– 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 –
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 <1% of 72
mcg LINZESS-treated CIC patients.
- In children and adolescents 6 to 17 years of age, diarrhea was
the most common adverse reaction in 72 mcg LINZESS-treated patients
in the FC double-blind placebo-controlled trial. Severe diarrhea
was reported in <1% of 72 mcg LINZESS treated patients. If
severe diarrhea occurs, dosing should be suspended and the patient
rehydrated.
Common Adverse Reactions (incidence ≥2% and greater than
placebo)
- In IBS-C or CIC adult patients: diarrhea, abdominal pain,
flatulence, and abdominal distension.
- In FC pediatric patients: diarrhea.
Please see full Prescribing Information including Boxed Warning:
https://www.rxabbvie.com/pdf/linzess_pi.pdf
LINZESS® and CONSTELLA® are registered trademarks of Ironwood
Pharmaceuticals, Inc. Any other trademarks referred to in this
press release are the property of their respective owners. All
rights reserved.
Forward-Looking Statements
This press release contains forward-looking statements.
Investors are cautioned not to place undue reliance on these
forward-looking statements, including statements about Ironwood’s
ability to execute on its mission; Ironwood’s strategy, business,
financial position and operations; Ironwood’s ability to drive
growth and profitability; the demand, development, commercial
availability and commercial potential of linaclotide, including
pursuing highly differentiated GI assets to add to our portfolio,
and the drivers, timing, impact and results thereof; the potential
indications for, and benefits of, linaclotide; our financial
performance and results, and guidance and expectations related
thereto; LINZESS prescription demand growth, LINZESS U.S. net sales
growth, total revenue and adjusted EBITDA in 2023; our ability to
develop apraglutide and the expected timing of receiving data from
the apraglutide clinical trials; the potential of apraglutide to
become the standard of care for patients with SBS-IF; the potential
of CNP-104 to be the first PBC disease modifying therapy and the
expected timing of receiving topline data from the clinical study
for CNP-104 in PBC patients; and our plan to advance IW-3300
including the timing and results thereof. These forward-looking
statements speak only as of the date of this press release, and
Ironwood undertakes no obligation to update these forward-looking
statements. Each forward-looking statement is subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in such statement. Applicable risks
and uncertainties include those related to the effectiveness of
development and commercialization efforts by us and our partners;
preclinical and clinical development, manufacturing and formulation
development of linaclotide, apraglutide, CNP-104, IW-3300, and our
product candidates; the risk that clinical programs and studies,
including for the linaclotide pediatric program, apraglutide,
IW-3300 and CNP-104, may not progress or develop as anticipated,
including that studies are delayed or discontinued for any reason,
such as safety, tolerability, enrollment, manufacturing, economic
or other reasons; the risk that findings from our completed
nonclinical and clinical studies may not be replicated in later
studies; the risk that peripheral T-cell immune responses evidenced
in patients treated with CNP-104 may neither support the
mechanistic rationale for CNP-104 nor be predictive of the topline
data from the clinical study for CNP-104 in PBC patients since the
clinical relevance of such T-cell immune response has not been
adequately established; the risk that we or our partners are unable
to obtain, maintain or manufacture sufficient LINZESS or our
product candidates, or otherwise experience difficulties with
respect to supply or manufacturing; the efficacy, safety and
tolerability of linaclotide and our product candidates; the risk
that the commercial and therapeutic opportunities for LINZESS or
our product candidates are not as we expect; decisions by
regulatory and judicial authorities; the risk we may never get
additional patent protection for linaclotide and other product
candidates, that patents for linaclotide or other products may not
provide adequate protection from competition, or that we are not
able to successfully protect such patents; the risk that we are
unable to manage our expenses or cash use, or are unable to
commercialize our products as expected; the risk that the
development of any of our linaclotide pediatric programs,
apraglutide, CNP-104 and/or IW-3300 are not successful or that any
of our product candidates is not successfully commercialized;
outcomes in legal proceedings to protect or enforce the patents
relating to our products and product candidates, including
abbreviated new drug application litigation; the risk that
financial and operating results may differ from our projections;
developments in the intellectual property landscape; challenges
from and rights of competitors or potential competitors; the risk
that our planned investments do not have the anticipated effect on
our company revenues; developments in accounting guidance or
practice; Ironwood’s or AbbVie’s accounting practices, including
reporting and settlement practices as between Ironwood and AbbVie;
the risk that we are unable to manage our expenses or cash use, or
are unable to commercialize our products as expected; the impact of
the COVID-19 pandemic; and the risks listed under the heading “Risk
Factors” and elsewhere in our Annual Report on Form 10-K for the
year ended December 31, 2022, in our Quarterly Report on Form 10-Q
for the second quarter ended June 30, 2023, and in our subsequent
Securities and Exchange Commission filings.
Condensed Consolidated Balance
Sheets
(In thousands)
(unaudited)
September 30, 2023
December 31, 2022
Assets
Cash and cash equivalents
$
110,164
$
656,203
Accounts receivable, net
124,546
115,458
Prepaid expenses and other current
assets
18,112
7,715
Restricted cash
788
1,250
Total current assets
253,610
780,626
Restricted cash, net of current
portion
510
485
Accounts receivable, net of current
portion
-
14,589
Property and equipment, net
5,630
6,288
Operating lease right-of-use assets
12,956
14,023
Intangible assets, net
3,889
-
Deferred tax assets
243,645
283,661
Other assets
3,823
847
Total assets
$
524,063
$
1,100,519
Liabilities and Stockholders’
Equity
Accounts payable
$
4,698
$
483
Accrued research and development costs
10,735
5,258
Accrued expenses and other current
liabilities
62, 714
16,700
Current portion of operating lease
liabilities
3,111
3,065
Current portion on convertible senior
notes
199,321
-
Note hedge warrants
-
19
Total current liabilities
280,579
25,525
Operating lease liabilities, net of
current portion
15,074
16,599
Convertible senior notes, net of current
portion
198,141
396,251
Revolving credit facility
325,000
-
Other liabilities
30,948
9,766
Total stockholders’ equity (deficit)
(325,679
)
652,378
Total liabilities and stockholders’
equity (deficit)
$
524,063
$
1,100,519
Condensed Consolidated
Statements of Income
(In thousands, except per
share amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues
Collaborative arrangements revenue
$
113,739
$
108,637
$
325,182
$
303,397
Total revenues
113,739
108,637
325,182
303,397
Operating expenses:
Research and development
32,985
11,545
80,409
33,819
Selling, general and administrative
36,046
28,619
119,647
87,604
Restructuring expenses
4,685
-
17,696
-
Acquired in-process research and
development
-
-
1,090,449
-
Total operating expenses
73,716
40,164
1,308,201
121,423
Income (loss) from operations
40,023
68,473
(983,019
)
181,974
Other income (expense):
Interest expense and other financing
costs
(9,839
)
(1,524
)
(13,206
)
(6,072
)
Interest and investment income
1,748
2,807
17,777
4,055
Gain on derivatives
-
151
19
200
Other income (expense), net
(8,091
)
1,434
4,590
(1,817
)
Income (loss) before income taxes
31,932
69,907
(978,429
)
180,157
Income tax expense
(17,982
)
(19,590
)
(51,385
)
(53,959
)
GAAP net income (loss)
13,950
50,317
(1,029,814
)
126,198
Less: GAAP net income (loss) attributable
to noncontrolling interests
(1,371
)
-
(28,662
)
-
GAAP net income (loss) attributable to
Ironwood Pharmaceuticals, Inc.
$
15,321
$
50,317
$
(1,001,152
)
$
126,198
GAAP net income (loss) attributable to
Ironwood Pharmaceuticals, Inc. per share—basic
$0.10
$0.33
($6.45
)
$0.82
GAAP net income (loss) attributable to
Ironwood Pharmaceuticals, Inc. per share—diluted
$0.09
$0.28
($6.45
)
$0.69
Reconciliation of GAAP Results
to Non-GAAP Financial Measures
(In thousands, except per
share amounts) (unaudited)
A reconciliation between net
income (loss) on a GAAP basis and on a non-GAAP basis is as
follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP net income (loss)1
$
13,950
$
50,317
$
(1,029,814
)
$
126,198
Adjustments:
Mark-to-market adjustments on the
derivatives related to convertible notes, net
-
(151
)
(19
)
(200
)
Amortization of acquired intangible
assets
207
-
211
-
Restructuring expenses
4,685
-
17,696
-
Acquisition-related costs
3,864
-
39,545
-
Tax effect of adjustments
(904
)
-
(1,447
)
-
Non-GAAP net income (loss)1
$
21,802
$
50,166
$
(973,828
)
$
125,998
A reconciliation between basic net income (loss) per share on a
GAAP basis and on a non-GAAP basis is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
GAAP net income (loss) attributable to
Ironwood Pharmaceuticals, Inc. per share – basic
$
0.10
$
0.33
$
(6.45
)
$
0.82
Plus: GAAP net income (loss) attributable
to noncontrolling interests – basic
(0.01
)
-
(0.18
)
-
Adjustments to GAAP net income (loss) per
share (as detailed above)
0.05
-
0.36
-
Non-GAAP net income (loss) per share –
basic
$
0.14
$
0.33
$
(6.27
)
$
0.82
Weighted average number of common shares
used to calculate net income (loss) per share — basic
155,886
153,066
155,240
154,713
A reconciliation between diluted net income (loss) per share on
a GAAP basis and on a non-GAAP basis is as follows:
Three Months Ended
September 30,
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP net income (loss) attributable to
Ironwood Pharmaceuticals, Inc. per share – diluted
$
0.09
$
0.28
$
(6.45
)
$
0.69
Plus: GAAP net income (loss) attributable
to noncontrolling interests – diluted
$
(0.01
)
-
$
(0.18
)
-
Adjustments to GAAP net income (loss) per
share (as detailed above)
0.04
-
0.36
-
Non-GAAP net income (loss) per share –
diluted
$
0.12
$
0.28
$
(6.27
)
$
0.69
Weighted average number of common shares
used to calculate net income (loss) per share — diluted
186,891
184,465
155,240
186,504
__________________
1 GAAP and non-GAAP net loss for nine
months ended September 30, 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.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands)
(unaudited)
A reconciliation of GAAP net income (loss)
to adjusted EBITDA:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
GAAP net income (loss)1
$
13,950
$
50,317
$
(1,029,814
)
$
126,198
Adjustments:
Mark-to-market adjustments on the
derivatives related to convertible notes, net
-
(151
)
(19
)
(200
)
Restructuring expenses
4,685
-
17,696
-
Interest expense
9,839
1,524
13,206
6,072
Interest and investment income
(1,748
)
(2,807
)
(17,777
)
(4,055
)
Income tax expense
17,982
19,590
51,385
53,959
Depreciation and amortization
507
362
1,063
1,078
Acquisition-related costs
3,864
-
39,545
-
Adjusted EBITDA1
$
49,079
$
68,835
$
(924,715
)
$
183,052
__________________
1 GAAP net loss and adjusted EBITDA for
nine months ended September 30, 2023 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.
U.S. LINZESS Commercial
Collaboration1
Revenue/Expense
Calculation
(In thousands)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
LINZESS U.S. net sales as reported by
AbbVie2
$
278,954
$
261,131
$
798,854
$
741,816
AbbVie & Ironwood commercial costs,
expenses and other discounts3
77,736
68,499
223,142
205,878
Commercial profit on sales of LINZESS
$
201,218
$
192,632
$
575,712
$
535,938
Commercial Margin4
72
%
74
%
72
%
72
%
Ironwood’s share of net profit
100,609
96,316
287,856
267,969
Reimbursement for Ironwood’s commercial
expenses
9,480
8,908
28,615
26,026
Ironwood’s collaborative arrangement
revenue
$
110,089
$
105,224
$
316,471
$
293,995
__________________
1 Ironwood collaborates with AbbVie on the
development and commercialization of linaclotide in North America.
Under the terms of the collaboration agreement, Ironwood receives
50% of the net profits and bears 50% of the net losses from the
commercial sale of LINZESS in the U.S. The purpose of this table is
to present calculations of Ironwood’s share of net profit (loss)
generated from the sales of LINZESS in the U.S. and Ironwood’s
collaboration revenue/expense; however, the table does not present
the research and development expenses related to LINZESS in the
U.S. that are shared equally between the parties under the
collaboration agreement. Please refer to the table at the end of
this press release for net profit for the U.S. LINZESS brand
collaboration with AbbVie.
2 LINZESS net sales are recognized using
AbbVie’s revenue recognition accounting policies and reporting
conventions. As a result, certain rebates and discounts are
classified as LINZESS U.S. commercial costs, expenses and other
discounts within Ironwood’s calculation of collaborative
arrangements revenue.
3 Includes certain discounts recognized
and cost of goods sold incurred by AbbVie; also includes commercial
costs incurred by AbbVie and Ironwood that are attributable to the
cost-sharing arrangement between the parties.
4 Commercial margin is defined as
commercial profit on sales of LINZESS as a percent of total LINZESS
U.S. net sales.
US LINZESS Full Brand
Collaboration1
Revenue/Expense
Calculation
(In thousands)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
LINZESS U.S. net sales as reported by
AbbVie2
$
278,954
$
261,131
$
798,854
$
741,816
AbbVie & Ironwood commercial costs,
expenses and other discounts3
77,736
68,499
223,142
205,878
AbbVie & Ironwood R&D
Expenses4
9,264
7,620
28,270
24,000
Total net profit on sales of LINZESS
$
191,954
$
185,012
$
547,442
$
511,938
__________________
1 Ironwood collaborates with AbbVie on the development and
commercialization of linaclotide in North America. Under the terms
of the collaboration agreement, Ironwood receives 50% of the net
profits and bears 50% of the net losses from the commercial sale of
LINZESS in the U.S. The purpose of this table is to present
calculations of the total net profit (loss) generated from the
sales of LINZESS in the U.S., including the commercial costs and
expenses and the research and development expenses related to
LINZESS in the U.S. that are shared equally between the parties
under the collaboration agreement.
2 LINZESS net sales are recognized using
AbbVie’s revenue recognition accounting policies and reporting
conventions. As a result, certain rebates and discounts are
classified as LINZESS U.S. commercial costs, expenses and other
discounts within Ironwood’s calculation of collaborative
arrangements revenue.
3 Includes certain discounts recognized
and cost of goods sold incurred by AbbVie; also includes commercial
costs incurred by AbbVie and Ironwood that are attributable to the
cost-sharing arrangement between the parties.
4 R&D expenses related to LINZESS in
the U.S. are shared equally between Ironwood and AbbVie under the
collaboration agreement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109546088/en/
Investors: Greg Martini, 617-374-5230
gmartini@ironwoodpharma.com
Matt Roache, 617-621-8395 mroache@ironwoodpharma.com
Media: Beth Calitri, 978-417-2031
bcalitri@ironwoodpharma.com
Ironwood Pharmaceuticals (NASDAQ:IRWD)
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