect on abdominal pain of MD-7246 in
approximately 400 IBS-D patients.– IBS-D affects an estimated 16 million Americans who suffer from
frequent and bothersome abdominal pain with a limited number of
treatment options available.
Global Collaborations and Partnerships
-
VIBERZI® (eluxadoline). In April 2019,
Ironwood and Allergan entered into a new non-exclusive U.S.
co-promotion agreement for VIBERZI for the treatment of adult patients
with IBS-D. Ironwood’s clinical sales specialists will continue to
detail VIBERZI to the healthcare practitioners (HCPs) to whom they
currently detail LINZESS. Under the terms of the new agreement,
Ironwood will now be compensated at a fixed rate per call delivered to
target HCPs, subject to a cap of approximately $4 million. In
addition, Ironwood has the potential to receive additional
consideration if a pre-specified number of VIBERZI units are sold
during the term of the agreement. The agreement covers the remainder
of 2019, with the opportunity for extension. -
LINZESS in Japan. Ironwood reported $2.6 million in sales of
linaclotide active pharmaceutical ingredient (API) to Astellas in the
first quarter of 2019. LINZESS was approved for the treatment of
adults with IBS-C in Japan in December 2016 and for the treatment of
chronic constipation in August 2018, and is being commercialized in
Japan by Ironwood’s partner Astellas Pharma Inc. -
LINZESS in China. Ironwood expects to launch LINZESS in China
with its partner AstraZeneca in the second half of 2019. Ironwood
previously announced that the National Medical Products Administration
approved the marketing application for LINZESS for adults with IBS-C
in China in January 2019. Ironwood and AstraZeneca are jointly
responsible for the commercialization of linaclotide in China, with
AstraZeneca primarily responsible for local operational execution.
First Quarter Financial Results
-
Total Revenues. Total revenues in the first quarter of 2019
were $68.7 million, consisting of $64.3 million associated with
Ironwood’s share of the net profits from the sales of LINZESS in the
U.S., $2.6 million in sales of linaclotide API, and $1.8 million in
linaclotide royalties, co-promotion and other revenue. -
Operating Expenses. Operating expenses in the first quarter of
2019 consisted of $64.7 million in SG&A expenses (including $18.9
million in separation expenses), $54.0 million in R&D expenses
(including $0.5 million in separation expenses), $3.3 million in
restructuring expenses, and $1.0 million in cost of revenues.– The separation of Ironwood and Cyclerion was completed on April 1,
2019. As a result, in the first quarter of 2019, SG&A and R&D
expenses included costs related to both companies. Beginning in the
second quarter of 2019, Ironwood expects to reclassify historical
Cyclerion-related assets, liabilities and expenses and
separation-related expenses as discontinued operations. -
Interest Expense. Net interest expense was $8.9 million in the
first quarter of 2019, primarily in connection with the 8.375% Notes
funded in January 2017 and the approximately $336 million convertible
debt financing funded in June 2015. Interest expense recorded in the
first quarter of 2019 includes $5.0 million in cash expense and $4.6
million in non-cash expense. -
Gain on Derivatives. Ironwood recorded a gain on derivatives of
$3.9 million in the first quarter of 2019 related to the change in
fair value of the convertible note hedges and note hedge warrants
issued in connection with the convertible debt financing. -
Net Loss.
– GAAP net loss was $59.3 million, or $0.38 per share, in the first
quarter of 2019, compared to net loss of $43.1 million, or $0.29 per
share in the first quarter of 2018. Non-GAAP net loss was $40.5
million, or $0.26 per share, in the first quarter of 2019, compared
to $37.8 million, or $0.25 per share in the first quarter of 2018.– Non-GAAP net loss excludes the impact of mark-to-market
adjustments on the derivatives related to Ironwood’s convertible
debt, the amortization of acquired intangible assets, the fair value
remeasurement of contingent consideration related to Ironwood’s U.S.
lesinurad license, and the impairment of acquired intangible assets
in connection with Ironwood’s notice of termination of the lesinurad
franchise. Beginning in the first quarter of 2019, Ironwood now also
excludes restructuring and separation-related expenses from non-GAAP
net loss. This is reflected in the non-GAAP net loss in the first
quarter of 2019 and 2018 presented in this press release. See
Non-GAAP Financial Measures below. -
Cash Flow Statement and Balance Sheet Highlights.
– Ironwood ended the first quarter of 2019 with approximately $119
million of cash and cash equivalents.– Ironwood used cash from operations of approximately $42 million
during the first quarter of 2019.– In March 2019, Ironwood paid its first principal payment of
approximately $12 million on its 8.375% Notes.
Gina Consylman, Ironwood’s chief financial officer, commented, “We are
at an exciting turning point in Ironwood’s trajectory as we transition
toward becoming a profitable company. We believe our ability to
successfully generate positive cash flows through continued top-line
growth and focused investment into our core business will enable the
potential for increased operational flexibility, a strengthened
financial profile, and the opportunity to create outstanding shareholder
value.”
Ironwood 2019 Financial Guidance
In 2019, Ironwood expects:
| 2019 Guidance | |||||||
| Total revenue | $370 – $390 million | ||||||
| Net interest expense | ~$35 million | ||||||
| Separation expenses1 | $30 – $40 million | ||||||
| Restructuring expenses2 | ~$3 – $4 million | ||||||
| (new) Adjusted EBITDA from continuing operations3 | >$65 million | ||||||
| (new) LINZESS net sales growth | Low-to-mid single digit % increase | ||||||
1 Separation expenses were $19.4 million in the first quarter
of 2019.
2 Restructuring expenses were largely incurred during the
first quarter of 2019 in connection with the reduction in workforce
commenced in February 2019. Total restructuring expenses in the first
quarter of 2019 were $3.3 million.
3 Adjusted EBITDA from continuing operations is expected to
be calculated by subtracting net interest expense, taxes, depreciation
and amortization from non-GAAP net income (loss) from continuing
operations. Beginning in the second quarter of 2019, Ironwood expects to
report in its financial statements GAAP net income (loss) from
continuing operations which will exclude discontinued operations related
to Cyclerion. Non-GAAP net income (loss) from continuing operations is
expected to include adjustments from GAAP net income (loss) from
continuing operations on a similar basis as described below for non-GAAP
net income (loss).
Non-GAAP Financial Measures
Ironwood presents non-GAAP net loss and non-GAAP net loss per share to
exclude the impact of net gains and losses on the derivatives related to
our convertible notes that are required to be marked-to-market, the
amortization of acquired intangible assets, the fair value remeasurement
of contingent consideration associated with Ironwood’s U.S. license
agreement with AstraZeneca for the exclusive rights to all products
containing lesinurad, and the impairment of intangible assets associated
with Ironwood’s subsequent notice of termination of the lesinurad
license agreement, if any. Beginning with its first quarter 2019
financial results, Ironwood is also excluding restructuring and
separation-related expenses from non-GAAP net loss. These adjustments
are reflected in the non-GAAP net loss in the first quarter of 2019 and
2018 presented in this press release. Non-GAAP adjustments are further
detailed below:
-
The gains and losses on the derivatives related to our convertible
notes may be 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. -
The acquired intangible assets associated with the terminated U.S.
license agreement with AstraZeneca for the exclusive rights to all
products containing lesinurad are valued as of the date of acquisition
and are amortized over their estimated economic useful life, and
management believes excluding the amortization of acquired intangible
assets provides more consistency with the treatment of internally
developed intangible assets for which research and development costs
were previously expensed. -
The contingent consideration balance also associated with the
terminated U.S. lesinurad license agreement with AstraZeneca is
remeasured each reporting period, and the resulting change in fair
value impacts the company’s reported results of operations. The
changes in the fair value remeasurement of contingent consideration do
not correlate to the company’s actual cash payment obligations in the
relevant period. -
Impairment of intangible assets is a non-cash charge that Ironwood
considers to be non-recurring as it is associated with its notice of
termination of the lesinurad franchise. As such, management believes
that excluding the impairment of intangible assets provides more
transparency into Ironwood’s continuing operations. -
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. -
Separation expenses include costs associated with the spin-off of
Cyclerion from Ironwood. These costs are considered non-recurring as
the separation was a significant and unusual event. These expenses
will not appear as non-GAAP adjustments used to calculate non-GAAP net
income (loss) from continuing operations or adjusted EBITDA from
continuing operations, as such expenses are expected to be included as
part of discontinued operations, and will therefore be excluded from
the calculation of GAAP net income (loss) from continuing operations.
Ironwood expects to present GAAP net income (loss) from continuing
operations and adjusted EBITDA from continuing operations, a non-GAAP
measure, beginning in the second quarter of 2019. Adjusted EBITDA from
continuing operations is expected to be calculated by subtracting net
interest expense, taxes, depreciation and amortization from non-GAAP net
income (loss) from continuing operations. Non-GAAP net income (loss)
from continuing operations is expected to include adjustments from GAAP
net income (loss) from continuing operations on a similar basis as
described above for non-GAAP net income (loss).
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 loss and non-GAAP net loss per share to GAAP net loss and
GAAP net loss per share, respectively, please refer to the table at the
end of this press release. Ironwood does not provide guidance on GAAP
net income (loss) from continuing operations or a reconciliation of
expected adjusted EBITDA from continuing operations to expected GAAP net
income (loss) from continuing operations because, without unreasonable
efforts, it is unable to predict with reasonable certainty the
adjustments used to calculate non-GAAP income (loss) from continuing
operations, including, without limitation, the mark-to-market
adjustments on the derivatives related to its convertible notes. These
adjustments are uncertain, depend on various factors and could have a
material impact on GAAP net income (loss) from continuing operations for
the guidance period.
Conference Call Information
Ironwood will host a conference call and webcast at 8:30 a.m. Eastern
Time on Thursday, May 2, 2019 to discuss its first quarter 2019 results
and recent business activities. Individuals interested in participating
in the call should dial (866) 393-4306 (U.S. and Canada) or (734)
385-2616 (international) using conference ID number 8429338. 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 May 2, 2019 running through 11:59 p.m. Eastern Time on
May 16, 2019. To listen to the replay, dial (855) 859-2056 (U.S. and
Canada) or (404) 537-3406 (international) using conference ID number
8429338. 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) is a GI-focused healthcare
company dedicated to creating medicines that make a difference for
patients living with GI diseases. We discovered, developed and are
commercializing linaclotide, the U.S. branded prescription market leader
for adults with irritable bowel syndrome with constipation (IBS-C) or
chronic idiopathic constipation (CIC). We are currently advancing a
Phase IIIb trial evaluating the efficacy and safety of linaclotide on
multiple abdominal symptoms, including pain, bloating and discomfort, in
adult patients with IBS-C.
We are also advancing two late-stage, first-in-category GI product
candidates: IW-3718 is a gastric retentive formulation of a bile acid
sequestrant being developed for the potential treatment of persistent
gastroesophageal reflux disease, and MD-7246 is a delayed-release
formulation of linaclotide that is being evaluated as an oral,
intestinal, non-opioid, pain-relieving agent for patients suffering from
abdominal pain associated with IBS with diarrhea.
Ironwood was founded in 1998 and is headquartered in Cambridge, Mass.
For more information, please visit our newly launched website at www.ironwoodpharma.com
or www.twitter.com/ironwoodpharma;
information that may be important to investors will be routinely posted
in both these locations.
About LINZESS (linaclotide)
LINZESS® is the #1 prescribed brand for the treatment of adult patients
with irritable bowel syndrome with constipation (IBS-C) and chronic
idiopathic constipation (CIC), based on IQVIA data.
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, straining, and incomplete evacuation
associated with CIC. 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. LINZESS
should be taken at least 30 minutes before the first meal of the day.
LINZESS is contraindicated in pediatric patients less than 6 years of
age. The safety and effectiveness of LINZESS in pediatric patients less
than 18 years of age have not been established. In neonatal mice,
linaclotide increased fluid secretion as a consequence of GC-C agonism
resulting in mortality within the first 24 hours due to dehydration. Due
to increased intestinal expression of GC-C, patients less than 6 years
of age may be more likely than patients 6 years of age and older to
develop severe diarrhea and its potentially serious consequences. In
adults with IBS-C or CIC treated with LINZESS, the most commonly
reported adverse event was diarrhea.
LINZESS is not a laxative; it is the first medicine approved by the FDA
in a class called guanylate cyclase-C (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 Allergan plc co-develop and
co-commercialize LINZESS for the treatment of adults with IBS-C or CIC.
In Europe, Allergan 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 Allergan for development and
commercialization of linaclotide in all other territories worldwide.
LINZESS Impo
Contacts
Meredith Kaya, 617-374-5082
Vice President, Investor Relations and
Corporate Communications
mkaya@ironwoodpharma.com