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Ironwood Pharmaceuticals Reports Fourth Quarter and Full Year 2023 Results; Achieves 2023 Financial Guidance

February 15, 2024 Off By BusinessWire

– LINZESS^®(Iinaclotide) 2023 U.S. net sales of $1.1 billion, an increase of 7% year-over-year, driven by EUTRx prescription demand growth of 10% year-over-year –

– 2023 Ironwood revenue of $443 million, driven primarily by $430 million in U.S. LINZESS collaboration revenue –

– Continues to expect topline results from the STARS Phase III study of apraglutide in patients with short bowel syndrome with intestinal failure (SBS-IF) in March of 2024 –

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

“In 2023, we made important progress toward realizing our vision to become the leading GI healthcare company in the industry,” said Tom McCourt, chief executive officer of Ironwood. “In its 11^th year on market, LINZESS had another terrific year as the leading prescription treatment for adults with IBS-C or chronic idiopathic constipation, with prescription demand increasing a robust 10% year-over-year. In June of 2023, LINZESS received FDA approval for functional constipation in pediatric patients ages 6 to 17, becoming the first and only prescription therapy for this patient population. In addition, we strengthened our GI pipeline with the addition of apraglutide. We believe apraglutide has the potential to improve the standard of care for patients with short bowel syndrome dependent on parenteral support, if approved, as the only once-weekly GLP-2 therapy, and achieve $1 billion dollars in peak net sales. Looking ahead in 2024, we remain focused on maximizing LINZESS, advancing our GI pipeline and delivering sustained profits and cash flows. We are excited about the continued strong LINZESS performance and the key pipeline catalysts ahead of us, highlighted by the topline data from our STARS Phase 3 study expected in March and topline data from the ongoing Phase 2 study for CNP-104 expected in the third quarter, which we believe can propel Ironwood’s next phase of growth and create value for patients and shareholders in the years to come.”

Fourth Quarter and Full Year 2023 Financial Highlights¹(in thousands, except for per share amounts)

	Q4 2023	Q4 2022	FY 2023	FY 2022
Total revenues	$117,553	$107,199	$442,735	$410,596
Total operating expenses²	79,964	38,836	1,388,165	160,259
GAAP net income (loss)²	(1,745)	48,867	(1,031,559)	175,065
GAAP net income (loss) attributable to Ironwood Pharmaceuticals, Inc.²	(1,087)	–	(1,002,239)	–
GAAP net income (loss) attributable to Ironwood Pharmaceuticals, Inc. per share – basic	(0.01)	0.32	(6.45)	1.13
GAAP net income (loss) attributable to Ironwood Pharmaceuticals, Inc. per share – diluted	(0.01)	0.27	(6.45)	0.96
Adjusted EBITDA²	39,895	68,703	(884,820)	251,755
Non-GAAP net income (loss)²	39	48,885	(973,788)	174,883
Non-GAAP net income (loss) per share – basic	(0.00)	0.32	(6.27)	1.13
Non-GAAP net income (loss) per share – diluted	(0.00)	0.27	(6.27)	0.96

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.
2.		Figures presented for FY 2023 include 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.

Fourth Quarter and Full Year 2023 Corporate Highlights

U.S. LINZESS

Prescription Demand: Total LINZESS prescription demand in the fourth quarter of 2023 was 50 million LINZESS capsules, a 10% increase compared to the fourth quarter of 2022, per IQVIA. Total prescription demand was 191 million LINZESS capsules for the full year 2023, a 10% increase compared to the full year 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 $274.4 million in the fourth quarter of 2023, a 5% increase compared to $260.3 million in the fourth quarter of 2022, and $1,073.2 million for the full year 2023, a 7% increase compared to $1,002.1 million for the full year 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 77% in the fourth quarter of 2023, compared to 74% in the fourth quarter of 2022. LINZESS commercial margin was 73% for the full year in each of 2023 and 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 $202.5 million in the fourth quarter of 2023, compared to $183.8 million in the fourth quarter of 2022. Net profit for the LINZESS U.S. brand collaboration, net of commercial and R&D expenses, was $749.9 million for the full year 2023, compared to $695.7 million for the full year 2022. See U.S. LINZESS Full Brand Collaboration table below and at the end of this press release.
Collaboration Revenue to Ironwood: Ironwood recorded $114.0 million in collaboration revenue in the fourth quarter of 2023 related to sales of LINZESS in the U.S., a 9% increase compared to $104.8 million for the fourth quarter of 2022. Ironwood recorded $430.5 million in collaboration revenue for the full year 2023, an 8% increase compared to $398.8 million in 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 December 31,		Twelve Months Ended December 31,
	2023	2022	2023	2022
LINZESS U.S. net sales as reported by AbbVie	274,356	$260,327	1,073,210	$1,002,143
AbbVie & Ironwood commercial costs, expenses and other discounts	62,903	66,879	286,045	272,757
Commercial margin	77%	74%	73%	73%
AbbVie & Ironwood R&D Expenses	8,980	9,684	37,250	33,684
Total net profit on sales of LINZESS	202,473	183,764	749,915	695,702
Full brand margin	74%	71%	70%	69%

In January 2024, Ironwood announced publication in The Lancet Gastroenterology & Hepatology of new linaclotide Phase III data in children and adolescents aged 6-17 years with functional constipation. The data highlighted additional efficacy endpoints from the company’s pivotal Phase III trial, which formed the basis of the June 2023 U.S. Food and Drug Administration (FDA) approval of linaclotide for the treatment of functional constipation in this population. Additional details can be found here.
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 short bowel syndrome dependent on parenteral support, also known as short bowel syndrome with intestinal failure, based on its potency and pharmacologic 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 the 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 an exploratory Phase II clinical trial, STARGAZE, to evaluate apraglutide in patients with steroid-refractory 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 disease modifying therapy for PBC.
COUR is currently conducting a clinical study with 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.

Fourth Quarter and Full Year 2023 Financial Results

Total Revenues. Total revenues in the fourth quarter of 2023 were $117.6 million, compared to $107.2 million in the fourth quarter of 2022. Total revenues for the full year 2023 were $442.7 million, compared to $410.6 million for the full year 2022.
- Total revenues in the fourth quarter of 2023 consisted of $114.0 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 fourth quarter of 2022 consisted of $104.8 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S. and $2.4 million in royalties and other revenue.
- Total revenues for the full year 2023 consisted of $430.5 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S., and $12.2 million in royalties and other revenue. Total revenues for the full year 2022 consisted of $398.8 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S., and $11.8 million in royalties and other revenue.
Operating Expenses. Operating expenses in the fourth quarter of 2023 were $80.0 million, compared to $38.8 million in the fourth quarter of 2022. Operating expenses for the full year 2023 were $1,388.2 million, compared to $160.3 million for the full year 2022.
- Operating expenses in the fourth quarter of 2023 consisted of $38.7 million in selling, general and administrative (“SG&A”) expenses, $35.7 million in R&D expenses, $5.0 million in acquired in‐process research and development as well as $0.6 million in restructuring expenses. Operating expenses in the fourth quarter of 2022 consisted of $28.4 million in SG&A expenses and $10.4 million in R&D expenses.
- Operating expenses for the full year 2023 consisted primarily of approximately $1.1 billion in acquired in‐process research and development relating to the acquisition of VectivBio, $158.3 million in SG&A expenses, $116.1 million in R&D expenses and $18.3 million in restructuring expenses. Operating expenses for the full year 2022 consisted primarily of $116.0 million in SG&A expenses, and $44.3 million in R&D expenses.
Interest Expense and Other Financing Costs. Interest expense was $8.4 million in the fourth quarter of 2023 and $21.6 million for the full year 2023, in connection with Ironwood’s convertible senior notes and revolving credit facility. Interest expense recorded in the fourth quarter of 2023 included $7.6 million in cash expense and $0.6 million in non-cash expense. Interest expense recorded for the full year 2023 included $19.3 million in cash expense and $2.1 million in non-cash expense.
- Interest expense was $1.5 million in the fourth quarter of 2022 and $7.6 million for the full year 2022, in connection with Ironwood’s convertible senior notes. Interest expense recorded in the fourth quarter of 2022 included $1.1 million in cash expense and $0.4 million in non-cash expense. Interest expense recorded for the full year 2022 included $5.7 million in cash expense and $1.9 million in non-cash expense.
Interest and Investment Income. Interest and investment income was $1.2 million in the fourth quarter of 2023 and $19.0 million for the full year 2023.
- Interest and investment income was $5.4 million in the fourth quarter of 2022 and $9.5 million for the full year 2022.
Gain (Loss) on Derivatives. Ironwood recorded a loss on derivatives of an insignificant amount in the fourth quarter of 2022, as a result of the change in fair value of its note hedge warrants. For the full year 2022, Ironwood recorded a gain on derivatives of $0.2 million. Ironwood’s note hedge warrants terminated unexercised upon expiration in April 2023.
Income Tax Expense. Ironwood recorded $32.1 million of income tax expense in the fourth quarter of 2023, and $83.5 million of income tax expense for the full year 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 $23.4 million of income tax expense in the fourth quarter of 2022 and $77.4 million of income tax expense for the full year of 2022, the majority of which was non-cash, as Ironwood continued to utilize net operating losses to offset taxable income for federal purposes and in many states.
GAAP Net Income (Loss) Attributable to Ironwood. GAAP net loss was $1.1 million, or ($0.01) per share (basic and diluted), in the fourth quarter of 2023 compared to GAAP net income of $48.9 million, or $0.32 per share (basic) and $0.27 per share (diluted), in the fourth quarter of 2022. GAAP net loss for the full year 2023 was $1.0 billion, or ($6.45) per share (basic and diluted), compared to GAAP net income of $175.1 million, or $1.13 per share (basic) and $0.96 per share (diluted), for the full year 2022.
Non-GAAP Net Income (Loss). Non-GAAP net income was an insignificant amount, or ($0.00) per share (basic and diluted), in the fourth quarter of 2023, compared to non-GAAP net income of $48.9 million, or $0.32 per share (basic) and $0.27 per share (diluted), in the fourth quarter of 2022. Non-GAAP net loss for the full year 2023 was $973.8 million, or ($6.27) per share (basic and diluted), compared to non-GAAP net income of $174.9 million, or $1.13 per share (basic) and $0.96 per share (diluted), for the full year 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 $39.9 million in the fourth quarter of 2023, compared to $68.7 million in the fourth quarter of 2022. For the full year 2023, adjusted EBITDA was ($884.8) million, compared to $251.8 million for the full year 2022.
- 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. See Non-GAAP Financial Measures below.
Cash Flow Highlights. Ironwood ended 2023 with $92.2 million of cash and cash equivalents, compared to $656.2 million of cash and cash equivalents at the end of 2022.
- In the fourth quarter of 2023 and in the full year of 2023, Ironwood repaid $25.0 million and $100.0 million, respectively, 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 $300.0 million as of December 31, 2023.
- Ironwood generated $35.8 million in cash from operations in the fourth quarter of 2023, compared to $79.2 million in cash from operations in the fourth quarter of 2022. Ironwood generated $183.4 million in cash from operations for the full year 2023, compared to $273.8 million for the full year 2022.
Ironwood 2024 Financial Guidance. In 2024, Ironwood continues to expect:

	2024 Guidance
U.S. LINZESS Net Sales Growth	Low-single digits %
Total Revenue	$435 to $455 million
Adjusted EBITDA¹	>$150 million ^{Excludes potential CNP-104 option exercise}

¹Adjusted EBITDA is calculated by subtracting restructuring expenses, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs from GAAP net income. For purposes of the 2024 guidance, Ironwood has assumed it will not incur material expenses related to business development activities in 2024 and excludes any costs associated with potential CNP-104 option exercise. 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. 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.

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, February 15, 2024 to discuss its fourth quarter and full year 2023 results and recent business activities. Individuals interested in participating in the call should dial +1 (888) 596-4144 (U.S. and Canada) or (647) 495-7514 (international) using conference ID number and event passcode 1057375. 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 February 15, 2024, running through 11:59 p.m. Eastern Time on February 29, 2024. To listen to the replay, dial (800) 770-2030 (U.S. and Canada) or (647) 362-9199 (international) using conference ID number 1057375. The archived webcast will be available on Ironwood’s website for 1 year 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 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).

Contacts

Investors:

Greg Martini, 617-374-5230

[email protected]

Matt Roache, 617-621-8395

[email protected]

Media:

Beth Calitri, 978-417-2031

[email protected]

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