Ironwood (IRWD) Posts Narrower-than-Expected Loss In Q3

Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) reported an adjusted loss of 18 cents per share in the third quarter of 2016, narrower than both the Zacks Consensus Estimate of a loss of 23 cents and the year-ago loss of 25 cents.

Total revenue in the quarter amounted to $66.1 million, up 66.9% from the year-ago period and above the Zacks Consensus Estimate of $61 million.

Quarter in Detail

Ironwood’s sole marketed product, Linzess (irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC)), generated U.S. net sales of $164.4 million, as reported by partner Allergan plc (NYSE:AGN) in its third-quarter 2016 earnings release, up 9.2% sequentially and 40% year over year.

According to data provided by IMS Health, Linzess prescriptions filled during the quarter crossed 700,000, up 26% from the year-ago period.

Ironwood and Allergan are presently working on broadening Linzess’ label by expanding the target patient population and gaining approval in additional indications. The two companies expect to launch a 72 mcg dose for CIC in early 2017, if approved. An approval is expected to boost prescriptions among the estimated 35 million adult CIC patients.

Meanwhile, the companies have filed for a regulatory approval of Linzess in China and Japan. Furthermore, a linaclotide colonic release formulation is in a phase IIb study in adults suffering from IBS-C, with data expected later this year. This second-generation GC-C agonist candidate has the potential to provide greater and faster abdominal pain relief, and will be able to expand the IBS-C and CIC market, if approved.

Moreover, Ironwood has several candidates in its pipeline, including IW-3718 for refractory gastroesophageal reflux disease, presently in a dose-ranging phase IIb study with data expected in 2017.

Ironwood has a licensing agreement with AstraZeneca PLC (NYSE:AZN) for the exclusive U.S. rights to gout treatment Zurampic (lesinurad) and all products containing lesinurad. Zurampic was launched in Oct 2016.

During the reported quarter, selling and administrative (SG&A) expenses were up a significant 40% to $45.0 million primarily due to investments associated with the launch of Zurampic.

Research and development (R&D) expenses were $37.5 million, up 45.3% from the year-ago period due to continued advancement of pipeline candidates, as well as costs associated with the submission of the lesinurad-allopurinol fixed dose combination product and the expansion of medical team for lesinurad.

2016 Guidance Updated

Backed by its financial discipline, the company now expects to use less than $50 million for operations in 2016, down from the previous guidance of less than $70 million. The company has, however, maintained its guidance for R&D expenses and SG&A expenses in the range of $140–$150 million and $170–$180 million, respectively.

Total marketing and sales expenses for Linzess are still expected to be around the mid-to-high end of the $230–$260 million range.

Zacks Rank & Key Picks

Ironwood currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the health care sector is Anika Therapeutics Inc. (NASDAQ:ANIK) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anika’s earnings estimates have increased from $1.96 to $2.06 for 2016 and from $2.03 to $2.09 for 2017 over the last 60 days. The company has posted a positive earnings surprise in all of the four trailing quarters with an average beat of 33.1%. Its share price has gained 8.6% year to date.

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