Ironwood Pharmaceuticals, Inc. Price & Performance (IRWD)

Also included are non GAAP financial measures. Which should be considered only as a supplement to and not a substitute for or superior to GAAP measures. The extent applicable please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures. During today's call, Tom McCord, our Chief Executive Officer, will begin with a brief overview. Mike Schutfein, our Chief Medical Officer, will discuss our pipeline. And I will provide a commercial update review of our financial results and guidance. Today's webcast includes slides. So for those of you dialing in, please go to the Events section of our website to access the accompanying slides separately. With that, I'll turn the call over to Tom. Good morning, everyone, and thanks for joining us today to review the fourth quarter and full year 2024 financial results and business updates. We're entering 2025 with a streamlined focus on advancing apraglutide and realizing its potential to significantly the market in GLP-two treated patients with short fall syndrome we're dependent on parenteral support. Recent data from our open label extents study which is called STARS Xtend, further reinforce and strengthen our confidence in aproglutide's potential to become Ironwood's Ironwood next blockbuster therapy.

Last month, we shared an analysis showing that twenty seven total patients achieved enteral autonomy, or in other words, achieve independence from parenteral support while on apraglutide. These data are important when thinking about the impact Apraglutide can have in this patient population. And demonstrate apaglutide's potential to provide patients with either longer periods away from or complete freedom from parental support. Building on these promising results, we're planning to include additional analysis based on exposure time, which from the long term extension study into our NDA submission package to support an even more robust clinically differentiated and comprehensive data package to the FDA As we recently announced, we have initiated the rolling submission of our NDA and expect to complete submission in the third quarter of twenty twenty five. If approved, epiglutide will become the first long acting GLP-two to market for short bowel syndrome patients dependent on parental support providing a new treatment option with the convenience of once weekly dosing. Aligned with this next phase of growth, we have restructured our business to focus on bringing Afrigutide to market. Strengthening our commitment to advance the advancing care for patients with short bowel syndrome. We believe these changes we've made position us for future growth long term value creation and ultimately reinforce our commitment to bringing new medicines to patients with rare disease.

We have a strong team in place to drive the success of apraglutide if approved. Our commercial efforts led by Tami Gas our newly appointed Chief Commercial Officer and she is supported by an experienced team with expertise in key functional areas of commercialization in both GI and rare disease. And we we're actively preparing for a potential commercial launch. Unlike LINZESS, launching a treatment for rare disease like short bowel syndrome requires a targeted approach. And through our extensive market assessment, we now know that this is a much smaller rare disease focused prescriber base primarily located in short bowel syndrome centers of excellence. Where the majority of patients are managed. With these insights in mind, we plan to implement a robust patient support service model one that ensures seamless care from the point of prescription to treatment authorization, delivery, initiation and ongoing utilization of apaglutide. While Aproglutide is our focus for the future, we helping millions of adults with IBS C and chronic constipation. Even after twelve years, demand continues to grow further solidifying LINZESS as the prescription market leader. In the fourth quarter twenty twenty four, saw a 12% increase in prescription demand growth compared to the fourth quarter twenty twenty three per IQVIA.

And 11% prescription demand growth for 2024 year over year. Due to brand volume growth was 11% for the fourth quarter of twenty twenty four and fourteen percent for the full year. This marks the eighth consecutive quarter for double digit new to brand volume growth demonstrating that patients and providers continue to choose LINZESS. For the full year of 2024, we achieved our latest 2024 financial guidance delivering $916,000,000 in net sales. And based on IQVIA script data, we are starting to see Medicare utilization a headwind in 2024, stabilize as a percent of our book of business in the second half of twenty twenty four. As we look ahead to 2025, we expect to continue to see continued strong demand growth with LINZESS while also anticipating pricing headwinds and therefore have a focused investment to continue to drive profits. We expect the cash flows from LINZESS continue to sustain future capital needs. To fund the next stage of growth for Ironwood Ironwood. Namely the commercial approval and launch of fapaglutide for short bowel syndrome patients were dependent on parental support. Before I turn the call over to Mike, to talk about epigluctide and short bowel syndrome in more detail, I want to take a moment to express our gratitude to our colleagues and partners in the physician, healthcare provider and patient community.

February is Rare Disease Month, And as we work towards our goal of developing and commercializing life changing therapies for patients with GI and rare diseases, we also seek to increase awareness for the people we serve who are at the center of our work, year round. Without their commitment, and your commitment, and engagement, we would not have been able to run the largest ever Short Bowel Syndrome intestinal failure trial with aproglutide. Short bowel syndrome is a devastating condition as we work urgently to deliver this important medicine to short bowel syndrome patients, who are dependent on parental support. With that, I'll turn it over to Mike. Mike? Thanks, Tom, and good morning, everyone. We're pleased to have initiated our rolling NDA submission earlier this year which we expect to be completed in the third quarter of twenty twenty five. I wanted to dive a bit deeper into the opportunity around that ProGlutide and the compelling data generated from the STARS Phase three clinical trial including additional data from the open label extension study STARS Xtant. Schurp Bao syndrome with intestinal failure results from severe organ failure due to a reduction in intestinal function below the minimum necessary for adequate nutrition and fluid absorption.

Leading to a dependence on parenteral sport or the IV administration of fluid and nutrients to maintain health, growth and survival. Approximately eighteen thousand adult patients are impacted by this disorder across The U. S, Europe and Japan. This condition is associated with increased mortality, significant morbidity, high economic burden and reduced quality of life. Intervention with parenteral support comes with its own challenges affecting quality of life. Prencial support can be required for ten hours a day and six days a week on average. Due to the significant patient burden, reducing the number of days and or the the hours a day per week on prenchial sport is extremely important to patients Aproglutide is uniquely designed to accelerate intestinal growth, for improved gut function and intestinal absorption. EpiGlutide is the only GLP-two analog to achieve a statistically significant reduction in weekly parenteral support volume with once weekly dosing.

In the STARS Phase three study, patients also achieved clinically meaningful parenteral support volume reductions as early as week eight. Additionally, as previously presented, some patients achieved two and three days off of parenteral sport per week. And the portion of patients achieved enteral autonomy in the STARS Phase three study. Entral autonomy is when individuals no longer require parenteral support a significant life changing milestone for patients and their families in their treatment journey. We're now seeing even more patients achieving enteral autonomy in our extension study. Fairly further reinforcing aproglutide's clinical profile. As Tom mentioned, based on an analysis we shared in January, twenty seven total patients treated with aproglutide achieved enteral autonomy. Beyond that, we continue to see encouraging trends in parenteral sport volume reduction more broadly with longer exposure to aproblutide. We're excited by this growing body of clinical evidence that we believe supports aproglutide's potential if approved, to become the first long acting once weekly GLP-two therapy for the treatment of Short Bowel Syndrome.

With that, I'll turn it over to Greg to review our financials. Greg? Thanks, Mike. We ended 2024 in a strong financial position. Achieving our 2024 full year guidance. Our business continues to be supported by strong LINZESS prescription demand. We saw 11% full year 2024 prescription demand growth. And recognized $223,000,000 in Linzeth U. S. Net sales in the fourth quarter. And $916,000,000 for the full year. Ironwood recorded $88,400,000 in collaborative arrangements revenue in the fourth quarter of twenty twenty four. And $340,400,000 for the full year. As you can see on Slide 11, in 2024, Glanzas continued to deliver strong double digit extended unit and new to brand prescription demand growth. The continued strong prescription demand growth bolsters our confidence in the strength of LINZESS over time and the expectation that LINZESS will drive meaningful cash flows moving forward to fund the next stage of growth through the advancement of Aproglutide. Turning to Slide 12, to review full year 2024 financial highlights. Total revenue was $351,400,000 GAAP net income was $1,800,000 and adjusted EBITDA was $100,600,000 which includes stock based compensation. As a reminder, we have provided 2025 financial guidance for adjusted EBITDA ex excluding stock based compensation expense.

And we'll be moving to this new definition beginning in the first quarter of twenty twenty five. We ended the full year 2024 with $88,600,000 of cash and cash equivalents on the balance sheet. In the fourth quarter, Ironwood repaid $15,000,000 of debt ending the year with $385,000,000 drawn on our credit facility. Over the past twelve months, in the midst of pricing headwinds in 2024, Ironwood reduced its total debt balance outstanding by roughly $115,000,000 As of 12/31/2024, Ironwood had access to roughly $254,000,000 in liquidity between the $88,600,000 of cash on hand and $165,000,000 undrawn revolver capacity. In 2025, we remain focused on delivering sustained profits and cash flows, to fund the advancement of aproglutide and repaid debt to strengthen our balance sheet. Moving to financial guidance on Slide 13.

We are reiterating our 2025 guidance at this time. This includes U. S. LINZESS net sales between $800,000,000 and $850,000,000 We expect GlinZESS prescription demand to remain strong with high single digit prescription [indiscernible] This strong demand growth is expected to be more than off offset by pricing headwinds associated with the Medicare Part D redesign that went into effect this year. We expect Ironwood revenue between $260,000,000 and $2.90 As a reminder, Ironwood Ironwood collaborative arrangement revenues from LINZESS as a portion of commercial profits. Which includes an add back for Ironwood selling and marketing expenses. And we expect adjusted EBITDA excluding stock based compensation, of greater than $85,000,000 which reflects a roughly $55,000,000 decrease from 2024 operating expenses primarily within SG and A, driven by the reorganization actions announced last month. In summary, we have taken actions to continue to generate profits and cash flows.

Pay down debt strengthen our balance sheet, and support the advancement of apraxolutide in 2025.

And to position the company for long term growth. We are increasingly encouraged by the positive body of clinical evidence that we believe supports Afroglutide's potential to meaningfully change the treatment paradigm for short bowel syndrome and become our second blockbuster therapy.

We are working diligently to complete our NDA submission by the third quarter of twenty twenty five and prelaunch planning is well underway to support the commercialization of AfroGlut upon approval by the FDA.

I want to close by thanking all of our employees patients, caregivers and advocates for their shared dedication to advancing life changing therapies for patients with GI and rare diseases. Operator, you may now open the line for questions.

Thank you. We will now begin the question and answer session. And your first question comes from the line of Chase Nikkerbocker of Your line is now open.

Good morning. Thanks for taking our questions. Just first from me, I get it's kind of early after kind of just taking these kind of headcount changes. But can you kind of just speak to the confidence you have in any kind of initial kind of learnings that you've kind of went to more virtual base marketing at least personally with yourselves? Around kind of the confidence you have on high single digit volume growth this year. Without that in person promotion from the Ironwood side? Thanks.

Tom, do you want to take that? Yes, sure. Thanks, Chase. As you know, we still have a very solid marketing mix supporting and driving the growth of LINZESS. We still have a number of AbbVie sales personnel in the really the key offices And at this point, it's a lot of the consumer advertising that's probably driving the ongoing growth. Certainly, when we look at ROIs, it tends to look very, very positive. And this is something that we've continued to refine over time. You think about where we were three, five years ago, we basically cut our selling effort more than by half And we've also pulled back on the media buy to increase the bottom line profit of the drug And we have not seen any evidence that demand is slowing down. And we're seeing that so far out of the gate. It's early. The numbers, as you know, don't always line up year over year. But we're still seeing very, very strong momentum on the brand. And I think as long as we can maintain broad payer access, I don't see that slowing down. When you have a brand in a market that has almost 50% market share, It's really hard for an emerging competitor to really capture share around you and away from you.

And we're actually continuing to see either maintaining or increasing our market share even in the face of multiple competitors over the last four or five years. So think we feel very confident in the single digit demand growth And we'll be certainly watching what's going on with our payer mix to really better understand what kind of exposure we have as the year goes on. But I think we feel very confident in the guidance we've given that it's very achievable. And hopefully we'll do everything we can to exceed it.

That's great, Tom. Thanks. And Greg, maybe just a couple on the model. First, if we think about kind of the cadence of cost savings, should we be kind of assuming that Q1 has a fairly full kind of recognition at least on a run rate basis of kind of those cost savings? And then just second on the R and D line, as these kind of trial activities start to roll off. I mean, when should we be kind of modeling a decrease in R and D Is it back half of 25%? Is it in 26%? Just help us think about expenses.

Yes. Thanks, Chase. In terms of the cost savings that were taken last month, first quarter, we won't see the full impact because these actions were taken at the January. So you'll really start seeing that full run rate in Q2 for the rest of the year. And then as you think about R and D, Really R and D for 2025 would not expect to see a decline really year over year, specifically aproglutide in the ongoing extension study. And also some of the CMC activities that we're continuing to complete as we move forward and prepare for a commercial launch. The 2026 is where we would start to see some of that inflection in terms of overall R and D spend. We'll provide more details on that as we get closer to '26.

I think it's important to mention Chase too on the long term extension. As Mike mentioned earlier, I mean, as we continue to actively follow these patients, we're seeing ongoing reduction in parenchial support and even enteral autonomy. So I think this is a really solid investment And for us, to really further understand the potential benefit that these patients can occur over time. And certainly, that obviously strengthens the overall profile of the drug.

Got it. And then just last thing from me, Greg, and I'll hop back in queue. But can you just kind of speak to the confidence around maintaining compliance on the covenants around the revolver and a little bit complex. I think it would be kind of helpful to kind of walk through a little bit of kind of detailed math on kind of some of those add backs, if you'd oblige us. Thank you. Yes, absolutely. Thanks, Chase. I think just broadly speaking, we have a high degree of confidence in our outlook of 2025 With our financial guidance, we will be able to continue to maintain covenant compliance throughout the year. And have a very high degree of confidence there We did adjust the adjusted EBITDA definition, as I noted in the prepared remarks, to give a little bit more clarity about some of key adjustments we have with those debt covenants, specifically with stock based compensation. But there are other add backs and I can't necessarily go through all of them in detail, but there are other add backs that do give us additional room and comfort with being able to achieve those covenant amounts for our debt throughout 2025.

And it's something we're very much focused on and very focused on disciplined expense management. To continue to drive profit and cash flows with those covenants in mind.

Thanks, guys.

Your next question comes from the line of Jason Butler of Citizens JMP. Please go ahead. Hi, thanks for taking the question. Just Just had one on the long term data for apicaloide. Can you maybe speak to the patient characteristics of those patients reaching or achieving enteral autonomy. I guess, were you seeing this from both CIC and stoma patients?

And then how does this compare to the double blind period of the study where you I think it was about seven patients achieved enteral autonomy. Have any of those patients maintained enteral autonomy for the entire period? Thank you.

Yes. Thanks, Jason. Thanks for your question. So in terms of the patient achieving internal autonomy, we really benefit from the fact that we have completed the largest ever done Phase III program in SPS I have. So it it's SPSIF, as you know, is a very heterogeneous syndrome patient disease. So having that large patient population really gives us an opportunity to look at a broad [indiscernible] and their outcomes. And if you to direct your question to the enteral autonomy, we certainly are seeing patients achieve enteral autonomy on both stoma and CIC. We'll actually roll out the details on the whole population. That's one of the things we're putting together for this submission because we know that's an important question for all of us in terms of understanding the critical benefit to this patient population. It's fair to say that it is in all of the secondaries. We presented some of this data last year too. In all the secondaries to look at subpopulations across SPSIF, we really do The double blind data, you probably recall, that initially, we saw enter autonomy achieved at twenty four weeks and that actually included stoma patients as well. And then by the end of forty eight weeks, we had roughly 10 patients achieve enter autonomy.

The 27 comes from adding in the STARS Xtend data, which is the 12 study, which is the extension study. And that brought that number up obviously to a very meaningful number of 27, which really in aggregate is a pretty robust outcome. If you look at other competitor products in terms of how many patients are achieving enteral autonomy. And the patients who achieved enteral autonomy in the double blind period carry on into the extension program. So we're really seeing good fidelity and once patients achieve enteral autonomy, they maintain it. Great. Thank you for taking the questions. Your next question comes from the line of Amy Lee of Jefferies. This is Cassie on for Amy.

Congrats on the quarter. So I guess I was wondering, as we think about the timing of the Medicare Part D redesign impact, is it fair to assume that the impact to LINZESS revenues won't be until the second half of twenty twenty five, since LINZESS is low cost and it takes time for patients to get into catastrophic coverage?

Yes. Thanks, Kathy, for the question. I think the key for us is our full year guidance obviously takes into account our expectations for this redesign for the full year.

I think there is an element of timing here where we will have to see how prescription demand trends and ultimately the tiering within Medicare Part D plays out over the course of the year. So I do think each quarter we move forward, we'll have better insights into what the potential price exposure is. But we feel very confident that our guidance range appropriately accounts for the the trends and the expectations we have for the year.

Okay, great.

Thank you. Your next question comes from the line of Isao Khorsed of Leerink Partners. Please go ahead.

This is Matt Halper on for Just a couple for me. How should we be thinking about the launch expenses for Abilutide, both in terms of magnitude and timing and what levels are contemplated in the 2025 adjusted EBITDA guide? And then second question, just what options exist around the 2026 convert And how is the company thinking about managing that? Thank you.

Thanks, Matt. I can take both of those. In terms of the commercial launch expenses, we have been working on commercial planning 2024 and we'll continue that into 2025 I would say at this point, they are not significant expenses within the overall P and L and we would expect to see a bit of a ramp up as we get closer to launch in 2026. And we'll provide additional details on exactly what that spend looks like as we get closer to that timing. And then in terms of the 2026 convertible notes, this is something that we continually evaluate our capital structure. In the context of our overall forecast and outlook, and we are very much focused throughout 2025 on strengthening our balance sheet.

With the intent on driving profits and cash flows to repay our existing And so we'll provide additional details as we make decisions on any further actions on our balance sheet. But at this point, I really want to focus on driving cash flows to repay our outstanding debt. Got it. Thank you.

Your next question comes from the line of David Amsellem of Piper Sandler. Please go ahead.

Hey, thanks. I joined late, so maybe you already addressed this. But can you just talk more broadly about the cost structure? It's not so much about your ability to launch Aperaglutide, but the extent to which you can extract more savings know you had the recent restructuring, but maybe talk more about how you're thinking about further streamlining just given the state of the capital Yes. Thanks, David.

In terms of cost structure, I think we feel very good about our outlook. As I mentioned, in terms of 2025 and the actions we've taken to really focus on profit and cash flows in 2025. As we move forward, we'll continue to evaluate other alternatives to really prioritize investments focused on those in investments we think will drive our best long term value. And that includes the Ironwood P and L, as well as the overall Linzess brand investment. In conjunction with AbbVie. So at this point, I think we've communicated everything that we can at this time on what we plan to do for 'twenty five. And we'll continue to evolve that as we move forward by 2026 and beyond.

Ladies and gentlemen, that concludes our Q and A session and today's call. Thank you everyone for joining. You may now disconnect.