Q4 2019 Earnings Call

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Operator: All lines have been placed in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this time, you will need to press Star 1 on your telephone. If you require further assistance, please press Star 0. I would now like to hand the conference over to your speaker, Meredith Kaya.

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I would now like I hand, the conference over to your Speaker Meredith Kaya Ma'am. Please go ahead.

Good morning, and thanks for joining us for fourth quarter and full year 2019, Investor update a press release crossed the wire. This morning and can be found on our website www Dot Ironwood pharma dotcom today's call an accompanying slides include forward looking statements such statements involve risks and uncertainties that may cause actual results to differ materially.

Meredith Kaya: Good morning, and thanks for joining us for our fourth quarter and full year 2019 Investor Update. A press release crossed the wire this morning and can be found on our website, www.ironwoodpharma.com. Today's call and accompanying slides include forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current Safe Harbor Statement slide, as well as under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2019, and in our future SEC filings. All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements. 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.

A discussion of these statements in risk factors is available on the current safe Harbor statements side as well as under the heading risk factors in our quarterly report on form 10-Q for the quarter ended September Thirtyth 2019, and in our future as you see filings.

Forward looking statements speak as of the date of this presentation and we undertake no obligation to update such statements also included our non-GAAP financial measures, which should be considered only as a supplement to and not a substitute for or superior to GAAP measures to the extent applicable. Please refer to the tables at the end of our press release for reconciliations of these measures to them as director.

Meredith Kaya: To 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 gap measure. During today's call, Mark Mallon will begin with an overview of the year, Tom McCourt will highlight our progress across our GI portfolio, Mike Shetzline will provide additional detail around our upcoming Phase 2 data readout for MD-7246, and Gina Konselman will close by discussing our fourth quarter and full year 2019 financial results and 2020 financial guidance. We will be referring to slides via the webcast. For those of you dialing in, please go to the events section of our website to access the webcast slides. With that, I'll turn the call over to Mark.

Comparable GAAP measures.

During today's call Mark Mallon will begin with an overview of the year, Tom Mccourt will highlight our progress across our G.I. portfolio make shuts line will provide additional detail around our upcoming phase two data readout for M.D. 7246, and Gina Konzmann will close by discussing our fourth quarter and full year 2019 financial results and 2020 financial Guy.

We will be referring to sides via the webcast for those of you dialing in please go to the event section of our website to access the webcast slides with that I'll turn the call over to Mark.

Mark Mallon: Thanks, Meredith, and thanks to everyone for joining us today. 2019 was a transformative year for Ironwood, and we are excited to share our full results with you. In April 2019, Ironwood was launched as a newly focused company with a clear vision to become the leader in USGI healthcare. The GI landscape represents an area of large, unmet need, one where we believe we can have a real impact on patients. There are 70 million Americans suffering from GI diseases. That's one in every five people.

Thanks, Meredith and thanks to everyone for joining today.

2019 was a transformative year for I would and we are excited to share our full results with you.

In April 2019, Arwood was launched as a newly focused company with a clear vision to become the leader in U.S.G.I. health care.

Did you got landscape represents an area of large unmet need one where we believe we can have a real impact.

For patients.

70 million Americans suffering from GE eye diseases. That's one in every five people.

Mark Mallon: Grounded in innovation with the demonstrated knowledge, expertise, and capabilities to build blockbuster GI brands, Ironwood is dedicated to advancing the treatment of GI diseases and redefining the standard of care for these patients. In order to achieve our vision, we have set out three strategic priorities to drive Lincez growth, advance our late-stage pipeline, and deliver sustainable processes. We're in the early stages of executing against each of these, with substantial progress in 2019, positioning us well for 2020 and beyond. I'd like to hit on a few of our 2019 highlights and then pass it on to the team to discuss in detail.

Grounded in innovation with the demonstrated knowledge expertise and capabilities to build blockbuster G.I. brands Ironwood is dedicated to advancing the treatment of JPY diseases and redefining the standard of care for these patients.

In order to achieve our vision, we set out three strategic priorities Drivelines says growth advance our late stage pipeline and deliver sustainable profits.

We're in the early stages of executing against each of these with substantial progress in 2019 positioning us well for 2020 and beyond.

I'd like to hit on a few of our 2019 highlights and then pass it onto the team to talk to him.

Mark Mallon: First, Linzess. Linzess is now the number one prescribed product in the U.S. for adults with IBSC or chronic idiopathic constipation, having crossed that important threshold in the latter half of 2019. These results were driven by acceleration in prescription demand growth, up 14% in 2019 compared to 13% growth in 2018. Importantly, just in these past six weeks, we've entered into settlement agreements that resolve the outstanding issues with Lin

First lien says that says is now the number one prescribed product in the west for adults with I'd be a C or chronic idiopathic constipation haven't cross, we'll cross that important threshold in the latter half of 2019.

These results were driven by acceleration prescription demand growth up 14% in 2019 compared to 13% growth in 2018.

Importantly, just in these past six weeks, we've entered into a settlement agreements that resolved the outstanding that says.

Mark Mallon: Patent litigation, with the earliest licensed generic entry for the 145 and 290 microgram doses in March of 2029. We are looking forward to working with our partner to continue to grow Lyncette's franchise for many years to come. And as a reminder, we also have U.S. patent applications pending covering the commercial formulation of the 72-microgram dose, which, if granted, will expire as late as 3031. Now turning to our GI pipeline, last May we initiated a Phase 2 study with 7246 in abdominal pain associated with IBSD, and we are on track for a data readout mid-year. We are initially exploring 7246 in IBSD, but we believe it has the potential to become a non-opioid abdominal pain relieving agent for a number of GI diseases.

Patent litigation with the earliest license generic entry for the 145 and 290 microgram doses in March of 2029, we're looking forward to working with our partner to continue to grow Lin says from franchise for many years to come.

And as a reminder, we also have U.S. patent applications pending covering the commercial formulation of the 72 microgram dose, which if granted will expire late.

It has 30 31.

Now turning to our job pipeline last May we initiated a phase two study was 70 246 in abdominal pain associated with IBSD and we are on track for a data read out mid year we.

We are initially exploring 7246 in IBSD, but we believe if it had it has the potential to become a non opioid abdominal pain relieving agent for a number of GE eye disease.

Mark Mallon: Additionally, our two Phase III pivotal trials for 3718 in refractory GERD continue to enroll patients, with data targeted in the second half of 2020. If approved, 3718 would be the first new medical innovation for the treatment of reflux disease in three decades. Lastly, we've significantly strengthened our financial profile since the launch of the PPIs. For the first time in Ironwood's history, we reported full-year profitability both on a GAAP and non-GAAP basis.

Additionally, our two phase three pivotal trials for 30, 718 or refractory GERD continues to enroll patients with days targeted in the second half of 2020. If approved 30 718 would be the first new medical innovation for the treatment of reflux disease in three decades. This is since the launch of the PPI and could be the first prescription option approved to improve.

Regurgitation.

Lastly, we've significantly strengthens our financial profile for the first time and I are with history reported full year profitability, both GAAP and non-GAAP basis.

Mark Mallon: Through a number of important actions taken post-separation, we've improved our capital structure, strengthened our commercial capabilities, and are running a more efficient business. We expect 2020 to be another pivotal year with multiple catalysts that we believe will position us for long-term value creation. We will be unwavering in our efforts to drive Linsaes growth. We are more confident than ever that Linsaes is a durable asset that we expect to continue to grow for many years to come. We are thoughtfully and urgently advancing our late-stage pipeline towards two important data readouts this year, each of which will help define our path forward. And lastly, we are focused on profitability, positioning Ironwood to become a strong cash-flow-generating business. We are a very different company today than we were a year ago. We believe that much of our future growth will come from our existing GI portfolio, as shown on this slide. Lincez is already on track to become a billion-dollar-plus drug.

Through a number of important actions taken post separation, we've improved our capital structure strengthen our commercial capabilities in a running a more efficient business.

We expect 2020 to be another pivotal year with multiple catalysts that we believe will position us for long term value creation.

We will be unwavering in our efforts Drivelines says growth, we're more confident than ever that one says is a durable asset that we expect to continue to grow for many years to come.

We're thoughtfully and urgently advancing our late stage pipeline towards two important data read out this year each of us each will which will help define our path forward and lastly, we're focused on profitability positioning I went to become a strong cash flow generating business.

We are very different company today than we were a year ago, we believe that much of our future growth will come from our existing Gee I portfolio as shown on this slide then says is already on track to become a billion dollar plus drug if you add to that 30, 718, and 70 246, which we believe could be two equally.

Mark Mallon: If you add to that 3718 and 7246, which we believe could be two equally-sized opportunities if approved, this tremendous growth potential will be on 20. With that said, we continue to stay well-informed on the broader GI landscape and are seeking GI opportunities that would fit well within our GI-focused approach and are aligned with our objectives to advance care for patients and create value for shareholders. We continue to have a high bar in terms of these types of opportunities or the types of opportunities we would pursue. We do not intend to move forward with assets that would compromise Linsay's growth, limit our ability to invest in our portfolio, or deliver profit. Before I turn it over to Tom, I'd like to close by saying that I am very proud of what the team has accomplished in such a short time. I'm also inspired by the millions of GI patients in need of new treatment options and more confident than ever in the opportunities we have in front of us at Ironwood. With that, I'll turn it over to Tom.

Studies, if approved this tremendous growth potential beyond 2020.

With that said, we continue to stay well informed on the broader geolens. Good and are seeking to you operative G.I. opportunities that would fit well within our G. I focused approach and are aligned with our objective to advance care for patients and create value for shareholders.

We continue to have a high bar in terms of these types of opportunities those types of opportunities we would person.

We do not intend to move forward with assets that would compromise Lin says growth limit our ability to investor in a portfolio or deliver process.

Before I turn it over to Tom I'd like to close by saying that I am very proud of what the team has accomplished in such a short time I'm also inspired by the millions of G.I. patients in need of new treatment options and more confident than ever and the opportunities. We have in front of us at island with that I'll turn it over to Tom.

Thanks, Mark [noise].

Thomas A. McCourt: Thanks, Mark. Our commercial performance in 2019 was headlined by the continued growth of Linzess. Linzess prescription demand increased 13% year-over-year during the fourth quarter of 2019, and, as Mark mentioned, 14% for the full year. The strong underlying demand resulted in net sales of $231 million and $803 million, respectively.

Our commercial performance in 2019 was headlined by the continued growth of Linzess Linzess prescription demand increased 13% Europe. Your during the first fourth quarter of 2019, and as Mark mentioned, 14% for the full year.

The strong underlying demand resulted in net sales of 231 million and 803 million respectively.

Thomas A. McCourt: For a brand in its eighth year on the market, we are very pleased with the growth we continue to see and the attributes attributed to this, including the impact of the withdrawal of prescription MiraLax from the market, our positive phase 3B data demonstrating that LINZS improves overall abdominal symptoms of bloating, pain, and discomfort, the continued impact of our DTC campaigns, and the tens of millions of patients who continue to suffer. In 2019, Linzess achieved a significant milestone and became the number one prescribed product for IBSC and chronic constipation. As you can see on this slide, Linzess was generating approximately 300,000 prescriptions per month at the end of 2019, exceeding Lactulose, the leading generic IBSC and chronic constipation prescription treatment. The growth in net sales, combined with focused investment behind the brand, has generated substantial profits for Ironwood. In 2019, total INZUS profitability, including both commercial and R&D expenses, was $514 million, translating to over $250 million for Ironwood.

For a brand and its easier on the market. We're very pleased with the growth we continue to see.

And the attributes and attribute this to a variety of factors, including the impact to withdraw prescription mere like from the market.

ER positive phase three be data.

Demonstrating that linzess improves overall abdominal symptoms of bloating pain and discomfort.

The continued impact of our DTC campaigns.

And the tens of millions of patients who continue to suffer.

In 2019, Linzess achieved a significant milestone and became the number one prescribed product bribe PSC and chronic constipation as you can see on this slide linzess, which generated approximately 300000 prescriptions per month at the end of 2019 exceeding lactulose the leading generic IBSD.

Chronic constipation prescription treatment.

The growth in net sales combined with focused investment behind the brand has generated substantial profits for ironwood in 2019, total linzess profitability, including both commercial and R&D expenses was 514 million translating to over 250 million to iron.

We believe we will continue to realize growth from the withdrawal prescription marijuana.

Thomas A. McCourt: We believe we will continue to realize growth from the withdrawal of prescription marijuana as physicians continue to choose Linzess for more and more of their IBSC and chronic constipation patients. Additionally, our new DTC campaign is expected to launch this spring, leveraging the opportunity to communicate with consumers about the overall abdominal symptoms associated with IBS-C. We have seen demand increase every time we launched a new campaign, including 2019, which was our most successful campaign to date. We expect this trend to continue as our quantitative market research suggests that the 2020 campaign could be as strong, if not stronger. 2020 is positioned to be another strong year for Linzess. We do expect to see the typical seasonality in the first quarter, primarily due to changing health plans, resets in annual deductibles, and the increased number of Americans using high-deductible health plans. We also tend to see a decrease in channel during the first quarter, both of which can impact net sales.

As physicians continue to choose linzess for more and more of their IDFC in chronic constipation patient.

Additionally, our new DTC campaign is expected to launch the spring leveraging the opportunity to communicate with consumers about the overall abdominal symptoms associated with IDFC.

We have seen a demand inflection every time, we launched a new campaign, including 2019, which was our most successful campaign to date.

We expect this trend to continue as our quantitative market research suggests that the 2020 campaign could be as strong if not stronger.

2020 is positioned to be another strong year for Linzess, we do expect to see the typical seasonality in the first quarter, primarily due to the changing health plans resets in annual deductibles and the increased number of Americans using high deductible health plans.

We also tend to see the decrease in channel during the first quarter, both of which can impact net sales.

The seasonality tends to stabilize in the second quarter with volume accelerated later later in the year.

Thomas A. McCourt: The seasonality tends to stabilize in the second quarter, with volume increasing later in the year. Turning to our partnership with Alnylam, Gavlari was launched late in the fourth quarter, and we are encouraged by the initial feedback we're hearing from the field. Physicians are highly engaged, increasing the time that our field reps are getting with them, and physicians are already identifying potential patients. Now our pipeline, beginning with 3718. There are an estimated 8-10 million patients in the U.S. who are suffering from refractory GERD despite being on standard care PPIs. Many of these patients are taking multiple drugs to treat their symptoms each and every day, including doubling their PPI dose, adding H2s, and supplementing with N-acids, and are still suffering from significant reflux and regurgitation three to five times a week on average.

Turning to our partnership with an element.

And I won't give Laurie was launched late in the fourth quarter and we're encouraged by the initial feedback we're hearing from the field positions are highly engaged increasing the time that our field reps are getting with them and positions are already identifying potential patients.

Now our pipeline beginning with 30 718.

There is an estimated eight to 10 million patients in the U.S., we're suffering from refractory GERD, despite being on standard care PPI.

Many of these patients are taking multiple drugs to treat their symptoms each and every day, including doubling their PPI dose, adding hctwos and supplementing within acids, and there's still suffering from significant reflux and regurgitation three to five times a week on average.

As evidence suggests the reason many of these patients continue to suffer.

Thomas A. McCourt: As evidence suggests, the reason many of these patients continue to suffer is because even though they're taking PPIs, which are eliminating stomach acid, they may actually be reflexing bile into the esophagus. 3718 is our gastric retentive bile acid sequestering agent, which we believe represents an opportunity to redefine the standard of care for these patients. Our Pivotal Phase III program is designed to evaluate the safety and efficacy of 3718 plus a PPI on refractory GERD in two identical trials. The trials were more than halfway enrolled by the end of 2019, and we're seeing a nice uptake in screening in 2020 so far. We will continue to target top-line data from the program in the second half of 2020. Now, 7246.

Because even though they're taking PPI switches, eliminating the stomach acid they may actually be re flexing bile into the esophagus.

30, 718 is there gastric retentive bile acid sequestering agent, which we believe represents an opportunity to redefine standard of care for these patients.

Our pivotal phase three program is designed to evaluate the safety and efficacy of 30 718, plus a PPI on refractory GERD and two identical trials.

The trials were more than halfway enrolled by the end of 2019, and we're seeing a nice uptake in screening in 2020, so far.

We continue to target topline data from program in the second half for 2020.

No 7246.

There is approximately 50 million Americans suffering from some form of lower G.I. pain, we an allergy again are valuing abdominal pain associated with IBSD through a phase twob through through the phase two study and expect topline data in mid 2020.

Michael Shetzline: There are approximately 50 million Americans suffering from some form of lower GI pain. We at Allergan are evaluating abdominal pain associated with IBSD through a Phase II study and expect top-line data in mid-2020. With 16 million Americans suffering from IBSD and current treatment options often failing to provide adequate relief of abdominal pain, there's a clear unmet medical need that we can fill. With that in mind, I'm going to ask Mike to talk in more detail about the upcoming results of the 7246 study.

With 16 million Americans suffering from IBSD and current treatment options, often failing to provide adequate relief abdominal pain, there's a clear unmet medical need that we can fill.

With that I'm going ask Mike talk in more detail about the upcoming results was seven to four to six study.

Thanks, Tom.

Our current data demonstrates and 7246 has fundamentally different clinical profile from.

Michael Shetzline: Thanks, Tom. Our current data demonstrates that 7246 has a fundamentally different clinical profile from regression, as we believe it can relieve abdominal pain associated with certain GI diseases without impacting bowel function. This is very important, as prior to this, many in the clinical community believed that

As we believe it can relieve abdominal pain associated with Sir Gi diseases without impacting bowel function.

It's very important as prior to this Fannie and the clinical community believed any abdominal pain Ben.

This was solely related to improve bowel function.

246 is designed to release in the call them further down the G. I track them assessed and where we believe abdominal pain originates it also bypasses the small intestine.

Michael Shetzline: It also bypasses the small intestine, where we believe the impact on fluid secretion occurs, thereby limiting the effect on bowel function.

We believe the impact on fluids accretion occurs, thereby limiting the effect on bowel function.

This hypothesis was originally demonstrated in our previous proof of concept phase two IDFC trial with 74 six.

Michael Shetzline: This hypothesis was originally...

Michael Shetzline: In that study, we demonstrated that the effect of 7246 on abdominal pain relief was the same as Linzest but with no appreciable effect on bowel function. Remember that these were IBSC patients, so even though they remained highly constipated, they still had a meaningful reduction in their pain relief. In the current Phase 2 trial in IBSD, we're seeking to answer two important questions.

In that study, we demonstrated that the effect of 17 for six on abdominal pain relief, what's the same as linzess, but with no appreciable effect on bowel function remember that these were IVC patients. So even though they remain highly constipated, they still had a meaningful reduction in their pain relief.

In the current phase two trial in IBSD, we're seeking to answer two important questions first does 7246 show a domino pain relief in this patient population.

Michael Shetzline: First, does 7246 show abdominal pain relief in this patient population? We're using a similar abdominal pain responder endpoint that we used in our previous LINZEST and 7246 trials, defined as at least a 30% reduction in abdominal pain from baseline. In this study, we hope to see an effect in a similar range to what we saw in the previous trial of Linzess and 7246. Second, does 7246 have an impact on bowel function? As I just mentioned, in the Phase II IVSC study with 7246, we saw a clinically insignificant effect on bowel function. We'll be looking to see if these data are replicated in the IVSD population. We're exploring three doses of 7246 in this trial, 300, 600, and 1,200 micrograms versus placebo.

We are using a similar abdominal pain respond or anything like that we used in our previous Linzess and 74, six trials defined as at least a 30% reduction and abdominal pain from baseline.

In this study we hope to see an effect in a similar range of what we saw in the previous trial of Linzess and 74 six.

Second does 7246 have an impact on bowel function.

I just mentioned in the phase two.

The study was 17 for six we saw clinically and significant effect on bowel function will be looking to see if these data are replicated in the IBSD population.

We are exploring three doses of 74 six in this trial 300, 600, 1200 micrograms versus placebo. The highest dose is four times that of Linzess and the 74 six Dennis use in the IVC study.

Michael Shetzline: The highest dose is four times that of Lenzest and the 7246 dose used in the IBSC study. We're studying the higher doses in particular to evaluate the degree of abdominal pain relief that can be achieved for these patients. We're finishing up dosing and look forward to reporting the top-line results mid-year. I'll now turn it over to Gina to discuss our financial results.

We're studying the higher doses in particular to evaluate that degree of abdominal pain relief that can be achieved for these patients, we're finishing up dosing and look forward to reporting the topline results midyear I'll now turn it over to Gina to discuss our financial results. Thanks, Mike 2019 was an incredibly strong year the strongest.

Gina Konselman: Thanks, Mike. 2019 was an incredibly strong year, the strongest since I've been here, particularly as it relates to our financials. We delivered robust revenues and profitability in 2019, exceeding our external guidance. After separating Cyclarion from Ironwood, we took several additional actions in 2019 that we believe better position us for future success and profitability. These actions included restructuring our debt, which lowers our cash interest expense over the next few years, moving our headquarters to Boston, restructuring our ex-U.S. linaclotide agreement, and securing the new partnership with O'Neillam. As a result, in the three quarters following the separation, and for the full year 2019, we were profitable on a gap and a non-gap basis. Over the next few minutes, I will highlight some of the progress we made in both the fourth quarter and full year and share our full 2020 financial guidance. Please refer to our press release for additional details.

I've been here, particularly as it relates to our financials.

We delivered robust revenues and profitability in 2019 exceeding our external guidance.

After separating side Clarion from Ironwood, we took several additional actions in 2019 that we believe better position us for future success and profitability.

These actions included restructuring our debt, which lowers our cash interest expense over the next few years moving our headquarters to Boston restructuring, our ex U.S. linaclotide agreements and securing the new partnership with on island.

As a result in a three quarters following the separation and for the full year 2019, we were profitable [laughter] GAAP and non-GAAP basis.

Over the next few minutes I will highlight some of the progress we made in both the fourth quarter and full year and share our full 2020 financial guidance. Please refer to our press release for additional details.

Revenues in the fourth quarter were 126 million driven by 106 million in collaboration revenue and 21 million in sales of Linaclotide.

Gina Konselman: Revenues in the fourth quarter were $126 million, driven by $106 million in collaboration revenue and $21 million in sales of linacletide API. Lindsay's commercial margin was 81% in the fourth quarter, contributing to our growth in collaboration revenue. The year-over-year expansion in commercial margin in the fourth quarter was primarily driven by the timing impact of the collaboration expenses and higher revenue. Turning to the full year, Ironwood revenues were $428 million, which included $42 million in license and milestone revenue resulting from our amended ex-U.S. linacletide agreements recorded in the third quarter.

Linzess commercial margin was 81% in the fourth quarter contributing to our growth in collaboration revenue year over year expansion in commercial margin in the fourth quarter was primarily driven by the timing impact of the collaboration expenses and higher revenue.

Turning to the full year Ironwood revenues were 428 million, which included 42 million in license and milestone revenue, resulting from our amended X U.S. Linaclotide agreements recorded in the third quarter.

With the amended actually less agreements, we are no longer responsible for the supply evolent appetite apiay and as a result, our revenue from Avi I sales is expected to decline to approximately 5 million in 2020, as we shipped final batches to our partners.

Gina Konselman: With the amended ex-U.S. agreements, we are no longer responsible for the supply of linacletide API, and as a result, our revenue from API sales is expected to decline to approximately $5 million in 2020 as we ship final batches to our partners. R&D expenses were $27 million and $115 million.

R&D expenses were 27 million and 115 million in the fourth quarter and full year, we plan to continue to invest significantly in R&D in 2020, as we continue to advance our ongoing clinical studies.

Gina Konselman: in the fourth quarter.

Gina Konselman: We plan to continue to invest significantly in R&D in 2020 as we continue to advance our ongoing clinical studies. ST&A expenses were $39 million and $172 million for the fourth quarter and full year. The decrease in ST&A compared to 2018 is primarily due to the termination of the Listen Your Ed License Agreement and the cost optimization actions implemented during the year. Interest expense was $7,037,000 for the fourth quarter and full year.

As DNA expenses were 39 million and 172 million in the fourth quarter and full year. The decrease in SGN eight compared to 2018 is primarily due to the termination of the Lesinurad license agreement and the cost cost optimization actions implemented during the year.

Interest expense was 7 million and 37 million in the fourth quarter and full year in connection with the debt restructuring last August we now expect our cash interest expense in 2022 decreased by approximately 9 million year over year with that said due to the equity component of our convertible debt total cash and non.

Gina Konselman: In connection with the debt restructuring last August, we now expect our cash interest expense in 2020 to decrease by approximately $9,000,000 year-over-year. However, due to the equity component of our convertible debt, total cash and non-cash interest expense is expected to be similar to total interest expense recorded in 2019. Lastly, we delivered both GAAP and non-GAAP profitability for the fourth quarter and full year. GAAP net income from continuing operations was $48 million for the fourth quarter and $59 million for the full year. Adjusted EBITDA from continuing operations was $55 million in the fourth quarter.

Cash interest expense are expected to be similar to total interest expense recorded in 2019.

Lastly, we delivered both GAAP and non-GAAP profitability for the fourth quarter and full year.

GAAP net income from continuing operations was 48 million for the fourth quarter and 59 million for the full year.

Adjusted EBITDA from continuing operations was 55 million in the fourth quarter. The fourth quarter is typically our strongest linzess collaboration revenue quarter. This combined with the timing impact of the collaboration expenses and Apiay sales resulted in a strong finish to the year. We do not expect this to be a run rate for 2020.

Gina Konselman: The fourth quarter is typically our strongest LINZES collaboration revenue quarter. This, combined with the timing impact of the collaboration expenses and API sales, resulted in a strong finish to the year. However, we do not expect this to be a run rate for 2020 as quarterly profitability will fluctuate. Adjusted EBITDA from continuing operations was $148 million for the full year.

Quarterly profitability well actually.

Adjusted EBITDA from continuing operations was 148 million for the full year.

One important reminder, is that even though we are now profitable we have over 1 billion in other wells as of yearend and expect them to offset tax liabilities for the next few years.

Gina Konselman: One important reminder is that even though we are now profitable, we have over $1 billion in NOLs as of year-end and expect them to offset tax liabilities for the next few years. Turning to our 2020 financial guidance, in 2020, Ironwood expects U.S. LINZES year-over-year net sales growth in the mid-single-digit percent range, driven by continued growth in volume demand and stable net price, which we consider to be plus or minus a few percent. We also expect total Ironwood revenue to be in the range of $360 to $380 million. We anticipate continued year-over-year growth in collaborative arrangements revenue in 2020 due to the expected strong demand for LINZES. Thirdly, we expect adjusted EBITDA to be greater than $105 million in 2020. As a reminder, 2019 total revenue and adjusted EBITDA from continuing operations included $42 million in Ex-U.S. license and milestone revenue and sales of API.

Turning to our 2020 financial guidance in 2020, iron, but expect U.S. linzess year over year net sales growth in the mid single digit percent range driven by continued growth in volume demand and stable net price, which we consider to be plus or minus 15%.

We also expect total ironwood revenue TV in the range of 360 to 380 million.

We anticipate continued year over year growth and collaborative arrangements revenue in 2020 due to the expected strong demand for Linzess.

Thirdly, we expect adjusted EBITDA to be greater than 105 million in 2020.

As a reminder, 2019 total revenue and adjusted EBITDA from continuing operations included the 42 million and they actually U.S. license and milestone revenue and the sales of <unk>.

As you can see 2019 was a great year for Ironwood, and we are positioned for near and long term value creation.

Gina Konselman: As you can see, 2019 was a great year for Ironwood, and we are positioned for near and long-term value creation. Our transition to profitability puts us in a strong position to invest thoughtfully in growing our business, and our capital allocation strategy is aligned with our strategic priorities. As Mark commented earlier, we expect to continue to invest in the advancement of our GI portfolio. This is our highest priority and where we believe we can create the most value today. We are also focused on delivering sustainable profits over time, which is a critical threshold for any investment decision we make. This enables us to continue to invest thoughtfully in our portfolio and pay down our existing debt. We expect to settle the remaining portion of our 2022 convertible notes in cash, and given our current projections over the next several years, believe we will have the option to settle our 2024 and 2026 notes in cash as well. Lastly, we are balancing our investments into our business in a way that allows us the financial flexibility to pursue external opportunities when we find something that meets the discipline criteria that we have set. With that, I'll now turn it back over to Mark for some closing comments before the Q&A.

Our transition to profitability puts us in a strong position to invest thoughtfully into on growing our business and our capital allocation strategy is aligned with our strategic priority.

As Mark commented on earlier, we expect to continue to invest in the advancement of our GR for Gee I portfolio. This is our highest priority and where we believe we can create the most value today.

We're also focused on delivering sustainable profits over time, which is a critical threshold for any investment decision. We make this enables us to continue to invest thoughtfully into our portfolio and pay down our existing debt. We expect to settle the remaining portion of our 2022 convertible notes in cash and given our current projections over the next.

Several years believed we will have the option to settle our 2024 and 26 notes in cash as well.

Lastly, we are balancing our investments into our business in a way that allows us the financial flexibility to pursue external opportunities when we find something that meets the discipline criteria that we have that.

With that I'll now turn it back over to Mark for some closing comments before queuing.

Mark Mallon: Thanks, Gia. I want to take a moment to recognize the team members at Ironwood who worked tirelessly and remained focused throughout the year to deliver these outstanding results. 2019 was a year full of favorable change for Ironwood. We delivered on linseed growth, completed the separation, relocated our headquarters, and embarked on our vision to create a leading GI-focused company in the U.S. We're off to a great start and have put the company on the right path for long-term value creation. With that said, we understand that there is more to do to achieve our goals. We must continue to focus on executing across all areas of the business, driving linseed growth, advancing our late-stage pipeline, and delivering sustainable processes. We have an exciting year ahead, full of important catalysts to continue the momentum we gained through 2019. And so I'll close by saying thanks for joining us this morning, and we look forward to your questions. Operator, we can open the line for questions.

Thanks to you.

Want to take a moment to recognize the team members at Ironwood, who worked tirelessly and remain focused throughout the year to deliver these outstanding results 2019 was a year full a favorable change Ryan would be delivered on one says growth completed separation relocated our headquarters in embarked on our vision to create a leading g. I focused company in the U.S., we're off to a great start.

And have put the company on the right path for long term value creation that said, we understand that there was more to do to achieve our goal. We must continue to focus on executing across all areas of business driving linzess growth advancing our late stage pipeline and delivering sustainable process. We have an exciting year ahead full of important catalyst to continue the momentum we gained.

Through 2019.

So I'll close by saying thanks for joining us this morning, and we look forward to your questions. Operator, we can open the lines for questions.

As a reminder to ask a question press star one on your telephone keypad again that star one to ask a question. Please standby Bali compiled a roster.

Operator: As a reminder, to ask a question, press star 1 on your telephone keypad. Again, that's star 1 to ask a question. Please stand by while we compile the roster. And your first question comes from Jacob Hughes with Wells Fargo.

And your first question comes from Jacobs Hughes with Wells Fargo.

Jacob William Hughes: Alright, goodbye.

Hi, good morning.

Jacob William Hughes: Morning, Jacob. Hey, good morning. My first question is, in your view, what are the upside factors to your sales guidance? I mean, can pricing be better than the stable commentary you provided earlier this year? And then, secondly,

Good morning.

Hey, Good morning, Oh, My first question is.

What are the upside factors to yourselves guidance that big pricing be better than the stable commentary you provided earlier this year and then secondly.

Jacob William Hughes: And finally, have there been any changes with AbbVie, and could Linzess ultimately...

Has there been any changes with abbvie and could lead to us ultimately come back to Ireland or iron without without a partner.

Jacob William Hughes: Back to Ireland or Ironwood without a partner.

Mark Mallon: So let me take the second question, Jacob, and I'll ask Tom to comment on the first one. So we've had limited interactions with AbbVie at this point, as we've talked about before. They're focused fully, as you would expect, on closing the transaction with Allergan. The Allergan team has stayed really strongly engaged and continued to work with us to drive Linsa's growth. We're looking forward to working with AbbVie in the future. They have great commercial capabilities to build on the success that we have had with Allergan. I've also said in the past that we remain open to options to really drive value for shareholders. So that hasn't changed, and we'll continue to be open to sort of a full range of options if they really could make a big difference for shareholders.

So let me.

Take the second question, Jacob and I'll ask Tom to comment on the first one so.

We had limited interactions with Abbott at this point as we've talked about before their focus for the as you would expect and closing the transaction with Allegan. The Allegan team has stayed really strongly engaged in a continued to work with us to drive linzess growth.

You know, we're looking forward to working with Abbvie in the future they've got great commercial capabilities to build on the success that we've had with a allegan I've said in the past also that you know we remain open to.

Options to really drive value to shareholders. So.

Got it hasn't changed and we'll continue to be.

Open to other sort of a full range of options that they they really could make a big difference for shareholder. So I think that's what we can say right now about everywhere like everyone else twos here that the transaction close so that we can start to engage with them fully.

Mark Mallon: So I think that's what we can say right now about AbbVie. We're waiting, like everyone else, to hear that the transaction has closed so that we can start to engage with them fully. I would say that in the limited interactions we've had with them, they've all been positive. I think they certainly see Linsa as one of the important products as part of the Allergan portfolio. So we're excited to work with them. Tom, do you want to talk about opportunities for upside?

I would say that in the limited act interactions Weve had with them they've all been positive I think they certainly see if you go lives as is one of the important products as part of the Allergan portfolio. So we're excited to work with them. Tom you want to talk about opportunities for upside.

Thomas A. McCourt: On price specifically, first of all, I think it's important to recognize that the brand is in a very, very healthy spot right now. When you look at the momentum that we're coming out of 2019 with, certainly the volume of patients out there are still underserved. We continue to see very steady, strong growth that's really founded on a high level of patient satisfaction, as well as a need for more effective therapy.

Yeah I'm just on the price specific let me first of all I think it's important to recognize the brand is in a very very healthy spot right. Now when you look at you know the momentum that we're coming out of the 2019 with certainly the volume of patients out there still underserved.

We continue to see very steady strong growth, that's really founded on a high level of patient satisfaction.

As well as.

A need for more effective therapy.

Thomas A. McCourt: That being said, obviously, price plays a significant role, and payer access is one of the core foundations for this near-term and long-term success. Certainly, like everybody else in the industry, there's certainly pricing pressure here. Last year was somewhat of a typical year where there was a number of factors that really affected some price erosion. As we look at this upcoming year, we see that, as we mentioned, stabilizing. Last year, we lost about 8% to 9% in price. We don't see that happening this year, from what we can see so far. Hey, we're optimistic. We think we have a very strong value proposition for the payer, but we have to make some decisions on some of the payer contracts, which we did, which obviously will maintain the stability and the price but may affect some of our volume. But I think overall, I think the brand is very healthy. I think we will see nothing but upside growth as we move forward.

That being said, obviously price plays a significant role and payer access is one of the core foundations for the near term and long term success.

Certainly as everybody else industry, there's there's certainly pricing pressure here last year was somewhat atypical year, where there was a number of factors are really affected some price erosion as we look at this upcoming year, we see that as we mentioned stabilizing so last year you know, we've we lost two we lost about 989%.

In price I, we don't see that happening this year from what we can see so far so hey, we're optimistic we think we have a very strong value proposition for the pair.

But you know we have to make some you know some decisions on on some of the payer contracts, which we did a which obviously will maintain stability in the price, but but may affect some of our volume, but I think overall I think the brand is very healthy I think you know, we see nothing but upside growth as we.

Move forward.

Mark Mallon: I would just say, thanks, Tom. I think that's right. Just to come back to the question about upside opportunities, there is a large market of people suffering from IBSC and chronic constipation that are not satisfied. We've shown that as we continue to add to what we do, particularly in the consumer space, that we can really accelerate growth. And so that's where I would see really the biggest opportunity is to continue to leverage and expand what we do with consumers. And of course, we're still very early into communication of the abdominal symptom data, which, you know, our market research has shown to be highly impactful in visits with physicians and patients. So definitely things to keep driving growth. Thanks, guys.

I would just say thanks, Tom I think Thats right just to you.

Got it come back to the question about upside opportunities.

The a large we this is a large market of people suffering from obviously in a chronic constipation that are not satisfied we've shown that the as we continue to add to what we do particularly with the consumer space that we we can it really accelerate growth and so thats, where I would see really the biggest opportunity as.

We continue to leverage and expand what we do with consumers and of course, we're still very early into a communication of the abdominal symptom data, which will give you know our market research has shown to be highly impactful to visit physicians and patients. So definitely things so keep keep driving growth.

Thanks, guys.

And our next question comes from Eric Joseph with J.C.J.P. Morgan.

Operator: And our next question comes from Eric Joseph with J.P. Morgan. Hi, good morning.

Hi, good morning, Thanks for taking my questions like maybe just a further question on the mid single digit growth.

Eric Joseph: Thanks for taking the questions. Maybe just a further question on the mid-single digit growth guidance for Lindus. Just to clarify, does that anticipate added demand from the abdominal symptom claims? And if not, how are you and Allergan assessing their impact on the brand? I guess that there are certain growth targets that you've put in place to measure the impact of abdominal symptom claims. And then, secondly, on commercial margin, if I heard correctly, Gina, you said that we shouldn't use fourth quarter 19 as the run rate for 2020. How should we be thinking about commercial spend for the brand directionally relative to 2019, considering that it looks favorable to 2018, and also kind of heading into the revised BTC effort? Thanks.

Growth guidance for Linzess, just to clarify does does that.

Anticipate added demand from the dominant within claims and if not how are you and allergy and assessing their impacts the brand I guess that there are certain growth targets.

That youve put in place to its a measured the impact of its almost within claims and then secondly on commercial margin. If I heard correctly, you said that we shouldn't use fourth quarter 19, the run rate for 2020.

How should we be thinking about commercial spend for the brand directionally relative to point 2019, considering that it looks favorable 2018, and also kind of heading into the revised BDC.

The effort thanks.

Sure. Eric This is Gina I'll take the second part of your question first and then probably turn it over to Tom.

Gina Konselman: Sure. Eric, this is Gina.

Gina Konselman: I'll take the second part of your question first and then probably turn it over to Tom. So on the commercial margin, you're right, 81% for the fourth quarter, so it was really nice to see. It was just a combination of the fourth quarter being typically our strongest quarter for LINZES revenue, so we, again, saw higher revenue in Q4, and then this time around, it was coupled with just a lower level of expenses during the fourth quarter as well, so we saw some of our expenses related to personal promotion earlier in the year rather than in Q4, so that's the timing comment. So with that said, we do expect, you know, margins to So our overall level of expense behind the brand; we're fully committed to supporting the brand. We have locked in that plan with Allergan for 2020 and expect roughly the same amount of expense in 2020 versus 2019.

So in the commercial margin you're right, 81% for the fourth quarter. So it's really nice to see it was just a combination of the fourth quarter separately, our strongest quarter for Linzess revenue. So we again saw higher revenue in Q4, and this time around it was coupled with just lower level of expenses during the fourth quarter as well. So we saw some of.

Our expenses related to personal promotion earlier in the year rather than in Q4, So that's the timing comment.

So with that said, we do expect.

Margins to continue to grow over time, but they will fluctuate quarter to quarter I'm in for instance, Q1, we typically see some seasonality impact where we'll see lower.

Level of revenue.

But we expect to continue to see a higher level of expense in Q1 versus Q4. So our overall level of expense behind the brands are fully committed to supporting the brand.

We have lost in that plan with Allergan for 2020 and expect to roughly the same amount of expense in 2021st as 2019.

I mean as far as you know what we think the impact of the additional abdominal symptoms that will be as far as the upside I think it's important to first note that we have been on a very strong linear growth curve since launch and in order to maintain that we constantly got to be able to identify and activate new.

Thomas A. McCourt: I mean, as far as what we think the impact of the additional abdominal symptoms will be as far as the upside is concerned, I think it's important to first note that we have been on a very strong linear growth curve since launch.

Thomas A. McCourt: And, you know, in order to maintain that, we constantly have to be able to identify and activate new sources of business, which is what we've done throughout the lifecycle of the product, with regard to the expansion of our claims, the addition of the 72-microgram dose, et cetera. I mean, this, again, is a further extension of the overall strategy in that what we know about this marketplace is that most patients do not identify with abdominal pain. They identify more with bloating and discomfort. So we believe that, you know, by educating people through our DPC campaign, we can get more patients to raise their hands and ask for help. In addition, you know, these claims also broaden the physician's view of who the appropriate patient is. And, you know, we certainly see upside, which we did build into the forecast, but obviously, you know, we're optimistic as far as what we'll see, and we'll continue to optimize our promotional mix to try to accelerate, you know, the ongoing growth of the brand.

New sources of business, which is what we've done throughout the lifecycle their product you know with regard to expansion of our claims. The addition of the 72 microgram dose et cetera. I mean this again, it's a further extension of the overall strategy in that what we know about this marketplace is most patients.

Do not identify with abdominal pain, they identify more with bloating discomfort. So we believe that by by educating you know through our DTC campaign, we can get more patients a raise their hand and asked for help.

In addition, yeah. These claims also broaden the physicians view of who the with the appropriate patient is and we certainly see upside that we did build into the forecast, but obviously you know we're optimistic as far as you know what we'll see and we'll continue to optimize our promotional mix to try to accelerate the ongoing.

The growth of the brand.

Tom would you expect the thesis.

Thomas A. McCourt: Tom, would you expect to see this, their impact residing within expanded uptake for one of the dose levels, perhaps an expansion of the 72 microgram dose formulation?

They are impact reside with and expanded uptake for one of the the those levels, perhaps expansion of the 72 microgram dose formulation.

Yes, I think the this obviously the the focus of the label change was really in the IB that's like patients, which is the 290 and 140 for the 290, particularly but we also know that a lot of positions we will use lower doses for these patients.

Thomas A. McCourt: Yeah, I think obviously the focus of the label change was really on IBS-like patients, which is the 290 and the 140, 290 particularly, but we also know that a lot of physicians will use lower doses for these patients. So I think we could very well see growth across all doses. You know, as we move forward. But again, you know, I think until we get into the marketplace and really start pulling all the levers, all the levers, you know, on communication to both patients and physicians, we're not going to see the full impact of what this additional claim will provide.

So I think we're going to us we could very well see growth across all doses.

As as we move forward.

But I again, I think you know until we get into the marketplace are really start pulling the levers all the levers communication to both patients and physicians were not going to see the full impact of of what this additional claim will will provide.

Got it thanks for taking my questions.

Thomas A. McCourt: Got it. Thanks for taking the questions, guys. Thanks, Eric.

Thanks, Eric.

And your next question comes from Rocky Ram Selvaraju with H.C. Wainwright Wainwright.

Eric Joseph: Thank you.

Operator: And your next question comes from Raghuram Savaraj with HC Wainwright.

Unknown Speaker: Good morning, this is Edward Markson for RAHM. I appreciate you guys taking the question. I noticed in the J.P. Morgan presentation you had mentioned that there were multiple efforts to support enrollment for the 3718 Phase 3 trial. I was just wondering what those multiple efforts were and whether you could provide some...

Good morning. This is Ed remarks on for Rob I appreciate taking the question I noticed in the JP Morgan presentation. You had mentioned that there were multiple efforts to support enrollment.

For the 371 phase three trial.

I was just wondering what those multiple efforts were and whether you could provide some guidance as to how confident you are that topline did it can still be produced in the second half of this year.

Unknown Speaker: guidance as to how confident you are that top line data can still be produced in the second half of the

Unknown Speaker: Second half of this year. Mike?

Yes, certainly so at the three so many trials you now there's a fairly robust large phase three program with over 13 had your patience and the patients to be enrolled have to go through a lot.

Michael Shetzline: Yes, certainly. So the 3718 trial, as you know, is a fairly robust, large phase 3 program with over 1,300 patients. And the patients, to be enrolled, have to go through a lot of steps, including invasive procedures like the Bravo. So we did recognize early that enrollment in that trial would be challenging.

Steps, including invasive procedures like that Rob. So we did recognize early that enrollment in that trial will be challenging we have kept the rest of that on a very regular basis and continue to your point into point of your question.

Michael Shetzline: We have kept abreast of that on a very regular basis and continue to, to your point and the point of your question, adapt and mitigate enrollment to make sure we achieve the desired goal, which is the top-line data at the end of 2020. Some of those efforts actually include enhanced central recruiting. We're looking at even newer opportunities, not just using the traditional method where we use the internet or ways to outreach to increase screening. We're actually taking a deeper dive into that, using some newer technologies to actually try to target the phenotype of patients that will deliver the patient we need to be enrolled. And that's a step above traditional screening efforts that central recruiting metrics have traditionally done.

Adapt and mitigate enrollment to make sure we achieved that desired goal, which is to top line data in the end of 2020. Some of those efforts actually include enhanced central recruiting we're looking at even newer opportunities not just using that traditional method, where we used the internet or ways to outreach to increase screening we're actually taken.

On a deeper dive into that using some newer technologies to actually try to target the phenotype of patients that will deliver the patient we need to be enrolled.

Thats a step up above traditional screening efforts essentially creating metrics have traditionally done. It's also just work more closely with a site, we and Mark's leadership team are actually visiting sites, we're engaged with the principal investigators and trying to make sure. We do everything we can to facilitate their activity in the clinical study. So we can make sure that they are variable.

Michael Shetzline: We've also just worked more closely with the site. Mark and his leadership team are actually visiting sites. We're very engaged with the principal investigators and trying to make sure we do everything we can to facilitate their activity in the clinical study so we can make sure that they are able to recruit the patients that they have in screening. Because, as you know, some of these invasive procedures then require a little more time at the site to go through. And so we're working very closely with the sites to improve that and facilitate that pass-through so that the screened patients become enrolled.

To deliver the patients that they have in screening because as you know some of these invasive procedures and require a little more time that decides to go through that and so we're working very closely with assays to improve that facilitate that pass through said at the screen patients becoming more.

Hey, Mike Mike just to be clear I think we have great confidence that we can deliver.

Thomas A. McCourt: And Mike, just to be clear, I think we have great confidence that we can deliver the study by the end of the year. I mean, everything looks like, and as we mentioned earlier, we've actually seen an uptick in the screening rates, which has been very encouraging with these rather innovative approaches that we've been leveraging.

The study by the end of year, I mean, everything looks like and as we mentioned earlier, we've actually seen an uptick in the screening rates, which has been very encouraging with these rather innovative approaches that that we've been leveraging.

Okay great.

Unknown Speaker: Okay, great. And then, as much as you can provide guidance, I was wondering what the projected 2020 royalties might be from.

Then as much if you can provide guidance I was wondering what the projected 2020 royalties might be from easy to work in China Nfls his work in Japan.

Yes, so I'll try and take that from both sides. So.

Gina Konselman: I'll try and take that from both sides. So I'm going to start with Astellas. If you recall, the Astellas royalties start in the mid-single digits, and they escalate to the low-double digits. Astellas recently reported their revenues for the nine-month end of 12-31-19, and they were approximately $40 million in sales. So I think you can do the calculation on the math, hopefully. On the AstraZeneca side in China, we haven't called out the specific amount of royalties in our guidance, but we would expect it to be around $50 million.

So I'm going to start with us Dallas.

If you recall the SLS royalties are they start in the mid single digits than they escalate to the low double digits.

Stellus recently reported their revenues for the nine months ended 12 31 thing team added approximately $40 million sale. So.

Okay.

The calculation.

Really.

On the Astra Zeneca side in China.

We haven't called out the amount of royalties that are financed but we would expect it to be rather modest 2020 and.

Gina Konselman: Holdout The amount of royalties within our guidance, but we would expect it to be rather modest in 2020. And that's just because they've only just launched.

They've only launched.

Gina Konselman: and they are seeking reimbursement in 2020. But we don't expect that until later in 2020. So right now, we have a very modest expectation.

They are.

King reimbursement in 2020, we don't expect that until later in 2020.

So right now we're very modest expectations.

Alright. Thank you I appreciate all the detail.

Unknown Speaker: Alright, thank you. I appreciate all the details. Thanks for your questions.

Thanks for your questions.

And your next question comes from Patrick Tichio with.

Operator: And your next question comes from Patrick Truccio with Birnbach, Capital.

Aaron Berg capital.

Patrick Truccio: Thanks. Good morning. Just first question, just regarding 7246 and the phase 2 top line data expected mid-year. The expectation is to see similar improvement in pain as the prior phase 2 trial, though in this trial, the highest dose is four times the dose evaluated in the IBS-C trial. So, I'm wondering what magnitude of pain relief from baseline we should anticipate and if there are any dose-limiting side effects we should be concerned about, particularly at the high dose in the phase 2 trial that's expected mid-year this year.

Thanks. Good morning, just first question just regarding 7246 in the top phase two top line data expected mid year.

The expectation is to see similar improvement in pain as the prior phase two trial during this trial the highest.

It is four times the dose valued an idea sea trials. So I'm wondering what magnitude of painterly from baseline three anticipated and.

And if there any dose limiting side effects, we should be concerned about particularly at the high dose in the phase two trial, that's expected midyear this year.

Michael Shetzline: Go ahead, Mike.

Go ahead, Mike Yes. Thanks for is that it's a very good opportunity to clarify some of that is important points around 74, six so as you mentioned that dose we're taking into the I guess treatment IBSD trial now is that three to four times the doses that weve used in the phase two we're actually very confident in this.

Michael Shetzline: Yeah, thanks for that. It's a very good opportunity to clarify some of those important points around 7246. So, as you mentioned, the dose we're taking into the IBSD trial now is three to four times the doses that we used in Phase 2. We're actually very confident in the safety profile for two important reasons. Number one, we know from the Phase 2 and the IBSC patient population that we really didn't see any dose-limiting side effects in that dose range. Now, to your point, that was up to 300 micrograms, but we have tested up to three grams or 3,000 micrograms in other studies, including healthy volunteer studies, and we didn't see any dose-limiting side effects, including diarrhea. In fact, no healthy volunteers actually reported diarrhea in a healthy volunteer study.

The profile for two important reasons.

Number one is we know from the phase two in the I'd be a seat patient population that we really didn't see any dose limiting side effects and that dose range now to your point that was up to 300 micrograms, but we have tested up to three grams or 3000 micrograms in other studies, including healthy volunteer studies, and we didn't see any dose limiting side effects include.

Turning around diarrhea in fact, no healthy volunteers actually I've reported diarrhea, and healthy volunteer study. So again, it's a new patient population IBSD, but based on the mechanism of action and what we know about that distal and more colonic delivery for 74, six we're fairly confident and safety profile and the IBSD trial is ongoing set a date has.

Michael Shetzline: So, again, it's a new patient population for IBSD, but based on the mechanisms of action and what we know about the distal and the more colonic delivery for 7246, we're fairly confident in the safety profile. Again, the IBSD trial is ongoing, so the data is blinded, but I can tell you in a blinded fashion that we've seen no unexpected safety concerns, and it's been fairly well So, we're fairly confident in the safety profile to date. However, that will obviously become much clearer when we see the data in the middle of this year.

Minded, but I can tell you in a blinded fashion that we've seen no unexpected safety concerns and it's been fairly well tolerated. So we're fairly confident in the safety profile. Today, However that we'll obviously become much clear we see today.

Mid of this year.

That's helpful. And then just secondly regarding the commercial collaboration with all 91 can you discuss more specifically arguments contribution to the commercial launch of your bar in terms of what proportion of patients that you believe ironwood out on the island discover and then secondly can you tell us what data iron.

Thomas A. McCourt: That's helpful. And then, just secondly, regarding the commercial collaboration with Alnylam, can you discuss more specifically Ironwood's contribution to the commercial launch of Givlari in terms of what proportion of patients you believe Ironwood could help Alnylam discover? And then secondly, can you tell us what data Ironwood has that could be helpful for other rare liver disease commercial launches? And should we expect the Givlari agreement to be the first of more to come?

How's that could be hopeful for other rare liver diseases commercial launches and should we expect your Florida agreement through the first of more to come.

Mark Mallon: So I'm going to have Tom answer that question, but just one last comment on 7246, Mike. I think you covered it, of course, our view on the safety profile, and, well, I just want to add that, you know, we talk about the, you know, seeing the pain effect in that phase two study, obviously that's something that, you know, there could be a possibility of getting even better results with the higher doses. We've not really been able to explore the dose response beyond 300 micrograms because of the risk of diarrhea. So, you know, this is why we're doing the study, to learn what might be possible going beyond that. But we certainly, you know, see the starting point based on the data we already have is exciting in terms of pain relief.

So I'm going to have Tom answer that question, but just one last comment on the 7246, So Mike I think you covered it of course, the our view on the safety profile.

Well I just want to add that we talk about the.

You know seeing the pain affected that phase two study <unk>, obviously, that's something that there could be a possibility of getting even better results in it with the higher doses were not really been able to explore the dose response beyond 300 micrograms because of the.

The risk of the diary so.

This is why we're doing this study is to learn what might be possible going be out beyond that but we certainly see the starting point based on the data we haven't already it already is exciting in terms of pay really.

Yes, as far as our role working with an eye on them I mean, our primary objective is to educate gastroenterologists and really key primary care docs about the disease and it's certainly a bulk of Laurie.

Thomas A. McCourt: Yes, as far as our role working with Inylam, I mean, our primary objective is to educate gastroenterologists and really key primary care doctors about the disease, and it's certainly about Gavlari. You know, this is, it's a great fit for us, you know, because, you know, really the cardinal symptom that these people suffer from is pretty severe lower abdominal pain. And one of the things we do know is that many of these patients are confused with IBS patients. So, you know, to have the opportunity to have a sales force as large as ours and as effective as ours within the GI community is, I think, going to be a very powerful tool. And what we do know about these patients, literally all of them, at some point, consult with a gastroenterologist.

Yeah. This is a it's a it's a great fit for us because you know really the cardinal the Cardinal symptom that these people suffer from is pretty severe lower abdominal pain and in one of the things. We do know as many of these patients are confused with RBS patient so.

They have the opportunity to habit salesforce is larger size ours and as effective as ours within the G.I. community.

I think it'd be a very powerful tool and what we do know about these patients really all of them at some point consult with the Gastroenterologist yield the early signals, we're seeing so far is.

Thomas A. McCourt: You know, the early signals we're seeing so far are very encouraging. We've begun to identify a number of patients that could likely be candidates for Javlari. And then as the mechanics work, you know, we now, once we identify those patients, we hand them off to an ILM who really kind of pulls through all the mechanics with regard to reimbursement and getting the drug to patient. So far, you know, the mechanics have worked well. The collaboration and communication is very effective.

You know very encouraging we've we've we've begun to identify a number of patients you know that could likely be candidates for January and then as the mechanics work. We've now once we identify those patients we hand them off to an eilam really kind of pulled through all the mechanics with regard to reimbursement and getting drug to pay.

And.

So far you know the mechanics.

Worked well I'm the collaboration and communication is very effective I think this is a great learning as you mentioned for us in this space understand what does it take you know to be successful it with an orphan disease in the G. Hepatology Arena and I think it's something we're going to continue to explore mark Matt.

Thomas A. McCourt: I think this is a great learning opportunity, as you mentioned, for us in this space to understand what it takes to be successful with an orphan disease in the GI hepatology arena. And I think it's something we're going to continue to explore. Mark mentioned that, you know, we have looked at a number of other GI-related diseases, including rare diseases, in which there are clearly some opportunities with regard to the emerging science. So I think we're very encouraged by what we've seen so far with Javlari. We're going to learn a lot, and I think there are a lot of possibilities coming out of this experience.

And that you know we have.

Looked at a number of other G.I. related diseases, including rare diseases, which there's clearly some opportunities with regard to the emerging science. So I think we're we're we're very encouraged by what we've seen so far with Google already we're going to learn a lot and I think there's a I think there's a lot of possibilities the coming out of this experience.

Mark Mallon: I mean, I just quickly add, and I think there are two core capabilities that we have that are going to be particularly helpful with this partnership as well as if there are future opportunities in rare diseases. So one is, of course, the ability to work with physicians and office staff to identify patients on the ground. These are obviously difficult patients to necessarily find; there's a lot of testing involved. But the relationships, really strong and deep relationships with the physicians and, in particular, their office staffs, are, I think, a critical success factor, and we really have that in place. And then the second thing is being able to sort of use advanced analytics and databases to help practices use the data that they have to identify these cases. And we've been applying some of those techniques already, certainly in how we've been looking to accelerate enrollment for the 3718, but also in identifying patients within practices for Linset. So I think this will just further strengthen those core capabilities.

I mean, I just quickly add and I think this there are two core capabilities that we have that are going to be particularly helpful. With this partnership as well as if there are a future opportunities in rare diseases. So so one is of course the ability to work with the with the physicians in office steps identify patients on the ground.

These are obviously difficult patients to necessarily fine. There's a lot of there's lot of testing involved that having the relationships really strong and deep relationships with the physicians and in particular their office staff is I think a critical success factor and we really have that in place and then the second thing is being able to sort of use advanced analytics and databases to it.

To help our practices use the data that they have to identify these phases and we've been applying some of those techniques already.

Certainly and how we've been looking to accelerate enrollment for the 30 718.

But also identifying patients too.

Within practices for Ferland set so.

I think this will just further strengthen those core capabilities.

Patrick Truccio: Thank you very much. Great. Thanks, Patrick.

Thanks very much.

Great. Thanks, Patrick.

And your next question comes from Boris Peaker with Cowen.

Operator: And your next question comes from Boris Peaker with Cohen. Thanks for taking my questions.

Great. Thanks for taking my questions, maybe just a more on 7246 I can you comment on the timeline that if you have a positive phase to read out in midyear. This year are what's the timeline to actually doing a pivotal study.

Boris Peaker: Maybe just more on 7246. Can you comment on the timeline for 7246 if you have a positive phase 2 readout mid-year this year, what's the timeline to actually doing a pivotal study? What size study would you need to do, and when can this ultimately be on the label if all the studies are successful?

Because I study would you need to do and when can this is ultimately be on the label of all the studies are successful.

Yes.

Michael Shetzline: Yes, so thanks. We're at, again, we're committed to top-line data for 7246, the phase two study, by mid this year. Okay, we actually think that study is fairly robust as a phase two trial. So we do recognize we'll need to consult with the agency for the formal design of the phase three program.

Yes, so thanks, whereas again, we're coming we're committed to topline data for 74 six phase two study mid this year. Okay. We actually think that study is fairly robust as a phase two trial. So we do recognize will need to consult with the agency for the formal design of the phase three program.

Michael Shetzline: And we will institute a rapid phase two meeting with the FDA during the latter half of this year, pending the results of the 7246 trial to put that in place. We're certainly hopeful to start that Phase 3 program as soon as possible and as early as the beginning of next year, hopefully. And if things go even better, maybe we could do it sooner, but we're pushing to at least do that by early 2021. In terms of the timeline you're asking and when it could be commercially available, that obviously will rest at the end of the Phase 2 meeting, the sample size we need for the pivotal program, whether we need to do one or two IBSD studies, because we do think we have an opportunity just to do one IBSD And so there are the details that make that sort of final determination a little premature right now, but I do think we're committed to starting that Phase 2 program as soon as possible.

And we will institute a rapid into phase two meeting with the FDA. During the later half of this year pending the results of 74 six trial to put that in place.

Certainly hopeful to start that phase three program as soon as possible and as early as the beginning of next year, hopefully and if things go even better maybe we could do it sooner, but we're pushing to at least do that by early 2021.

In terms of the timeline, you're asking and when it could be commercially available that obviously will rest in the end of phase two meeting the sample size, we need for that pivotal program, whether we need to do one or two IBSD studies, because we do think we have an opportunity just to do one IBSD study given the breadth and size of the phase two program.

And also our desire to do other sort of relevant indications, which we think they'd be supportive to in high BSD submission and so there the details that make that sort of final determination a little premature right now, but I do think we're committed to starting the phase three program as soon as possible or is that I think it's a really important to understand.

Boris Peaker: Boris, I think it's really important to understand, as I look at the potential of this brand, this is a pain drug. And we think we've, as we've mentioned, isolated the pain effect from the effect on bowel habits, which has obviously allowed us to push the dose and optimize the dose. But we see this as a completely different brand. I think, you know, this is, we do not see this as a line extension of Lins-S. You know, we want to be able to enter the market purely as a pain drug, IBSD is likely to be the first indication that we'll have as far as its demonstration of pain. But then we see ourselves going well beyond that into all, probably all forms of IBS as well as other GI diseases where there's a significant lower abdominal pain symptom. So you know, this, the data that's coming out of here, could really open up real opportunities for us. But I think it is important to say, you know, it's going to be important for us to really rebrand this and position it, you know, in a unique spot in the marketplace.

As I look at the potential this brand this is a pedro.

And and we think we've as we've mentioned we've we've isolated you know the pain effect from the effect on ball habit, which is obviously allowed us to push the dose and optimize the dose, but we see this as a complete different brand.

I think you know this is we do not see this is a line extension off linzess.

We want to be able to enter the market purely as a pain drug IB us IBSD is likely to be the first indication that we'll have as far as its demonstration of pain, but then we see ourselves going well beyond that into all probably all forms of IB us as well as other Gi diseases, where theres a significant lower.

Nominal pain symptom, so vis vis the data that's coming out of here could really open up a real opportunity for us, but I think it is important to say you know it's going to be important for us to really rebrand. The in position. This you know in in a unique spot in the marketplace.

Gotcha.

Thomas A. McCourt: Got you. I'm just curious, given the fact that you also saw this pain reduction, as you mentioned it's a pain drug, do you have any sense of whether any docs are currently using this essentially to do exactly that, to control lower GI pain?

Curious given the fact that you also saw this pain reduction as you mentioned is that pain drug you have any sense of any docs are currently using this essentially to do exactly that to control lower G.I. pain.

Yes, I think the one the one challenge the first of all yes.

Thomas A. McCourt: Yeah, I think the one challenge, first of all, yes, but that's generally in disorders that include constipation. Because, you know, one of the limitations of the current immediate release formulation is that if we push the dose, you're going to increase the pro-secretory effect of the drug and increase the risk of diarrhea. But we also see a very clear dose-ranging effect on the relief of pain. So, you know, yes, it's getting very broad application. Yes, most doctors, I think almost all doctors see this as a pain drug that's differentiated from other treatments, you know, but it also does affect bowel function.

But that's generally in disorders that include constipation.

Because one of the limitations of the current immediate release formulation as we push the dose youre going to increase the pro secret tree affected the drug increase or risk of diarrhea.

But we also see a very clear dose ranging effect on the relief of pain. So you know, yes, it's getting very broad application yes.

Most docs I think almost all doxey this as a pain drug that's differentiated from other treatments, but it also does affect bowel function.

Great. Thank very much for taking my questions.

Boris Peaker: Unknown Speaker Great. Thank you very much. And as a reminder to ask a question, press star 1 on your telephone keypad. Our next question comes from David Ledowitz of Morgan Stanley. Thank you very much for taking my question. To expand on the last question, when you look forward to potentially marketing a drug like 7246, how would you compare that, what would be needed for that experience, to how the evolution of the Linzess launch went?

And as a reminder, as a reminder to ask a question press star one on your telephone keypad. Our next question comes from David Lebowitz with Morgan Stanley.

Oh, Thank you very much for taking my question or two is to expand off the last question. When you look forward to potentially marketing a truck like 7246, how would you compare.

That what would be needed to be done for that experience.

Operator: Sure. This is Tom.

To how the the evolution of the Linda assess launch went.

David Ledowitz: Thanks, Mark. You know, we learned an awful lot. Linzess was a tremendous success, and we're delighted. We've learned a lot about how to commercialize the product, what the marketing mix should look like, and how to change the marketing mix over time. You know, I think what we've learned is, you know, these are largely going to be the same prescribers as we saw with Linzess and IBSC. And that being said, it's a fair assumption that the early growth is from a fairly small group of physicians, somewhere between 20,000 to 25,000 docs, drove about 70 to 80 percent of the early growth.

Sure I was just.

Thanks Mark.

You know we learned an awful lot Linzess was a you know tremendous success and we're delighted.

We've learned a lot about how to commercialize the product what the marketing mix should look like and the marketing mix over time.

I think what we've we've learned as you know these these are large you're going to be the same prescribers as we saw with site with linzess when I'd be a C and that being said, it's a fair the growth. The early growth is from a fairly small small group of physicians somewhere between 20 to 25000.

Ducs drove about 70% to 80% of the early growth. So I think there there's certainly a path forward to more efficiently commercialize this product as we secure reimbursement overtime. So I think we can leverage not only the things that we learned on linzess, but also some of the capabilities that we've built over time to Mark's point.

Thomas A. McCourt: So I think there is certainly a path forward to more efficiently commercialize this product as we secure reimbursement over time. So I think we can leverage not only the things that we learned on Linzess but also some of the capabilities that we've built over time, to Mark's point. You know, how do we proactively identify patients, you know, through electronic databases? How do we get patients to more efficiently raise their hands based on the symptoms? And, of course, you know, what's the alternative? These patients, other than opioids, have no alternative to treat these lower abdominal pain symptoms.

Thank you know how do we proactively identify patients.

Through electronic databases, how do we get patients to more efficiently raise their hand based on the symptoms.

And of course, you know what's the alternative these patients other than opioids. These patients have no alternative to treat these lower abdominal pain symptoms. So I think I think we've we've again, we've learned a lot I think we were well positioned to really increased the productivity of the overall commercial particularly the.

Thomas A. McCourt: So I think, again, we've learned a lot. I think we are well positioned, you know, to really increase the productivity of the overall commercial, particularly the selling effort, as we move forward as an organization.

Selling effort as we move forward as an organization.

Thomas A. McCourt: So are we talking about a patient population that right now is either getting treated with opioids or nothing, or would they typically be using just over-the-counter analgesics?

So are we talking about Oh patient population that right now is either getting treated with opioids are nothing or or would they be typically using just over the counter analgesics.

They are using everything I mean, a lot of it has to do with the severity of the pain right.

Thomas A. McCourt: They're using everything, and a lot of it has to do with the severity of the pain, right? There have been certainly a number of studies that have been done in the past that have shown an increased use of opioids in this population. Obviously, everybody in the healthcare industry is trying to get that under control, but yeah, I mean, they're using NSAIDs, they're using aspirins, they're using all kinds of things to try to manage their lower abdominal symptoms, but unfortunately, most of these treatments are insufficient. I mean, this is a very unique mechanism that could really affect the management of these lower abdominal pain symptoms.

There has been certainly a number of studies that have been done in the past that have showed an increase use of opioids. In this population. Obviously, we're trying everybody's in the healthcare industry is trying to get that under control, but yeah, I mean, they're using and say it's are using as friends are using they are using all kinds of things to try to to manage their lower abdominal symptoms, but.

Really most of these treatments are insufficient I mean this is a very unique mechanism you know that could really affect a the management of these lower abdominal pain symptoms.

David Ledowitz: Thank you for taking my questions.

Thank you for taking my questions.

David Ledowitz: Thank you, everyone.

Thanks, David.

Okay, and I would now like to turn the call back over to Mark Mallon. Please go ahead.

Mark Mallon: And I would now like to turn the call back over to Mark Mallon. Please go ahead.

So operator, just to confirm we don't have any additional questions.

Operator: Operator, just to confirm, we don't have any additional questions for people in the queue.

People in the queue correct.

Operator: Correct.

Okay and I, just think everybody on the call. We appreciate your time and interested in Ireland and look forward to continue sharing the exciting development of iron with the during the course of the year. Thanks.

Mark Mallon: Okay. And I just want to thank everybody on the call. We appreciate your time and interest in Ironwood and look forward to continuing to share the exciting developments of Ironwood during the course of the year. Thanks.

Operator: Well, ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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