–2019 revenue of $428 million, driven primarily
by U.S. LINZESS® (linaclotide) collaboration revenue–
–GAAP net income from continuing operations of
$59 million and adjusted EBITDA from continuing operations of $148
million for the full year 2019–
–2020 total revenue and adjusted EBITDA
guidance incorporates previously amended agreements with Astellas
and AstraZeneca–
–Data readouts from MD-7246 Phase II trial and
IW-3718 Phase III trials expected in 2020–
Ironwood Pharmaceuticals, Inc. (Nasdaq: IRWD), a GI-focused
healthcare company, today provided an update on its fourth quarter
and full year 2019 results and recent business performance.
“2019 brought us a catalyzing opportunity to become a GI-focused
healthcare company dedicated to advancing the treatment of GI
diseases and redefining the standard of care for millions of
patients,” said Mark Mallon, chief executive officer of Ironwood.
“To do this, we are executing on our strategy to drive LINZESS
growth, advance our late-stage GI portfolio, and deliver
sustainable profits. We made substantial progress in 2019 across
each of these priorities and expect 2020 to be another pivotal
year. We are already off to a strong start having settled all
outstanding LINZESS patent litigation, and we look forward to
continued momentum through strong growth of LINZESS, top-line data
readouts from MD-7246 and IW-3718, and further revenue generation
in 2020.”
Fourth Quarter and Full Year 2019 Financial
Highlights1
(in thousands, except for per share
amounts)
4Q
2019
4Q
2018
FY
2019
FY
2018
Total revenues
$
126,301
$
130,692
$
428,413
$
346,639
Total costs and expenses
76,708
100,831
308,290
497,309
GAAP net income (loss) from continuing
operations
47,858
8,373
58,943
(194,146)
GAAP net income (loss)
47,858
(15,493)
21,505
(282,368)
GAAP net income (loss) per share –
basic
0.31
(0.10)
0.14
(1.85)
GAAP net income (loss) per share –
diluted
0.30
(0.10)
0.14
(1.85)
Adjusted EBITDA from continuing
operations
54,515
33,427
147,791
304
Non-GAAP net income (loss)
47,090
6,643
85,497
(105,975)
Non-GAAP net income (loss) per share
0.30
0.04
0.55
(0.69)
- Refer to the Reconciliation of GAAP Results to Non-GAAP
Financial Measures table and to the Reconciliation of GAAP Net
Income (Loss) from Continuing Operations to Adjusted EBITDA from
Continuing Operations table at the end of this press release. Refer
to Non-GAAP Financial Measures for additional information.
Fourth Quarter and Full Year 2019 Corporate
Highlights
U.S. LINZESS
- LINZESS U.S. net sales, as provided by Ironwood’s U.S.
collaboration partner, Allergan plc, were $231.2 million in the
fourth quarter of 2019, a 13% increase compared to the fourth
quarter of 2018, and $803.2 million for the full year 2019, a 6%
increase compared to the full year 2018. Ironwood and Allergan
share equally in U.S. brand collaboration profits. – Total LINZESS
prescription demand in the fourth quarter of 2019 included 36
million LINZESS capsules, a 13% increase compared to the fourth
quarter of 2018, per IQVIA. For the full year 2019, total
prescription volume included 133 million LINZESS capsules, a 14%
increase compared to the full year 2018. – LINZESS commercial
margin was 81% in the fourth quarter of 2019 compared to 71% in the
fourth quarter of 2018. LINZESS commercial margin was 72% for the
full year 2019 compared to 66% for the full year 2018. See U.S.
Brand Collaboration table below and at the end of this press
release. – Ironwood recorded $101.6 million in collaboration
revenue in the fourth quarter of 2019 related to sales of LINZESS
in the U.S., compared to $81.6 million in the fourth quarter of
2018. For the full year 2019, Ironwood recorded $325.5 million in
collaboration revenue related to sales of LINZESS in the U.S.,
compared to $264.2 million for the full year 2018. 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
$170.1 million in the fourth quarter of 2019, compared to $129.0
million in the fourth quarter of 2018. Net profit for the LINZESS
U.S. brand collaboration, net of commercial and R&D expenses,
was $513.7 million for the full year 2019, compared to $444.8
million for the full year 2018. See U.S. LINZESS Full Brand
Collaboration table below and at the end of this press
release.
-
As previously disclosed, during the year ended 2018, Allergan
reported to Ironwood a $59.8 million negative adjustment to LINZESS
net sales relating to the cumulative difference between Allergan’s
previous gross-to-net estimates during the three years ended
December 31, 2015, 2016 and 2017 and actual subsequent payments
made. This adjustment is not included in the net profit numbers
above, but is included in Ironwood’s full year 2018 collaboration
revenue. Refer to the U.S. LINZESS Full Brand Collaboration table
at the end of this press release. – Ironwood and Allergan have
entered into settlement agreements with five generic drug
manufacturers (Teva Pharmaceuticals, USA, Sandoz Inc., Aurobindo
Pharma Ltd. and an affiliate of Aurobindo, Mylan Pharmaceuticals
Inc. and Sun Pharma Global FZE) resolving all outstanding patent
infringement litigation brought in response to their abbreviated
new drug applications seeking approval to market generic versions
of LINZESS prior to the expiration of Ironwood’s and Allergan’s
applicable patents. Pursuant to the terms of the settlements,
Ironwood and Allergan granted each of the five generic drug
manufacturers a license to market their 145 mcg and 290 mcg generic
versions of LINZESS, beginning as early as March 2029 (subject to
U.S. FDA approval), unless certain limited circumstances, customary
for settlement agreements of this nature, occur. Ironwood and
Allergan previously entered into a settlement agreement providing
Mylan a license to market its 72 mcg generic version of LINZESS
beginning in August 2030 (subject to U.S. FDA approval), unless
certain limited circumstances, customary for settlement agreements
of this nature, occur. The settlement with Teva does not grant any
license to Teva with regard to its 72 mcg generic version of
LINZESS.
U.S. LINZESS Full Brand
Collaboration1
(in thousands, except for percentages)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
LINZESS U.S. net sales2
$231,155
$205,239
$803,204
$761,214
Allergan & Ironwood commercial costs
and expenses
44,678
59,353
228,593
257,767
Commercial margin2
81%
71%
72%
66%
Allergan & Ironwood R&D
Expenses
16,344
16,887
60,870
58,599
Total net profit on sales of LINZESS2
170,133
128,999
513,741
444,848
Full brand margin2
74%
63%
64%
58%
- Refer to the U.S. LINZESS Full Brand Collaboration table at the
end of this press release.
- As previously disclosed, during the three months ended
September 30, 2018, Allergan reported to Ironwood an approximately
$59.3 million negative adjustment to LINZESS net sales which is not
reflected in the table above. Such adjustment relates to the
cumulative difference between certain previously estimated LINZESS
gross-to-net sales reserves and allowances made by Allergan during
the years ended December 31, 2015, 2016 and 2017, and actual
subsequent payments made. This adjustment is primarily associated
with estimated governmental and contractual rebates, as reported by
Allergan. Upon receiving the information from Allergan, Ironwood
recorded a $29.7 million reduction to collaborative arrangement
revenue and accounts receivable in its third quarter 2018 financial
statements related to its share of the adjustment. In addition,
during the three months ended December 31, 2018, Allergan reported
to Ironwood a true-up of approximately $0.2 million related to the
previously reported adjustment.
GI Pipeline
- 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 refractory GERD. Ironwood continues to target top-line data in
the second half of 2020. – Refractory GERD affects an estimated 8
to 10 million Americans who continue to suffer from heartburn and
regurgitation despite receiving treatment with proton pump
inhibitors (PPIs), the current standard of care. There are
currently no treatments available for the treatment of
regurgitation associated with GERD.
- MD-7246. Ironwood and Allergan completed enrollment in a
Phase II clinical trial of MD-7246 in patients suffering from
abdominal pain associated with IBS with diarrhea (IBS-D). Ironwood
continues to target top-line data from the Phase II trial in
mid-2020. – MD-7246 is a delayed-release formulation of linaclotide
designed to provide targeted delivery of linaclotide to the colon,
where the majority of the abdominal pain is believed to originate,
and to limit additional fluid secretion in the small intestine
resulting in minimal impact on bowel function. – MD-7246 is being
evaluated as an oral, intestinal, non-opioid, pain-relieving agent
for patients in the U.S. suffering from abdominal pain associated
with certain GI diseases, including IBS-D. 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 U.S. Promotional
Partnerships
- U.S. Disease Education and Promotional Partnership with Alnylam
Pharmaceuticals, Inc. In August 2019, Ironwood and Alnylam
announced a U.S. GI disease education and promotional agreement for
Alnylam’s GIVLAARI™ (givosiran), an RNAi therapeutic targeting
aminolevulinic acid synthase 1 for the treatment of adults with
Acute Hepatic Porphyria (AHP). – The non-exclusive agreement covers
an approximately three-year term. Ironwood will receive fixed
payments and royalties in the mid-teens percent on net sales
generated from prescriptions or referrals from certain physicians
related to Ironwood’s promotional efforts. Alnylam will maintain
responsibility for all other aspects of givosiran’s development and
commercialization and retains all global development and
commercialization rights. – In November 2019, the U.S. Food and
Drug Administration approved GIVLAARI injection for subcutaneous
use for the treatment of adults with AHP.
- LINZESS in Japan. In August 2019, Ironwood and its partner
Astellas Pharma Inc. entered into an amended and restated license
agreement relating to the development and commercialization of
linaclotide in Japan. – Beginning in 2020, Astellas assumed
responsibility for linaclotide active pharmaceutical ingredient
(API) manufacturing in Japan and Ironwood will receive royalties
beginning in the mid-single-digit percent and escalating to the low
double-digit percent, based on annual net sales of LINZESS in
Japan. – Astellas reported LINZESS net sales of approximately 4.3
billion yen during the nine months ended December 31, 2019. LINZESS
was approved for the treatment of adults with IBS-C in Japan in
December 2016 and for the treatment of adults with chronic
constipation in Japan in August 2018 and is being commercialized in
Japan by Astellas.
- LINZESS in China. In September 2019, Ironwood and its partner
AstraZeneca entered into an amended and restated collaboration
agreement for the development and commercialization of LINZESS in
China. LINZESS was approved by the Chinese National Medical
Products Administration for adults with IBS-C in China in January
2019 and was launched in November 2019. – Under the terms of the
amended agreement, AstraZeneca obtained exclusive rights to
develop, manufacture, and commercialize linaclotide in China
(including Hong Kong and Macau) and will be responsible for all
expenses associated with these activities beginning in 2020.
Ironwood will receive royalties beginning in the mid-single-digit
percent and increasing up to 20 percent based on annual net sales
of LINZESS in China.
Fourth Quarter Financial Results
- Total Revenues. Total revenues in the fourth quarter of
2019 were $126.3 million, compared to $130.7 million in the fourth
quarter of 2018. Total revenues for the full year 2019 were $428.4
million, compared to $346.7 million in the full year 2018. – Total
revenues in the fourth quarter of 2019 consisted of $101.6 million
associated with Ironwood’s share of the net profits from the sales
of LINZESS in the U.S., $20.6 million in sales of linaclotide API,
and $4.1 million in linaclotide royalties, co-promotion and other
revenue. Total revenues in the fourth quarter of 2018 consisted of
$81.6 million associated with Ironwood’s share of the net profits
from the sales of LINZESS in the U.S., $45.9 million in sales of
linaclotide API, and $3.2 million in linaclotide royalties,
co-promotion and other revenue. – Total revenues for the full year
2019 consisted of $325.5 million associated with Ironwood’s share
of the net profits for the sales of LINZESS in the U.S., $48.8
million in sales of linaclotide API, $42.4 million in license and
milestone payments, and $11.7 million in linaclotide royalties,
co-promotion and other revenue. Total revenues for the full year
2018 consisted primarily of $264.2 million associated with
Ironwood’s share of the net profits from the sales of LINZESS in
the U.S., $70.4 million in sales of linaclotide API, and $12.0
million in linaclotide royalties, co-promotion and other
revenue.
- Operating Expenses. Operating expenses in the fourth
quarter of 2019 were $76.7 million, compared to $100.8 million in
the fourth quarter of 2018. Operating expenses in full year 2019
were $308.2 million, compared to $497.3 million in the full year
2018. – Operating expenses in the fourth quarter of 2019 consisted
of $39.2 million in SG&A expenses, $26.5 million in R&D
expenses, and $11.0 million in cost of revenues. – Operating
expenses for the full year 2019 consisted primarily of $172.5
million in SG&A expenses, $115.0 million in R&D expenses,
$23.8 million in cost of revenues, and $3.6 million in
restructuring expenses partially offset by $3.5 million related to
the write-down of commercial supply and inventory to net realizable
value and (settlement) loss on non-cancellable purchase commitments
and a $3.2 million gain on lease modification in connection with
the separation of Ironwood and Cyclerion Therapeutics, Inc., or
Cyclerion, completed on April 1, 2019.
- Interest Expense. Net interest expense was $6.6 million
in the fourth quarter of 2019 and $33.7 million for the full year
2019, primarily in connection with the convertible senior notes.
Interest expense recorded in the fourth quarter of 2019 included
$1.8 million in cash expense and $5.3 million in non-cash expense.
Interest expense recorded for the full year 2019 included $17.0
million in cash expense and $19.6 million in non-cash expense, and
included interest amounts associated with the 8.375% Notes due 2026
prior to their redemption in September 2019. See Convertible Debt
Offering below.
- Gain (loss) on Derivatives. Ironwood recorded a gain on
derivatives of $4.5 million in the fourth quarter of 2019 as a
result of the change in fair value of the convertible note hedge
and note hedge warrants. For the full year 2019, Ironwood recorded
a gain on derivatives of $3.0 million.
- Net Income (Loss). – GAAP net income was $47.9 million,
or $0.31 per share, in the fourth quarter of 2019, compared to GAAP
net loss of $(15.5) million, or $(0.10) per share, in the fourth
quarter of 2018. GAAP net income for the full year 2019 was $21.5
million, or $0.14 per share, compared to GAAP net loss of $(282.4)
million, or $(1.85) per share, in the full year 2018. – Non-GAAP
net income was $47.1 million, or $0.30 per share, in the fourth
quarter of 2019, compared to non-GAAP net income of $6.6 million,
or $0.04 per share, in the fourth quarter of 2018. Non-GAAP net
income was $85.5 million, or $0.55, per share for the full year
2019, compared to non-GAAP net loss of $(106.0) million, or $(0.69)
per share, for the full year 2018. – Non-GAAP net income excludes
the impact of mark-to-market adjustments on the derivatives related
to Ironwood’s 2022 Convertible Notes, the amortization of acquired
intangible assets, the fair value remeasurement of contingent
consideration related to Ironwood’s terminated U.S. lesinurad
license, the impairment of acquired intangible assets in connection
with Ironwood’s notice of termination of the lesinurad franchise,
restructuring and separation-related expenses, and loss on the
extinguishment of debt. These adjustments are reflected in non-GAAP
net income (loss) in the fourth quarter of 2019 and 2018 presented
in this press release. See Non-GAAP Financial Measures below.
- Net Income (Loss) from Continuing Operations. The
separation of Ironwood and Cyclerion was completed on April 1,
2019. Beginning in the second quarter of 2019, Ironwood recast
historical Cyclerion-related operations as discontinued operations.
– GAAP net income from continuing operations in the fourth quarter
of 2019 was $47.9 million, compared to GAAP net income from
continuing operations of $8.4 million in the fourth quarter of
2018. GAAP net income from continuing operations was $58.9 million
for the full year 2019, compared to GAAP net loss from continuing
operations of $194.1 for the full year 2018. – Ironwood did not
incur any Cyclerion-related operations during the fourth quarter of
2019. Ironwood recorded $37.4 million in GAAP net loss from
discontinued operations for the full year 2019.
- Adjusted EBITDA from Continuing Operations. Adjusted
EBITDA from continuing operations was $54.5 million in the fourth
quarter of 2019 and $147.8 million for the full year 2019. –
Adjusted EBITDA from continuing operations is calculated by
subtracting net interest expense, taxes, depreciation,
amortization, fair value of remeasurement of contingent
consideration, mark-to-market adjustments on derivatives related to
Ironwood’s 2022 Convertible Notes, impairment of intangibles,
restructuring expenses, separation expenses, and loss on
extinguishment of debt from GAAP net income (loss) from continuing
operations. See Non-GAAP Financial Measures below.
- Cash Flow Statement and Balance Sheet Highlights. –
Ironwood ended the fourth quarter of 2019 with $177 million of cash
and cash equivalents. – Ironwood generated $27.6 million in cash
from operations in the fourth quarter of 2019.
- Convertible Debt Offering. In August 2019, Ironwood
issued $200 million in aggregate principal amount of 0.75%
Convertible Senior Notes due 2024 and $200 million in aggregate
principal amount of 1.50% Convertible Senior Notes due 2026. –
These notes carry an initial conversion price of approximately
$13.39 per share. In connection with the offering, Ironwood also
entered into capped call transactions with certain financial
institutions that are expected generally to reduce the potential
dilution to common stock in certain circumstances, upon conversion
of the notes. The cap price of the capped call transactions will
initially be approximately $17.05 per share. Aggregate net
proceeds, after fees and expenses, were approximately $391.0
million. – Ironwood used a portion of the net proceeds to
repurchase $215 million aggregate principal amount of its
outstanding 2022 Convertible Notes, pay the cost of the capped call
transactions, and redeem the outstanding principal balance of the
8.375% Notes.
Performance Against 2019 Financial Guidance
2019 Results
Revised 2019 Guidance
Original 2019
Guidance1
Total revenue
$428 million
$410 – $420 million
$370 – $390 million
Net interest expense
$34 million
~$35 million
~$35 million
Separation expenses2
$32 million
~$30 million
$30 – $40 million
Restructuring expenses3
$4 million
~$4 million
~$3 – $4 million
Adjusted EBITDA from continuing
operations4
$148 million
>$130 million
>$65 million
LINZESS net sales growth
6%
Mid-single digit % increase
Low-to-mid single digit %
increase
1 Ironwood revised its 2019 guidance in connection with its
third quarter 2019 earnings update on October 31, 2019. Revised
2019 guidance for total revenue and adjusted EBITDA from continuing
operations reflects approximately $42.4 million in license and
milestone payments related to the amended ex-U.S. agreements with
Astellas and AstraZeneca that were recognized in the third quarter
of 2019.
2 Separation expenses were $3.8 million in the fourth quarter of
2019.
3 Restructuring expenses were largely incurred during the first
quarter of 2019 in connection with the reduction in workforce
commenced in February 2019. There was an insignificant amount of
restructuring adjustments in the fourth quarter of 2019.
4 Adjusted EBITDA from continuing operations is calculated by
subtracting net interest expense, taxes, depreciation,
amortization, fair value of remeasurement of contingent
consideration, mark-to-market adjustments on derivatives related to
Ironwood’s 2022 Convertible Notes, impairment of intangibles,
restructuring expenses, separation expenses, and loss on
extinguishment of debt from GAAP net income (loss) from continuing
operations. In the second quarter of 2019, Ironwood began reporting
in its financial statements GAAP net income (loss) from continuing
operations which excludes discontinued operations related to
Cyclerion. See Non-GAAP Financial Measures below.
Ironwood 2020 Financial Guidance
In 2020, Ironwood expects:
2020 Guidance
LINZESS net sales growth
Mid-single digit % increase
Total Revenue
$360 – $380 million
Adjusted EBITDA1
>$105 million
1 Adjusted EBITDA is calculated by subtracting net interest
expense, taxes, depreciation, amortization, mark-to-market
adjustments on derivatives related to Ironwood’s 2022 Convertible
Notes, restructuring expenses, separation expenses, and loss on
extinguishment of debt from GAAP net income (loss).
Non-GAAP Financial Measures
Ironwood presents non-GAAP net income (loss) and non-GAAP net
income (loss) per share to exclude the impact of net gains and
losses on derivatives related to our 2022 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 terminated 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. Ironwood also excludes
restructuring, separation-related expenses and loss on
extinguishment of debt from non-GAAP net income (loss). These
adjustments are reflected in the non-GAAP net income (loss) in the
fourth quarter and full year 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 2022
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 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. Certain of these expenses do not appear as non-GAAP
adjustments used to calculate adjusted EBITDA from continuing
operations, as such expenses are included as part of discontinued
operations, and are therefore excluded from the calculation of GAAP
net income (loss) from continuing operations.
- Loss on extinguishment of debt is considered to be a
non-recurring event as it is associated with a distinct financing
decision. Included in loss on extinguishment of debt are costs
associated with the extinguishment of the 8.375% Notes and a
portion of the 2022 Convertible Notes.
Ironwood also presents adjusted EBITDA from continuing
operations, a non-GAAP measure. Adjusted EBITDA from continuing
operations is calculated by subtracting net interest expense,
taxes, depreciation, amortization, fair value of remeasurement of
contingent consideration, mark-to-market adjustments on derivatives
related to Ironwood’s 2022 Convertible Notes, impairment of
intangibles, restructuring expenses, separation expenses and loss
on extinguishment of debt from GAAP net income (loss) from
continuing operations. The adjustments are made on a similar basis
as described above related to non-GAAP net income (loss), as
applicable.
Ironwood also presents guidance on adjusted EBITDA, a non-GAAP
measure. Adjusted EBITDA is calculated by subtracting net interest
expense, taxes, depreciation, amortization, mark-to-market
adjustments on derivatives related to Ironwood’s 2022 Convertible
Notes, restructuring expenses, separation expenses and loss on
extinguishment of debt from GAAP net income (loss). The adjustments
are made on a similar basis as described above related to non-GAAP
net income (loss), 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 (loss) and non-GAAP net income (loss) per share
to GAAP net income (loss) and GAAP net income (loss) per share,
respectively, and for a reconciliation of adjusted EBITDA from
continuing operations to net income (loss) from continuing
operations on a GAAP basis, please refer to the tables 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 to expected GAAP net income (loss) from continuing
operations because, without unreasonable efforts, it is unable to
predict with reasonable certainty the non-GAAP adjustments used to
calculate adjusted EBITDA including, without limitation, the
mark-to-market adjustments on the derivatives related to its 2022
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, February 13, 2020 to discuss its fourth
quarter and full year 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 1975039. 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 13, 2020 running through 11:59 p.m. Eastern Time on
February 27, 2020. To listen to the replay, dial (855) 859-2056
(U.S. and Canada) or (404) 537-4306 (international) using
conference ID number 1975039. 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 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 refractory 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 certain GI
diseases.
Ironwood was founded in 1998 and is headquartered in Boston,
Mass. For more information, please visit our 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 our ability
to maintain net income or generate and maintain positive cash
flows; the development, commercial availability and commercial
potential of linaclotide and our other product candidates and the
drivers, timing, impact and results thereof; 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 strategy, business and operations; the anticipated
timing of clinical developments and the timing and results of
clinical studies, including with respect to the MD-7246 Phase II
trial and the IW-3718 Phase III trials; expectations regarding our
global collaborations, including partners’ responsibility,
beginning in 2020, for API, finished drug product and finished
goods manufacturing in their respective territories; the potential
of our capped call transactions, entered into in connection with
the issuance of our 0.75% Convertible Senior Notes due 2024 and our
1.50% Convertible Senior Notes due 2026, to reduce the potential
dilution to our common stock in certain circumstances upon
conversion of those notes; and our financial performance and
results, and guidance and expectations related thereto (including
the drivers and timing thereof), including expectations related to
LINZESS net sales growth, total revenue and adjusted EBITDA. 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, 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 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, 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 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; 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; the risk that we are
unable to manage our expenses or cash use, or are unable to
commercialize our products as expected; and the risks listed under
the heading “Risk Factors” and elsewhere in Ironwood’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2019, and
in our subsequent SEC filings. 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. Ironwood uses non-GAAP financial measures in this press
release, which should be considered only a supplement to, and not a
substitute for or superior to, GAAP measures. Refer to the
Reconciliation of GAAP Results to Non-GAAP Financial Measures table
and to the Reconciliation of GAAP Net Income (Loss) from Continuing
Operations to Adjusted EBITDA from Continuing Operations table and
related footnotes accompany this press release. 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.
LINZESS® is a registered trademark of Ironwood Pharmaceuticals,
Inc. Any other trademarks referred to in this presentation are the
property of their respective owners. All rights reserved.
Condensed Consolidated Balance
Sheets
(In thousands)
(unaudited)
December 31, 2019
December 31, 2018
Assets
Cash and cash equivalents
$
177,023
$
173,172
Accounts receivable, net
11,279
20,991
Related party account receivable, net
105,967
59,959
Inventory, net
648
-
Prepaid expenses and other current
assets
10,685
10,216
Restricted cash, short-term
1,250
1,250
Current assets of discontinued
operations
-
847
Total current assets
306,852
266,435
Restricted cash, net of current
portion
971
6,426
Accounts receivable, net of current
portion
32,597
-
Property and equipment, net
12,429
7,652
Operating lease right-of-use assets
17,743
-
Convertible note hedges
31,366
41,020
Goodwill
785
785
Other assets
5
89
Non-current assets of discontinued
operations
-
9,643
Total assets
$ 402,748
$ 332,050
Liabilities and Stockholders’
Deficit
Accounts payable
$
3,978
$
14,891
Related party accounts payable, net
1,509
-
Accrued research and development costs
2,956
2,963
Accrued expenses and other current
liabilities
30,465
38,001
Capital lease obligations
-
73
Current portion of deferred rent
-
252
Current portion of 2026 Notes
-
47,554
Current portion of operating lease
liabilities
1,146
-
Current portion of contingent
consideration
-
51
Deferred revenue
875
-
Current liabilities of discontinued
operations
-
15,739
Total current liabilities
40,929
119,524
Capital lease obligations, net of current
portion
-
158
Deferred rent, net of current portion
-
6,308
Note hedge warrants
24,260
33,763
Convertible senior notes
407,994
265,601
Operating lease liabilities, net of
current portion
22,082
-
2026 Notes, net of current portion
-
100,537
Other liabilities
734
2,530
Total stockholders’ deficit
(93,251)
(196,371)
Total liabilities and stockholders’
deficit
$
402,748
$
332,050
Condensed Consolidated
Statements of Operations
(In thousands, except per
share amounts)
(unaudited
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Revenues
Collaborative arrangements revenue
105,654
84,352
379,652
272,839
Product revenue, net
-
479
-
3,445
Sale of active pharmaceutical
ingredient
20,647
45,861
48,761
70,355
Total Revenues
126,301
130,692
428,413
346,639
Costs and expenses:
Cost of revenues, excluding amortization
of acquired intangible assets
11,013
21,463
23,875
32,751
Write-down of commercial supply and
inventory to net realizable value and (settlement) loss on
non-cancellable purchase commitments
-
-
(3,530)
247
Research and development
26,537
28,239
115,044
101,060
Selling, general and administrative
39,190
50,424
172,450
219,676
Amortization of acquired intangible
assets
-
-
-
8,111
Gain on fair value remeasurement of
contingent consideration
-
-
-
(31,045)
Gain on lease modification
-
-
(3,169)
-
Restructuring expenses
(32)
705
3,620
14,715
Impairment of intangible assets
-
-
-
151,794
Total cost and expenses
76,708
100,831
308,290
497,309
Income (loss) from operations
49,593
29,861
120,123
(150,670)
Other (expense) income:
Interest expense
(7,123)
(9,586)
(36,602)
(37,724)
Interest and investment income
565
837
2,862
2,991
Gain (loss) on derivatives
4,517
(12,739)
3,023
(8,743)
Loss on extinguishment of debt
-
-
(30,977)
-
Other income
306
-
514
-
Other expense, net
(1,735)
(21,488)
(61,180)
(43,476)
Income (loss) from continuing
operations
47,858
8,373
58,943
(194,146)
Loss from discontinued operations1
-
(23,866)
(37,438)
(88,222)
GAAP net income (loss)
$47,858
$(15,493)
$21,505
$(282,368)
Income (loss) from continuing operations
per share- basic
$0.31
$0.05
$0.38
$(1.27)
Income (loss) from continuing operations
per share- diluted
$0.30
$0.05
$0.38
$(1.27)
Loss from discontinued operations per
share- basic and diluted1
0.00
(0.15)
(0.24)
(0.58)
GAAP net income (loss) per share—basic
$0.31
$(0.10)
$0.14
$(1.85)
GAAP net income (loss) per
share—diluted2
$0.30
$(0.10)
$0.14
$(1.85)
1 See Discontinued Operations table at the end of this press
release for a detailed breakout of net loss from discontinued
operations. 2 The inclusion of applicable dilutive securities in
its calculation of diluted earnings per share was anti-dilutive for
the year ended December 31, 2019. As a result, diluted earnings per
share is equivalent to basic earnings per share for the year ended
December 31, 2019.
Reconciliation of Discontinued
Operations
(In thousands)
(unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Costs and expenses included in
discontinued operations
Research and development
-
$ 16,033
$ 21,792
$ 65,443
Selling, general and administrative
-
7,755
15,646
21,615
Restructuring expenses
-
78
-
1,164
Net loss from discontinued operations
-
$ 23,866
$ 37,438
$ 88,222
Reconciliation of GAAP Results
to Non-GAAP Financial Measures
(In thousands, except per
share amounts)
(unaudited)
A reconciliation between GAAP net income
(loss) on a GAAP basis and on a non-GAAP basis is as follows:
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
GAAP net income (loss)
$47,858
$(15,493)
$21,505
$(282,368)
Adjustments:
Mark-to-market adjustments on the
derivatives related to convertible notes, net
(4,517)
12,739
(3,023)
8,743
Amortization of intangible assets
-
-
-
8,111
Gain on fair value remeasurement of
contingent consideration
-
-
-
(31,045)
Impairment of intangible assets
-
-
-
151,794
Restructuring expenses
(32)
783
3,620
15,879
Separation expenses
3,781
8,614
32,418
22,911
Loss on extinguishment of debt
-
-
30,977
-
Non-GAAP net income (loss)
$47,090
$6,643
$85,497
$(105,975)
A reconciliation between diluted GAAP net
income (loss) per share on a GAAP basis and on a non-GAAP basis is
as follows:
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
GAAP net income (loss) per share
–diluted
$0.30
$(0.10)
$0.14
$(1.85)
Adjustments to GAAP net income (loss) per
share (as detailed above)
(0.00)
0.14
0.41
1.16
Non-GAAP net income (loss) per share
–diluted1
$0.30
$0.04
$0.55
$(0.68)
Weighted average number of common shares
used in net income (loss) per share — diluted
157,915
154,091
156,023
152,634
1 Numbers may not add due to rounding.
Reconciliation of GAAP Net
Income (Loss) from Continuing Operations to
Adjusted EBITDA from
Continuing Operations
(In thousands, except per
share amounts)
(unaudited)
A reconciliation between net income (loss)
from continuing operations on a GAAP basis and adjusted EBITDA from
continuing operations:
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
GAAP net income (loss) from continuing
operations
$ 47,858
$ 8,373
$ 58,943
$ (194,146)
Adjustments:
Mark-to-market adjustments on the
derivatives related to convertible notes, net
(4,517)
12,739
(3,023)
8,743
Amortization of acquired intangible
assets
-
-
-
8,111
Gain on fair value remeasurement of
contingent consideration
-
-
-
(31,045)
Impairment of intangibles
-
-
-
151,794
Restructuring expenses1
(32)
705
3,620
14,715
Separation expenses1
3,781
2,167
17,954
3,540
Loss on extinguishment of debt
-
-
30,977
-
Interest expense
7,123
8,749
36,602
37,724
Interest income
(565)
-
(2,862)
(2,991)
Depreciation1
867
694
5,580
3,859
Adjusted EBITDA from continuing
operations
$ 54,515
$ 33,427
$ 147,791
$ 304
1 These adjustments relate to the portion of costs included in
continuing operations and not the amounts that have been recast to
discontinued operations.
U.S. LINZESS Commercial
Collaboration1
Revenue/Expense
Calculation
(In thousands)
(unaudited)
Three Months Ended December
31,
2019
2018
LINZESS U.S. net sales
231,155
$205,239
Allergan & Ironwood commercial costs
and expenses2
44,678
59,353
Commercial profit on sales of LINZESS
186,477
$145,886
Commercial Margin3
81%
71%
Ironwood’s share of net profit
$93,239
$72,943
Reimbursement for Ironwood’s selling,
general and administrative expenses4
8,359
8,879
Net sale adjustment5
-
(254)
Ironwood’s collaborative arrangement
revenue
$101,598
$81,568
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. Excludes approximately $0.5 million for
each of the three months ended December 31, 2019 and 2018,
respectively, related to patent prosecution and patent litigation
costs recognized in connection with the collaboration agreement
with Allergan. 5 During the three months ended December 31, 2018,
Allergan reported to Ironwood a true-up of approximately $0.2
million related to the previously reported adjustment for the
cumulative difference between certain previously estimated LINZESS
gross-to-net sales reserves and allowances made by Allergan during
the years ended December 31, 2015, 2016 and 2017, and actual
subsequent payments made.
U.S. LINZESS Commercial
Collaboration1
Revenue/Expense
Calculation
(In thousands)
(unaudited)
Twelve Months Ended December
31,
2019
2018 excluding Net Sales
Adjustment2
Net Sales Adjustment
2018
LINZESS U.S. net sales
$803,204
$761,214
$(59,832)
$701,382
Allergan & Ironwood commercial costs
and expenses3
228,593
257,767
-
257,767
Commercial profit on sales of LINZESS
$574,611
$503,447
$(59,832)
$443,615
Commercial Margin4
72%
66%
63%
Ironwood’s share of net profit
$287,306
$221,808
Reimbursement for Ironwood’s selling,
general and administrative expenses5
38,123
42,435
Ironwood’s collaborative arrangement
revenue
$325,429
$264,243
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 During the twelve months ended December 31, 2018,
Allergan reported to Ironwood an approximately $59.8 million
negative adjustment to LINZESS net sales. Such adjustment relates
to the cumulative difference between certain previously estimated
LINZESS gross-to-net sales reserves and allowances made by Allergan
during the years ended December 31, 2015, 2016 and 2017, and actual
subsequent payments made. This adjustment is primarily associated
with estimated governmental and contractual rebates, as reported by
Allergan. Upon receiving the information from Allergan, Ironwood
recorded a $29.9 million reduction to collaborative arrangement
revenue and accounts receivable in its full year 2018 financial
statements related to its share of the adjustment. 3 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. 4
Commercial margin is defined as commercial profit on sales of
LINZESS as a percent of total LINZESS U.S. net sales. 5 Includes
Ironwood’s selling, general and administrative expenses
attributable to the cost-sharing arrangement with Allergan.
Excludes approximately $2.4 million, and approximately $2.2 million
for the years ended December 31, 2019 and 2018, respectively,
related to patent prosecution and patent litigation costs
recognized in connection with the collaboration agreement with
Allergan.
U.S. LINZESS Full Brand
Collaboration1
Revenue/Expense
Calculation
(In thousands)
(unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
LINZESS U.S. net sales2
$ 231,155
$ 205,239
$ 803,204
$ 761,214
Allergan & Ironwood commercial costs
and expenses3
44,678
59,353
228,593
257,767
Allergan & Ironwood R&D
Expenses4
16,344
16,887
60,870
58,599
Total net profit on sales of LINZESS
$170,133
$ 128,999
$ 513,741
$ 444,848
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 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 During the twelve months ended
December 31, 2018, Allergan reported to Ironwood an approximately
$59.8 million negative adjustment to LINZESS net sales. Such
adjustment relates to the cumulative difference between certain
previously estimated LINZESS gross-to-net sales reserves and
allowances made by Allergan during the years ended December 31,
2015, 2016 and 2017, and actual subsequent payments made. This
adjustment is primarily associated with estimated governmental and
contractual rebates, as reported by Allergan. Upon receiving the
information from Allergan, Ironwood recorded a $29.9 million
reduction to collaborative arrangement revenue and accounts
receivable in its full year 2018 financial statements related to
its share of the adjustment. 3 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. 4 R&D expenses
related to LINZESS in the U.S. are shared equally between Ironwood
and Allergan under the collaboration agreement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200213005367/en/
Investors and Media: Meredith Kaya, 617-374-5082
mkaya@ironwoodpharma.com
Media: Beth Calitri, 978-417-2031
bcalitri@ironwoodpharma.com
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