Analysts at JPMorgan no longer hold a bullish view on Ironwood Pharmaceuticals, Inc. IRWD after the company released top-line results from a phase 2b trial called IW-3718. The firm's Anupam Rama downgraded Ironwood's stock from Overweight to Neutral with a price target lowered from $20 to $19.
Ironwood's valuation should compose of two entities, the analyst explained. First the company's commercial franchise (Linzess and Zurampic/Duzallo) is worth $17 to $18 per share with upside coming from new products in the pipeline. The problem is that the company's pipeline only has "some value" and large value creation will take time.
"The unmet need in the refractory GERD is clear; however, the phase 2b data, while overall trending in the right direction, does not fully de-risk the phase 3 program, with many questions left open (high placebo rate in a refractory population, clinical meaningfulness of IW-3718 treatment effect, baseline characteristics, degree of dose response in phase 2b and dose optimization into the phase 3, etc)," the analyst wrote.
Finally, Ironwood's IW-3718 phase 2b results shows that investors need to wait "an even longer" time for appreciation in the stock, Rama continued. On top of that, it will also take "definitively compelling clinical data" from the sGC platform for any improvement in sentiment.
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