Mizuho Securities Reiterates Buy on Ironwood Pharma (IRWD) Following Investor Dinner
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Mizuho Securities reiterated a Buy rating and $24.00 price target on Ironwood Pharmaceuticals (NASDAQ: IRWD) following an investor meeting. Mizuho believes that the company's life cycle extension study readout in the 4Q could be a bigger catalyst than expected.
Analyst Irina Koffler commented, "The trial on two new linaclotide formulations is expected to read out in 4Q:16. The important areas to focus on are: (1) The first colonic release life-cycle extension product (DR1) is aimed to provide either deeper or faster pain relief than Linzess (and three doses of both DR1 and DR2 will be compared to placebo and the 290 mcg Linzess in an 8-arm trial). If it works, this drug could enhance patient compliance / retention, and become the drug of choice for new patient starts (thereby growing / replacing Linzess overall), and also extend the patent estate of the Linzess franchise until 2036. Management indicated that a generic would need to conduct a clinical trial and that developing a substitutable product would be highly challenging. (2) The second colonic release linaclotide product (DR2) is only supposed to work on GI pain, and not constipation. It is therefore expected to miss the primary endpoint in the trial (composite responder to both bowel movement frequency and pain endpoints). However, it is hoped that this formulation will hit on secondary endpoints related to pain and pain responders. It is therefore important to be attentive to this intentional endpoint miss that has been designed into the study and not to assume a failed program based on headlines. We currently model modest risk-adjusted revs (<$150M in aggregate) for both products but actual upside could be more significant."
Shares of Ironwood Pharmaceuticals closed at $15.59 yesterday.
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