Ironwood Pharmaceuticals Reports Third Quarter 2024 Results

– LINZESS^® (Iinaclotide) EUTRx prescription demand growth of 13% year-over-year –

– Remains on track to complete apraglutide NDA submission in Q1 2025 –

– Maintains Full Year 2024 Financial Guidance –

BOSTON--(BUSINESS WIRE)--Ironwood Pharmaceuticals, Inc. (Nasdaq: IRWD), a GI-focused healthcare company, today reported its third quarter 2024 results and recent business performance.

“LINZESS continued to deliver robust prescription demand growth in the third quarter,” said Tom McCourt, chief executive officer of Ironwood Pharmaceuticals. “LINZESS extended units and new-to-brand prescriptions each increased 13% year-over-year, respectively, reinforcing that patients and health care professionals continue to choose LINZESS in a growing market. Although LINZESS has faced pricing headwinds throughout 2024, we are maintaining our full year financial guidance. With apraglutide, we continue making progress in preparing the NDA submission and remain on track to complete the submission in the first quarter of 2025. Our team is focused on getting apraglutide to market as soon as possible, and we look forward to providing more updates on our progress in the months ahead. We believe that, if approved, apraglutide would be the drug of choice among physicians to treat adult patients with short bowel syndrome who are dependent on parenteral support.”

Third Quarter 2024 Financial Highlights¹
(in thousands, except for per share amounts)

¹ Refer to the Reconciliation of GAAP Results to Non-GAAP Financial Measures table and to the Reconciliation of GAAP Net Income to Adjusted EBITDA table at the end of this press release. Refer to Non-GAAP Financial Measures for additional information.

Third Quarter 2024 Corporate Highlights

U.S. LINZESS

• Prescription Demand: Total LINZESS prescription demand in the third quarter of 2024 was 54 million LINZESS capsules, a 13% increase compared to the third quarter of 2023, per IQVIA.
• U.S. Brand Collaboration: LINZESS U.S. net sales are provided to Ironwood by its U.S. partner, AbbVie Inc. (“AbbVie”). LINZESS U.S. net sales were $225.5 million in the third quarter of 2024, a 19% decrease compared to $279.0 million in the third quarter of 2023. Ironwood and AbbVie share equally in U.S. brand collaboration profits.
  • LINZESS commercial margin was 65% in the third quarter of 2024, compared to 72% in the third quarter of 2023. See the U.S. LINZESS Full Brand Collaboration table at the end of this press release.
  • Net profit for the LINZESS U.S. brand collaboration, net of commercial and research and development (“R&D”) expenses, was $139.6 million in the third quarter of 2024, a decrease compared to $192.0 million in the third quarter of 2023. See the U.S. LINZESS Full Brand Collaboration table at the end of this press release.
• Collaboration Revenue to Ironwood: Ironwood recorded $88.9 million in collaboration revenue in the third quarter of 2024 related to sales of LINZESS in the U.S., compared to $110.1 million for the third quarter of 2023. Third quarter of 2024 collaboration revenue to Ironwood includes a $5.8 million positive adjustment to reflect Ironwood’s estimate of LINZESS gross-to-net reserves as of September 30, 2024. See the U.S. LINZESS Commercial Collaboration table at the end of the press release.

Pipeline Updates

Apraglutide

• Ironwood is advancing apraglutide, a next-generation, synthetic glucagon-like peptide-2 (“GLP-2”) analog for short bowel syndrome (“SBS”) patients dependent on parenteral support (“PS”), a severe chronic malabsorptive condition. Ironwood believes apraglutide has the potential to improve the standard of care for adult patients with SBS who are dependent on PS as the first and only GLP-2 with once-weekly administration, if approved.
  • Ironwood is working to submit a new drug application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) and marketing applications to other regulatory agencies for apraglutide for the treatment of adult patients with SBS who are dependent on PS.

CNP-104

• In the third quarter of 2024, Ironwood received from COUR Pharmaceutical Development Company, Inc. (“COUR”) the topline data from COUR’s Phase II clinical study for the treatment of primary biliary cholangitis. On September 27, 2024, Ironwood notified COUR of its decision not to exercise the option to acquire an exclusive license to CNP-104. As a result, the collaboration and license option agreement between Ironwood and COUR terminated, and Ironwood retains no rights and has no obligations related to CNP-104.

IW-3300

• Ironwood is advancing IW-3300, a guanylate cyclase-C agonist for the potential treatment of visceral pain conditions, such as interstitial cystitis / bladder pain syndrome (“IC/BPS”) and endometriosis.

  Ironwood has decided to end further recruitment for the Phase II proof of concept study in IC/BPS and analyze the data once all currently enrolled patients complete the full 12-week study assessment, which will inform the next steps on the program.

Revolving Credit Facility

• In September 2024, Ironwood entered into a first amendment to its revolving credit agreement to, among other things, increase the quantum of the revolving credit facility from $500.0 million to $550.0 million, extend the maturity date, and increase Ironwood’s permitted maximum consolidated secured net leverage ratio. Additional details can be found in Ironwood’s Form 8-K filing dated September 30, 2024.

Third Quarter 2024 Financial Results

• Total Revenue. Total revenue in the third quarter of 2024 was $91.6 million, compared to $113.7 million in the third quarter of 2023.
  • As noted above, revenue was lower year-over-year, primarily due to the decrease in collaborative arrangements revenue.
  • Total revenue in the third quarter of 2024 consisted of $88.9 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S., and $2.7 million in royalties and other revenue. Total revenue in the third quarter of 2023 consisted of $110.1 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S. and $3.6 million in royalties and other revenue.
• Total Costs and Expenses. Total costs and expenses in the third quarter of 2024 were $66.0 million, compared to $73.7 million in the third quarter of 2023.
  • Total costs and expenses in the third quarter of 2024 consisted of $36.1 million in selling, general and administrative (“SG&A”) expenses, $29.8 million in R&D expenses and an insignificant amount in restructuring expenses. Total costs and expenses in the third quarter of 2023 consisted of $36.0 million in SG&A expenses, $33.0 million in R&D expenses and $4.7 million in restructuring expenses.
• Interest Expense. Interest expense was $9.4 million in the third quarter of 2024, in connection with Ironwood’s convertible senior notes and revolving credit facility. Interest expense was $9.8 million in the third quarter of 2023, in connection with Ironwood’s convertible senior notes and revolving credit facility.
• Interest and Investment Income. Interest and investment income was $1.2 million in the third quarter of 2024. Interest and investment income was $1.7 million in the third quarter of 2023.
• Income Tax Expense. Ironwood recorded $13.7 million of income tax expense in the third quarter of 2024, the majority of which was non-cash, as Ironwood continues to utilize net operating losses to offset taxable income for federal purposes and in many states. Ironwood recorded $18.0 million of income tax expense in the third quarter of 2023, the majority of which was non-cash, as Ironwood continued to utilize net operating losses to offset taxable income for federal purposes and in many states.
• GAAP Net Income Attributable to Ironwood. GAAP net income attributable to Ironwood was $3.6 million, or $0.02 per share (basic and diluted) in the third quarter of 2024, compared to GAAP net income of $15.3 million, or $0.10 per share (basic) and $0.09 per share (diluted) in the third quarter of 2023.
• Non-GAAP Net Income. Non-GAAP net income was $3.9 million, or $0.02 per share (basic and diluted), in the third quarter of 2024, compared to non-GAAP net income of $21.8 million, or $0.14 per share (basic) and $0.12 diluted in the third quarter of 2023.
  • Non-GAAP net income excludes the impact of mark-to-market adjustments on the derivatives related to Ironwood’s 2022 Convertible Notes, amortization of acquired intangible assets, restructuring expenses and acquisition-related costs, all net of tax effect. See Non-GAAP Financial Measures below.
• Adjusted EBITDA. Adjusted EBITDA was $26.2 million in the third quarter of 2024, compared to $49.1 million in the third quarter of 2023.
  • Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs, from GAAP net loss. See Non-GAAP Financial Measures below.
• Cash Flow Highlights. Ironwood ended the third quarter of 2024 with $88.2 million of cash and cash equivalents, compared to $92.2 million of cash and cash equivalents at the end of 2023.
  • In the third quarter of 2024, Ironwood repaid $25.0 million of the outstanding principal balance on its revolving credit facility. The outstanding principal balance on the revolving credit facility was $400.0 million as of September 30, 2024.
  • Ironwood generated $9.9 million in cash from operations in the third quarter of 2024, compared to $32.5 million in cash from operations in the third quarter of 2023.
• Ironwood 2024 Financial Guidance. Ironwood continues to expect:

¹ Adjusted EBITDA is calculated by subtracting restructuring expenses, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs from GAAP net income. For purposes of the 2024 guidance, Ironwood has assumed it will not incur material expenses related to business development activities in 2024. Ironwood does not provide guidance on GAAP net income or a reconciliation of expected adjusted EBITDA to expected GAAP net income because, without unreasonable efforts, it is unable to predict with reasonable certainty the non-GAAP adjustments used to calculate adjusted EBITDA. These adjustments are uncertain, depend on various factors and could have a material impact on GAAP net income for the guidance period. 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.

Non-GAAP Financial Measures

Ironwood presents non-GAAP net income (loss) and non-GAAP net income (loss) per share to exclude the impact, net of tax effects, of net gains and losses on derivatives related to Ironwood’s 2022 Convertible Notes that are required to be marked-to-market, amortization of acquired intangible assets, restructuring expenses, and acquisition-related costs. Non-GAAP adjustments are further detailed below:

• The gains and losses on the derivatives related to Ironwood’s 2022 Convertible Notes were highly variable, difficult to predict and of a size that could have a substantial impact on the company’s reported results of operations in any given period.
• Amortization of acquired intangible assets are non-cash expenses arising in connection with the acquisition of VectivBio and are considered to be non-recurring.
• Restructuring expenses are considered to be a non-recurring event as they are associated with distinct operational decisions. Restructuring expenses include costs associated with exit and disposal activities.
• Acquisition-related costs in connection with the acquisition of VectivBio are considered to be non-recurring and include direct and incremental costs associated with the acquisition and integration of VectivBio to the extent such costs were not classified as capitalizable transaction costs attributed to the cost of net assets acquired through acquisition accounting.

Ironwood also presents adjusted EBITDA, a non-GAAP measure, as well as guidance on adjusted EBITDA. Adjusted EBITDA is calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs from GAAP net income. The adjustments are made on a similar basis as described above related to non-GAAP net income (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 and GAAP net income per share, respectively, and for a reconciliation of adjusted EBITDA to GAAP net income, please refer to the tables at the end of this press release.

Ironwood does not provide guidance on GAAP net income or a reconciliation of expected adjusted EBITDA to expected GAAP net income because, without unreasonable efforts, it is unable to predict with reasonable certainty the non-GAAP adjustments used to calculate adjusted EBITDA. These adjustments are uncertain, depend on various factors and could have a material impact on GAAP net income for the guidance period.

Conference Call Information

Ironwood will host a conference call and webcast at 8:30 a.m. Eastern Time on Thursday, November 7, 2024 to discuss its third quarter 2024 results and recent business activities. Individuals interested in participating in the call should dial (888) 596-4144 (U.S. and Canada) or (646) 968-2525 (international) using conference ID number and event passcode 2530602. To access the webcast, please visit the Investors section of Ironwood’s website at www.ironwoodpharma.com. The call will be available for replay via telephone starting at approximately 11:30 a.m. Eastern Time on November 7, 2024, running through 11:59 p.m. Eastern Time on November 21, 2024. To listen to the replay, dial (800) 770-2030 (U.S. and Canada) or (609) 800-9909 (international) using conference ID number 2530602. The archived webcast will be available on Ironwood’s website for 1 year beginning approximately one hour after the call has completed.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals (Nasdaq: IRWD), an S&P SmallCap 600® company, is a leading gastrointestinal (GI) healthcare company on a mission to advance the treatment of GI diseases and redefine the standard of care for GI patients. We are pioneers in the development of LINZESS® (linaclotide), the U.S. branded prescription market leader for adults with irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC). LINZESS is also approved for the treatment of functional constipation in pediatric patients ages 6-17 years-old. Ironwood is also advancing apraglutide, a next-generation, long-acting synthetic GLP-2 analog being developed for rare gastrointestinal diseases, including short bowel syndrome with intestinal failure (SBS-IF) as well as several earlier stage assets. Building upon our history of GI innovation, we keep patients at the heart of our R&D and commercialization efforts to reduce the burden of GI diseases and address significant unmet needs.

Founded in 1998, Ironwood Pharmaceuticals is headquartered in Boston, Massachusetts, with a site in Basel, Switzerland.

We routinely post information that may be important to investors on our website at www.ironwoodpharma.com. In addition, follow us on X and on LinkedIn.

About LINZESS (Linaclotide)

LINZESS® is the #1 prescribed brand in the U.S. for the treatment of adult patients with irritable bowel syndrome with constipation (“IBS-C”) or chronic idiopathic constipation (“CIC”), based on IQVIA data. LINZESS is a once-daily capsule that helps relieve the abdominal pain, constipation, and overall abdominal symptoms of bloating, discomfort and pain associated with IBS-C, as well as the constipation, infrequent stools, hard stools, straining, and incomplete evacuation associated with CIC. LINZESS relieves constipation in children and adolescents aged 6 to 17 years with functional constipation. The recommended dose is 290 mcg for IBS-C patients and 145 mcg for CIC patients, with a 72 mcg dose approved for use in CIC depending on individual patient presentation or tolerability. In children with functional constipation aged 6 to 17 years, the recommended dose is 72 mcg.

LINZESS is not a laxative; it is the first medicine approved by the FDA in a class called GC-C agonists. LINZESS contains a peptide called linaclotide that activates the GC-C receptor in the intestine. Activation of GC-C is thought to result in increased intestinal fluid secretion and accelerated transit and a decrease in the activity of pain-sensing nerves in the intestine. The clinical relevance of the effect on pain fibers, which is based on nonclinical studies, has not been established.

In the United States, Ironwood and AbbVie co-develop and co-commercialize LINZESS for the treatment of adults with IBS-C or CIC. In Europe, AbbVie markets linaclotide under the brand name CONSTELLA® for the treatment of adults with moderate to severe IBS-C. In Japan, Ironwood’s partner, Astellas, markets linaclotide under the brand name LINZESS for the treatment of adults with IBS-C or CIC. Ironwood also has partnered with AstraZeneca for development and commercialization of LINZESS in China, and with AbbVie for development and commercialization of linaclotide in all other territories worldwide.

LINZESS Important Safety Information

INDICATIONS AND USAGE

LINZESS® (linaclotide) is indicated for the treatment of both irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC) in adults and functional constipation (FC) in children and adolescents 6 to 17 years of age. It is not known if LINZESS is safe and effective in children with FC less than 6 years of age or in children with IBS-C less than 18 years of age.

IMPORTANT SAFETY INFORMATION

Contraindications

• LINZESS is contraindicated in patients less than 2 years of age due to the risk of serious dehydration.
• LINZESS is contraindicated in patients with known or suspected mechanical gastrointestinal obstruction.

Warnings and Precautions

• LINZESS is contraindicated in patients less than 2 years of age. In neonatal mice, linaclotide increased fluid secretion as a consequence of age-dependent elevated guanylate cyclase (GC-C) agonism, which was associated with increased mortality within the first 24 hours due to dehydration. There was no age dependent trend in GC-C intestinal expression in a clinical study of children 2 to less than 18 years of age; however, there are insufficient data available on GC-C intestinal expression in children less than 2 years of age to assess the risk of developing diarrhea and its potentially serious consequences in these patients.

Diarrhea

• In adults, diarrhea was the most common adverse reaction in LINZESS-treated patients in the pooled IBS-C and CIC double-blind placebo-controlled trials. The incidence of diarrhea was similar in the IBS-C and CIC populations. Severe diarrhea was reported in 2% of 145 mcg and 290 mcg LINZESS-treated patients and in <1% of 72 mcg LINZESS-treated CIC patients.
• In children and adolescents 6 to 17 years of age, diarrhea was the most common adverse reaction in 72 mcg LINZESS-treated patients in the FC double-blind placebo-controlled trial. Severe diarrhea was reported in <1% of 72 mcg LINZESS treated patients. If severe diarrhea occurs, dosing should be suspended and the patient rehydrated.

Common Adverse Reactions (incidence ≥2% and greater than placebo)

• In IBS-C or CIC adult patients: diarrhea, abdominal pain, flatulence, and abdominal distension.
• In FC pediatric patients: diarrhea.

Please see full Prescribing Information including Boxed Warning: https://www.rxabbvie.com/pdf/linzess_pi.pdf

LINZESS® and CONSTELLA® are registered trademarks of Ironwood Pharmaceuticals, Inc. Any other trademarks referred to in this press release are the property of their respective owners. All rights reserved.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned not to place undue reliance on these forward-looking statements, including statements about Ironwood’s ability to execute on its mission; Ironwood’s strategy, business, financial position and operations; Ironwood’s ability to drive growth and profitability; the commercial potential of LINZESS; our financial performance and results, and guidance and expectations related thereto; LINZESS prescription demand growth, LINZESS U.S. net sales growth, total revenue and adjusted EBITDA in 2024; that the increase in LINZESS extended units and new-to-brand prescriptions is reinforcing that patients and health care professionals continue to choose LINZESS in a growing market; our plan to and the expected timing to complete the NDA submission; our plan to on getting apraglutide to market as soon as possible, our belief that if apraglutide is approved, it would be the drug of choice among physicians to treat adult patients with SBS who are dependent on PS; our plan to submit an NDA and marketing applications to other regulatory agencies for apraglutide. 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.

Contacts

Investors:
Greg Martini, 617-374-5230
gmartini@ironwoodpharma.com

Matt Roache, 617-621-8395
mroache@ironwoodpharma.com

Media:
Beth Calitri, 978-417-2031
bcalitri@ironwoodpharma.com

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