– LINZESS®
(linaclotide) 2020 U.S. net sales of $931 million, up 10%
year-over-year; Ironwood expects 2021 U.S. LINZESS net sales growth
of 3 to 5% –
– 2020 total
revenue of $390 million, driven primarily by $369 million in U.S.
LINZESS collaboration revenue –
– 2020 GAAP
net income was $106 million and adjusted EBITDA was $161 million;
ended 2020 with $363 million in cash and cash equivalents
–
– Full year
2021 total revenue guidance of $370 to $385 million and adjusted
EBITDA guidance of >$190 million –
Ironwood Pharmaceuticals, Inc. (Nasdaq: IRWD), a GI-focused
healthcare company, today provided an update on its fourth quarter
and full year 2020 results and recent business performance.
“The fourth quarter marked a strong finish to 2020, which is a
testament to the hard work and dedication of the Ironwood team.
LINZESS U.S. net sales grew 10% year-over-year in 2020 – remarkable
growth in the face of the COVID-19 pandemic – and Ironwood
delivered its second full year of profits. While the year did bring
disappointing outcomes within the development portfolio, the team
took thoughtful actions to help better position Ironwood for the
future,” said Mark Mallon, chief executive officer of Ironwood.
“Looking ahead, Ironwood has a tremendous opportunity to maximize
LINZESS through innovative commercial strategies, build its GI
pipeline by pursuing assets for serious, organic GI diseases, and
deliver sustainable profits and cash flow. I believe in Ironwood’s
future as a GI leader, as it seeks to progress its mission to
advance the treatment of GI diseases and redefine the standard of
care for patients.”
Fourth Quarter and Full Year 2020
Financial Highlights1
(in thousands, except for per share
amounts)
4Q
2020
4Q
2019
FY
2020
FY
2019
Total revenues
$116,680
$126,301
$389,523
$428,413
Total costs and expenses
65,296
76,708
246,583
$308,290
GAAP income from continuing operations
43,204
47,858
106,176
58,943
GAAP net income
43,204
47,858
106,176
21,505
GAAP net income per share – basic
0.27
0.31
0.67
0.14
GAAP net income per share –diluted
0.27
0.30
0.66
0.14
Adjusted EBITDA
65,952
54,515
160,678
147,791
Non-GAAP net income
56,934
47,090
127,687
85,497
Non-GAAP net income per share – basic
0.36
0.30
0.80
0.55
Non-GAAP net income per share –
diluted
0.36
0.30
0.79
0.55
- Refer to the Reconciliation of GAAP Results to Non-GAAP
Financial Measures table and to the Reconciliation of GAAP Income
from Continuing Operations to Adjusted EBITDA table at the end of
this press release. Adjusted EBITDA is reconciled from GAAP Income
from Continuing Operations. There were no discontinued operations
for the three and twelve months ended December 31, 2020 or the
three months ended December 31, 2019. Refer to Non-GAAP Financial
Measures for additional information.
Fourth Quarter and Full Year 2020 Corporate
Highlights
U.S. LINZESS
- Prescription Demand: Total LINZESS
prescription demand in the fourth quarter of 2020 was 38 million
LINZESS capsules, an 8% increase compared to the fourth quarter of
2019, per IQVIA. Total prescription demand was 144 million LINZESS
capsules for the full year 2020, a 9% increase compared to the full
year 2019, per IQVIA.
- U.S. Brand Collaboration:
- LINZESS U.S. net sales are provided to Ironwood by its U.S.
partner, AbbVie. LINZESS U.S. net sales were $278 million in the
fourth quarter of 2020, a 16% increase compared to $240 million for
the fourth quarter of 2019, and $931 million for the full year
2020, a 10% increase compared to $845 million for the full year
2019. Ironwood and AbbVie share equally in U.S. brand collaboration
profits. See the LINZESS U.S. Commercial Collaboration table at the
end of the press release.
- The difference between LINZESS net sales growth and total
prescription demand growth in the fourth quarter was primarily due
to net price improvement and inventory fluctuations.
- LINZESS commercial margin was 65% in the fourth quarter of 2020
compared to 76% in the fourth quarter of 2019. Commercial margin
was 72% for the full year 2020 compared to 68% for the full year
2019. See the U.S. LINZESS Full Brand Collaboration table below and
at the end of this press release regarding adjustments recorded in
the fourth quarter of 2020.
- Net profit for the LINZESS U.S. brand collaboration, net of
commercial and research and development (R&D) expenses, was
$168 million in the fourth quarter of 2020 compared to $166 million
in the fourth quarter of 2019. Net profit for the LINZESS U.S.
brand collaboration, net of commercial and R&D expenses, was
$619 million for the full year 2020 compared to $514 million for
the full year 2019. See U.S. LINZESS Full Brand Collaboration table
below and at the end of this press release.
- Collaboration Revenue to Ironwood:
Ironwood recorded $111 million in collaboration revenue in the
fourth quarter of 2020 related to sales of LINZESS in the U.S., a
9% increase compared to $102 million for the fourth quarter of
2019. Ironwood recorded $369 million in collaboration revenue for
the full year 2020, a 13% increase compared to $325 million in
2019. See U.S. LINZESS Commercial Collaboration table at the end of
the press release.
U.S. LINZESS Full Brand
Collaboration1
(in thousands, except for percentages)
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
LINZESS U.S. net sales as reported by
AbbVie
$278,320
$239,650
$931,211
$844,761
AbbVie & Ironwood commercial costs,
expenses and other discounts
97,992
56,940
260,825
270,150
Commercial margin
65%2
76%
72%
68%
AbbVie & Ironwood R&D Expenses
11,889
16,344
51,295
60,870
Total net profit on sales of LINZESS
168,439
166,366
619,091
513,741
Full brand margin
61%
69%
66%
61%
- All periods presented have been adjusted to conform with
AbbVie’s revenue recognition accounting policies and reporting
conventions. As a result, certain of the rebates and discounts that
were previously classified within LINZESS U.S. net sales have been
reclassified as LINZESS U.S. commercial costs, expenses and other
discounts within Ironwood’s calculation of collaborative
arrangements revenue. Refer to the U.S. LINZESS Full Brand
Collaboration table at the end of this press release.
- Commercial margin decreased in the fourth quarter of 2020
compared to the fourth quarter of 2019 due to a $38.7 million
adjustment recorded in the fourth quarter of 2020 to account for
selling expenses incurred in 2020 relating to virtual details and
overhead due to the COVID-19 pandemic. During the first three
quarters of 2020, only costs associated with in-person details were
allocated to the LINZESS U.S. brand collaboration, although AbbVie
and Ironwood field representatives performed both in-person and
virtual details.
IW-3300
- Ironwood is currently advancing IW-3300, a guanylate cyclase-C
agonist being developed for the potential treatment of visceral
pain conditions, such as interstitial cystitis / bladder pain
syndrome (IC/BPS) and endometriosis.
- IW-3300 is in pre-clinical development. Ironwood expects to
submit an Investigational New Drug (IND) application with the U.S.
FDA in the second half of 2021 for the initiation of a Phase I
clinical trial with IW-3300.
- IC/BPS affects an estimated four to 12 million Americans,
according to the Interstitial Cystitis Association. An estimated
four million reproductive-age women in the U.S. have diagnosed
endometriosis, according to a study published in Gynecologic and
Obstetric Investigation. Both diseases have a limited number of
treatment options available.
U.S. Promotional Partnerships and Global
Collaborations
- U.S. Disease Education and Promotional Partnership with Alnylam
Pharmaceuticals, Inc. (Alnylam). 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.
- Under the original agreement, Ironwood received 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.
- Ironwood efforts in 2020 contributed to more than 25 patients
starting on GIVLAARI treatment. As a result, Ironwood earned $4.3
million from Alnylam in 2020, inclusive of both fixed payments and
royalties.
- In December 2020, Ironwood and Alnylam amended the agreement.
Beginning in 2021, Ironwood will no longer receive fixed payments
and remains eligible to receive royalties as described above over
the term of the agreement, which is approximately three years.
- LINZESS in China and Japan.
- Japan. Under its license agreement with Astellas, Ironwood
receives royalties beginning in the mid-single-digits percent and
escalating to the low double-digits percent, based on annual net
sales of LINZESS in Japan. In the fourth quarter of 2020, Astellas
assumed responsibility for linaclotide active pharmaceutical (API)
manufacturing in Japan.
- LINZESS net sales in Japan for the nine months ended December
31, 2020, as reported by Astellas, were approximately ¥4.9 billion,
a 14% increase compared to the nine months ended December 31,
2019.
- China. Under its collaboration agreement with AstraZeneca,
Ironwood receives royalties beginning in the mid-single-digits
percent and increasing up to 20 percent based on annual net sales
of LINZESS in China (including Hong Kong and Macau).
- In December 2020, the Chinese National Healthcare Security
Administration (NHSA) added LINZESS to the 2020 reimbursement list.
Ironwood expects a modest ramp-up in LINZESS net sales in China
(including Hong Kong and Macau) in 2021.
Leadership Changes
- CEO Transition. In February 2021, Ironwood announced that Mark
Mallon plans to step down as chief executive officer and a member
of the Ironwood Board of Directors, effective March 12, 2021.
- The Ironwood Board has named Thomas McCourt, Ironwood’s
president, as interim CEO effective upon Mr. Mallon’s
departure.
- The Ironwood Board plans to initiate a candidate search with
the assistance of a leading executive search firm to identify Mr.
Mallon’s permanent successor.
- Board of Directors.
- Julie McHugh, Ironwood’s Board chair, will become executive
chair of the Board of Directors effective upon Mr. Mallon’s
departure. In that capacity, Ms. McHugh will continue to lead the
Board of Directors as well as provide counsel and guidance to
Ironwood’s senior management team through the CEO transition.
- In the fourth quarter of 2020, Ironwood also appointed
Alexander Denner, Ph.D. and Jay P. Shepard to its Board of
Directors. Dr. Denner serves as a member of the Governance and
Nominating Committee, and Mr. Shepard serves as a member of the
Audit Committee.
Fourth Quarter and Full Year Financial Results
- Total Revenues. Total revenues in the fourth quarter of
2020 were $116.7 million, compared to $126.3 million in the fourth
quarter of 2019. Total revenues for the full year 2020 were $389.5
million, compared to $428.4 million for the full year 2019.
- Total revenues in the fourth quarter of 2020 consisted of
$110.7 million associated with Ironwood’s share of the net profits
from the sales of LINZESS in the U.S., $3.5 million in linaclotide
royalties, co-promotion and other revenue, and $2.5 million in
sales of linaclotide API. 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 for the full year 2020 consisted of $368.6
million associated with Ironwood’s share of the net profits from
the sales of LINZESS in the U.S., $12.9 million in linaclotide
royalties, co-promotion and other revenue, and $8.0 million in
sales of linaclotide API. 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
non-contingent milestone payments, and $11.7 million in linaclotide
royalties, co-promotion and other revenue.
- Operating Expenses. Operating expenses in the fourth
quarter of 2020 were $65.3 million, compared to $76.7 million in
the fourth quarter of 2019. Operating expenses for the full year
2020 were $246.6 million, compared to $308.2 million for the full
year 2019.
- Operating expenses in the fourth quarter of 2020 consisted
primarily of $34.0 million in selling, general and administrative
(SG&A) expenses, $16.3 million in R&D expenses, and $14.2
million in restructuring expenses. Operating expenses in the fourth
quarter of 2019 consisted primarily 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 2020 consisted primarily
of $140.0 million in SG&A expenses, $88.1 million in R&D
expenses, $15.4 million in restructuring expenses, and $3.1 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 settlement of non-cancellable purchase
commitments and a $3.2 million gain on lease modification in
connection with the separation of Ironwood and Cyclerion
Therapeutics, Inc. (Cyclerion) completed on April 1, 2019.
- Restructuring expenses for the full year 2020 are related to a
workforce reduction in connection with Ironwood’s decision to
discontinue IW-3718. Ironwood reduced its workforce by
approximately 100 full-time employees. The workforce reduction was
substantially completed in the fourth quarter of 2020.
- Interest Expense, net of Interest and Investment Income.
Net interest expense was $7.3 million in the fourth quarter of 2020
and $28.0 million for the full year 2020, primarily in connection
with Ironwood’s convertible senior notes. Interest expense recorded
in the fourth quarter of 2020 included $3.6 million in cash expense
and $5.7 million in non-cash expense. Interest expense recorded for
the full year 2020 included $7.2 million in cash expense and $22.3
million in non-cash 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 Ironwood’s 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.
- Gain (Loss) on Derivatives. Ironwood recorded a gain on
derivatives of $0.4 million in the fourth quarter of 2020 as a
result of the change in fair value of the convertible note hedges
and note hedge warrants. For the full year 2020, Ironwood recorded
a loss on derivatives of $6.1 million.
- 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.
- Income Tax Expense. Ironwood recorded $1.3 million in
state income taxes in the fourth quarter of 2020 and $2.7 million
for the full year 2020, primarily in connection with a change in
California tax law that temporarily disallows the use of net
operating losses. Ironwood did not record any income tax expense in
2019.
- Net Income.
- GAAP net income was $43.2 million, or $0.27 per share (basic
and diluted), in the fourth quarter of 2020, compared to GAAP net
income of $47.9 million, or $0.31 per share (basic) and $0.30 per
share (diluted), in the fourth quarter of 2019. GAAP net income for
the full year 2020 was $106.2 million, or $0.67 per share (basic)
and $0.66 per share (diluted), compared to GAAP net income of $21.5
million, or $0.14 per share (basic and diluted), for the full year
2019.
- Non-GAAP net income was $56.9 million, or $0.36 per share
(basic and diluted), in the fourth quarter of 2020, compared to
non-GAAP net income of $47.1 million, or $0.30 per share (basic and
diluted), in the fourth quarter of 2019. Non-GAAP net income for
the full year 2020 was $127.7 million, or $0.80 per share (basic)
and $0.79 per share (diluted), compared to Non-GAAP net income of
$85.5 million, or $0.55 per share (basic and diluted), for the full
year 2019.
- Non-GAAP net income excludes the impact of mark-to-market
adjustments on the derivatives related to Ironwood’s 2022
Convertible Notes, restructuring expenses, separation expenses, and
loss on extinguishment of debt. These adjustments are reflected in
non-GAAP net income in the fourth quarter and full year 2020 and
2019 results presented in this press release. See Non-GAAP
Financial Measures below.
- Income from Continuing Operations. Beginning in the
second quarter of 2019, Ironwood recast historical operations
related to Cyclerion as discontinued operations.
- Ironwood recorded $43.2 million and $47.9 million in income
from continuing operations during the fourth quarter of 2020 and
2019, respectively. Ironwood recorded $106.2 million and $58.9
million in income from continuing operations during the full year
2020 and 2019, respectively.
- Ironwood did not incur any separation-related expenses for the
full year 2020. Ironwood recorded $37.4 million in GAAP net loss
from discontinued operations for the full year 2019.
- Adjusted EBITDA. Adjusted EBITDA was $66.0 million in
the fourth quarter of 2020, compared to $54.5 million in the fourth
quarter of 2019. For the full year 2020, adjusted EBITDA was $160.7
million, compared to $147.8 million for the full year 2019.
- Adjusted EBITDA is calculated by subtracting net interest
expense, income 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 income from continuing operations.
See Non-GAAP Financial Measures below.
- Cash Flow Statement and Balance Sheet Highlights.
- Ironwood ended 2020 with $362.6 million of cash and cash
equivalents, compared to $177 million of cash and cash equivalents
at the end of 2019.
- Ironwood generated $51.5 million in cash from operations in the
fourth quarter of 2020, compared to $27.6 million in cash from
operations in the fourth quarter of 2019. Ironwood generated $168.8
million in cash from operations for the full year 2020, compared to
$10.7 million for the full year 2019.
- Strong Performance Against 2020 Financial Guidance
2020 Results
Revised 2020 Guidance
Original 2020 Guidance
U.S. LINZESS Net Sales Growth
10%
~10%
Mid-single digit % increase
Total Revenue
$390 million
High end of $370 – $385
million
$360 – $380 million
Adjusted EBITDA1
$161 million
~$150 million
>$105 million
1 Adjusted EBITDA is calculated by subtracting net interest
expense, income 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 income from continuing
operations.
- Ironwood 2021 Financial Guidance
In 2021, Ironwood expects:
2021 Guidance
U.S. LINZESS Net Sales Growth
3% to 5%
Total Revenue
$370 to $385 million
Adjusted EBITDA1
>$190 million
1 Adjusted EBITDA is calculated by subtracting net interest
expense, income 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 income from continuing
operations.
Non-GAAP Financial Measures
Ironwood presents non-GAAP net income and non-GAAP net income
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. Ironwood also excludes restructuring,
separation-related expenses, and loss on extinguishment of debt
from non-GAAP net income, if any. These adjustments, as applicable,
are reflected in the non-GAAP net income in the fourth quarter and
full year 2020 and 2019 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.
- 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, as such expenses are
included as part of discontinued operations, and are therefore
excluded from the calculation of GAAP income 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, a non-GAAP measure, as
well as guidance on adjusted EBITDA. Adjusted EBITDA is calculated
by subtracting net interest expense, income 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
income from continuing operations. The adjustments are made on a
similar basis as described above related to non-GAAP net income, as
applicable.
Management believes this non-GAAP information is useful for
investors, taken in conjunction with Ironwood’s GAAP financial
statements, because it provides greater transparency and
period-over-period comparability with respect to Ironwood’s
operating performance. These measures are also used by management
to assess the performance of the business. Investors should
consider these non-GAAP measures only as a supplement to, not as a
substitute for or as superior to, measures of financial performance
prepared in accordance with GAAP. In addition, these non-GAAP
financial measures are unlikely to be comparable with non-GAAP
information provided by other companies. For a reconciliation of
non-GAAP net income and non-GAAP net income per share to GAAP net
income and GAAP net income per share, respectively, and for a
reconciliation of adjusted EBITDA to income 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 income from
continuing operations or a reconciliation of expected adjusted
EBITDA to expected GAAP income from continuing operations because,
without unreasonable efforts, it is unable to predict with
reasonable certainty the non-GAAP adjustments used to calculate
adjusted EBITDA. These adjustments are uncertain, depend on various
factors and could have a material impact on GAAP income 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 Wednesday, February 17, 2021 to discuss its fourth
quarter and full year 2020 results and recent business activities.
Individuals interested in participating in the call should dial
(833) 350-1432 (U.S. and Canada) or (647) 689-6932 (international)
using conference ID number and event passcode 4598414. 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 17, 2021 running through 11:59 p.m. Eastern Time
on March 3, 2021. To listen to the replay, dial (800) 585-8367
(U.S. and Canada) or (416) 621-4642 (international) using
conference ID number 4598414. 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).
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, constipation, and overall abdominal symptoms of bloating,
discomfort and pain associated with IBS-C, as well as the
constipation, infrequent stools, hard stools, straining, and
incomplete evacuation associated with CIC. 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 guanylate cyclase-C (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 GC-C agonists. LINZESS contains a peptide
called linaclotide that activates the GC-C receptor in the
intestine. Activation of GC-C is thought to result in increased
intestinal fluid secretion and accelerated transit and a decrease
in the activity of pain-sensing nerves in the intestine. The
clinical relevance of the effect on pain fibers, which is based on
nonclinical studies, has not been established.
In the United States, Ironwood and AbbVie co-develop and
co-commercialize LINZESS for the treatment of adults with IBS-C or
CIC. In Europe, AbbVie markets linaclotide under the brand name
CONSTELLA® for the treatment of adults with moderate to severe
IBS-C. In Japan, Ironwood's partner Astellas markets linaclotide
under the brand name LINZESS for the treatment of adults with IBS-C
or CIC. Ironwood also has partnered with AstraZeneca for
development and commercialization of LINZESS in China, and with
AbbVie for development and commercialization of linaclotide in all
other territories worldwide.
LINZESS Important Safety Information
INDICATIONS AND USAGE
LINZESS (linaclotide) is indicated 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
Company’s ability to execute on its mission; the Company’s
strategy, business, financial position and operations, including
with respect to the Company’s goals of maximizing LINZESS through
innovative commercial strategies, building an innovative GI
pipeline by pursuing assets for serious, organic GI diseases and
delivering sustainable profits and cash flow; the Company’s ability
to drive growth and profitability; the demand, development,
commercial availability and commercial potential of linaclotide and
the drivers, timing, impact and results thereof; the potential
indications for, and benefits of, linaclotide; the potential of
IW-3300 to be an effective treatment of visceral pain conditions
and the size of the IB/BPS and endometriosis populations, as well
as our plans to submit an IND with the U.S. FDA and, assuming IND
approval, to advance IW-3300 into Phase I development (including
the timing and results thereof); our decision to discontinue
development of IW-3718; expectations regarding our U.S. promotional
partnerships and global collaborations, including expectations
regarding LINZESS net sales in China; anticipated leadership
transitions, including the expected date and duration thereof; and
our financial performance and results, and guidance and
expectations related thereto, including expectations related to
U.S. LINZESS net sales growth, total revenue and adjusted EBITDA.
These forward-looking statements speak only as of the date of this
press release, and Ironwood undertakes no obligation to update
these forward-looking statements. Each forward-looking statement is
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied in such
statement. Applicable risks and uncertainties include those related
to the effectiveness of development and commercialization efforts
by us and our partners; preclinical and clinical development,
manufacturing and formulation development of linaclotide and our
product candidates; the risk that 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,
including due to the impacts of the COVID-19 pandemic; the risk
that findings from our completed nonclinical and clinical studies
may not be replicated in later studies; the risk that we or our
partners are unable to obtain, maintain or manufacture sufficient
LINZESS or our product candidates, or otherwise experience
difficulties with respect to supply or manufacturing; the efficacy,
safety and tolerability of linaclotide and our product candidates;
the risk that the therapeutic opportunities for LINZESS or our
product candidates are not as we expect; decisions by regulatory
and judicial authorities, including the potential impact of the
COVID-19 pandemic on governmental authorities; the risk we may
never get additional patent protection for linaclotide and other
product candidates; 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; 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; developments in accounting guidance or
practice; Ironwood’s or AbbVie’s accounting practices, including
reporting and settlement practices as between Ironwood and AbbVie;
the risk that we are unable to manage our expenses or cash use, or
are unable to commercialize our products as expected; the
possibility that the leadership transitions do not occur as
anticipated for any reason or on the expected timing; 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,
2020, and in our subsequent SEC filings. In addition, the COVID-19
pandemic and the associated containment efforts have had a serious
adverse impact on the economy, the severity and duration of which
are uncertain. Government stabilization efforts will only partially
mitigate the consequences. The extent and duration of the impact on
our business and operations is highly uncertain. Factors that will
influence the impact on our business, operations and financial
results include the duration and extent of the pandemic, the extent
of imposed or recommended containment and mitigation measures, and
the general economic consequences of the pandemic. The pandemic
could have a material adverse impact on our business, operations
and financial results for an extended period of time.
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 Income from Continuing Operations
to Adjusted EBITDA table and related footnotes accompany this press
release. Further, Ironwood considers the net profit for the U.S.
LINZESS brand collaboration with AbbVie in assessing the product’s
performance and calculates it based on inputs from both Ironwood
and AbbVie. 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)
December 31, 2020
December 31, 2019
Assets
Cash and cash equivalents
$
362,564
$
177,023
Accounts receivable, net
122,351
11,279
Related party account receivable, net
-
105,967
Inventory, net
-
648
Prepaid expenses and other current
assets
9,189
10,685
Restricted cash, short-term
1,735
1,250
Total current assets
495,839
306,852
Restricted cash, net of current
portion
485
971
Accounts receivable, net of current
portion
23,401
32,597
Property and equipment, net
8,929
12,429
Operating lease right-of-use assets
16,576
17,743
Convertible note hedges
13,065
31,366
Goodwill
785
785
Other assets
158
5
Total assets
$559,238
$ 402,748
Liabilities and Stockholders’ Equity
(Deficit)
Accounts payable
$
661
$
3,978
Related party accounts payable, net
-
1,509
Accrued research and development costs
1,898
2,956
Accrued expenses and other current
liabilities
26,486
30,465
Current portion of operating lease
liabilities
3,128
1,146
Deferred revenue
-
875
Total current liabilities
32,713
40,929
Note hedge warrants
12,088
24,260
Convertible senior notes
430,256
407,994
Operating lease liabilities, net of
current portion
20,318
22,082
Other liabilities
1,763
734
Total stockholders’ equity (deficit)
62,640
(93,251)
Total liabilities and stockholders’
equity (deficit)
$559,238
$ 402,748
Condensed Consolidated
Statements of Operations
(In thousands, except per
share amounts)
(unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
Revenues
Collaborative arrangements revenue
$114,209
105,654
$381,545
379,652
Sale of active pharmaceutical
ingredient
2,471
20,647
7,978
48,761
Total revenues
116,680
126,301
389,523
428,413
Costs and expenses:
Cost of revenues
897
11,013
3,136
23,875
Settlement on non-cancellable purchase
commitments
-
-
-
(3,530)
Research and development
16,267
26,537
88,062
115,044
Selling, general and administrative
33,982
39,190
140,003
172,450
Gain on lease modification
-
-
-
(3,169)
Restructuring expenses
14,150
(32)
15,382
3,620
Total cost and expenses
65,296
76,708
246,583
308,290
Income from operations
51,384
49,593
142,940
120,123
Other (expense) income:
Interest expense
(7,521)
(7,123)
(29,478)
(36,602)
Interest and investment income
220
565
1,504
2,862
Gain (loss) on derivatives
420
4,517
(6,129)
3,023
Loss on extinguishment of debt
-
-
-
(30,977)
Other income
(3)
306
24
514
Other expense, net
(6,884)
(1,735)
(34,079)
(61,180)
Income from continuing operations, before
income taxes
44,500
47,858
108,861
58,943
Income tax expense
1,296
-
2,685
-
Income from continuing operations
43,204
47,858
106,176
58,943
Loss from discontinued operations
-
-
-
(37,438)
GAAP net income
$43,204
47,858
$106,176
$21,505
Income from continuing operations, per
share — basic
$0.27
$0.31
$0.67
$0.38
Income from continuing operations, per
share —diluted
$0.27
$0.30
$0.66
$0.38
Loss from discontinued operations per
share — basic and diluted
-
-
-
$(0.24)
GAAP net income per share—basic
$0.27
$0.31
$0.67
$0.14
GAAP net income per share—diluted
$0.27
$0.30
$0.66
$0.14
Reconciliation of GAAP Results
to Non-GAAP Financial Measures
(In thousands, except per
share amounts) (unaudited)
A reconciliation between GAAP net income
on a GAAP basis and on a non-GAAP basis is as follows:
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
GAAP net income
$43,204
$47,858
$106,176
$21,505
Adjustments:
Mark-to-market adjustments on the
derivatives related to convertible notes, net
(420)
(4,517)
6,129
(3,023)
Restructuring expenses
14,150
(32)
15,382
3,620
Separation expenses
-
3,781
-
32,418
Loss on extinguishment of debt
-
-
-
30,977
Non-GAAP net income
$56,934
$47,090
$127,687
$85,497
A reconciliation between basic GAAP net
income 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,
2020
2019
2020
2019
GAAP net income per share –basic
$0.27
$0.31
$0.67
$0.14
Adjustments to GAAP net income per share
(as detailed above)
0.09
0.00
0.13
0.41
Non-GAAP net income per share –basic1
$0.36
$0.30
$0.80
$0.55
Weighted average number of common shares
used to calculate net income per share — basic
160,071
156,825
159,427
156,023
A reconciliation between diluted GAAP net
income 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,
2020
2019
2020
2019
GAAP net income per share –diluted
$0.27
$0.30
$0.66
$0.14
Adjustments to GAAP net income per share
(as detailed above)
0.09
0.00
0.13
0.41
Non-GAAP net income per share –diluted
$0.36
$0.30
$0.79
$0.55
Weighted average number of common shares
used to calculate net income per share — diluted
161,485
157,915
160,655
156,023
___________________________ 1Numbers may not add due to
rounding.
Reconciliation of GAAP Income
from Continuing Operations to Adjusted EBITDA
(In thousands)
(unaudited)
A reconciliation between income from
continuing operations on a GAAP basis and adjusted EBITDA:
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
GAAP income from continuing
operations1
$43,204
$47,858
$106,176
$58,943
Adjustments:
Mark-to-market adjustments on the
derivatives related to convertible notes, net
(420)
(4,517)
6,129
(3,023)
Restructuring expenses1
14,150
(32)
15,382
3,620
Separation expenses2
-
3,781
-
17,954
Loss on extinguishment of debt
-
-
-
30,977
Interest expense
7,521
7,123
29,478
36,602
Interest and investment income
(220)
(565)
(1,504)
(2,862)
Income tax expense
1,296
-
2,685
-
Depreciation and amortization1
421
867
2,332
5,580
Adjusted EBITDA
$65,952
$54,515
$160,678
$147,791
___________________________ 1 There were no discontinued
operations for the three or twelve months ended December 31, 2020.
2 These adjustments relate to the portion of costs included in
continuing operations and excludes 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,
Twelve Months Ended December
31,
2020
2019
2020
2019
LINZESS U.S. net sales as reported by
AbbVie2
$278,320
$239,650
$931,211
$844,761
AbbVie & Ironwood commercial costs,
expenses and other discounts3
97,992
56,940
260,825
270,150
Commercial profit on sales of LINZESS
$180,328
$182,710
$670,386
$574,611
Commercial Margin4
65%
76%
72%
68%
Ironwood’s share of net profit5
90,164
91,355
335,193
287,306
Reimbursement for Ironwood’s selling,
general and administrative expenses6
20,562
8,359
39,312
38,123
Adjustments to reconcile Ironwood’s
previously reported share of net profit in conformance with AbbVie
revenue recognition accounting policies and reporting
conventions7
-
1,884
(5,902)
-
Ironwood’s collaborative arrangement
revenue
$110,726
$101,598
$368,603
$325,429
___________________________ 1 Ironwood collaborates with AbbVie
on the development and commercialization of linaclotide in North
America. Under the terms of the collaboration agreement, Ironwood
receives 50% of the net profits and bears 50% of the net losses
from the commercial sale of LINZESS in the U.S. The purpose of this
table is to present calculations of Ironwood’s share of net profit
(loss) generated from the sales of LINZESS in the U.S. and
Ironwood’s collaboration revenue/expense; however, the table does
not present the research and development expenses related to
LINZESS in the U.S. that are shared equally between the parties
under the collaboration agreement. Please refer to the table at the
end of this press release for net profit for the U.S. LINZESS brand
collaboration with AbbVie. 2 In connection with its acquisition of
Allergan, AbbVie recast historically reported LINZESS U.S. net
sales (previously reported by Allergan) for periods beginning on
January 1, 2019, to conform to AbbVie’s revenue recognition
accounting policies and reporting conventions. As a result, certain
of the rebates and discounts that were previously classified within
LINZESS U.S. net sales have been reclassified as LINZESS U.S.
commercial costs, expenses and other discounts within Ironwood’s
calculation of collaborative arrangements revenue. 3 Includes
certain discounts recognized and cost of goods sold incurred by
AbbVie; also includes selling, general and administrative expenses
incurred by AbbVie and Ironwood that are attributable to the
cost-sharing arrangement between the parties, including the
adjustment to selling expenses incurred in 2020 and recorded in the
fourth quarter of 2020. 4 Commercial margin is defined as
commercial profit on sales of LINZESS as a percent of total LINZESS
U.S. net sales. Ironwood has recalculated commercial margin in
connection with AbbVie’s recast of historically reported LINZESS
U.S. net sales (previously reported by Allergan). 5 Ironwood has
recalculated its share of net profit on sales of LINZESS in the
U.S. to conform with AbbVie’s recast of historically reported
LINZESS U.S. net sales (previously reported by Allergan). 6
Includes Ironwood’s selling, general and administrative expenses
attributable to the cost-sharing arrangement with AbbVie. Excludes
$0.6 million and $2.4 million for the years ended December 31, 2020
and 2019, respectively, related to patent prosecution and patent
litigation costs recognized in connection with the collaboration
agreement with AbbVie. 7 In connection with its acquisition of
Allergan, AbbVie recast LINZESS U.S. net sales (previously reported
by Allergan) for periods beginning on January 1, 2019 to conform
with its revenue recognition accounting policies and reporting
conventions for certain rebates and discounts. This recast did not
result in any change to Ironwood’s historically reported
collaborative arrangements revenue or collaborative arrangements
revenue policy. Ironwood continues to record collaborative
arrangements revenue based on actual settlement payments received
from AbbVie.
U.S. LINZESS Full Brand
Collaboration1
Revenue/Expense
Calculation
(In thousands)
(unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
LINZESS U.S. net sales as reported by
AbbVie2
$278,320
$239,650
$931,211
$844,761
AbbVie & Ironwood commercial costs,
expenses and other discounts3
97,992
56,940
260,825
270,150
AbbVie & Ironwood R&D
Expenses4
11,889
16,344
51,295
60,870
Total net profit on sales of LINZESS5
$168,439
$166,366
$619,091
$513,741
___________________________ 1 Ironwood collaborates with AbbVie
on the development and commercialization of linaclotide in North
America. Under the terms of the collaboration agreement, Ironwood
receives 50% of the net profits and bears 50% of the net losses
from the commercial sale of LINZESS in the U.S. The purpose of this
table is to present calculations of the total net profit (loss)
generated from the sales of LINZESS in the U.S., including the
commercial costs and expenses and the research and development
expenses related to LINZESS in the U.S. that are shared equally
between the parties under the collaboration agreement. 2 In
connection with its acquisition of Allergan, AbbVie recast
historically reported LINZESS U.S. net sales (previously reported
by Allergan) for periods beginning on January 1, 2019, to conform
to AbbVie’s revenue recognition accounting policies and reporting
conventions. As a result, certain of the rebates and discounts that
were previously classified within LINZESS U.S. net sales have been
reclassified as LINZESS U.S. commercial costs, expenses and other
discounts within Ironwood’s calculation of collaborative
arrangements revenue. 3 Includes certain discounts recognized and
cost of goods sold incurred by AbbVie; also includes selling,
general and administrative expenses incurred by AbbVie and Ironwood
that are attributable to the cost-sharing arrangement between the
parties, including the adjustment to selling expenses incurred in
2020 and recorded in the fourth quarter of 2020. 4 R&D expenses
related to LINZESS in the U.S. are shared equally between Ironwood
and AbbVie under the collaboration agreement. 5 Ironwood has
recalculated its share of net profit on sales of LINZESS in the
U.S. to conform with AbbVie’s recast of historically reported
LINZESS U.S. net sales (previously reported by Allergan).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210217005183/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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