Loss Widens at Ironwood - Analyst Blog
April 24 2013 - 12:00PM
Zacks
Ironwood Pharmaceuticals, Inc.’s (IRWD)
first-quarter 2013 loss of 87 cents per share compared unfavorably
with the year-ago loss of 34 cents per share. Results were
primarily hurt by higher selling, general and administrative
(SG&A) and collaboration expense. The Zacks Consensus Estimate
hinted at a loss of 70 cents per share.
Total revenues in the first quarter of 2013 were down to $3.3
million from $12.2 million in the year-ago period. Revenues were
below the Zacks Consensus Estimate of $6 million.
Linzess Update
We note that Ironwood’s sole marketed product is Linzess
(linaclotide). It is marketed for the treatment (once-daily) of
adults suffering from irritable bowel syndrome with constipation
(IBS-C) or chronic idiopathic constipation (CIC). Ironwood
co-markets the drug with Forest Laboratories, Inc.
(FRX). Forest Labs and Ironwood share Linzess revenues generated in
the US equally. Net sales of the drug, as reported by Forest Labs
came in at $4.5 million in the first quarter of 2013 as compared to
$19.2 million in the last quarter. We note that in the final
quarter of 2012 Linzess sales primarily consisted of initial trade
stocking.
We remind investors that on Dec 17, 2012, the companies announced
the US launch of Linzess. The launch followed the approval of the
drug by the US Food and Drug Administration (FDA) in Aug 2012.
In the EU, approval came in Nov 2012 under the trade name
Constella. Ironwood is collaborating with Almirall, S.A. in EU for
the drug. The product is expected to be launched in the UK and
Germany by Jun 30, 2013.
Ironwood is also working with its Japanese partner, Astellas Pharma
Inc. for the development of Linzess in Japan, South Korea, Taiwan,
Thailand, the Philippines and Indonesia and with
AstraZeneca (AZN) in China. Currently, Astellas is
evaluating it in a phase II trial for IBS-C with results expected
in the second half of 2013. Ironwood and AstraZeneca expect to
initiate a phase III trial evaluating linaclotide in adult IBS-C
patients in the second half of 2013.
The company is looking to broaden the Linzess label by
incorporating additional patient populations and indications. To
further analyze the effect of Linzess on abdominal symptoms in
patients suffering from CIC, Forest Labs and Ironwood have
initiated a phase IIIb clinical trial. Results from the trial are
expected in the second half of 2013. Ironwood plans to initiate
additional trials to evaluate Linzess for additional
gastrointestinal disorders.
Other Expenses
During the quarter, SG&A expenses surged 104.5% to $33.4
million. The massive increase was primarily attributable to Linzess
commercialization costs. For 2013, Ironwood continues to expect
total investment in sales and marketing for Linzess in the range of
$250 – $300 million.
Research and development (R&D) expenses amounted to $32.8
million, an increase of 11%, as the company continues to develop
Linzess. In 2013, Ironwood expects to invest approximately $60–$75
million in R&D expenses not pertaining to linaclotide.
Ironwood carries a Zacks Rank #3 (Hold) in the short run. We expect
investor focus to remain on the market performance of Linzess.
Stocks, which currently look attractive in the pharma space include
Athersys Inc. (ATHX), carrying a Zacks Rank #1
(Strong Buy).
ATHERSYS INC (ATHX): Free Stock Analysis Report
ASTRAZENECA PLC (AZN): Free Stock Analysis Report
FOREST LABS A (FRX): Free Stock Analysis Report
IRONWOOD PHARMA (IRWD): Free Stock Analysis Report
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