You guys ready to go? All right. We're gonna go ahead and get started here. Thank you everybody for joining us this afternoon at the Citizens Life Sciences Conference. Excited to be joined next by Ironwood Pharmaceuticals, and we're joined by Michael Shetzline, the CMO, and Greg Martini, CFO. A lot to talk about, an exciting year for LINZESS, and a lot of news flow we've just had about the lead pipeline asset apraglutide. Maybe I'll just turn it over to you, Greg, for you know give a 30-second overview.
Yeah. Thank you, Jason, and first of all, thank you for having us. For Ironwood, we are a GI-focused healthcare company. As we enter 2026, we really have three focus priorities. First is maximizing LINZESS. LINZESS is our commercial asset. It's a market-leading prescription therapy for the treatment of irritable bowel syndrome with constipation and chronic idiopathic constipation, and it's a product that we partner in collaboration with AbbVie. In 2026, we expect LINZESS to deliver greater than $1.1 billion in U.S. net sales. Our second priority is advancing apraglutide, which is a Phase III asset that you just mentioned.
We are expecting to initiate a confirmatory Phase III study in the Q2 of this year for the treatment of short bowel syndrome with intestinal failure, and we really believe that apraglutide has the potential to be a best-in-class treatment for short bowel syndrome patients. Then third is delivering profits and cash flows. We did guide for 2026 that we expect to deliver greater than $300 million of adjusted EBITDA, which will enable us to also generate significant operating cash flows, which will allow us to pay down a portion of our outstanding debt.
Awesome. Maybe let's start with LINZESS and dial in a little bit to that guidance. There's been a lot of change for LINZESS over the last 24 months from a net price perspective. What. Let's start with what hasn't changed is the product continues to deliver growth on a unit basis, demand growth. What are your expectations there in terms of demand growth, and why have you been so successful at continuing to grow the product every year?
Yeah. Exactly as you said, now in its 14th year on market, LINZESS continues to grow high single-digit, low double-digit prescription demand volume growth, as patients continue to seek therapy. A lot of new patients are coming into LINZESS coming from over-the-counter therapies where they are unsatisfied with those overall treatments. We've continued to see the market grow and LINZESS, as the market leader, continue to outpace that market growth. To your point, pricing has been a big focus of ours over the last couple of years. We did take steps for 2026 to adjust our pricing for LINZESS. We reduced our list price in response to some of the evolving healthcare dynamics.
Ultimately what that enabled us to do is eliminate some inflationary rebate penalties that we had been exposed to specifically within Medicaid over the last two years.
There's been a couple of moving pieces on the net price and one has been the Part D redesign. We've now had a year's worth of experience there. From a high level, why are you confident now that the net price remains stable or predictable for the, you know, the next several years through to the end of the brand life?
Yeah. There were a couple of changes that we had to navigate in 2024 and 2025 with legislative changes, such as the Medicaid AMP cap repeal, and then the Medicare Part D redesign that you noted. Now in 2026, our contracting is really in place for the year. We, as I mentioned, took steps to reduce the rebates owed for Medicaid, and so a lot of our channel mix and the different rebating across channels is not as significant at this point in time. As we look forward even beyond 2026, we do have more line of sight into pricing, as LINZESS was one of the selected brands for the CMS price negotiation for Medicare.
Medicare is our biggest book of business, about 50% of our overall volume, and so we do have quite a bit more visibility now into not only 2026 pricing, but also 2027 and beyond.
Okay. Great. We'll just talk about the investment into the brand as well. Obviously a very profitable brand, but how do you think about the sales and marketing investment in the products over the next several years?
Yeah. We have always focused in conjunction with AbbVie on how we maximize brand profits and cash flows. We believe right now we have the right level of investment and mix between personal promotion and direct-to-consumer advertising. We really continue to invest in the brand to drive that continued demand growth that we've seen, and we expect to continue to do that. As the brand continues to evolve over the coming years, we'll continue to look for opportunities to refine that investment to continue to drive profits and cash flows.
You're always active at medical conferences. Can you just talk about the med affairs effort that still goes into LINZESS?
Yeah.
Michael.
Yeah. We still have a strong med affairs association obviously within Ironwood, but we also do a lot partnering with AbbVie, and we get a lot of good feedback. We just went to conferences, obviously ACG and DDW are our biggest conferences. We always have a big presence in that, and we're continuing to publish data out with LINZESS on a continual basis, and especially on the ped side. More recently, as you know, we've gotten approved on the pediatric side for IBS with constipation in ages seven years-17 years. We have an SNDA under review, which we should have action in 2026 on functional constipation in kids six years and above. We still have a very active program with them.
Can you just talk a little bit about the opportunity from a pediatric side? You know, you've expanded the label. The label's been expanded a couple of times and improved a couple of times. To what extent are those drivers of continued growth as well?
Yeah. I would say there absolutely is an unmet need within these younger age groups. We're really excited with the opportunity to be able to serve broader patient populations. In terms of contributing, they are a contributor to that continued double-digit demand growth and some of the new-to-brand business that is coming into our overall demand. They are not necessarily driving a significant inflection. They're additive, but they haven't necessarily driven a stepwise change in the demand .
What do you hear? You know, like you said, 14 years in, you've probably heard, you know, a lot of feedback over time, but what do you hear from physicians today about why they still like using the drug, why patients still like being on the drug?
Yeah. I mean, go ahead. I think the biggest thing has been the pain benefit. I mean, it actually was one of the sentinel things that the evidence had always been sort of within the primary endpoint, but not separated out. I think one of the inflection points happened when we did this study to address the labeling about the symptoms, abdominal pain and discomfort, and putting the discomfort on the table as well for what people really suffer from. I think that's one of the key elements. It certainly works and improves frequency, but the aspect of the pain benefit, I think, is the thing that really bleeds through very strongly with patients.
Got it. Maybe let's talk about guidance again for a second, on the profitability side. You mentioned that you do expect to generate substantially more adjusted EBITDA than last year. Just walk us through the pieces of that end up in cash flow and you mentioned like delevering on the balance sheet.
Yeah. Absolutely. As I mentioned earlier, greater than $300 million of adjusted EBITDA is what we guided to for 2026. We delivered $138 million of adjusted EBITDA in 2025, more than 100% increase year-over-year expected in adjusted EBITDA. The primary driver for that is really the LINZESS improvement in net sales and how that translates to Ironwood revenues. We're really dropping that down to our profitability. In 2025, we did take several steps to reduce our investment as a company within Ironwood. We ended up reducing our overall operating expenses last year by about $60 million. That is contributing also to our ability to generate cash flows in 2026 .
To your point on our ability to delever, we did end 2025 with $215 million of cash on the balance sheet, and we do expect to generate significant profits this year to be able to pay down our convertible notes in June of this year, in just a few months, which is $200 million. Also expect to be able to repay a portion of our outstanding credit facility by year-end, and ultimately end the year in a position where we have roughly $300 million of debt outstanding on a gross basis, which is around 1x adjusted EBITDA.
Okay
... delevering relative to the last two years.
Over the last few months, you've gone through a strategic review process, and a large number of those options that are available to you now have become because LINZESS has seen the stability it now has and can grow and growing again. Just walk us through where, how you think about that strategic review process today.
In 2025, we underwent this process, ultimately looking at how do we maximize shareholder value. That continues to be our focus as a company today, as we continue to move forward on our strategy and the priorities that I had outlined, that will always be our focus of how do we maximize shareholder value as we execute our strategy. As we move throughout 2025, our financial position improved drastically.
Mm-hmm
... it broadened our opportunity set of how we can ultimately maximize that shareholder value. I'd say as we stand today, we feel very confident about our financial position, our path forward on apraglutide, our prospects for LINZESS and the continued cash flows over the coming years. We feel very good about our path forward in 2026, and we'll continue to evaluate options to further maximize value as they come up, but we have a very clear path as it .
You feel confident today that cash flow from LINZESS can fund the company and development of apraglutide?
Yes. Cash flows from LINZESS, we believe will be able to fund continued investment in apraglutide, repayment of our debt over the coming years, and ultimately support the transition to an apraglutide commercial launch, if approved.
Let's talk about apraglutide. It's an exciting phase three asset. Maybe just walk us through the background here of mechanism and the first in class and how you think about differentiation for the asset, Michael.
Yeah. We were attracted to apraglutide because, number one, it's the first weekly approach to this patient population, and we know these patients are burdened with a lot of medical need and a lot of medical things they need to do for their parenteral support. Weekly therapy, we thought could add a lot of value. Also its potency. It had a unique aspect from the potency perspective. The ability to take that pharmacokinetics and see how that translated into patients was an opportunity to potentially bring a best-in-class asset to these patients suffering from short bowel syndrome with intestinal failure. That's ultimately what attracted us to that. There was early clinical data on biomarkers and stuff that proved that it does have this effect, and it's a known mechanism.
The GLP-2 mechanism in growing intestinal epithelium is what GLP does is very important to these patients. That increased absorptive surface allows patients to absorb more fluid and nutrients, and that ultimately brings them better relief and better health, and then they can reduce the parenteral support they need. The ultimate goal for these patients is to come off their parenteral support. These patients actually take parenteral support for up to 12 hours a day, oftentimes five days-seven days a week, so it's a very burdensome process. Then we obviously got interested in that from that perspective, came into it with the largest trial ever done with an SBS-IF of 164 patients that was statistically successful and showed a clinical benefit as well as good safety and tolerability.
We do think we have an opportunity for a potentially best-in-class asset in this space.
Just walk through the phase three results in a little more detail. Just walk us through, you know, the primary endpoint and the key secondaries.
Yeah
from the phase III study.
In the phase III study completed, okay, the primary endpoint was a 24-week endpoint on the weekly parenteral support volume reduction. It obviously hit that study endpoint. Actually from a therapeutic perspective, the efficacy was twice placebo, which was actually best in class compared to other agents who've completed trials in this space. It was a very robust trial with a very low placebo response that was executed very well. We also hit the key primary or key secondary endpoints, which are clinically relevant, which include days off parenteral support. That's a historically important regulatory endpoint because that was the regulatory precedent set back with the first drug approved in this class, Gattex, for short bowel syndrome with intestinal failure. We thought that was a great outcome.
There were also some additional key endpoints which were subgroup specific or anatomy specific. We had endpoints in colon-in-continuity that were 48-week endpoints that actually didn't meet statistical significance, and that called into question the subgrouping within the space. We've worked with the agency over the last year, and for the confirmatory trial that we're planning that, as Greg mentioned, is starting in the Q2 , there really isn't a need or desire for these anatomy specific, subgroup analyses. We've worked with the agency on that, and I think it's become clear from the patient's perspective, but also from the prescriber's perspective, that the stoma and CIC patients are both medically needed, both react, similarly to the GLP-2 therapy and are both clinically relevant.
All of our endpoints in a confirmatory trial, which is a key difference, are whole population endpoints for that program.
Understanding you're not looking at this specifically in the confirmatory study, just walk us through the data that gives you comfort and confidence that the apraglutide is active in both of those subgroups.
Yeah. We did a very deep analysis in that because obviously we had a longer data. We just had the biggest study done to date. The question here is, does all the efficacy come from one subgroup? The subgroups, just to remind you, are stoma. Those are people who have their small bowel empty into a bag, and then there are people who have a small bowel that empties into a remnant of colon, and they're called colon-in-continuity. Historically, that's been of concern because when the original approval for Gattex happened, which was the first approval, it wasn't clear whether these subgroups were different. It did turn out in that, in Gattex's original data set that really the majority, I might say all the efficacy came from the stoma subpopulation.
That developed a concern on whether CIC patients really do contribute to the endpoint. We obviously had a very robust data set in both populations, bigger than what Gattex had in their whole study. We really embarked on a diligent effort to make sure that both populations do contribute to our primary endpoint. We took a very statistically rigorous approach. There are approaches you can take when the primary endpoint has two populations in it to see which contribution each population plays in that primary endpoint. We took this data to the agency, and it's very clear statistically, we brought the statistical experts with us, that the CIC patients receiving apraglutide do contribute to the primary endpoint, and they do benefit.
Just to be clear on the Gattex side, although the endpoints from the primary were uniquely different between stoma and CIC, the drug was approved for both populations and patients with CIC do get a clinical benefit.
Do you think Gattex is used in both of those populations?
We certainly know it's used in both, but we also know physicians have some concerns on the absolute benefit in CIC. There's also some nuance there, and what I mean by that is it matters how many days of parenteral support you need.
Yeah.
Right? Oftentimes colon-in-continuity patients don't need a full seven days, right? Because they have a less parenteral support volume need in general. Therefore, if you're going to take Gattex, you need to take it every day, seven days a week. It gets to be a trade-off for the patient. You're already being burdened by five days of parenteral support. Do you want to add something to do on the other two days to take another therapy to save a day? Like that kind of stuff. We do think that calculus comes into how Gattex is used in the overall population.
You read out a positive study, like you said, hit the primary endpoint in several of the key secondaries. When you were in dialogue with FDA, they ended up coming back and saying, "We'd like a confirmatory study." Can you kind of just walk us through the background there?
Yeah. We certainly had a very robust large trial. We had a positive endpoint and then positive on the key secondaries. There was a nuance in the trial in the effort to sort of reduce the drug use from a drug production perspective, but also the injection volume perspective, it wound up that the patients in the clinical trial received a lower dose than was specified in the protocol. So that we actually worked with the agency in detail. We presented the data that we had a very good idea on that dose being 3.5 mg, and we still had a positive trial. Our general review, as well as with some external experts, was because it was a lower dose and we had a positive trial, we had a good path forward.
The agency really just wanted us to confirm that. They said, "Look, this is your single pivotal trial. Do it in another trial, confirm it, and we're all in." That's the design discussion we had with them on the key elements of the program. The primary one there is just to confirm that what we did in the original STARS program is what we're reconfirmed in the STARS-2 study, which is the one Greg mentioned we're starting, I mean, Q2 .
Can we just run through the key elements of the trial design for STARS 2?
Yeah.
maybe a little bit of contrasting with-
Yeah, sure.
STARS-1.
What does remain the same are the key elements that are for regulatory approval, which as I mentioned, are the 24-week endpoint for the relative reduction in weekly parenteral support volume. Okay, that's the primary endpoint. It's a 24-week endpoint, and it's in the whole population. Again, consistent with the 007 trial. And then also we'll have key secondaries on saving days of parenteral support. Also 24-week endpoints, also in the whole population, very consistent with 007 or the original STARS study. And because we want to maintain those trials both for an eventual NDA submission, that's the ultimate goal. We have a lot of very robust data, good efficacy and very good safety and long-term safety.
As I said, we mentioned how we have worked out very clearly on the dose administration, so we think that's a very achievable goal. What's different is the fact that we don't have the longer-term endpoints. We don't have the 48-week endpoints, and we don't have the anatomy-specific endpoints. Because they're the ones the agency, with our discussions with them, we sort of didn't need to push because we agree now that both populations are relevant and they're really whole-population endpoints. It's really a 24-week study, a 24-week focus study, around the primary and the key secondaries I mentioned, and really to confirm what we did in the STARS original pivotal study.
What is the target dose you're focused on? Is it going back to the original dose that you intended to have, or are you focused on the lower dose that you actually saw?
First, we don't call it a lower dose, right?
Right
'Cause it was very clinically effective and statistically robust, right? Now, it happened to be lower than what we anticipated, but honestly, it worked. Again, the real reason for the next study is to confirm what we did in the STARS program, and we gave 3.5 mg in the STARS study, and we're targeting to give 3.5 mg in the confirmatory study, so those studies both can be part of the eventual SNDA submission.
Got it.
Oh, go ahead.
I was gonna say, help us look forward to results. What's success in this study? You know, again, just the confirmation of the statistical endpoint, but are you looking to replicate the magnitudes of benefit you saw in STARS 1?
Well, I think the main thing for us is just to confirm STARS.
Yeah.
I mean, we do think we have an opportunity for best-in-class therapy, as I mentioned, from a weekly perspective, and we have placebo-like tolerability. I mean, the biggest questions we get from patients in the extension trial, which they all stay in the extension trial, is we continue to get clinical benefits as patients stay on therapy. Right now, we're actually up to one in five patients is achieving enteral autonomy. They're the patients that come off all parenteral support, and sometimes it takes longer for people on therapy to actually achieve that goal. We're hearing very good continued outcomes, and like we said before, the original STARS study was statistically significant and clinically meaningful. We just aim to confirm that data, and we think we have an opportunity for a best-in-class therapy for patients.
From an execution perspective, are you using similar sites or some of the same sites or a lot of the same sites as you did in STARS 1? The enrollment criteria look roughly the same, and then just, you know, how long do you think this study could take?
Yeah. The enrollment criteria are roughly the same.
Yeah.
We certainly have gone through all of the original STARS data to do everything we can to optimize the operational and clinical success of the program, but pretty much the same. We're taking synergies from all our site engagements. We have a lot of study sites we're still working with in the extension trial, right? We still have a number of patients in the extension trial, so we have an opportunity there. We're also going to new sites because a lot of sites have a select number of patients. It's often not that many, so we also don't wanna exhaust each site. We wanna use what we can.
We're gonna use a combination and take the best learnings from the STARS original program, use what we can that we still have, and then add to that to ensure we get the trial done as quick as possible. Right now, we're targeting a submission sort of the end of 2029, initiate the trial in Q2 , but we're certainly taking every opportunity to improve that. As I said, right now, we're really pushing for that, and we do think we can potentially work on the timeline there, but we wanna get started initially in quarter two and push forward.
Maybe I'll ask Greg this. How does that timeline overlap with LINZESS' brand life?
Yeah. LINZESS, as you know, is our primary cash flow driver. Those cash flows will continue to be invested in apraglutide development. There is the potential for a generic entrant in 2029, so around the same timeframe that we would be looking towards an NDA submission. We still believe that the LINZESS cash flows over the course of the next several years will put us in a very strong position, that we'll be well-capitalized to be able to support an eventual transition to an apraglutide commercial launch, if approved.
Look, the cool point here isn't identical, but it's similar. Greg, you said you're a, you know, GI-focused company and one of the leading GI-focused companies. What can you leverage from the experience that you've had from LINZESS commercially to drive success with launching apraglutide?
Yeah. We spent a lot of time in 2024 leading up to 2025 in some of the FDA engagement that Michael noted, preparing for commercial success and commercial launch for apraglutide. A lot of the work to prepare how we're gonna position the product, what capabilities are needed, a lot of that work's already been done.
Yeah.
We feel quite confident about our approach in terms of go-to-market for apraglutide upon eventual approval. Ultimately, a lot of those learnings are leveraging the know-how we have from our commercial success in working with AbbVie and working on LINZESS for the last 14 years. We have a lot of the same resources in place that were instrumental in the success of LINZESS, and we've been able to really refine our approach in a rare disease indication like short bowel syndrome to really we believe position this for success upon launch.
What are your plans for apraglutide outside of the U.S.?
Yeah. We are from a capability standpoint, we do have development capabilities in Basel, Switzerland. We have commercial capabilities that have been more historically focused on the U.S., so that will be our primary market focus and where we believe is the largest addressable market dollar-wise for Short Bowel Syndrome. That'll be our primary focus. Ex-U.S., we will look for opportunities to potentially partner in select regions where it makes sense to further expand the commercial opportunity.
Just obviously, you have a lot going on, right? As you think about the longer term here, to what level of priority will it become to bring in an earlier stage pipeline or assets that have adjacencies with apraglutide?
Yeah. We, for 2026, we're really focused on execution.
Yes.
Really maximizing LINZESS, getting the study, confirmatory STARS 2 study up and running, paying down debt.
Mm-hmm.
We'll continue to look at opportunities to enhance the portfolio over time.
Mm-hmm.
2026 is really focused on execution.
Fantastic. Michael, Greg, really appreciate you being here this afternoon, and looking forward to the start of the apraglutide STARS-2 trial.
Thank you.
Thank you, Jason.