– 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 –
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(in thousands, except for percentages)
Three Months EndedMarch 31,
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 Important Safety Information
INDICATIONS AND USAGE
LINZESS (linaclotide) is indicated in adults for the treatment
of both irritable bowel syndrome with constipation (IBS-C) and
chronic idiopathic constipation (CIC).
IMPORTANT SAFETY INFORMATION
WARNING: RISK OF SERIOUS DEHYDRATION IN PEDIATRIC
PATIENTS
LINZESS is contraindicated in patients
less than 6 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. Use of LINZESS should
be avoided in patients 6 years to less than 18 years of age. The
safety and effectiveness of LINZESS have not been established in
patients less than 18 years of age.
Contraindications
- LINZESS is contraindicated in patients
less than 6 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
Pediatric Risk
- LINZESS is contraindicated in patients
less than 6 years of age. The safety and effectiveness of LINZESS
in 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.
- Use of LINZESS should be avoided in
pediatric patients 6 years to less than 18 years of age. Although
there were no deaths in older juvenile mice, given the deaths in
young juvenile mice and the lack of clinical safety and efficacy
data in pediatric patients, use of LINZESS should be avoided in
pediatric patients 6 years to less than 18 years of age.
Diarrhea
- 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. If severe
diarrhea occurs, dosing should be suspended and the patient
rehydrated.
Common Adverse Reactions (incidence ≥2% and greater than
placebo)
- In IBS-C clinical trials: diarrhea (20%
vs 3% placebo), abdominal pain (7% vs 5%), flatulence (4% vs 2%),
headache (4% vs 3%), viral gastroenteritis (3% vs 1%) and abdominal
distension (2% vs 1%).
- In CIC trials of a 145 mcg dose:
diarrhea (16% vs 5% placebo), abdominal pain (7% vs 6%), flatulence
(6% vs 5%), upper respiratory tract infection (5% vs 4%), sinusitis
(3% vs 2%) and abdominal distension (3% vs 2%). In a CIC trial of a
72 mcg dose: diarrhea (19% vs 7% placebo) and abdominal distension
(2% vs <1%).
Please see full Prescribing Information including Boxed Warning:
http://www.allergan.com/assets/pdf/linzess_pi
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 the
development, launch, commercial availability and commercial
potential of linaclotide, our other product candidates and the
other products that we promote and the drivers, timing, impact and
results thereof (including pipeline catalysts); expectations and
timing regarding our ability to achieve profitability from
continuing operations, positive cash flow and greater
competitiveness and the resulting shareholder value; market size,
commercial potential, prevalence, and the growth in, and potential
demand for, linaclotide and other product candidates, as well as
their potential impact on applicable markets; the potential
indications for, and benefits of, linaclotide and other product
candidates; our business and operations and any benefits or costs
of the separation of Cyclerion; the anticipated timing of
preclinical, clinical and regulatory developments and the design,
timing and results of clinical and preclinical studies; expected
periods of patent exclusivity, durability and life of the
respective patent portfolios for linaclotide and other product
candidates; the strength of the intellectual property protection
for linaclotide and other product candidates; future licensing and
commercialization efforts; the potential for, and timing of,
regulatory submissions and approvals for linaclotide and other
product candidates, and the level of risk associated with the path
to approval; and our financial performance and results, and
guidance and expectations related thereto (including the drivers
and timing thereof), including expectations related to total
revenue, net interest expense, separation expenses, restructuring
expenses, LINZESS net sales growth and adjusted EBITDA from
continuing operations (including how adjusted EBITDA from
continuing operations will be calculated and when the Company will
present this measure). 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; the risk that our
clinical programs and studies may not progress or develop as
anticipated; the risk that findings from our completed studies may
not be replicated in later studies; the efficacy, safety and
tolerability of linaclotide and other product candidates; the
decisions by regulatory and judicial authorities; the risk that we
may never get sufficient patent protection for linaclotide and
other product candidates or that we are not able to successfully
protect such patents; the outcomes in legal proceedings to protect
or enforce the patents relating to our products and product
candidates, including abbreviated new drug application litigation;
the possibility that we may not achieve some or all of the
anticipated benefits of the separation of Cyclerion; the risk that
financial and operating results may differ from our projections;
the risk that we may not achieve profitability; and the risks
listed under the heading “Risk Factors” and elsewhere in Ironwood’s
Annual Report on Form 10-K for the year ended December 31, 2018,
and in our subsequent SEC filings. These forward-looking statements
(except as otherwise noted) speak only as of the date of this press
release, and Ironwood undertakes no obligation to update these
forward-looking statements. Further, Ironwood considers the net
profit for the U.S. LINZESS brand collaboration with Allergan in
assessing the product's performance and calculates it based on
inputs from both Ironwood and Allergan. This figure should not be
considered a substitute for Ironwood's GAAP financial results. An
explanation of our calculation of this figure is provided in the
U.S. LINZESS Brand Collaboration table and related footnotes
accompanying this press release.
Condensed Consolidated Balance
Sheets(In thousands)(unaudited)
March 31,2019
December 31, 2018
Assets Cash, and cash equivalents $ $119,045 $ 173,172
Accounts receivable, net 3,291 20,991 Related party account
receivable, net 69,326 59,959 Inventory, net 593 - Prepaid expenses
and other current assets 8,327 11,063 Restricted cash, short-term
1,250 1,250 Total current assets 201,832 266,435 Restricted cash,
net of current portion 6,426 6,426 Property and equipment, net
19,017 17,270 Operating lease right-of-use assets 84,833 -
Convertible note hedges 50,589 41,020 Goodwill 785 785 Other assets
56 114 Total assets $ 363,538 $ 332,050
Liabilities and
Stockholders’ Deficit Accounts payable $ 11,203 $ 18,123
Accrued research and development costs 9,734 8,219 Accrued expenses
and other current liabilities 39,591 45,252 Capital lease
obligations - 73 Current portion of deferred rent - 252 Current
portion of 2026 Notes 45,961 47,554 Current portion of operating
lease liabilities 12,080 - Current portion of contingent
consideration - 51 Total current liabilities 118,569 119,524
Capital lease obligations, net of current portion - 158 Deferred
rent, net of current portion - 6,308 Note hedge warrants 39,388
33,763 Convertible senior notes 269,947 265,601 Operating lease
liabilities, net of current portion 79,950 - 2026 Notes, net of
current portion 90,140 100,537 Other liabilities 2,723 2,530 Total
stockholders’ deficit (237,179) (196,371)
Total liabilities and
stockholders’ deficit $ 363,538 $ 332,050
Condensed Consolidated Statements of
Operations(In thousands, except per share
amounts)(unaudited)
Three Months EndedMarch
31,
2019 2018 Revenues Collaborative
arrangements revenue $66,152 $63,086 Product revenue, net - 635
Sale of active pharmaceutical ingredient
2,578
5,434 Total Revenues 68,730 69,155 Costs and expenses: Cost of
revenues, excluding amortization of acquired intangible assets
1,043 2,607 Research and development 53,990 36,505 Selling, general
and administrative 64,741 59,501 Amortization of acquired
intangible assets - 3,476 Loss on fair value remeasurement of
contingent consideration - 512 Restructuring expenses 3,328 2,422
Total cost and expenses 123,102 105,023 Loss from operations
(54,372) (35,868) Other (expense) income: Interest expense (9,592)
(9,273) Interest and investment income 736 681 Gain on derivatives
3,944 1,316 Other expense, net (4,912) (7,276) GAAP net (loss)
income $(59,284) $(43,144) GAAP net (loss) income per
share—basic and diluted $(0.38) $(0.29)
Three Months EndedMarch
31,
2019 2018 Non-GAAP net loss $(40,546) $(37,847)
Non-GAAP net loss per share (basic and diluted) $(0.26) $(0.25)
Weighted average number of common shares
used in net loss per share — basic and diluted
154,956
151,013
Reconciliation of GAAP Results to Non-GAAP
Financial Measures(In thousands, except per share
amounts)(unaudited)
A reconciliation between net loss on a GAAP basis and on a
non-GAAP basis is as follows:
Three Months Ended March
31,
2019 2018 GAAP net loss
$(59,284) $(43,144) Adjustments: Mark-to-market adjustments on the
derivatives related to convertible notes, net (3,944) (1,316)
Amortization of intangible assets - 3,476 Loss on fair value
remeasurement of contingent consideration - 512 Restructuring
expenses 3,328 2,422 Separation expenses 19,354 203 Non-GAAP net
loss $(40,546) $(37,847)
A reconciliation between diluted net loss per share on a GAAP
basis and on a non-GAAP basis is as follows:
Three Months Ended March
31,
2019 2018 GAAP net income (loss)
per share – Basic and Diluted $(0.38) $(0.29) Adjustments to GAAP
net loss per share(as detailed above) 0.12 0.04 Non-GAAP net loss
per share – basic and diluted $(0.26) $(0.25)
U.S. LINZESS Commercial
Collaboration1Revenue/Expense Calculation(In
thousands)(unaudited)
Three Months Ended March
31,
2019 2018 LINZESS U.S. net sales
$ 161,348 $ 159,334
Allergan & Ironwood commercial costs
and expenses2
53,315 58,890 Commercial profit on sales of LINZESS $ 108,033 $
100,444
Commercial Margin3
67% 63% Ironwood’s share of net profit $ 54,016 $ 50,222
Reimbursement for Ironwood’s selling,
general and administrative expenses4
10,277 10,928 Ironwood’s collaborative arrangement revenue $ 64,293
$ 61,150
1 Ironwood collaborates with Allergan 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 Allergan.2 Includes cost of goods sold incurred by Allergan as
well as selling, general and administrative expenses incurred by
Allergan and Ironwood that are attributable to the cost-sharing
arrangement between the parties.3 Commercial margin is defined as
commercial profit on sales of LINZESS as a percent of total LINZESS
U.S. net sales.4 Includes Ironwood’s selling, general and
administrative expenses attributable to the cost-sharing
arrangement with Allergan.
U.S. LINZESS Full Brand
Collaboration1Revenue/Expense Calculation(In
thousands)(unaudited)
Three Months Ended March
31,
2019 2018 LINZESS U.S. net sales
$ 161,348 $159,334
Allergan & Ironwood commercial costs
and expenses2
53,315 58,890
Allergan & Ironwood R&D
Expenses3
13,616 11,597 Total net profit on sales of LINZESS $ 94,417 $
88,847
1 Ironwood collaborates with Allergan 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 Allergan.2 Includes cost of goods sold incurred by Allergan as
well as selling, general and administrative expenses incurred by
Allergan and Ironwood that are attributable to the cost-sharing
arrangement between the parties.3 Commercial margin is defined as
commercial profit on sales of LINZESS as a percent of total LINZESS
U.S. net sales.4 Includes Ironwood’s selling, general and
administrative expenses attributable to the cost-sharing
arrangement with Allergan.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190502005282/en/
Meredith Kaya, 617-374-5082Vice President, Investor Relations
and Corporate Communicationsmkaya@ironwoodpharma.com
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