Ironwood Q2 Earnings & Revenues Fall Shy of Estimates

Ironwood Pharmaceuticals, Inc. IRWD reported break-even earnings for the second quarter of 2024 compared with the Zacks Consensus Estimate of earnings of 17 cents per share. The company had recorded adjusted earnings of 31 cents per share in the year-ago quarter.

Total revenues in the second quarter were $94.4 million, which also missed the Zacks Consensus Estimate of $104 million. The top line decreased almost 12.1% year over year due to the decrease in collaborative arrangements revenues related to the sole marketed drug, Linzess (linaclotide).

Quarter in Detail

As reported by partner AbbVie Inc. ABBV, Ironwood's marketed product — Linzess — generated net sales of $211.2 million in the United States, down 22% year over year, due to continued pricing pressure. However, total prescriptions for Linzess increased 11% year over year.

Ironwood and AbbVie equally share Linzess' brand collaboration profits and losses.

IRWD's share of net profit from the sales of Linzess in the United States (included in collaborative revenues) totaled $91.4 million, declining almost 12.8% year over year. Linzess share of profit was affected by the $30.0 million gross-to-net change in estimate, which was recorded in the first quarter of 2024.

Linzess' collaborative revenues from U.S. sales missed our model estimate of $103.9 million.

Ironwood has agreements with two partners — Astellas Pharma and AstraZeneca AZN — related to the development and commercialization of Linzess in Japan and China, respectively.

Both Astellas and AstraZeneca have exclusive rights to develop and market the drug in their respective territories. Astellas and AZN are liable to pay royalties to Ironwood on net Linzess revenues earned in their regions.

Ironwood recorded $3 million in royalties and other revenues, up 15.3% from the prior-year quarter's figure.

Operating expenses (including research and development expenses, selling, general and administrative expenses and restructuring expenses) in the reported quarter were $69.4 million compared with $1.2 billion recorded in the year-ago quarter.

Operating expenses in the year-ago quarter included a one-time charge of $1.1 billion of acquired in-process research and development ("IPR&D") from the acquisition of VectivBio.

As of Jun 30, 2024, Ironwood had cash and cash equivalents worth $105.5 million compared with $121.5 million as of Mar 31, 2024.

2024 Guidance

Owing to the continued pricing pressure for Linzess resulting from higher-than-expected Medicaid utilization trends, Ironwood lowered its revenue guidance for 2024.

The company now expects total revenues in the range of $350 million-$375 million for 2024 compared with the earlier projection of $405-$425 million. U.S. sales of Linzess are now expected in the range of $900-$950 million. Earlier, the company expected U.S. sales of Linzess to decline in the mid-single digit range in 2024.

In response to the lowered revenue guidance, IRWD stock declined 32.6% on Aug 8.

Shares of Ironwood have plunged 64.6% year to date compared with the industry's decline of 5.2%.

Image Source: Zacks Investment Research

Meanwhile, the company now expects to deliver adjusted EBITDA of more than $75 million for 2024 versus the earlier projection of more than $120 million.

Pipeline Updates

With the acquisition of VectivBio last June, Ironwood acquired the rights to develop and commercialize apraglutide.

Ironwood is evaluating the safety and efficacy of once-weekly subcutaneous apraglutide in the pivotal phase III STARS study for reducing parenteral support (PS) dependency in adult patients with short bowel syndrome with intestinal failure (SBS-IF).

IRWD plans to complete a new drug application filing for apraglutide to the FDA for the treatment of adult patients with SBS who are dependent on PS in the first quarter of 2025.

Ironwood is developing two other pipeline candidates, IW-3300 and CNP-104.

A phase II proof-of-concept study is evaluating IW-3300 in a mid-stage study for the potential treatment of visceral pain conditions, such as interstitial cystitis/bladder pain syndrome and endometriosis.

Ironwood, in collaboration with COUR Pharmaceuticals, is developing CNP-104 for treating primary biliary cholangitis (PBC). The latter is evaluating CNP-104 in PBC patients, with top-line data from the same expected later in the third quarter of 2024.

Zacks Rank & Stock to Consider

Ironwood currently carries a Zacks Rank #5 (Strong Sell).

A top-ranked stock in the healthcare sector is Exact Sciences Corporation EXAS, sporting a Zacks Rank #1 (Strong Buy) at present.

In the past 60 days, estimates for Exact Sciences' 2024 loss per share have narrowed from $1.09 to $1.00. Loss per share estimates for 2025 have narrowed from 21 cents to 8 cents. Year to date, shares of EXAS have decreased 22.6%.

EXAS' earnings beat estimates in three of the trailing four quarters while meeting the same on the remaining occasion, the average surprise being 56.19%.

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