Q2 2022 Ironwood Pharmaceuticals Inc Earnings Call
Operator: Please wait, the conference will begin shortly.
Please wait the conference will begin shortly.
Stephanie: Good morning, my name is Stephanie, and I will be your conference operator today.
Tom Mccourt: We continue to focus on strengthening our pipeline through in-license or acquisition
Mike Schetzlein: We're currently working to finalize the study design for the proof-of-concept study,
David Ansellem: Thank you.
Tom Mccourt: And
Tom Mccourt: And keep in mind, we've continued to refine
Tom Mccourt: And we just really want to be disciplined with regard to how we think
[music].
Okay.
Good morning, My name is Stephanie and I will be your conference operator today.
Stephanie: At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals second quarter 2022 investor update conference call.
Tom Mccourt: of innovative GI assets as we believe it will position our company for continued growth.
Mike Schetzlein: which we are targeting to start the end of this year.
Tom Mccourt: we're very pleased with the progress we're making and the ongoing collaboration and dialogue with both our partner as well as the FDA.
Tom Mccourt: the marketing mix with regard to the level of investment, both with regard to professional
Tom Mccourt: about allocation of our capital.
At this time I would like to welcome everyone to the ironwood from it.
Second quarter 2022, Investor update Vince Com.
All lines have been placed mute cheap.
To prevent any background noise. After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time.
Press Star then the number one on your telephone.
If you would like to withdraw your question press the star one.
Sravan Amani: Morning, David.
Matt Roche director of Investor Relations you May begin your conference.
Stephanie: All lines have been placed on mute to prevent any background noise.
Tom Mccourt: Mike will provide an update of our pipeline in a few minutes.
Mike Schetzlein: And finally, CMP104.
Sravan Amani: This is Sravan.
Thank you Stephanie.
Tom Mccourt: And finally, we continue to deliver sustained profits in cash flow.
Tom Mccourt: Yeah, we clearly have regulatory precedent in terms of OTC approaches for occasional
Tom Mccourt: promotion, DTC, and certainly, you know, one of the real key investments is payer access,
Boris Peeker: Great.
And thanks for joining us for our second quarter 2022 Investor update.
Our press release issued this morning can be found on our website.
Today's call and accompanying slides include forward looking statements such.
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 annual report on Form 10-K for the year ended December 31, 2021, and in our future SEC filings.
All forward looking statements speak as of the date of this presentation.
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 to.
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 GAAP measures.
Mike Schetzlein: CORE Pharmaceuticals is currently conducting a clinical trial for CMP104, and the top-line
Sravan Amani: First, let's have Mike
During today's call Tom Mccourt, our CEO , who will review our strategic priorities and provide an update on the commercial performance of Linzess.
Mike <unk>, our Chief Medical Officer will discuss our pipeline and strengthen our money our Chief Financial Officer will review, our financial results and guidance.
Today's webcast includes flags so for those of you dialing in please go to the events section of our website to access the accompanying slide separately with that I will turn the call over to Tom. Thanks, Matt Good morning, everyone and thanks for joining us today as we share our second quarter results the positive momentum across our business continued in <unk>.
Stephanie: After the speaker's remarks, there will be a question and answer session.
Tom Mccourt: consultation with products like Miralek.
Tom Mccourt: which really drive, you know, near-term and long-term growth for the brand.
Boris Peeker: Thank you very much.
Stephanie: If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad.
Tom Mccourt: We ended Q2 with over $500 million in cash and cash equivalents on the balance sheet
Mike Schetzlein: data is on track to read out in 2023.
Sravan Amani: respond to your first point about
Tom Mccourt: So we've had some, you know, preliminary
Tom Mccourt: Hopefully that answers your question, David.
Operator: Again, if you would like to ask a question, please press star,
Stephanie: If you would like to withdraw your question, again, press the star one.
Tom Mccourt: after repaying our 2022 convertible notes in cash and completing our share repurchase
Mike Schetzlein: We're happy with the progress to date, working in partnership with CORE to get the study
Sravan Amani: the PEDS question, and then I'll handle the question on commercial margin thereafter.
David Ansellem: Okay, thank you.
Quarter as demonstrated by a robust linzess prescription demand growth the advancement of our clinical programs completion of our share repurchase program and repayment of our 2022 convertible notes. The progress we made in the second quarter is a direct result of hard work and strong execution from the team along.
Mike Schetzlein: Yep, sure.
Operator: All right, great.
Long with our shared commitment to advancing treatment and Gi diseases, redefining standard of care and Gi and bringing important medicines to our patients. Our mission is to become the leading GI health care company in the U S.
Stephanie: Thank you, Matt Roache, director of investor relations.
Tom Mccourt: program during the quarter.
Mike Schetzlein: sites activated and begin enrolling patients.
Mike Schetzlein: So the current study that you're alluding to, the 6- to 17-year-old functional constipation,
Tom Mccourt: discussions, including with our partners.
Operator: Again, if you would like to ask a question, please press star, then the number one on your
Operator: then the number one on your telephone keypad.
No I'll start with a brief overview of our strategic priorities on slide six.
Matt Roache: You may begin your conference.
Mike Schetzlein: certainly adds additional support to the overall safety and tolerability of
Tom Mccourt: So I think we are in a good position to
Operator: telephone keypad.
Operator: There are no further questions at this time.
Our strategy starts with maximizing linzess.
Matt Roache: Thank you, Stephanie.
Mike Schetzlein: the use of LIS-S in patients certainly under the age of 18.
Tom Mccourt: carry that forward.
Operator: Your next question comes from Boris Peeker with Cohen.
Since launch nearly 10 years ago Linzess continues to experience remarkable prescription demand growth and widespread acceptance among health care practitioners as a leading prescription treatment for adults with Ibs C in chronic idiopathic constipation.
Matt Roache: Good morning, and thanks for joining us for our second quarter 2022 investor update.
Mike Schetzlein: And you recall, and I think the basis of your question was at launch,
Tom Mccourt: And it's a continued program that we have.
Boris Peeker: Your line is open.
We're proud to report the brand recently surpassed 4 million unique patients treated since launch in 2012.
Mike Schetzlein: we had a box warning that encompassed all the pediatric patients from those 18 and below.
Tom Mccourt: And then, David, I'll start with your second question.
Boris Peeker: Hi, great.
In the second quarter, Linzess prescription demand increased 9% versus the prior year quarter and Linzess achieved an all time high in new to brand prescription volume as patients and prescribers turned to linzess to treat their ibs C or chronic idiopathic constipation symptoms.
David Ansellem: First of all,
Boris Peeker: Thanks.
The first half of 2020 to Linzess prescription demand has performed in line with expectations with double digit prescription demand growth year over year. We believe there is still significant opportunity to reach appropriate new patients and drive additional prescription growth for the brand.
In addition to the commercial success of Linzess, we continued to make progress with our ongoing clinical trials.
Mike Schetzlein: So over the years, we've done a number of studies in pediatric patients,
We now expect our phase III pediatric study and six to 17 year olds with functional constipation to read out in the third quarter. This year and we remain on track with previously shared data readout timing for IW, three 300 and C. N P. One O four.
Mike Schetzlein: including patients 7- and 17-year-olds with IBS, 6- to 17-year-olds with functional constipation, a prior study, a phase 2 study,
We continue to focus on strengthening our pipeline through in license or acquisition of innovative Gi assets as we believe it will position our company for continued growth micro.
Mike will provide an update of our pipeline in a few minutes.
And finally, we continue to deliver sustained profits and cash flow.
We ended Q2 with over $500 million in cash and cash equivalents on the balance sheet. After repaying our 2022 convertible notes in cash and completing our share repurchase program during the quarter.
Tom Mccourt: We're pleased with the progress across our three strategic priorities and believe we
Mike Schetzlein: in addition to the one we're talking about now, and also a study in 2- to 5-year-olds.
David Ansellem: we're really pleased about our progress on commercial margin overall and how we're
We're pleased with the progress across our three strategic priorities and believe we will continue to position ourselves for growth moving forward.
Tom Mccourt: will continue to position ourselves for growth moving forward.
Tom Mccourt: Now let's turn to some additional details on the commercial performance of Linzess on
Mike Schetzlein: That actually got us a
David Ansellem: managing expenses.
Boris Peeker: This is Nikon for Boris Peeker.
Operator: Thanks, everyone, for joining today.
Now, let's turn to some additional details on the commercial performance of Linzess on slide seven.
Operator: This concludes today's conference call. You may now disconnect.
Tom Mccourt: slide 7.
Mike Schetzlein: revision of the box, which now only includes
Boris Peeker: I just have two questions.
Operator: Please wait.
Mike Schetzlein: kids less than 2 years of age.
Tom Mccourt: Linzess continues to perform exceptionally well, powered by both new patient and refill
Mike Schetzlein: So this study specifically addresses the 6- to 17-year-old population.
David Ansellem: I'll start by answering your question about where we are today with respect to
Boris Peeker: First is on
Linzess continues to perform exceptionally well powered by both new patient and refill volume.
Tom Mccourt: volume, further reinforcing its position as the number one prescribed branded medicine
Mike Schetzlein: So we've actually had that change in relation to a submission we did with the agency last year with the aggregate data
Boris Peeker: IW3300.
Further reinforcing its position as the number one prescribed branded medicine in the U S for the treatment of adults with Ibs C and chronic idiopathic constipation.
Tom Mccourt: in the U.S. for the treatment of adults with IBSV and chronic idiopathic constipation.
Mike Schetzlein: I just mentioned.
Boris Peeker: I was wondering if we're going to, if we should expect to see some data from this phase
Boris Peeker: one trial, whether it be safety data or whatnot before the initiation of the phase two trial.
Tom Mccourt: As I mentioned earlier, Linzess prescription demand in the second quarter grew 9% year
Mike Schetzlein: But certainly additional data in that patient population is always helpful.
Boris Peeker: And then my second question is, what is your guys' strategy right now on like potentially
As I mentioned earlier Linzess prescription demand in the second quarter grew 9% year over year.
Tom Mccourt: over year.
Mike Schetzlein: As
Tom Mccourt: We believe high single-digit demand growth is impressive, particularly relative to the
We believe high single digit demand growth is impressive, particularly relative to the 14% demand growth achieved during the second quarter in 2021.
Tom Mccourt: 14% demand growth achieved during the second quarter of 2021 as the market recovered from
As the market recovered from the COVID-19 pandemic.
Tom Mccourt: the COVID-19 pandemic.
Tom Mccourt: Overall, the strong double-digit year over year Linzess demand growth for the first half
Overall, the strong double digit year over year Linzess demand growth for the first first half of 2022 is in line with our expectations for the full year. In addition, 90 day prescriptions have grown as a percentage of total retail prescriptions now, making up 21% of total prescriptions.
Tom Mccourt: of 2022 is in line with our expectations for the full year.
Tom Mccourt: In addition, 90-day prescriptions have grown as a percentage of total retail prescriptions,
Tom Mccourt: now making up 21% of total prescriptions.
This has led to an all time high in the average size of prescriptions.
Tom Mccourt: This has led to an all-time high in the average size of prescription.
Turning to slide eight the impressive growth in Linzess prescription demand is a reflection of the strong clinical profile.
Tom Mccourt: Turning to slide 8, the impressive growth in Linzess prescription demand is a reflection
David Ansellem: commercial margin, and then talk a little bit about where we're going and where we think we'll
Tom Mccourt: of the strong clinical profile, focused investment in both consumer and professional promotion,
David Ansellem: head with the company.
David Ansellem: You know, first point is, year-to-date commercial margins are 71%
Focused investment in both consumer and professional promotion and class leading payer access.
Tom Mccourt: and class-leading payer access.
Tom Mccourt: As a result of our efforts to maximize Linzess, total prescription share at the end of the
David Ansellem: through June 2022, compared to 72% through June 2021 prior year.
As a result of our efforts to maximize Linzess total prescription share at the end of the second quarter was 44% an all time high for the brand over the past year Linzess has grown share approximately two points within the branded and generic Ibs C in chronic idiopathic constipation market.
Tom Mccourt: second quarter was 44%, an all-time high for the brand.
David Ansellem: And a commercial margin,
Tom Mccourt: Over the past year, Linzess has grown share approximately two points within the branded
David Ansellem: you know, can fluctuate quarter to quarter based on timing of expenses throughout the year.
Tom Mccourt: New prescription share has also increased, further strengthening the market leadership position
David Ansellem: As a reminder, for everyone out there, the second quarter tends to be the largest
New prescription share has also increased further strengthening the market leadership position with Linzess.
Tom Mccourt: of Linzess.
David Ansellem: commercial investment of the year due to the timing of the DTC launches and where we spent,
Now slide nine.
In addition to being the branded prescription market leader in Ibs D. In chronic idiopathic constipation, the clinical importance of Linzess was further acknowledged in the quarter and updated treatment guidelines.
Tom Mccourt: Now slide nine.
David Ansellem: where we have our commercial spend in the year.
Tom Mccourt: In addition to being the branded prescription market leader in IBSD and
On June 20th Linzess receive a strong recommendation from the American Gastroenterology Association for the treatment of Ibs C supported by a high level of evidence.
Tom Mccourt: chronic idiopathic constipation, the clinical importance of Linzess was further acknowledged
Linzess was the only treatment to receive a strong recommendation for the treatment of adults with Ibs C and the updated <unk> treatment guidelines.
Tom Mccourt: in the quarter in updated treatment guidelines.
Tom Mccourt: On June 20th, Linzess received a strong
Howard for reinforcement that Linzess can help millions of adults living with a highly frustrated symptoms of Ibs C.
Tom Mccourt: recommendation from the American Gastroenterological Association for the treatment of IBSD supported
Tom Mccourt: by a high level of evidence.
These guidelines are a critical tool to help physicians provide evidence based care for their patients and we will work to communicate this update during our ongoing interaction with our customers.
Finally, we are committed to advancing the lifecycle management program for Linzess to broaden the clinical utility for the brand and help and help even more patients in need of treatment.
We are excited about the strong position we're in today and the opportunities ahead of us as we seek to continue to maximize linzess advanced clinical programs strengthened our financial position and grow ironwood's leadership within Gi.
We strive to lead the way in Gi both through innovative Gi therapeutics and also in our contributions to the broader Gi community.
Over the next few days Ironwood will be sponsoring the young investigator form at the 2022 American neuro Gastroenterology and mortality the society annual meeting or a N and M S.
We also had the honor of sponsoring the E and M. S. Ironwood diversity award and we hope to see some of you there.
Thanks, as always to the employees patients and shareholders for all your support.
Boris Peeker: expanding the pipeline further beyond core and beyond TMP104 and beyond IW3300?
I will now like to hand, it over to Mike to discuss our pipeline programs, Mike. Thanks, Tom and good morning, everyone. We continue to make good progress across our three pipeline programs I'll start with little appetite pediatric program on slide 11, the clinical study in six to 17 year olds with functional constipation was well executed.
Mike Schetzlein: we move forward with the clinical program in pediatric, we have additional studies we're doing.
Boris Peeker: Thanks.
Mike Schetzlein: We're kicking off another study now in 2- to 5-year-olds in the near term with our partner AbbVie.
Boris Peeker: Sure.
Mike Schetzlein: So all that data will be pulled together with the ultimate goal to have an engagement with the agency in the future for further
Boris Peeker: Thanks.
<unk> enrollment on time, and we now expect top line data in the third clear. This is an exciting opportunity to potentially expand the clinical utility of Linzess and assuming positive data and FDA approval, bringing a new treatment option to this patient population as there are currently no FDA approved prescription pediatric therapies for functional constipation.
Boris Peeker: And look, Mike, why don't you handle the first question again on IW3300
Next we're advancing IW 1300, <unk> <unk> agonist and our wholly owned ironwood asset for the potential treatment of visceral pain conditions, such as interstitial cystitis bladder pain syndrome in endometriosis, we have completed the studies in healthy volunteers, which will enable us to begin the phase II proof of concept study.
Boris Peeker: and our plan there, and then I'll address the second.
Mike Schetzlein: Yeah, sure.
Mike Schetzlein: So the phase one program for IW3300 was in Healthy Volunteers.
Focusing on the potential pain benefits of IW 300 for patients suffering from interstitial cystitis bladder planes pain syndrome.
We're currently working to finalize the study design for the proof of concept study, which we are targeting to start the end of this year.
And finally <unk> clear Pharmaceuticals is currently conducting a clinical trial for <unk> and the topline data is on track to read out in 2023.
We're happy with the progress to date working in partnership with <unk> to get the study sites activated and begin enrolling patients when we speak to investigators they're excited about of course novel approach, which combines the PDC two antigen with state of the art state.
Mike Schetzlein: When we speak to investigators, they're excited about CORE's novel approach, which combines
Mike Schetzlein: the PDCE2 antigen with state-of-the-art pharmaceutical nanoparticles to tolerate the immune system
State of the art pharmaceutical nanoparticles to tolerate the immune system and potentially eliminate the bile duct destruction that is that the cooler of primary biliary cholangitis.
Mike Schetzlein: and potentially eliminate the bile duct destruction that is at the core of primary biliary cholangitis.
Mike Schetzlein: We believe CMP104 has the potential to significantly shift the treatment paradigm in PBC, target
We believe <unk> has the potential to significantly shift the treatment paradigm in PBC target the root cause of PBC and if successful will be the first truly disease modifying therapy for patients.
Mike Schetzlein: the root cause of PBC, and, if successful, be the first truly disease-modifying therapy
Mike Schetzlein: for patients.
Mike Schetzlein: With that, I'll now turn it over to Shrevan to review our financial performance.
With that I'll now turn it over to <unk> to review our financial performance.
Shrevan Amani: Thanks, Mike.
Thanks, Mike.
Shrevan Amani: Hello, everyone, and a pleasant Thursday morning to you, wherever you may be.
Mike Schetzlein: discussions about the box and the appropriate language for pediatric patients.
Mike Schetzlein: It was a single
The conference will begin shortly.
Hello, everyone, a pleasant Thursday morning to wherever you may be I will begin by really Iterating Toms earlier commentary.
Tom Mccourt: Linzess was the only treatment to receive a strong recommendation for
Shrevan Amani: I will begin by reiterating Tom's earlier commentary.
David Ansellem: So second quarter commercial margins for 2022
Mike Schetzlein: ascending dose study as well as a multiple ascending dose studies. Both of those studies
Tom Mccourt: the treatment of adults with IBSD in the updated AGA treatment guidelines, a powerful reinforcement
Tom Mccourt: that Linzess can help millions of adults living with the highly frustrated symptoms of IBSD.
Tom Mccourt: These guidelines are a critical tool to help physicians provide evidence-based care for their
Tom Mccourt: patients, and we will work to communicate this update during our ongoing interaction with our
Shrevan Amani: We are delighted with our strong first-half performance, driven by continued impressive
Mike Schetzlein: were completed on time.
Delighted with our strong first half performance driven by continued impressive linzess demand growth.
Tom Mccourt: customers.
Shrevan Amani: Lindsay's demand growth.
Tom Mccourt: Finally, we're committed to advancing the lifecycle management program for Linzess to
Shrevan Amani: Based on our performance to date, we remain on track to achieve the guidance we put forth
Mike Schetzlein: But we remain confident in the safety and tolerability in this patient population because all studies to date have demonstrated
Mike Schetzlein: Both of those studies did not demonstrate any concerns that make
Based on our performance to date, we remain on track to achieve the guidance, we put forth at the beginning of this year. Please refer to our press release for a detailed financial information.
Tom Mccourt: broaden the clinical utility for the brand and help even more patients in need of treatment.
Mike Schetzlein: any issues for us to complicate proceeding to starting the POC study at the end of this year.
Tom Mccourt: We are excited about the strong position we're in today and the opportunities ahead of us as we
Shrevan Amani: at the beginning of this year.
Mike Schetzlein: So we're going through that data now, and we certainly are having discussions on how to
Tom Mccourt: seek to continue to maximize Linzess, advance clinical programs, strengthen our financial
Matt Roache: Our press release issued this morning can be found on our website.
Shrevan Amani: Please refer to our press release for our detailed financial information.
Mike Schetzlein: disseminate that data, but we clearly will put it in the public domain.
Matt Roache: Today's call and accompanying slides include forward-looking statements.
Shrevan Amani: Now to slide 13.
Mike Schetzlein: You may know those trials
Now to slide 13, Linzess U S. Net sales were $248 million in the second quarter of 2022, a 4% decrease compared to the second quarter of 2021.
Matt Roache: Such statements involve risks and uncertainties that may cause actual results to different materials.
Shrevan Amani: Lindsay's U.S. net sales were $248 million in the second quarter of 2022, a 4% decrease
David Ansellem: were also impacted by lower net sales in the quarter, which was primarily driven by unfavorable
Mike Schetzlein: are registered in clintrials.gov.
Mike Schetzlein: Even though they're Healthy Volunteer studies, we're not
Mike Schetzlein: obligated to put that data just because they're phase one in Healthy Volunteers,
Matt Roache: 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 annual report on form 10-K for the year ended December 31st, 2021, and in our future SEC filings.
Shrevan Amani: compared to the second quarter of 2021.
David Ansellem: inventory fluctuations. We don't expect those inventory fluctuations to have material impact
Mike Schetzlein: but we are committed to disseminating the data publicly.
Matt Roache: All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements.
Shrevan Amani: Strong Lindsay's prescription demand growth was more than offset by net price decline
David Ansellem: on the full year, as we've said earlier, but those fluctuations had an impact in this quarter.
Mike Schetzlein: So we certainly will take that
Strong linzess prescription demand growth was more than offset by net price declining and inventory fluctuations versus prior year.
Matt Roache: 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.
Shrevan Amani: and inventory fluctuations versus prior year.
David Ansellem: And so where we stand, you know, we feel like we're on track to hit our guidance for profitability for
Mike Schetzlein: opportunity.
Matt Roache: 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 GAAP measures.
Shrevan Amani: Net price was anticipated per our previously provided guidance, and inventory channel fluctuations
Net price was anticipated for our previously provided guidance inventory channel fluctuations are not expected to have a material impact on net sales for the full year.
Shrevan Amani: are not expected to have a material impact on net sales for the full year.
Shrevan Amani: In the first half of 2022, prescription demand is up 10% year-over-year, and net sales growth
David Ansellem: the year.
Mike Schetzlein: Great.
In the first half of 2022 prescription demand is up over.
He is up 10% year over year and net sales growth is up 1% year over year.
Shrevan Amani: is up 1% year-over-year.
Shrevan Amani: For the full year, we continue to expect Lindsay's U.S. net sales growth in the low single digits
For the full year, we continue to expect Linzess U S. Net sales growth in the low single digits, driven by double digit prescription demand growth.
Shrevan Amani: driven by double-digit prescription demand growth, turning to Lindsay's brand profitability.
Turning to Linzess brand profitability.
Shrevan Amani: Total margin in the second quarter of 2022 was 69%, compared to 72% in the second quarter
Commercial margin in the second quarter of 2022 was 69% compared to 72% in the second quarter of 2021.
Shrevan Amani: of 2021.
Matt Roache: During today's call, Tom McCourt, our CEO, will review our strategic priorities and provide an update on the commercial performance of Linzess.
Tom Mccourt: position, and grow Ironwood's leadership within GI.
Shrevan Amani: Moving to Ironwood revenues.
David Ansellem: And then with respect to long-term and where we expect, you know, where we are from a
Mike Schetzlein: And so on the piece on strategy, I'll start by saying that I think
Moving to Ironwood revenues in the second quarter of 2020 to Ironwood revenues were $97 million driven primarily by U S. Linzess collaboration revenues of $94 million.
Shrevan Amani: In the second quarter of 2022, Ironwood revenues were $97 million, driven primarily by U.S.-Lindsay's
Shrevan Amani: collaboration revenues of $94 million, turning to income tax expense.
Turning to income tax expense.
Shrevan Amani: During the second quarter of 2022, Ironwood recorded $17 million of income tax expense.
During the second quarter of 2020 to Ironwood recorded $17 million of income tax expense.
Shrevan Amani: Ironwood will continue to record tax expense on our P&L at our effective tax rate throughout 2022.
We will continue to report.
Tax expense on our P&L and our effective tax rate throughout 2022.
Matt Roache: Mike Schetzlein, our Chief Medical Officer, will discuss our pipeline, and Shrevan Amani, our Chief Financial Officer, will review our financial results and guidance.
Tom Mccourt: We strive to lead the way in GI, both through
Shrevan Amani: As a reminder, Ironwood has significant net operating loss carry-forwards from prior years,
As a reminder, ironwood has significant net operating loss carryforwards from prior years and therefore, the majority of our income taxes will be a non cash expense as we use our net operating losses.
Shrevan Amani: and therefore the majority of our income taxes will be a non-cash expense as we use our net
Shrevan Amani: operating losses.
Tom Mccourt: innovative GI therapeutics and also in our contributions to the broader GI community.
Shrevan Amani: Moving to Ironwood's profitability.
David Ansellem: brand perspective and where we want to go, you know, we're constantly evaluating.
Moving to ironwood's profitability.
Shrevan Amani: As a reminder, second quarter 2021 GAAP net income included $338 million non-recurring
As a reminder, second quarter 2021, GAAP net income included $338 million nonrecurring income tax benefit related to the release of the valuation allowance GAAP net income was $37 million and adjusted EBITDA was $56 million in the second quarter of 2020.
Shrevan Amani: income tax benefit related to the release of the valuation allowance.
Matt Roache: Today's webcast includes slides, so for those of you dialing in, please go to the events section of our website to access the accompanying slides separately.
Shrevan Amani: GAAP net income was $37 million, and adjusted EBITDA was $56 million in the second quarter of 2022.
Matt Roache: With that, I'll turn the call over to Tom.
Shrevan Amani: Next.
David Ansellem: We're always
Next.
Tom Mccourt: Thanks, Matt.
Shrevan Amani: Our cash and capital allocation priorities on slide 14.
David Ansellem: looking with our partner where and how we can fine-tune and improve those margins.
Shrevan Amani: we're going to continue to take a balanced approach to capital deployment.
Shrevan Amani: In the second quarter, we generated $61 million in cash flow from operations and ended the quarter with $504 million in cash and cash equivalents.
Our cash and capital allocation priorities on slide 14.
Second quarter, we generated $61 million in cash flow from operations and ended the quarter with $504 million in cash and cash equivalents.
Shrevan Amani: In May, we completed our $150 million share repurchase program. For the overall program, under which repurchases commenced in December 2021, Ironwood repurchased 13.1 million shares at an average price per share of $11.47, approximately 8% of our Class A common stock.
David Ansellem: We do think
Shrevan Amani: We believe
In May we completed our $150 million share repurchase program.
For the overall program under which repurchases commenced in December 2021, Ironwood repurchased $13 1 million shares at an average price per share of $11 47.
Approximately 8% of our class a.
Common stock.
Shrevan Amani: In addition, in June, we repaid the remaining $121 million aggregate principal amount of the 2022 convertible notes in full. And as of June 30, 2022, we now have $400 million in convertible notes outstanding.
In addition.
<unk>.
In June we repaid the remaining $121 million.
Aggregate principal amount of the 2022 convertible notes in full.
And as of June 32022, we now have $400 million in convertible notes outstanding.
Tom Mccourt: Over the next few days, Ironwood will be sponsoring the Young Investigator Program
Shrevan Amani: Over the past 12 months, Ironwood has deployed roughly $270 million in capital to strengthen our financial position.
Shrevan Amani: we're positioned in the company for future success, which includes maximizing LMS growth
Tom Mccourt: at the 2022 American Neurogastroenterology and Motility to Society Annual Meeting, or ANMS.
Over the past 12 months Ironwood has deployed roughly $270 million in capital to strengthen our financial position.
Our capital allocation priorities include investing to maximize linzess and actively pursuing innovative highly differentiated gi assets to add to our portfolio we.
Tom Mccourt: Good morning, everyone, and thanks for joining us today as we share our second quarter results.
Tom Mccourt: We also have the honor of sponsoring the ANMS Ironwood Diversity Award, and we hope to see
Shrevan Amani: Our capital allocation priorities include investing to maximize LMSS and actively pursuing innovative, highly differentiated GI assets to add to our portfolio.
Shrevan Amani: to commercial innovation, lifecycle management, and actually pursuing these highly differentiated
Tom Mccourt: some of you there.
We are focused on identifying and investing in opportunities that create the most value for our patients and shareholders over the long term.
We are fortunate to have a growing market, leading and profitable brand in linzess, our strong balance sheet and continue to take a disciplined approach to capital allocation, which we believe positions us well for continued growth.
Tom Mccourt: The positive momentum across our business continued in second quarter, as demonstrated by robust Linzess prescription demand growth, advancement of our clinical programs, completion of our share repurchase program, and repayment of our 2022 convertible notes.
Shrevan Amani: GI assets to bolster our portfolio.
Before moving onto our financial guidance I will like I would like to highlight that Ironwood was added to the S&P Smallcap 600 index. In June we are excited to be added to this reputable index as it as it is a recognition of ironwood's momentum and financial strength as we continue to make a difference.
People living with gastro.
Intestinal diseases.
Turning to our 2022 guidance on slide 15.
David Ansellem: there is still room to grow on the commercial margin front and we'll continue to try and drive
Shrevan Amani: We're focusing on identifying and investing in
We are reiterating our full year 2022 financial guidance as we remain confident in the continued strength of linzess with expectations of double digit prescription demand growth.
We continue to expect U S. Linzess net sales growth in the low single digits.
Ironwood revenue of $420 million to $430 million, which includes approximately $10 million in royalty and other revenues.
And adjusted EBITDA of greater than $250 million.
Tom Mccourt: The progress we made in the second quarter is a direct result of hard work and strong execution from the team, along with our shared commitment to advancing treatment in GI diseases, redefining standard of care in GI, and bringing important medicines to our patients.
Shrevan Amani: We are focused on identifying and investing in opportunities that create the most value for our patients and shareholders over the long term.
David Ansellem: those efficiencies.
Shrevan Amani: opportunities to create the most value for our patients and shareholders over the long term,
We believe the progress we are making positions our company well for continued growth.
We remain focused on advancing our three strategic priorities and we are excited about the opportunities ahead of us to improve the lives of Gi patients and deliver shareholder value I want to close by thanking all of our employees patients caregivers and advocates for their shared dedication to advancing and supporting therapies for Gi disorders.
Tom Mccourt: Our mission is to become the leading GI healthcare company in the U.S.
Tom Mccourt: Thanks, as always, to the employees, patients, and shareholders for all
Shrevan Amani: We are fortunate to have a growing market-leading and profitable brand in LMSS, a strong balance sheet, and continue to take a disciplined approach to capital allocation, which we believe positions us well for continued growth.
Tom Mccourt: Tom, I don't know if you've got anything else to add.
Shrevan Amani: including licensing such as CMP and other acquisitions.
Operator, you May now open up the line for questions.
Tom Mccourt: Now, I'll start with a brief overview of our strategic priorities on slide six.
Tom Mccourt: your support.
Shrevan Amani: Before moving on to our financial guidance, I would like to highlight that Ironwood was added to the S&P Small Cap 600 Index in June. We are excited to be added to this reputable index, as it is a recognition of Ironwood's momentum and financial strength as we continue to make a difference for people living with gastrointestinal diseases.
Tom Mccourt: Yeah, thanks, Trevin.
Shrevan Amani: And so for us, at this point in
At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
Your first question comes from David Anderson.
With Piper Sandler.
Tom Mccourt: Our strategy starts with maximizing Linzess.
Tom Mccourt: I will now like to hand it over to Mike to discuss our pipeline programs.
Shrevan Amani: Turning to our 2022 guidance on slide 15, we are reiterating our full year 2022 financial guidance as we remain confident in the continued strength of LMSS with expectations of double-digit prescription demand growth.
Tom Mccourt: I think
Shrevan Amani: time, our team continues to engage with third parties and evaluate opportunities.
Your line is open.
Tom Mccourt: Since launch nearly 10 years ago, Linzess continues to experience remarkable prescription demand growth and widespread acceptance among healthcare practitioners as a leading prescription treatment for adults with IBSD and chronic idiopathic constipation.
Mike Schetzlein: Mike?
Shrevan Amani: We continue to expect U.S. LMSS net sales growth in the low single digits.
Shrevan Amani: You know,
Hey, Thanks, and just a couple so first wanted to ask about the functional constipation study in peds.
Tom Mccourt: We are proud to report the brand recently surpassed 4 million unique patients treated
Shrevan Amani: We believe the progress we are making positions our company well for continued growth.
Shrevan Amani: this market, while it's been better for us this year as a buyer potentially, finding assets,
Shrevan Amani: We remain focused on advancing our three strategic priorities, and we are excited about the opportunities ahead of us to improve the lives of GI patients and deliver shareholder value.
Shrevan Amani: I think we are going to continue to be disciplined.
Shrevan Amani: I want to close by thanking all of our employees, patients, caregivers, and advocates for their shared dedication to advancing and supporting therapies for GI disorders.
Mike Schetzlein: Thanks, Tom, and good morning, everyone.
Shrevan Amani: And if we find opportunities
To the extent that.
Mike Schetzlein: We continue to make good progress across our three
Shrevan Amani: that make sense and can create long-term shareholder value, we'll pursue them.
You do.
Shrevan Amani: And we're not going to comment on any other specific efforts beyond that.
Net favorable data.
How does that advance the potential discussion surrounding.
And over the counter.
Version of Linaclotide.
Shrevan Amani: But, you know,
What kind of conversation and dialogue would you have with the FDA subsequent.
Tom Mccourt: the other thing to remember, you know, year over year was, you know, the second quarter in 2021
To that data again, assuming it's positive.
And then secondly on the commercial Martin.
Tom Mccourt: was an interesting quarter.
I wanted to ask sort of a forward looking question.
The product is the <unk>.
Franchise.
As it gets later and it's in it's in its lifecycle and it's commercialized.
How do you see commercial margin evolving do you think the commercial margins might increase is there potentially could be less in the way of intensive promotion, what's the right way to think about that over the long term. Thank you.
Tom Mccourt: since launch in 2012.
Mike Schetzlein: pipeline programs.
Operator: Operator, you may now open up the line for questions.
Tom Mccourt: One, you know, we had this surge of demand as we were coming out of the
Shrevan Amani: we have set a high bar for ourselves in evaluating potential transactions, and any asset that we
Good morning, David as the Shriven out first.
Tom Mccourt: In the second quarter, Linzess prescription demand increased 9% versus the prior year
Tom Mccourt: pandemic.
Let's have Mike respond to your first point about.
Pete's question, and then I'll handle the question on commercial margin thereafter, yes sure. So the current study that youre alluding to the six to 17 year old functional constipation, certainly adds additional support to the overall safety and Tolerability.
Tom Mccourt: quarter and Linzess achieved an all-time high in new-to-brand prescription volume as patients
Mike Schetzlein: I'll start with the Linacotide Pediatric Program on slide 11.
Shrevan Amani: acquire is going to meet our internal criteria.
Tom Mccourt: and prescribers turned to Linzess to treat their IBSD or chronic idiopathic constipation
Tom Mccourt: symptoms.
Operator: At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad.
The use of Linzess in patients certainly under the age of 18, and you recall and I think the basis of your question was at launch we had a box warning that encompassed all of the pediatric patients from those 18 and below.
Tom Mccourt: Through the first half of 2022, Linzess prescription demand has performed in line with expectations
Operator: Your first question comes from David Ansel with Piper Sandler.
Tom Mccourt: with double-digit prescription demand growth year-over-year.
David Ansellem: Your line is open.
Over the years, we've done a number of studies in pediatric patients, including patients seven to 17 year olds with Ibs $6 six to 17 year olds with functional constipation, a prior study a phase II study. In addition to the one we're talking about now and also a study in two to five year olds that actually got us.
Mike Schetzlein: The clinical study in 6- to 17-year-olds with functional constipation was well executed,
David Ansellem: Hey, thanks, and just a couple.
Mike Schetzlein: completed enrollment on time, and we now expect top-line data in the third quarter.
A revision of the box, which now only includes our kids less than two years of age. So this study, which specifically addresses the six to 17 year old population. So we've actually had that change in relation to some extent David the agency last year with the aggregate data I just mentioned, but certainly additional data in that pay.
Tom Mccourt: We believe there's still significant opportunity to reach appropriate new patients and drive
Mike Schetzlein: This is an exciting opportunity to potentially expand the clinical utility of Linzess
David Ansellem: So first, I wanted to ask about the functional constipation study in PEDS.
Tom Mccourt: additional prescription growth for the brand.
Mike Schetzlein: to potentially expand the clinical utility of Linzess, and assuming positive data and FDA
Tom Mccourt: In addition to the commercial success of Linzess, we continue to make progress with our ongoing
Mike Schetzlein: approval, bring a new treatment option to this patient population, as there are currently no
Population is always helpful. As we move forward with the clinical program in pediatric we have additional studies, we're doing we're kicking off another study and now in two to five year olds in the near term with our partner Abbvie. So all of that data will be pulled together with the ultimate goal to have it and engage with the agency in the future for further discussions about the <unk>.
Tom Mccourt: clinical trials.
Mike Schetzlein: FDA-approved prescription pediatric therapies for functional constipation.
Tom Mccourt: We now expect our Phase III pediatric study in 6- to 17-year-olds with functional constipation
Mike Schetzlein: Next, we're advancing IW3300, a guanylate cyclase C agonist, and a wholly owned Ironwood asset
<unk> and the appropriate language for pediatric patients, but we remain confident in the safety and Tolerability in this patient population because all studies to date have demonstrated linzess to be safe and well tolerated in that pay in the pediatric patients. We studied and just one final note. Please note. We're currently not labeled in pediatrics. So this is all about address.
Mike Schetzlein: Lins-S to be safe and well tolerated in the pediatric patients we studied.
Saying that the label language that we had which to your real question helps support US just further progress on discussions on how to move to an OTC.
David It's Tom.
The piece of this is it's certainly there it looks like a clear path forward.
From a regulatory front, but Mike can maybe comment on that yes, certainly there is very clear about what trial design would look like.
To get an indication for occasional constipation, and we're very very confident that obviously the drug will meet those requirements, but I think that the most important thing here with the whole pediatric program is really eliminating the safety concern that FTE originally had that was hypothetical.
And we're very pleased with the progress we're making in the ongoing collaboration and dialogue with both our partner as well as the FDA.
Yes, we clearly have regulatory precedent in terms of OTC, a purchase for occasional constipation with products like <unk> and we've had some preliminary discussions including with our partners. So I think we are in a good position to carry that forward and it's a continued program that we have.
Mike Schetzlein: And just one final note, please note,
And then.
David I'll hand, I'll start with your second question first of all.
Im really pleased about our progress on commercial margin overall, and how we are managing expenses I'll start by answering your question about where we are today with respect to commercial margin and then talk a little bit about where we're going and where we think will help the company.
Mike Schetzlein: we're currently not labeled in pediatrics,
Mike Schetzlein: so this is all about addressing the label language that we had, which, to your real question,
Mike Schetzlein: helps support us as further progress on discussions on how to move to an OTC product.
First first point is year to date commercial margins are 71%.
Through June 2022, compared to 72% through June 2021, prior year, and our commercial margin can fluctuate quarter to quarter based on timing of expenses throughout the year as a reminder for everyone out there in the second quarter tends to be the largest commercial investment of the year due to the timing of.
The DTC launches.
And where we spend and where we have our commercial spend in the year.
So second quarter commercial margins for 2022 were also impacted by lower net sales in the quarter, which was primarily driven by unfavorable inventory fluctuations. We don't expect those inventory fluctuations had a material impact on the full year as we said all said earlier, but those fluctuations had an impact in this quarter.
Tom Mccourt: And David, this is Tom Quart.
So where we stand.
We feel like we're on track to hit our guidance for.
For profitability for the year, and then with respect to long term and where we expect where we are from a brand perspective, and where we want to go yes. We're constantly evaluating we're always looking with our partner where and how we can fine tune and improve those margins. We do think there is still room to grow on the commercial margin front and we will.
We continue to try and drive those efficiencies Tom I don't know if you'd add anything else that yeah. Thanks, Robin I think the other thing to remember year over year was.
The second quarter in 2021 was an interesting quarter one.
We had the surge of demand as we are coming out of the pandemic and additional because of the pandemic. We were short on calls that were getting build to the P&L. So the margins were more favorable with those two combined.
Tom Mccourt: And in additional, because of the pandemic, you know, we were short on calls that
Tom Mccourt: were getting billed to the P&L. So the margins were more favorable, you know, with those two
Tom Mccourt: combined things.
So yes.
Yes.
As Kevin mentioned, we're delighted with.
Tom Mccourt: So, you know, as Trevin mentioned, you know, we're delighted, you know, with the,
The progress we're making at it keep in mind, we've continued to refine the marketing mix with regard to the level of investment both with regard to professional promotion DTC and certainly one of the real key investments as payer access, which really drive near term and long term growth for the brand.
Hopefully that answers your question David.
Great. Thank you.
Alright, great.
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 Boris Becker with Cowen.
Your line is open.
Alright, great. Thanks. This is Nick on for both Speaker.
I have two questions first is on <unk> 3300, I was wondering if we're going to if we should expect to see some data from this phase one trial, whether it be safety data or whatnot before the initiation of the phase III.
Trial and then my second question is what is your guys' strategy right now on potentially expanding the pipeline further beyond core.
Jim one of four and beyond IW 1300. Thanks.
Sure.
Thanks, and look what one might want you handle the first question again on IW 3300, and our plans there and then I'll.
Yeah sure. So the phase one program for IW 300, plus in healthy volunteers.
It was a single sending dose study as well as a multiple ascending dose studies. Both of those studies were completed on time at both of those studies did not demonstrate any concerns that may get any issues for us to complicate per se.
Proceeding to starting the <unk> study end of this year. So we're gone through that data now and we certainly are having discussions on how to disseminate that data, but we clearly will put it in the public domain. You may know those trials are registered in clinic trials Dot Gov, even though they're healthy volunteer studies, we're not obligated to put that data from <unk> phase one in healthy volunteers, but.
We are committed to disseminating the data publicly so we certainly will take that opportunity.
Great and so on the piece on.
On strategy I look.
I'll start by saying that I think we're going to continue to take a balanced approach to capital deployment.
We believe we are positioning the company for future success, which includes maximizing linzess growth to commercial innovation lifecycle management.
And actually pursuing these highly differentiated gi assets to bolster our portfolio.
We're focusing on identifying and investing in opportunities that create the most value for our patients and shareholders over the long term.
Including licensing such as CMP and other acquisitions and so for US at this point in time.
Our team continues to engage with third parties and evaluate opportunities. This market, while it's been better for us this year as a buyer potentially finding assets I think we are.
Can it be continue to be disciplined and if they if we find opportunities that make sense and can create long term shareholder value, we'll pursue them and we're not going to comment on any other specific efforts beyond that but we have set a high bar for ourselves and evaluating potential transactions and any asset that we acquire is going to meet our internal criteria.
Shrevan Amani: I don't know, Tom, or… Well, I think that's
Tom or I think thats spot on to Robyn I think the exciting thing is there's a lot of things. There's a lot of activity right now with regard to emerging technologies and treatments.
Tom Mccourt: spot on, Shravan.
Tom Mccourt: I think the exciting thing is there's a lot of activity right now with regard
There's other dynamics in the market that look maybe may turn into something that may be very attractive. So again to <unk> point. The bar is high we like where we are and how we're growing as far as our overall financial health and we just really wanted to be disciplined with regard to how we think about allocation of our capital.
Great. Thank you very much.
Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
There are no further questions at this time, thanks, everyone for joining US today. This concludes today's conference call you may now disconnect.
Tom Mccourt: to readout in the third quarter this year, and we remain on track with previously shared
Mike Schetzlein: for the potential treatment of visceral pain conditions, such as interstitial cystitis,
David Ansellem: So to the extent that
Tom Mccourt: The other piece of this is certainly there looks like a clear path forward
Tom Mccourt: you know, with the progress we're making.
Tom Mccourt: to emerging technologies and treatments.
Tom Mccourt: data readout timing for IW3300 and CMP104.
Mike Schetzlein: bladder pain syndrome, and endometriosis.
David Ansellem: you do
Tom Mccourt: from a regulatory front, but Mike can maybe comment on that.
Tom Mccourt: And, you know, there's other dynamics in the market that,
Mike Schetzlein: We have completed the studies in Healthy Volunteers,
David Ansellem: get favorable data,
Tom Mccourt: You know, certainly there, you know, it's very clear about what a trial design would look like
Tom Mccourt: you know, may turn into something that may be very attractive.
Please wait the conference will begin shortly.
Mike Schetzlein: which will enable us to begin the Phase 2 proof-of-concept study, focusing on the potential
David Ansellem: how does that
Tom Mccourt: to get an indication for occasional constipation.
Tom Mccourt: So, again, to Shravan's point,
Mike Schetzlein: pain benefits of IW3300 for patients suffering from interstitial cystitis and bladder pain syndrome.
David Ansellem: advance the potential discussion
Tom Mccourt: And we're very, very confident that obviously the drug, you know, will meet those
Tom Mccourt: you know, the bar is high.
David Ansellem: surrounding
Tom Mccourt: requirements.
Tom Mccourt: You know, we like where we are and how we're growing as far as
David Ansellem: an over-the-counter
Tom Mccourt: But I think that the most important thing here with the whole pediatric program is really
Tom Mccourt: our overall financial health.
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David Ansellem: version of
Tom Mccourt: eliminating the safety concern that FDA originally had that was hypothetical.
David Ansellem: linaclotide?
David Ansellem: What kind of conversation or dialogue would you have with the FDA
David Ansellem: subsequent to that data?
David Ansellem: Again, assuming it's positive.
David Ansellem: And then secondly, you know, on the commercial margin,
David Ansellem: I wanted to ask sort of a forward-looking question is, you know, as the product, as the franchise,
David Ansellem: you know, is
David Ansellem: gets later in its life cycle, in its commercial life,
Okay.
David Ansellem: how do you see commercial margins evolving?
David Ansellem: Do you think that commercial margins, you know, might increase as there potentially could be less in the way of intensive promotion?
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David Ansellem: What's the right way to think about that over the long term?
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