IRONWOOD PHARMACEUTICALS INC Q2 FY2024 earnings call

LINZESS Overview - Prescription demand for LINZESS remained robust in Q2 with 11% growth, new-to-brand up 15% for sixth consecutive quarter. - Facing pricing headwinds from higher Medicaid utilization affecting U.S. net sales. ### Pipeline Updates - Apraglutide: Presented late-breaking STARS Phase 3 data at Digestive Disease Week, positive feedback on clinical profile. On track for NDA submission in first quarter 2025, aiming for once-weekly dosing convenience. - CNP-104: On track to share Phase II proof-of-concept top line results this quarter, will inform decision on acquiring exclusive license from COUR Pharma for US. ### Cash Flow and Debt - Generated $33 million of operating cash flow in Q2. Repaid $20 million principal of 2024 convertible notes in June using cash on hand and revolving credit facility.

LINZESS saw prescription demand increase 11% in Q2, with new-to-brand prescriptions up 15% for the sixth consecutive quarter. LINZESS US net sales as reported by AbbVie were $211 million in Q2. Ironwood recorded a $17 million adjustment to collaborative arrangements revenue in Q2, resulting in U.S. collaboration revenue of $91 million. LINZESS is facing pricing headwinds due to higher-than-expected Medicaid utilization, impacting U.S. net sales.

• Revised full-year 2024 guidance due to higher Medicaid utilization pricing headwinds. - Now expects LINZESS US net sales between $900 million and $950 million, Ironwood revenue between $350 million and $375 million, and adjusted EBITDA greater than $75 million. - Focus on disciplined expense management in second half of 2024 to offset top-line headwinds.

• Pricing headwinds from higher-than-expected Medicaid utilization. - Uncapped rebates on LINZESS Medicaid volumes from AMCAP repeal legislation leading to higher rebates and magnifying pricing pressures.

Q: As you think about 2025 and maximizing LINZESS net economics, how do you think about contracting and backing off widespread preferred access? Also, level set expectations on CNP-104.

A: Sravan Emany defers to Mike Shetzline on CNP-104 (looking at T cell response and liver function markers) and Andrew Davis on contracting strategy focusing on net economics.

Q: On apraglutide, do you still expect launch in 2025 and details on optimizing the commercial use kit?

A: Sravan Emany says approval could be 2025/early 2026 depending on review, and Mike Shetzline discusses optimizing kit for easier patient administration.

Q: Pricing pressure more than anticipated, how to think about revenue growth trajectory; and on CNP-104, T cell responses from COUR study.

A: Sravan Emany talks about revised guidance due to higher Medicaid utilization, and Mike Shetzline explains CNP-104 first-in-human study and T cell response differences across diseases.

Q: Remaining gating items for apraglutide BLA submission and feedback from prescribers.

A: Mike Shetzline discusses finalizing NDA components and commercial planning, and Tom McCourt and Andrew Davis talk about launch preparation and disease awareness programs.

Q: Interaction with patient advocacy groups on apraglutide and payer discussions; and LINZESS JV commercial margins.

A: Mike Shetzline talks about positive feedback from patient advocacy groups, and Sravan Emany discusses LINZESS JV commercial margins and guidance reflecting best estimate.