Awesome. Thank you very much for joining us again for the session with Ironwood management team. My name is Mohit Bansal, and I'm joined by Tom McCourt, the CEO of the company, and Tammi Gaskins, the Chief Commercial Officer of the company. Thank you very much for joining us today.
Thanks, Mohit. Thanks for having us.
Awesome. Exciting times at Ironwood. Very exciting year for you guys. Can you talk a little bit about in the last one year, what has changed at the company? Tammi has been the architect of a lot of those changes. Talk a little bit about those things.
Yeah, this is really a turnaround year for us as you well know. That was driven off the back of a couple of unfortunate situations, one of which was the IRA hit that we took on Medicaid rebates. Of course, we made a very bold move to drop the WAC, which eliminated it. We are seeing basically a $300-$350 million swing in revenue as far as net sales. We are on track to see about a 30% growth rate year-over-year, which has obviously turned the company around.
In addition, as you know, with the feedback we got from FDA on apraglutide, where they were requesting a confirmatory trial, even though we had the largest trial ever run, was positive, that was placebo-like tolerability. There were some questions on the dosing, and they really requested a confirmatory trial, which we worked very closely with the FDA to get clarity on that. It is going to be a shorter trial, a smaller trial. We have it up and running, and right now we are bringing on additional sites.
We are tracking really well. The cash flows obviously have improved dramatically w ith regard to our balance sheet, which enabled us to pay off the $200 million convert that we have, and we're going to continue to whittle away at the revolver that we still have out. But we're, at this point, really de-leveraging the company dramatically, where we're below 1x EBITDA. I think we feel very good about where we're at. Tammi has done a terrific job in collaborating with AbbVie to really turn LINZESS around and heading it in the right direction.
Maybe, Tammi, you can talk a little bit more about where the drug is and where LINZESS is and where we're going,
Yeah. Well, first of all, working on a brand like LINZESS is incredible because it's prescription Rx leader for IBS-C and CIC. Helped over. We're getting close to 5 million patients, unique patients since launch. But I would say, Mohit, it's the first time in my long career that I've been part of a brand that was achieved blockbuster status, was over $1 billion. For pricing reasons, we saw, as Tom alluded to, a big step back last year. We are very proud at the beginning of this year to say we were guiding to greater than $1 billion again.
That really has been driven by improved net price year-on-year. As Tom McCourt mentioned, because we made a change to the list price, we are able to eliminate inflationary rebates across channels, including Medicaid. That, combined with favorable timing of year-on-year gross-to- net rebate reserves, has really made that change. Then we raised the guidance further at mid-year, in part due to continued net price benefit, but also because we have increased our expectations about full-year demand growth.
So really exciting time just to be taking LINZESS, even this late in the brand's maturity into a new realm, continued demand growth, and as Tom said, really strengthening the balance sheet for the organization.
Oh, awesome. I think I was more intrigued by the guidance raised in the middle of the year as well.
Okay.
More than the again, a price cut was a surprise for everyone. I think you were a little bit conservative in the beginning that you did not know probably that if there will be a volume loss because of those pricing changes and everything. Walk us through how the thought process has changed and what you saw in the marketplace with the impact of that price cut, because for some plans, it became less profitable to use LINZESS and all that. So talk a little bit about the impact on the marketplace and what gave you confidence to raise the guidance in the middle of the year.
Yeah. We've consistently seen demand grow for quite a long time for LINZESS year- on- year. But we knew with this significant change that we made and where some channels, it would be less profitable for them. If you will, for LINZESS, that there could be an impact in demand. At the beginning of the year, we raised our guidance due to the improved net price, but we thought there could be some demand softening in certain channels because of the lowering of the list price and the removal of the inflationary rebates.
We gave it a couple of quarters, and we originally alluded to low single-digit demand growth year-on-year. Through June, we were tracking to 5%, and we believe that this trend is going to continue, so we're expecting mid-single-digit demand growth for the full year, U.S. TRx volume demand growth. That, combined with the net price change, enabled us to increase our guidance.
Got you. So basically, you may be tracking close to the same volume growth which you have seen in the past. Is that a fair way to think about it despite the changes here?
Yeah. Volume, one thing that's, again, unique about this market with IBS-C/CIC is the market continues to grow year- over- year. We see more patients coming into the prescription market. They're dissatisfied with OTC therapies as their treatment. Most of LINZESS demand is sourced or comes from the OTC marketplace. Volume continues to drive. In part because of the market growing and more patients coming in, then as the Rx market leader it's most likely that those patients are going to receive LINZESS when they go to their doctor for their conditions.
Yeah, and I think access is obviously a key component to this. Because in a category like this, if physicians aren't going to jump through hoops to fill out a prior authorization or deal with step edits, maintaining the strong coverage we have is absolutely paramount to continue the drive. We have worked very closely with the payers to make sure that we have market-leading access. Which this has become the go-to drug for people that have both either chronic constipation or pain or bloating associated with that.
Right. That brings me to the next question, because I'm sure you are in the access discussions for next year at this point. This is the time right now. The question here is that how should we. Obviously it's super early to give guidance, but how should we think about the price volume going forward for 2027 at this point? Assuming volume could continue to grow, but how should we think about price here?
Tammi, you want to.
Yeah. This is probably the most clarity and I'll say stability we add into LINZESS pricing for years. That's a couple of reasons. As I said, because the changes we made that eliminate some of the inflationary rebates, but also as we go into 2027, because I know you're aware, Mohit, that LINZESS starts with the MFP for Medicare, right? LINZESS was a negotiated drug. So that also gives us visibility in what the price is going to be for Medicare for the coming years. And that is the largest book of business. So certainly, more clarity, more visibility into price.
We do expect that the market is going to keep growing from a demand perspective for a variety of reasons, including the aging population in the U.S. and patients presenting with more severe symptoms. So with all those things, we will continue to look at those things as markers for success over the coming years, as well as margins, commercial margins, right? So we really look to work with our partner to optimize the profitability and revenues of the brand.
Got it. Medicaid is also a decent book of business here as well, right? If I am not mistaken.
Medicaid is, I am sorry.
Medicaid is also part of the business here, right?
It is.
Right.
It is the smaller component of our business. Medicare Part D is the largest followed by Commercial and then Medicaid. But the inflationary rebates that used to exist actually disproportionately affected the business. With that change, that then brought more consistency to the net price across channels overall. The MFP for Medicare is in line with our expectations. As you alluded to keeping driving demand is going to be critical with that clarity into price.
Does MFP pricing helps with the volume?
You are asking the question. Right now, we actually, as of today, have 100% coverage for LINZESS in Medicare. When I talked about more the aging population, we know that older individuals tend to present more with IBS-C and CIC as well. The short answer is that is a key part of our business. We expect it to keep growing. As an MFP drug, even though we have great coverage today, it will still have to be made available to those patients.
Very helpful. Thank you. I want to spend a lot of time on Apra as well.
Okay.
Because.
Love to talk about it.
Both sides, clinical/the commercial side, because Tammi has done a lot of work there. Would love to understand that. Now, talk to us a little bit about the FDA discussions here. You talked.
The what?
FDA.
The FDA discussions here.
FDA, sure. Yep.
It was a little bit odd that despite all the data, they asked for another trial, but that's probably the dosing thing. What steps you are taking to make sure the, because the dosing issue was basically doctors did not know how to rightly dose patients and all that. Talk a little bit about that, how you address that.
Well, to take a step back, so we uncovered this after the phase III trial read out. It was a positive trial. Drug was well-tolerated, but the exposure data didn't look quite right. When we looked back and examined all the exposure data, and as we did a root cause analysis, we found out that they had made a change in the vial, actually, and they didn't account for the lyo-cake . Some of the directions to the patient wasn't quite clear. There was some variability in the dosing, but it was pretty consistent, quite consistent, where they intended to deliver 5 mg , they only delivered 3.5 mg.
What we wanted to do is, this was the largest trial ever conducted. We have very good tolerability and safety data. When the FDA came forward with, We want to see another trial or a confirmatory trial, we wanted to match the two. We wanted to be able to leverage the first STARS trial. What we did was, we redesigned the package to make it far easier to use and far more accurate. We put that through a human factor study and evaluated how patients administered and what the exposure looked like, and we saw very, very consistent feedback.
I think the new kit plus the clarity and direction for the patient, I think will resolve that with the FDA. And certainly, at some point, we have this extension study. That is continued. So we still have well over 100 patients that are continuing to take Apra in STARS Extend. We will switch those patients. So that will give us another data set of patients available with regard to the PK data, the tolerability data, the efficacy data, that will only strengthen the data set for the NDA. So we feel very confident that we will have a positive trial, and we will be able to move forward as quickly as we can with the NDA.
You could argue the instructions are very clear that they were called consistently at 3.5 mg dose, right? Consistently wrong.
Yeah. Exactly.
Some investor told me that you need to be consistently right or consistently wrong for me to make money off with you. Awesome. Thank you very much for this. Talk to us about the timelines at this point. You have started the trial now. How long would it take, and when should we expect data at this point?
Do you want to take that?
Yeah. We did start, as you just shared, and we had our first site activated before the end of June, and we are working as quickly as possible, building on the sites that we had previously. As Tom mentioned, we had 68 sites, largest SBS-IF trial to date with our first STARS trial. We're going to continue to add on to that, in particular in the U.S., to try and accelerate enrollment as quickly as possible. Right now, and previously, we've indicated we're looking to file an NDA by 2029.
But of course, we will do anything we can to accelerate that because we know the importance of continuing this and bringing it forward for patients. Tom, you want to add anything there?
Yeah, I think we've expanded the U.S. sites dramatically. In the previous trial, it was mainly European sites. Obviously, VectivBio was headquartered in Switzerland, and that made sense. But we had an opportunity to expand the U.S. sites. It is going to open up an additional pool of patients. How quickly we can get them in the trial is really what we are focusing on now. But I think our intention is, how can we really accelerate enrollment and file the NDA well ahead of schedule?
This is a shorter trial than the first.
Yeah.
Our primary endpoint, it will be 24 weeks, and our goal or our plan is to submit a comprehensive data set, bringing in the first STARS efficacy. Then, of course, we have several years of long-term extension safety data as well, so looking at the pool of that data to help support a submission.
Got it. Last time around, you were looking at 52 week to at least see some differentiation around CIC subset as well. It doesn't look like the drug's benefit can be parsed out in those subsets. Where do you stand on that thought process?
Yeah. FDA's got very clear on this, and this was, I think, another piece of good news for us as far as trial design, is they're looking at it as an aggregate population.
They clearly saw benefit in both populations. The stoma, certainly because the dynamic range was so bigger as far as their volume of parenteral support, it was easier to show an improvement than CIC. But clearly, they both benefited, so FDA wants us to keep both populations in the study. We're not going to separate the two in separate analysis. It'll be one aggregate data set. It will be a balanced data set. I think this was a real step in the right direction by the FDA, and it certainly reduces the complications of the trial design.
Completely makes sense. Then, there is a thought process out there that having, because yours is a weekly drug, having a consistent GLP-2 exposure should lead to better efficacy than a GATTEX or other drugs as well. Can you see that in the clinical trial, that benefit? I know the nine-patient trial where you looked at the stool output and all that.
Yeah.
It was seen there in that particular endpoint. Just talk a little about that.
No question. I think the biggest challenge with GATTEX, as you know, it's a very short-acting drug. You have to take a daily injection, but if you miss a couple injections, it can really mess up the parenteral support that is required for the patient. It makes it very cumbersome for the patient and the clinician to manage the disease. As well as there is some significant tolerability issues with regard to gastric distress, which is a reason why 50% of people discontinue within the first 12 months.
That is not what we see b ecause of the long-acting nature of the drug, you see very smooth blood levels, and it consistently, because it is a trophic hormone, these patients continue to get better and better over time. It is really remarkable when you think about where these patients start. These people are on parenteral support 8-10 hours a day, five to seven days a week, and we have dramatically reduced that. In fact, one out of five patients got completely off parenteral support.
Which really was astounding and was a real, I think, a big driver when the FDA saw those data with regard to how do we work with the sponsor to say, how do we get this to patients faster? I think we feel really good about that. I do think the fact that almost all the patients rolled over from the original trial into STARS Extend and we have maintained almost 90% of the patients for years. I think it says a lot about how well these patients are doing, how well it is tolerated, and how consistent they are as far as compliance.
Yeah. Just to reinforce that point, we are very excited. We shared at ACG last year some additional data from the STARS Extend trial. As Tom just said, most patients rolled over, whether they were on active treatment or placebo, and we continue to see improvement over time, the longer that patients stay on therapy, including achieving enteral autonomy. We had done analysis early last year. We saw 35 patients achieving enteral autonomy, and we plan to do additional analyses for those patients as well.
But that's being able to stay with the therapy and see those benefits we believe means significant potential for apraglutide, if approved in the future.
Got it. Very helpful. The other question, I think, Tammi, you have done a lot of work trying to figure out what is the real size of the market in this, and I think the ICD code is also new thing in this space. Talk a little bit about that and what is your latest estimate of the market opportunity here?
Yes, Mohit. We've spent a lot of time looking at that and looking at different resources, research, and claims because in this type of market, not all data is available. But we feel pretty confident that when we look at patients in the U.S. who would be considered GLP-2 eligible. By that we mean they are on parenteral support three or more days a week. We are looking about 8,000 patients. Of those, we estimate, again, based on research and available claims data, that only about a quarter of those patients, so in any given time, between 1,500 and 2,000, are actually on GATTEX.
We had just discussed that there is, unfortunately, a high discontinuation rate that we see with GATTEX, about 50% at a year. We see that there is potential not only in the market to increase utilization but to expand GLP-2 use overall. That is going to be critical to the market opportunity. In addition to getting new patients, also helping to support those patients to stay on therapy longer than they currently do is going to be key to the market. Just to bring it back, we believe apraglutide has the potential to increase GLP-2 utilization, if approved, and help patients stay on therapy longer. That will be our goal for the market opportunity.
Got it. When people discontinue, why do they discontinue? Is it the daily dosing the issue, or is it not enough benefit? What is the issue with the product?
Yeah. Tom, you can comment here too. We do hear in market research, obviously these patients, there is a lot of burden in their lives just with the daily parenteral support. So, we have heard things cited in terms of once daily dosing. We have heard things cited from HCPs and patients in terms of side effects as well. So I am sure it is multifactorial. But to your point of having something, it is not just about convenience. I know we talk about this. It is once-weekly efficacy, right?
And seeing that efficacy then supporting that with a safety and tolerability profile that can help patients to stay with that efficacy that is really what can bring differentiation to the market.
Got it.
One of the things that has been striking to me is the recognition of the benefit to the patient that we're hearing from the investigators, that the patients really see the benefit. And one of the pieces or insights that we got out of this study was on is one of the challenges on GATTEX is these patients don't recognize the benefit quickly. And we think when you look at the clinical profile that we're going to bring to market, it's going to be far more attractive and appealing to patients and caregivers, which I think, to Tammi's point, will enable us to expand the market as far as the GLP-2 market.
Yeah. That's
The patients are there, they're suffering. They're very identifiable because they consume so much healthcare that you can find the patients. Now the question is how do we get the patients and keep them on the drug?
Got it.
Yeah. That's important because we did see separation in the original STARS trial with significance reduction in PS volume as early as 8 weeks. Now we need to confirm those results with our second trial. But it is something that we've heard is motivating for patients.
Got it. Very helpful. Do we know where GATTEX biosimilars are at this point in terms of development, and any view on those? They are still probably a biosimilar to an inferior drug, but again, how do you think about those two dynamics?
Yeah. Maybe I'll start, Tom can add on. Just to clarify, so GATTEX did submit an NDA, so it would actually be a generic.
Okay. Then no biosimilar. Okay, fine.
Not a biosimilar. No.
Yeah.
When we've given our estimates, our peak sales goals and estimates, looking at $700 million+ , we've assumed in that there will be a generic teduglutide on the market a nd potentially even another long-acting GLP-2. That is already figured into our forecast. In terms of any updates, we did hear last year, Cipla is a company that stated publicly that they may launch a generic in the 2026-2027 time frames. We still don't have any updates on that. There has been a bit more movement in Europe with Adalvo and Viatris but we still haven't seen any impact yet on sales trajectory.
That is what we plan for, expect. We keep monitoring it very closely, but it is a very small patient population, so we don't expect it is going to be a multi-source generic market.
Got it. Go ahead.
I think the thing that is important to realize here, too, is the generic doesn't solve the problem GATTEX has. This is this whole daily dosing, short acting, the peaks and troughs that may affect the parenteral support management, and the tolerability. So again, this apra will be such a far more attractive option for patients versus another generic GATTEX.
Got it. So for patients who are on parenteral support but not on GATTEX, or never tried GATTEX. What is the reason for that segment? Is it community setting, they don't know about it? What exactly is the issue there?
Yeah. Again, that is a fairly complex answer, but even after GATTEX has been approved since 2012, there still isn't broad awareness or the perception that a GLP-2 is the part of standard of care. Even after this time, there's still some awareness. Also, what we hear in research is the doctor and the patient want to make sure that the patient's adjusting their parenteral support and doing all those things, and that the patient's going to be able to stay with therapy.
I think giving an option, that, as we were talking about, where you could see some efficacy early and you could have the convenience of once weekly, it might change that dynamic in terms of seeing more patients. Trying more patients on the therapy.
Got it.
Yeah, because that's a really good point in that once a patient has been stabilized with their parenteral support, they don't like to mess with it. Unless they see a clear benefit of starting a weaning process which requires some real effort and attention to do that. Now, in the end, it's great for the patient. You get off two, three days a week of parenteral support or no parenteral support. But it's got to be obvious to the patient that they can get there. I think part of this is somewhat of an apathy issue. I think this is where we have to get out and educate people on how much better they can do when they are treated.
Yeah. No, that is well said in terms of the motivation. It is that these patients do develop a new standard, a norm, and it is making changes to that to ultimately, hopefully, help them get to an even better place.
At what point you would start to build the sales force for apraglutide, maybe 2028 or so, as you get to. Because earlier, the plan was to combine with LINZESS, but now LINZESS, you have trimmed the sales force a little bit here. How are you thinking about that?
Yeah. This is a much different design and footprint than for LINZESS, right? Much smaller footprint in terms of these patients, or more concentrated at centers of excellence. It is more of an account-based approach. This is not a broad reach and frequency model like you would have for a brand like LINZESS. Certainly, a smaller sales force, which also means you can wait a bit longer to bring them on, because you are not talking about the extensive hiring that you would for a big team for a brand like LINZESS.
We are keeping in mind that target of submitting NDA in 2029, and we will certainly space things or time things appropriately for when we want to get to market if approved. Speed is of the essence to make all that happen and to potentially help more patients with our brand.
I think probably an equally important consideration here, Mohit Bansal, is the hub services for the patient. I think Tammi and the team have done a lot of work looking at best practices to say, What does that hub service look like to get the patient, the drug, the caregiver to interact, and how do we support that? We hear that over and over from the prescribers or the physicians that those services are invaluable as far as educating patients, pulling through specialty pharma to get the drug to the patient, and encourage them to be compliant with therapy.
I think we're spending a lot of time making sure that we have a best-in-class hub service to support the patients.
Got it. Makes sense. Last question from the financial side of things. The balance sheet is in a much better position in last year or so. How well funded you are for not only LINZESS, but I'm sure LINZESS is supporting the apraglutide development here. Let's talk a little bit about the funding situation here.
I think we feel very comfortable with where we are right now, and I think we have a very clear line of sight of what we expect to see to LOE and post LOE, which is pretty significant revenues coming in. The brand's going to continue to be more LINZESS will continue to be more profitable as we get closer. We do think there's things that we can do to hang on to some of that business, even post LOE, right? I think based on our projections with regard to our expenses, costs, scaling, we'll have enough cash to get us through the launch of Apra.
I think we're taking a conservative point of view with that because we certainly want to make sure we have a healthy balance sheet. Our intention is still to continue to delever and reduce our debt, but we certainly want to make sure we have enough cash on hand to make sure we have a very successful launch of Apra.
As you know, Mohit, our guidance as of mid-year was for revenue, $460 million-$485 million. Greater than $310 million adjusted EBITDA. Of course, we're looking to end the year with debt less than one time.
EBITDA
The EBITDA. Just to give you perspective on our goal and our guidance for this year, taking us into the next year.
Awesome. On that high note, thank you very much for joining us today.
Thanks
All the best.
Thanks for having us.
Thanks for having us. We enjoyed it.
Thank you so much.