Q3 2021 Ironwood Pharmaceuticals Inc Earnings Call
Operator: Good morning. My name is Rob, and I will be our conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals third quarter 2021 investor conference.
Good morning, My name is Rob and that'll be our conference operator today at this time I would like to welcome everyone to the Ironwood Pharmaceuticals third quarter 2021, Investor update call.
Operator: Investor update call
Operator: All lines have been placed on mute to prevent any background noise. After the speaking,
All lines, you've been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question. During this session simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again Presti Star one. Thank you, Matt Roach director of <unk>.
Operator: Remarks, there will be a question and answer session. If you would like to ask a question during this session,
Operator: session, simply press Star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press Star 1.
Operator: Thank you. Matt Roach, Director of Investor Relations, you may begin your conference. Thank you, Ralph.
Chester Relations you may begin your conference.
Thank you Ross.
Matt Roache: Good morning, and thanks for joining us for our third quarter, 2021 investor update. Our press release crossed the wire this morning and can be found on our website. 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 10Q for the quarter ended June 30, 2021, and in our future SEC filings.
Good morning things for joining us for our third quarter 2021 investor.
I would press release across the water. This morning and can be found on our website.
Today's call and accompanying slides include forward looking statements such statements involve risks and uncertainties and then cause actual results to differ materially.
Discussion of these statements and risk factors is available on the current safe Harbor seasons lie.
As well as under the heading risk factors in our quarterly report on Form 10-Q.
June 30th 2021, and in our future a SEC filings.
Matt Roache: All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements, also including our non-gap financial measures which should be considered only as a supplement to and not a substitute for or superior to gap measures. 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 measures. During today's call, Tom McCourt, our CEO, will provide an update on progress towards our strategic priorities and the commercial performance of Lenz.
All forward looking statements speak as of the date of this presentation and we undertake no obligation to update such statements.
Included are non-GAAP financial measures.
He considered only as a supplement to and not a substitute for a a superior to.
Measures.
To the extent applicable please refer to the tables and if our press release a reconciliation of these measures the most directly comparable GAAP measures.
During today's call Tom Accord, our CEO.
By an update on progress towards our strategic priority and commercial performance I'll Linzess.
Matt Roache: Mike Schetzline, our chief medical officer, will provide an update on our pipeline, including the option agreement with core pharmaceuticals that we announced this morning, and Jason Rickard, our chief operating officer, will wrap up with a review of our financial results and guidance. We'll be referring to slides via the webcast. For those of you dialing in, please go to the event section of our website to access this slide. With that, I will turn the call over to Tom.
[noise] might shed fine our chief Medical Officer will provide an update button pipeline, including the option agreement with core pharmaceuticals that we announced this morning and.
And Jason Richard R. Chief operating officer will wrap up with a review our financial results and guidance.
We will be referring to slides via webcast, but those are you dialing and please go to the events section of our website to access the slides.
With that I will.
Turn the call over to Tom.
Thomas A. McCourt: Thanks, Matt. Good morning, everyone, and thanks for joining us today. We close another strong quarter in 2021, driven once again by double-digit lends us prescription demand growth year over year. This morning, we announced that we've expanded our pipeline by entering into an option agreement with core pharmaceuticals, which we'll review in more detail in a few minutes. We're coming out of a terrific American College of Gastrontrology meeting, where we presented new findings from a survey on the impact of abdominal symptoms on adult patients with irritable bowel syndrome with constipation. In addition, we gave an oral presentation and presented four other posters, one of which received ACG's Presidential Poster Award.
Thanks, Matt Good morning, everyone. The thanks for joining us today.
We closed another strong quarter in 2021, driven once again by double digit linzess prescription demand growth year over year.
This morning, we announced that we've expanded our pipeline by entering into an option agreement was core pharmaceuticals, which will review in more detail in a few minutes.
We're coming out of a terrific American college of Gastroenterology meeting, where we presented new findings from our survey on the impact of abdominal symptoms and adult patients with irritable bowel syndrome with constipation. In addition, we gave an oral presentation are presented for other posters, one of which received Acg's presidential poster award.
Thomas A. McCourt: I couldn't be more proud of the team's execution and the work we're doing to advance treatment for GI diseases and redefine the standard of care for GI patients. Let's start with a few overview of our strategic imperatives, as well as our strategic priorities. Our strategy starts with maximizing LinzS. Since launch in 2012, LinzSys continues to experience accelerated demand and widespread acceptance among health care practitioners as a leading prescription treatment for adults with IBSC and chronic constipation.
I couldn't be more proud of the team's execution and the work we're doing too advanced treatment.
G I diseases, and redefined standard of care for G I patients.
Let's start with a few overview.
Of our strategic imperatives, as well as our strategic priorities.
Our strategy starts with maximizing linzess since launch in 2012 live does continues to experience accelerated demand and widespread acceptance among health care practitioners as a leading prescription treatment for adults with IBSA chronic constipation.
Thomas A. McCourt: In the third quarter, Linza's total prescription demand grew 12% versus the prior year quarter, and new to brand prescription growth continued to outpace the market. Next, we are looking to build an innovative portfolio, both through the development of internal assets and through bringing in external therapies that target serious organic GI diseases. Mike will be providing an update on our pipeline. Finally, we're committed to delivering sustainable profits and cash flow. We had another impressive quarter on the bottom line and ended this third quarter with $574 million in cash and cash equivalents on the balance sheet.
And the third quarter Linzess total prescription a man grew 12% versus the prior year quarter and new to brand prescription growth continued to outpace the market.
Next we are looking to build an innovative portfolio both through the development of internal assets, Andrew bring in external therapies that target serious organic Gi diseases might.
Mike will be providing an update on our pipeline.
Finally, we're committed to delivering sustainable profits and cash flow, we had another impressive quarter on the bottom line and ended the third quarter with $574 million in cash and cash equivalents on the balance sheet.
Thomas A. McCourt: We're taking a thoughtful and disciplined approach to capital allocation in an effort to maximize return to our shareholders, while we continue to explore growth opportunities with the same high bar we've always had. Now, I will turn it over to Mike to discuss our pipeline. Mike?
We're taking a thoughtful and disciplined approach to capital allocation in an effort to maximize return to our shareholders. As we continue to explore growth opportunities with the same high bar, we've always had.
Now I will turn it over to Mike to discuss our pipeline mine. Thanks.
Michael Shetzline: Thanks Tom and good morning everyone. We're advancing our pipeline through the development of IW 3300 our wholly owned asset for the potential treatment of visceral pain conditions such as interstitial Soitis, bladder pain syndrome, and endometriosis. We're on track with the I&D application to the FDA this year and the start of the clinical program in the first quarter of 2022. In addition to IW3, 3,300, we're excited to announce that we entered into an option agreement with CORE to acquire an exclusive license, develop, and commercialize in the U.S. CMP104, which we believe, if successful, may have the potential to transform the treatment of primary billiary colangitis, otherwise known as PPC, a rare autoimmune disease targeting a liver that affects an estimated 133,000 people in the U.S. Coor's novel approach uses a biodegradable nanoparticle encapsulating PDCE2, which is the autoantogen believed to be responsible for the autoimmune pathology of primary bilary colinjibate.
Thanks, Tom.
Good morning, everyone were advancing our pipeline to the development of IW 3300 are Holy and asset for the potential treatment of history of paint conditions, such as interstitial cystitis bladder pain syndrome endometriosis, we're on track with the iron the application to the end of this year and it started that kind of a program in the first quarter of 2022.
In addition to IW 3300, we're excited to announce that we entered into an option agreement with cooler to fire exclusive license developed and commercialized in the U S. C. N P. One O four which we believe is successful may have the potential to transform the treatment of primary biliary cholangitis other.
Twice now is PVC.
Rare autoimmune disease targeting a lever that affects an estimated 133000 people in the U S. Coors novel approach is biodegradable nanoparticle Encapsulating P. D. C E. Two such as the Autoantigen believes very responsible for the order the impasse allergy of primary billing.
Area Cholangitis.
Michael Shetzline: Coors' proprietary platform combines PVC E2 with state-of-the-artaceutical nanop particles to tolerize the immune system and potentially eliminate the immune cell biodoc destruction present in PBC. Coors' platform has shown proof of technology in clinical and pre-clinical settings, further demonstrating the opportunity for the platform to treat PBC. Currently, there is no therapy to address the root cause of the autoimmune destruction of the biodex in TBC, which can result in profound fatigue and puritis as well as other symptoms and not uncommonly can lead to irreversible damage and scarring of the liver, ultimately requiring a liver transplant.
Coors proprietary platform components combines PVC hate to the state of the art pharmaceutical nanoparticles thaler icy immune system and potentially eliminate the median sale I'll dot destruction present in PVC course platform has shown proved first technology in clinical in preclinical settings.
Further demonstrated in the opportunity for the platform to treat PVC.
Currently there is no therapy that addresses the root cause of the audio named destruction firebox and PVC, which can result in profound fatigue and P writers as well as other symptoms and not uncommonly can lead to irreversible damage and scarring of the liver ultimately requiring liver transplant.
Michael Shetzline: We believe CMP 104 has the potential to shift the treatment paradigm in PBC with the opportunity to be the first disease-modifying therapy for PBC. Collaborating with Core allows us to move our strategy forward through expansion of our pipeline, leveraging our deep relationship with gastrologists and advancing innovation via differentiated opportunities like CMP 101. We believe Coors' expertise in immune reprogramming and Ironwood's development and commercial strength, as well as our reach in the GI disease area, presents an opportunity to help introduce a potentially new, game-changing therapy to patients in significant need of new treatment opportunities.
<unk> one O four has the potential to shift the treatment paradigm in PVC with the opportunity to be that first disease modifying therapy for PVC collaborating with core allows us to those our strategy for expansion.
Expansion of our pipeline leveraging our deep relationship with extra trial, just and advancing innovation, if rainshade opportunities like CMP one O four.
We believe course expertise in January programming, and iron was developing a commercial strength as well as our reach in the GI disease area presents an opportunity to help introduce a potentially new game changing therapy, the patient's insignificant need a new treatment options were thrilled to be collaborating with court, which expects to begin a clinical trial foreseen P. One is worth this.
Michael Shetzline: We're thrilled to be collaborating with CORE, which expects to begin a clinical trial for CMP104 this year. Jason will provide more detail on the agreement later in the call. Ellen Ford will continue to share new updates as our pipeline development progresses. Now, back to Tom to discuss the commercial performance of Linzess. Thanks, Mike.
Year, Jason will provide more detail on the agreement later on the call going forward will continue to schedule updates as our pipeline development progresses now back to town to discuss the commercial performance of Linzess. Thanks, Mike Linzess continues to deliver a remarkably strong performance in the third quarter.
Thomas A. McCourt: Thanks, Mike. Linz continues to deliver a remarkably strong performance in the third quarter, powered by both new patients and refill volume, further reinforcing its position as the number one prescribed medicine in the U.S. for the treatment of adults with IVSC and chronic constipation. As I mentioned earlier, Linses prescription demand increased by 12% year-over-year, resulting in U.S. net sales of $253 million. This strong performance reaffirms our confidence that Linses has the potential to exceed a billion dollars in U.S. net sales in the near future.
Word by both new patients and refill volume further reinforcing his position as a number one prescribed medicine in the us for the treatment of adults with IBSA and chronic constipation.
Ancient earlier, Linzess prescription demand b, 12% year over year, resulting in U S. Net sales of 253 million. This strong performance reaffirms our confidence the winters has the potential to exceed 1 billion dollar in U S. Net sales in the near future.
Thomas A. McCourt: We believe that the impressive demand growth we're seeing with Linzest continues to be the result of strong execution of our commercial strategy and fueled by a few sustainable drivers. First, our clinical focus on constipation plus overall abdominal symptoms is a key differentiator for Lin-Tess, relative to the needs of adult IBSC patients who often are burdened by bloating, pain, and discomfort.
We believe that the impressive demand growth, we're seeing with leaves US continues to be the result of strong execution of our commercial strategy and fueled by a few sustainable drivers.
First are critical focus on constipation, plus overall abdominal symptoms is a key differentiator for linzess.
Relative to the needs of adult Ivy I see patients, who often are burdened by bloating pain and discomfort.
Thomas A. McCourt: Second, we believe our consumer promotional efforts are encouraging more potential patients to seek information, as evidenced by the increased visits to linsess.com and the growing number of new patient starts. Telemedicine also continues to help make physician care easily accessible for IBSC and chronic constipation patients. Third, our professional promotion efforts focused on gastroenterologists and high prescribing primary care physicians are nearing pre-COVID levels that are having a positive impact on Finally, our class-leading payer access continues to be paramount to the success of the brand. Lindzz recently became the preferred brand across all commercial formularies for yet another major payer in the U.S., and we expect Linzis will continue to maintain class-leading unrestricted access in 2022.
We believe our consumer promotional efforts are encouraging more potential patients to seek information as evidenced by the increase visits to linzess dot com and the growing new patient starts.
[noise] Telemedicine also continues to help make physician care easily accessible for IBSA and chronic constipation patients.
Third or professional promotion efforts focused on Gastroenterologists in high prescribing primary care physicians are nearing pre COVID-19 levels that are having a positive impact on our overall selling effort.
Finally, our class leading payer access continues to be Paramount to the success of the brand leaves US recently became preferred brand across all commercial formularies for yet another major payer and the U S and we expect Linzess will continue to maintain class leading unrestricted.
Access in 2022.
Thomas A. McCourt: We continue to advance a number of lifecycle management opportunities with the goal of increasing the clinical utility of Lenzes. As we mentioned in August, I am very pleased that the FDA approved our proposed modification to the Linzis label based on clinical data generated in pediatric studies. The updated label modifies the box warning for the risk of serious dehydration and contradiction against the use of children in those less than two years of age. The box warning and contradiction previously applied to all children less than 18 years of age and less than six years of age, respectively.
We continue to advance and number of lifecycle management opportunities with the goal of increasing the clinical utility of Linzess.
As we mentioned in August.
I am very pleased that the F D a approved or proposed modification so with this label.
Based on clinical data generated in pediatric studies.
Updated label modifies the bus box warning for the risk of serious dehydration and contraindication against the use of children, if those less than two years of age.
The box morning, and contraindications previously applied to all children less than 18 years of age and less than six years of age respectively as.
Thomas A. McCourt: As a reminder, Linz is not currently approved for use in patients under 18 years of age. The warning on the LinzS label at launch was primarily applied due to preclinical findings, and there was an absence of any clinical data in the pediatric population at that time. Since that time, we've been generating clinical data in pediatrics to better characterize the potential benefit and risk profile of an acutide in this population. This important label update reflects the clinical and safety data that have been generated to date in children 2 to 18 years of age.
As a reminder, linzess is not currently approved for use in patients under 18 years of age.
The warning under Linzess label at launch was primarily apply due to preclinical finding and there was an absence of any clinical data in the pediatric population at that time.
Since that time, we've been generating clinical data in pediatrics to better characterize the potential benefit risk profile when appetite in this population.
This important label update reflects the clinical and safety data that has been generated to date and children two to 18 years of age.
Thomas A. McCourt: As soon as all the ongoing planned pediatric studies with when aquitite are completed, we plan to engage the FDA on potential additional label updates to reflect all the pediatric clinical and safety data that we will generate. Looking ahead, we're focused on delivering value to our patients and shareholders. We're confident in the strategy and the opportunities that we see ahead to improve the lives of millions of patients suffering from GI diseases. We believe the growth investments we're making position our company for long-term success. GI symptoms and GI disorders can be severe and debilitating, and they often rank near the top of the list for reasons why patients seek medical care.
As soon as all the ongoing plan pediatric studies with an appetite completed we plan to engage the FDA potential additional label updates to reflect all the pediatric clinical and safety data that we will be generated.
Looking ahead, we're focused on delivering value to our patients and shareholders. We're confident in the strategy and the opportunities that we see ahead to improve lives of millions of patients suffering from Gi diseases.
We believe the growth investments, we're making physicians our company for long term success.
GI symptom and <unk> disorders can be severe and debilitated often rank near the top of the list for reasons why patients seek medical care.
In most cases these disorders have limited or no treatment options trading urgency around the need for new and innovative treatment options.
Thomas A. McCourt: In most cases, these disorders have limited or no treatment options, creating urgency around the need for new and innovative treatment options. To address this problem, we have built a strong experienced team that is focused on pursuing innovative assets in GI with significant medical need and strong scientific rationale. This is what drives us every day at Ironwood, and I would like to thank all the employees, patients, caregivers, and advocates in the GI community for their shared dedication to supporting our efforts in this underserved market. I'll now turn the call over to Jason to review our financial performance. Jason?
To address this problem, we have built a strong experienced team, but it's focused pursuing innovative assets and Gi with significant medical need and strong scientific rationale.
This is what drives us everyday at Ireland, and I would like to thank all of the employees patients caregivers and advocates in the Jag community for the shared dedication to supporting our efforts in this under underserved market.
I will now turn the call over to Jason to review, our financial performance Jason.
Jason Nicholas Butler: Thanks, Tom. And good morning, everyone. First, I'll walk through our Q3 financial performance, then touch on our capital allocation strategy, and provide more specifics on our agreement with Coor. And finally, I'll review our 2021 guidance. Please refer to our press release for our detailed financial information. Moving to Linses.
Thanks, Tom and good morning, everyone.
A few updates to provide today first of all walk through our Q3 financial performance then touch on our capital allocation strategy and provide more specifics on our agreement with core and finally I'll review, our 2021 guidance.
Please refer to our press release for a detailed financial information.
Moving to Linzess.
Jason Nicholas Butler: U.S. net trade sales grew 5% compared to the third quarter of 2020, driven by robust prescription demand growth, partially offset by net price and inventory channel flux. For the balance of 2021, we expect that the impressive Linzest prescription demand growth will continue, and we will continue to expect mid-single-digit price erosion. Regarding the channel, we've seen fewer inventory channel fluctuations today in 2021, which has resulted in favorable net sales growth in the first half of the year, but is resulting in a dampening of net sales growth in the second half of the year, as was the case in the third quarter, and is expected to continue through the fourth quarter. Through the third quarter, net sales growth is up 11% year-to-date, and we continue to expect to meet our net sales growth guidance of between 6 and 8% for the full year. Turning to Lenzh's brand profitability,
U S. Net trade sales grew 5% compared to the third quarter of 2020, driven by robust prescription demand growth, partially offset by net price in inventory channel fluctuations.
Balance of 2021, we expect at the impressive linzess prescription demand growth will sustain and will continue to expect mid single digit price erosion.
Regarding the channel is in fewer inventory channel fluctuations today in 2021, which has resulted in favorable net sales growth in the first half of the year, but as resulting in a dampening of net sales growth in the second half of the year as was the case in the third quarter and is expected to continue through the fourth quarter.
During the third quarter net sales growth is up 11% year to date and we continue to expect to meet our net sales growth guidance of between six and 8% for the full year.
Turning to Linzess brand profitability.
Jason Nicholas Butler: Commercial margin in the third quarter was 74% versus 78% in the third quarter of 2020. I'd like to point out that the lower commercial margin versus the same period last year was primarily the result of an increase in operating expenses in the third quarter of 2021 versus the third quarter of 2020 when we did not execute as many in-person details due to COVID-19 restrictions. As you may recall, our selling expenses related to virtual call details and overhead during the first three quarters of 2020 were adjusted in the fourth quarter of last year.
Commercial margin in the third quarter was 74% versus 78% in the third quarter of 2020, I'd like to point out that the lower commercial margin versus the same period last year. It was primarily the result of an increase in next selling expense in the third quarter of 2021 versus the third quarter of 2020, when we did our execute as many in person details.
Due to COVID-19 restrictions.
As you may recall are selling expenses related to virtual call details and overhead during the first three quarters of 2020 were adjusted in the fourth quarter of last year.
Jason Nicholas Butler: We continue to seek to expand margins over time through growing Lenz S net sales and disciplined investment behind the brand. In the third quarter of 2021, Iwood revenues were 104 million, driven by $100 million in Lincess U.S. collaboration revenues, which were flat year over year due to the net sales growth being offset by higher selling expenses versus last year, as I just mentioned.
We continue to seek to expand margins over time through growing linzess net sales and disciplined investment behind the brand in the third quarter of 2021, I would revenues were 104 million driven by 100 million in Linzess U S collaboration revenues, which were flat year over year due to net sales growth being offset by.
Hire some expense versus last year as I just mentioned.
Jason Nicholas Butler: Now to hire was profitability. We delivered gap net income of 56 million in the third quarter of 2021 and adjusted EBITDA of 65 million. Moving to cash and capital allocation priorities, in the third quarter, we generated $75 million in cash flow from operations and ended the quarter with 574 million in cash and cash equivalents, up from 363 million at the end of 2020. As a growth company, we're focused on identifying and investing in opportunities that create the most value for our patients and shareholders over the long term.
Now to Iron was profitability, we delivered GAAP net income of $56 million in the third quarter of 2021, and adjusted EBITDA was $65 million.
Moving to cash in capital allocation priorities in the third quarter, we generated $75 million in cash flow from operations and ended the quarter with $574 million in cash and cash equivalents up from $363 million at the end of 2020.
As a growth company or focused on identifying investing an opportunity to create the most value for our patients and shareholders over the long term or positioning our company for future success, which includes continued investment island.
Jason Nicholas Butler: We're positioning our company for future success, which includes continued investment in the pipeline of assets and expanding our innovative pipeline of assets, such as the agreement announced this morning with Corps. And as we previously disclosed in the second quarter of 2021, we have received authorization from our board to buy back up to $150 million of outstanding shares of common stock through December 2022. We are fortunate to have a strong balance sheet, which we believe positions us well for continued growth. Before moving to our financial guidance, I would like to provide more detail on the option agreement with court.
And expanding our innovative pipeline ambassadors such as the agreement announced this morning with a core.
And as we previously disclosed in the second quarter of 2021, we have received authorization for our board to buy back up to $150 million for outstanding shares of common stock through December 2022.
We're fortunate to have a strong balance sheet, which would lead positions as well for continued growth.
Before moving to our financial guidance I think to provide more detail on the option agreement with a quarter.
Jason Nicholas Butler: Under the terms of the agreement, we will make an upfront, non-referable payment of $6 million to Corps, and additional payments of $4 million upon the commencement of Corps' clinical study for CNP 104, $2 million upon receipt of FDA Fast Track designation for CMP 104, and approximately 7.5 million to perform this study. We expect approximately 10 million of such near-term payments to hit the P&L in the fourth quarter of 2021, with the remaining amount of such payments to be incurred between 2022 and 2023.
Under the terms of the agreement, we will make it upfront nonrefundable payments of $6 million decor, and additional payments of $4 million. Upon commencement of course clinical study for CMP one O four.
2 million upon receipt of FTE Fastrack designation for CMP, one O four and.
And approximately seven five nights performance study.
Respect approximately 10 million assertion near term payments data P&L in the fourth quarter of 2021 with the remaining of such payments to be incurred between 2022 and 2023.
Jason Nicholas Butler: After we review the data from the Core study, if we exercise the option, we will pay Core $35 million in exchange for an exclusive license to develop and commercialize CNP 104 in the U.S. for the treatment of PPC. Additionally, we will pay royalties to Corps in the high single digits to low double digits percentage of the aggregated annual net sales in the U.S. on products containing CMP 104, and Corps will be eligible to receive commercial milestone payments of up to $440 million over the term of the agreement. Amen.
How do we review the data from course study if we exercise the option, we will pay core $35 million in exchange for an exclusive license the development commercialized CMP one O four in the U S for the treatment of PVC.
Additionally, we will pay royalties decor in the high single digits to low double digit percentage of the aggregated annual net sales in the U S and products containing CMP little Fork and core will be eligible to receive commercial milestone payments up to $440 million over determined the agreement.
Jason Nicholas Butler: We're excited to be collaborating with Core to potentially help transform the treatment of PBC. GMP 104 fits squarely within the framework and guiding principles of our business development strategy. Going forward, we're looking to bring an asset similar to CMP 104 that is highly differentiated, targets clear unmet medical needs, and has clear decision points. And we continue to see these types of opportunities in the market. Turning to our 2021 financial guidance, in addition to Lenz's U.S. net sales growth between 6 to 8%, we continue to expect total ironwood revenue of 390 to 410 million and adjusted EBIT of greater than 210 million.
We're excited to be collaborating with core potentially help transform the treatment of PVC CMP one on floor fit squarely within the framework in guiding principles of our business development strategy.
Going forward, we are looking at bringing asset similar to CMP. One afford that are highly differentiated turning to clear unmet medical needs and have clear decision points and would continue to see these types of opportunities in the market.
Turning to our 2021 financial guidance. In addition to Linzess use net sales growth between 16%. We continue to expect total ironwood revenue, a 390 to 410 million and adjusted EBITDA of greater than $210.
Jason Nicholas Butler: We believe the continued financial performance, strong balance sheet, and disciplined approach to capital allocation positions us well to continue to invest in our business and pursue additional opportunities in the GI space. I'll now turn the call back over to Tom for closing remarks before Q&A. Thanks, Jason, and thanks to everyone for joining our call this morning. I'm extremely proud of our financial performance this quarter and of our team's continued dedication to our vision of becoming the country's leading GI healthcare company. We look forward to updating you on our progress and on our 2022 outlook at the upcoming JPMorgan Healthcare Conference in early January. Operator, you may now open up the lines for questions.
We need to continue financial performance strong balance sheets, and disciplined approach to capital allocation physicians as well to continue to invest our business and pursue additional opportunities in the Gis space.
Now turn the call back over to Tom for closing remarks before Q&A.
Thanks, Jason and thanks, everyone for joining a call this morning I'm.
I am extremely proud of our financial performance this quarter.
And of our teams continued dedication to our vision of becoming the country's leading Gi healthcare company.
We look forward to updating you on our progress and under 20 twenty-two outlook at the upcoming J P. Morgan healthcare confidence in early January.
Operator, you May know open up the lines for questions.
Operator: At this time, I would like to remind everyone, in order to
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, what passed for just a moment to compile the Q&A roster.
Operator: everyone, in order to ask a question, press star then number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster, and your first question comes from the line of Eric Joseph from J.P. Morgan. Your line is open.
And your first question comes from the line of Eric Joseph from J P. Morgan Your line is open.
Operator: J.P. Morgan. Your line is open.
Unknown Attendee: Hi, good morning. This is Hannah on behalf of Eric.
Hi, good morning.
China on for Eric Thanks for taking the question. So just first with regard to the cardio just wondering how the mechanism and critical potential of C. M. P. One O four I can transfer at the other.
Unknown Attendee: Thanks for taking the question. So just first, with regard to the core deal, just wondering how the mechanism and clinical potential of CMP 104 compare with the other assets being developed for PBC. And can you speak to some of the properties of the candidate with respect to administration and dosing?
That's been going on for P. B C and can you speak with some of the properties aren't Burma and became in that respect to administration and dancing.
Michael Shetzline: Sure, I'll have Mike Schatzliner, head of medical, take that question. Yeah, thanks for the question.
Sure I'll.
I'll have Mike shut find our header medical I'll take that question yes.
Thanks for your question as you're probably aware current therapies directed a PVC are primarily derivatives, a file assets things like or so and things like that.
Michael Shetzline: Yeah, thanks for the question. As you're probably aware, current therapies directed at PBC are primarily derivatives of bile acids, things like Erso and things like Okoliva. What we're trying to achieve with the core asset is actually very much a disease-modifying effect because the platform actually is directed towards tolerating the immune system. So what PBC is, it's an autoimmune disease, and the antigen responsible for the pathology of that disease, which we believe today is the PDCE2 antigen. What the core asset does is it takes that antigen, encapsulates it in nanoparticles. Those nanoparticles get directed primarily to the liver and spleen.
What we're trying to achieve.
As it is actually very much a disease modifying effect because the platform xa's directed towards televising the immune system. So let PVC is it's an auto immune disease and the antigen responsible for the past algae that sees that we believed today is that P. D. C E. Two antigen let the.
Core asset does is it takes that antigen encapsulated in nanoparticles. This nanoparticles get directed primarily to the liver and spleen and those organs the immune system when they see the antigen PVC too they recognize it and polarized to it so they become <unk>.
Michael Shetzline: In those organs, the immune system, when it sees the antigen, the PDCE2, it recognizes it and becomes tolerable to it. So they become anergic or less responsive or sometimes not responsive and would not then continue the autoimmune destruction of the bile duct cells. That's the pathology of PBC. So, in principle, the core acid targets the root cause of PBC, the autoimmune destruction of the biode duct cells. Parent therapies try to manage disease by mimicking what bile acids do. Does that answer your question?
Or less responsive, sometimes not responsive and would not then continue the order the destruction of the bottle sales that's the pet biology PVC. So in principle, the core asset targets the root cause of PVC auto immune destruction of the bile duct.
<unk> current therapies trying to manage disease unlimited.
<unk>.
Does that answer your question.
Unknown Attendee: Yes, and can you speak a little bit just about the properties of the molecule, how it's administered, and how you... Yes, certainly.
Yeah, and can you speak a little bit to sit their properties are gonna want to know how it could administer.
Yes, certainly person.
Michael Shetzline: Yes, so currently, the dosing for the first in human study will be IV dosing given two doses one week apart, and the evidence so far to date in clinical and preclinical models suggests that that could be sufficient to adequately tolerize patients to the PBCE2 antigen.
Yes, so apparently the dosing for the first thing in the study will be I think dosing.
Given two doses one week apart and.
And the evidence so far to date in clinical in preclinical models suggest that that could.
Could be sufficient to adequately televised patients to add the PVC PVC need to end of June.
Michael Shetzline: So, I mean, from a commercial opportunity as we look at this, obviously, this is a highly symptomatic disease. It's quite serious and could be quite debilitating in the long term.
So I mean.
From a commercial opportunities we look at this obviously this is a highly symptomatic disease, it's quite serious and it can be quite debilitating in the long term and they have a drug like.
Michael Shetzline: And to have a drug like this that could be a disease-modifying agent would obviously be a huge breakthrough, and you can imagine the value that could be created for patients. So, you know, I think the way we've structured the deal and certainly the clinical development pathway really gives us a clear line of sight to a decision point, you know, whether we move on or not. But we're very excited about the opportunity. We're very excited about the science. And I think we're, you know, we're looking forward to working with Core in moving this asset forward.
Like this that could be a disease modifying agents, obviously it could be a huge breakthrough and you can imagine the value of that could be created for patients. So I think the way we've structured the deal and certainly the clinical development pathway.
Really gives us a clear line of sight to a decision point, whether we move on or not but we're very excited about the opportunity. We're very excited about the science.
And I think we're we're looking forward to working with the corps in moving this bizarre asset forward.
Unknown Attendee: Great, and just looking on Cp.gov, it looks like the primary study has a 120-day primary study period before the follow-up period. Just wondering when you expect to see data and have that data in hand, and how soon after receiving that data, you have to make the option to go first.
Okay, and I'm, just looking at <unk> Dot com it looks like our primary study has 120 a day primary vegetarian before the follow up period, just wondering uhm one yet so I can see data on on that date on handling how soon after receiving that there you have to make the authentication.
Michael Shetzline: Yeah, so good question. So, as you know, this is the first human study, so it is a 120-day study that we're proposing. We actually, as you mentioned, QUID our strategy is understanding GI diseases and disorders, of which we have a good understanding of the mechanism of action, the pathology, and the ability to interpret the data to understand the clinical doubt. And this approach in PBC delivers all that. That's why we're very excited about the upper.
Yeah. So good question so.
As you notice that person here in the study so that is 120 day a study that we're proposing uhm we actually.
As you mentioned could our strategies understanding Gi diseases and disorders, which we have a good understanding of the magnuson action packed allergy and the ability to interpret today to understand the clinical value.
And this approach <unk> delivers all that that's what I'm very excited about the opportunity. So we're working currently lift cooler we're going to have opportunities that Chaplin steady progress and also look at some of the objective endpoints within the study like that Biochemistries involved in the liver pathology things like the outline foster.
Michael Shetzline: So we're working currently with CORE; we're going to have opportunities to check on study progress and also look at some of the objective endpoints within the study, like the biochemistry involved in liver pathology, things like Alpland phosphatase, which is a recognized marker for not only disease progression but also improvement in PBC, and also the immune-modifying aspects of the platform or of the core asset, where we can actually look at the response You can actually see that improve, hopefully, that's obviously the goal of the therapy during treatment.
<unk>, which is a recognized marker or not on the disease progression, but also improvement MTBC and also the immune to modify aspects of the platform of the cooler asset where we can actually look at the response to the T cells in patients with PVC.
To understand their reactivity.
<unk> you can actually say improve hopefully that's obviously that goes to therapy during treatment and so will maintenance or to get that data through through the study they're heavily obviously labs that'll be drawn to the study and begin looked at integrating all that clinical data that will give us a clear decision maintain for the exercise of the option.
Michael Shetzline: And so we'll need to sort of get that data through the study. There are obviously labs that will be drawn from the study. And we do hope that integrating all that clinical data will give us clear decision-making for the exercise of the option.
Okay. Thanks for taking my question.
Unknown Attendee: Great, thanks for taking the question.
Thank you.
Operator: Your next question comes from a line David Levowitz from Morgan Stanley. Your line is open.
Your next question comes from the line of David Lebowitz from Morgan Stanley. Your line is open.
Unknown Attendee: Good morning. Thank you very much for taking the time. When you look at asset MP 104, could you tell us a little bit more about the indication, how it is currently managed? How is it actually how impactful it is on these individuals' day-to-day lives?
Good thank.
Thank you very much.
When you look at the assets and Pete.
One O four I guess can you tell us a little bit more about the indication how is it currently managed how is it.
How is it actually.
How impactful it is on on on these individuals day to day lives.
Michael Shetzline: Mike, do you want to take this? Sure.
Like do you want to take that sure. So PVC is it very chronic and debilitating disease Uhm. It's helpful. Not uncommonly at progressive to a degree of liver function liver dysfunction, and piled up destruction that can ultimately lead to the need for the.
Michael Shetzline: Sure. PBC is a very chronic and debilitating disease. It not uncommonly progresses to a degree of liver function, liver dysfunction, and biodeck destruction that can ultimately lead to the need for a liver transplant. So it's a very serious medical condition. On the way to that, patients suffer very clinically detrimental fatigue and puritis, and the itching can be quite debilitating.
A a transplant.
So it's a very serious medical condition uhm on the way today.
<unk> suffer very clinically detrimental.
<unk> and Pra's itchy and can be quite debilitating uhm and the current therapies.
Michael Shetzline: And the current therapies are urso-biacolic acid, called Urso, and then for erso failures, poor people who are intolerant, they can take Ocalaiva. So those current therapies are bile acid derivatives. So they help.
Diet coke acid.
So and then four or so failures.
Or people and tolerance they can take ocarina. So this current therapies or by a acid derivatives. So they helped increase the liver I'll slow. So note that when we talk about what's happening in the liver to patients with PVC again.
Michael Shetzline: increase liver bile flow. So note that when we talk about what's happening in the liver to patients with PVC, they get bioduct destruction, they get fibrosis, and that impedes the flow of bile through the liver, through the bile ducts, and out into the digestive system. And that impeded bioflow is one of the things that drives some of the symptoms. But again, it's more managing that through bioflow. Those therapies do not treat the underlying cause of the disease, which is the immune destruction of the bioluct cells.
Destruction, they get fibrosis and that impedes the flow of liver through deliver the vial docks and out into the digestive system and that and Peter into the microphone was one of the things that drives some of the symptoms, but again, it's for managing that through bio Flo therapies do not treat the underlying cause of the disease.
Is when she sat immune destruction of the bile duct cells and that's with CMP is targeted to do.
Michael Shetzline: And that's what CMP 104 is targeted to do. By taking the PDC-2 antigen, its goal is to re-educate the immune system or how the body responds to that antigen, whereas in the PBC patient, it would destroy it. The biodecs By re-educating the T-cells, therapy has the potential to eliminate that destruction or reverse that destruction and provide a better immune profile, meaning that biodeck destruction could potentially cease. And patients should have a very clear disease-modifying and much better course and may even obviate the disease course if it were to completely reprogram the T-cells.
Taking the PDC <unk> antigen. It's goal is to re educate the immune system or how the body responds does that antigen, whereas isn't PVC patient and would destroy the file ducks I reeducating. The T cells therapy has the potential to <unk>.
Renee and destruction or reverse that destruction and provide a better immune profile.
I'll bet destruction potentially cease and patient should have it very clear disease, modifying and much better course and made an obviate the disease course, if it works it completely <unk>.
Three program the T cells.
Unknown Attendee: If you had to look at the landscape right now and other drugs in development for PBC, how do you see this therapy as compared to them in terms of promise?
Look at the landscape right now in other drugs in development for PVC.
How do you see this.
B as as compared to them in terms of promise.
Michael Shetzline: Yeah, so along the same lines, many of the therapies that are even being considered, like fibrinates and such, still focus on that bile acid mechanism or their bile acid mimics. So they still try to approach the PBC patient from just enhancing bioflow through the liver. So really, that competitive landscape is pretty much consumed by assets that improve liver flow but don't really get to the underlying mechanism of T-cell destruction.
Yes, along the same lines many of the things that are even being considered like <unk> and such still focused on that.
File acid mechanism board there by unless it mimics so they still try that approach to PVC patient from just enhancing Bios those who deliver so really that competitive landscape has pretty much consumed by H asset set improve liver flow, but don't really get to the underlying mechanism.
The T cell destruction.
Thomas A. McCourt: Yeah, and I think, you know, as we've talked to a number of hepatology experts, this identification of the antigen and the specificity of the target, they're very excited about this as being really the first disease-modifying agent that we've been able to have, and certainly will be. It could be a real breakthrough for patient treatment. So, you know, I think, you know, David, we're very excited about the opportunity for this to be a game changer and really position us to do it all. All alone, you know, in this space.
Yeah, and I think we've talked to a number of the herpetology experts.
This identification of the antigen specificity.
Specificity of the target.
They're very excited about this as being really the first disease modifying agents that we've been able to have and certainly we will be it could be a real breakthrough for patient treatment. So yeah I think they.
We're very excited about the opportunity for this to be a game changer and really be really position all alone in this space.
Unknown Attendee: And last question on as far as moving forward, what would we expect on, I guess, the path to market as far as what trials are needed and in time?
And last question on our path forward.
What would we expect on I guess the path to market.
Michael Shetzline: Mike, as far as the trials are concerned, will they not be required to get the drug approved? Yeah, sure.
As far as what trials are needed and timing.
Mike as far as the trials are required to get the drug approved yes sure. So clearly this is the initial study.
Michael Shetzline: So clearly, this is the initial study, as we've proposed, and we're going to really need that data set to understand the benefit of risk, carrying that clinical data with the platform demonstrated to be safe and well tolerated. This is a new patient population, PBC patients, so this will be new data in that patient population. But we'll absolutely need to see the data from this initial study to really inform what the next subsequent studies would be like.
<unk> purpose.
And we're going to really need that dataset to understand that the risk that carries that clinical data with the platform at demonstrated to be safe and well tolerated as a new patient population TBC patient so.
This will be new data and that patient population, but will absolutely need to see the data for this initial study really inform with the next subsequent studies would add a just how they will be design and also obviously have an engagement with the agency, but this isn't sort of an orphan and rare type disease, which means usually we have options.
Michael Shetzline: be designed and also obviously have an engagement with the agency. But this is sort of an orphan and rare type disease, which means usually we can have options that could be more expeditious to market, but again, it is premature today to sort of get too granular and go out without any data in patients.
That could be more expeditious.
Two two market, but again it is premature today to sort of get too granular that without any data and patients. Yes, I think David that's one of the home goods also attracted to us as.
Thomas A. McCourt: Yeah, I think David, that's one of the things.
Thomas A. McCourt: That's one of the things that's also attractive to us is, you know, with, you know, the potential designation by the FDA for accelerated, you know, review as a priority, the time to market looks also could quite be, depending on the clinical outcome of this study, could really be attractive. And it's part of the reason why we see significant value here as we move forward.
With the potential designation by the FDA for accelerated.
Review as a priority.
Time to market looks also could could be depending on the clinical outcome of this study could really be attractive.
As part of the reason why we see a significant value here as we move forward.
Unknown Attendee: I got it. Thank you for taking my question.
Got it thank you for taking my question.
Operator: Again, if you would like to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from Tim Chang from Northland Capital. Your line is open, I think.
Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad. Your next question comes from the line of Kim Chang from Northland Capital. Your line is open.
Unknown Attendee: I'm just looking at the core website, and I guess their target for data would be the first quarter of 2023, and I just wanted to sort of go back. Are there, is there orphan drug status already with this CNP 104?
Hi, Thanks mm mm.
I'm just looking at the core website and I guess there target for data would be the first quarter of 2023 and I just wanted to.
Sort of.
Go back.
Are there.
Is there orphan drug status already with this C N P. One O four.
Michael Shetzline: Mike? Yeah, I think they have orphaned drug staff. I have to confirm that, but I think that's the case.
Yeah.
Dave orphanage access at that confirm that but I think that's the case.
And.
I was also looking at the critical of website and it looks like the inclusion criteria for this phase two a study I guess, it's is it treatment failures patients that have failed on.
Unknown Attendee: And I was also looking at the clinical trial's website, and it looks like the inclusion criteria for this phase-to-a study are treatment failures, patients that have failed on, I guess, standard of care. Is that right?
Michael Shetzline: Yeah, it's in patients who have failed either Erso or intolerant Erso and or Okoliva. And Okoliva is currently available for people who can't tolerate or fail Erso. And again, they're the biol acid derivatives that I mentioned earlier.
I guess standard of care is that right.
Yeah said patients who have failed either aircell or.
Or intolerant ourselves and or I OCA leader and hopefully is currently available for people, who can't tolerate or fail of herself and again that a vial acid derivatives today mentioned earlier.
Unknown Attendee: What is the failure rate with current meds? Is it pretty high?
What is the failure rate with current meds is it is it pretty high.
Michael Shetzline: Yeah, it's a range, so it's up to potentially 40%. But I think it's important to understand that even with patients on Erso or Oglevaa, this mechanism is very much synergistic in terms of it wouldn't, if this first asset proved successful and we could polarize the immune system, then clearly that benefit applies to people even on Herzoglava or even on El-Golivit. Now, we'll stop to do studies to demonstrate that. I may be wrong, but I'm really trying to distinguish the fact that this immune-modifying profile is distinct and unique from what patients get when they take Erso.
Yeah, it's it's a range of potentially 40%, but I think it's important to understand that even with patients are silver believe that this mechanism is very much synergistic in terms of it wouldn't if this at first asset proves successful and we can holler.
I see new system, then clearly that benefit applies to people even on her so or even a milk or leave it and it will start to do studies to demonstrate that don't get me wrong, but I'm really trying to distinguish the fact that this and nin modifying profile is distinct and unique from what patients get when they take.
Lisa.
I think <unk>.
The piece of this is.
Thomas A. McCourt: I think, Tim, the piece of this is, this could be this disease-modifying agent that obviously, initially will probably look at, you know, in those failures. When you think about how debilitating and problematic PBC is, you know, there's certainly an opportunity for these two treatments, as Mike mentioned, to work together, you know, and over time, it would probably be pulled up into earlier therapy. So if it can indeed, you know, be a disease-modifying agent.
As could be this disease modifying agents that obviously and initially we'll we'll probably look at in those failures do you think about how debilitating and problematic PVC is.
Certainly an opportunity for these two treatments as Mike mentioned to work together.
Over time, it would probably be pulled up into earlier therapy. So if it can indeed be a disease modifying agents.
Unknown Attendee: Okay. And on the BD front, I mean, obviously, you're looking for additional assets to bring in on the pipeline side.
Alright.
Okay, and I guess on the B D front I mean, obviously, you're looking for additional assets to bring in on the pipeline. The side I think I think you had mentioned Cvs disease previously.
Unknown Attendee: I think you had mentioned Celiac disease previously. Is that still an area of interest? Yeah, it is. Yeah, we've talked about it, and certainly,
Billing area of interest.
Yes. It is.
We've talked about and certainly.
Thomas A. McCourt: Yeah, it is. You know, we've talked about, and certainly, you know, pancreatitis; we've talked about filiac disease, which is, you know, an area of interest. There's a lot of activity in this space that looks attractive in addition to, you know, this opportunity in PBC.
Uhm pancreatitis, we've talked about affiliate disease, which is in an area of interest.
A lot of activity in the space that look attractive in addition to this opportunity and PVC.
Okay, great. Thanks.
Based on.
Operator: And there are no further questions at this time. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Hey, there are no further questions at this time. This concludes today's conference call. Thank you for your participation you may now disconnect.
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