Ironwood (IRWD) Q2 Loss Widens, Revenues Miss, Stock Up

Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) reported second-quarter 2017 adjusted loss of 28 cents per share, wider than both the Zacks Consensus Estimate of a loss of 23 cents and the year-ago loss of 16 cents.

Total revenue (collaborative revenue) in the quarter amounted to $65.1 million, up 19.7% from the year-ago period but below the Zacks Consensus Estimate of $68.5 million.

Ironwood’s shares gained 2.16% in afterhours trading on Aug 3 on positive pipeline updates. In fact, a look at the company’s share price movement shows that the stock has outperformed the industry this year so far. Ironwood’s shares have gained 8.8% during this period, while the industry registered an increase of 0.9%.

The Quarter in Detail

As reported by partner Allergan plc (NYSE:AGN) , Ironwood’s key marketed product – Linzess – generated U.S. net sales of $167.8 million, up 11.5% year over year.

Please note that Ironwood and Allergan have an equal share in brand collaboration profits or losses. Ironwood's share of the net profits from the sales of Linzess in the U.S. (included in collaborative revenues) was $43.8 million in the second quarter, up 11% year over year.

According to data provided by IMS Health, Linzess prescriptions filled during the quarter crossed 750,000, up 15% from the year-ago period.

During the reported quarter, selling and administrative (SG&A) expenses increased 56.5% to $57.8 million, and research and development (R&D) expenses were $37.3 million, up 17.9% from the year-ago period

Zurampic, Ironwood’s second commercial product for the treatment of uncontrolled gout, was launched in Oct 2016.

Zurampic raked in sales of $0.5 million in the quarter. Zurampic prescriptions filled during the quarter were 1500, higher than 900 prescriptions filled in the previous quarter.

Pipeline Updates

Linzess is currently approved in the U.S. for the treatment of adults with irritable bowel syndrome with constipation (IBS-C; 290 mcg) and chronic idiopathic constipation (CIC; 145 mcg & 72 mcg). Ironwood and Allergan are looking to broaden Linzess’ label by expanding the targeted patient population and gaining approval for additional indications. The partners are also developing a delayed release version of Linzess for IBS-C and non-constipated subtypes of IBS.

Ironwood has a partnership with Astellas Pharma to market Linzess in Japan. Astellas is looking to submit regulatory application for label expansion in chronic constipation with the Japanese regulatory authority

In China, Hong Kong and Macau, Ironwood has an agreement with AstraZeneca plc (NYSE:AZN) for Linzess. The regulatory filing is under review in China for IBS-C. The company expects the review to be completed in the first quarter of 2018.

This year, Ironwood expects to launch Duzallo, the fixed-dose combination of Zurampic and allopurinol. The new drug application for Duzallo is under review in the U.S. The FDA’s decision is expected in the second half of 2017 and the drug is expected to be launched in late 2017. If approved, Duzallo would become the first dual-mechanism treatment for patients with uncontrolled gout.

2017 Guidance Maintained

The company continues to expect to use less than $100 million for operations in 2017. This is however much higher than the 2016 levels. This is due to the full year of commercial expenses related to the launch of Zurampic and to support the potential launch of Duzallo and pipeline advancement.

The company also maintained its R&D expenses and SG&A expenses guidance for 2017 in the range of $145–$160 million and $235–$250 million, respectively.

Zacks Rank & Stock to Consider

Ironwood currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the pharma sector is Summit Therapeutics PLC (NASDAQ:SMMT) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Summit’s loss estimates narrowed from $2.36 to 32 cents for 2017 over the last 30 days. The company delivered positive earnings surprise in each of the four trailing quarters with an average beat of 25.55%. Its share price is up 66.4% so far this year.

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