Duncan Williams Starts Ironwood Pharmaceuticals (IRWD) at Hold, Sees More Attractive Entry Point in The Future

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Price: $12.65 -2.01%

Rating Summary:
6 Buy, 8 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
Up: 19 | Down: 21 | New: 29

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Duncan Williams initiates coverage on shares of Ironwood Pharmaceuticals (NASDAQ: IRWD) with a Hold rating and a fair value estimate of $15.

The firm believes that news of the Linaclotide approval is already priced into the stock and that any approval-related speculation could lead to negative volatility around the FDA panel and PDUFA in 2012 and actual approval may not drive share appreciation.

Duncan estimates that the company will only realize ~$1.7 billion in global Linaclotide royalties by 2027 based on sales of +$4.7 billion generated by its three existing partners, Forest Labs, Almirall, and Astellas.

The firm anticipates significant promotional expenses associated with global market creation for this category which also negatively impact the economics on the product, and therefor does not see the company attaining any profit from it before 2016, one year later than the consensus.

Duncan Williams forecasts $3.4 billion peak sales for Linaclotide in the US, with a profit split with Forest and $330 million peak Linaclotide royalty revenues from EU and Japan. The firm believes that additional financing may be required to get through the launch and expect more attractive entry points into the stock in the future.

For more ratings news on Ironwood Pharmaceuticals click here and for the rating history of Ironwood Pharmaceuticals click here.

Shares of Ironwood Pharmaceuticals closed at $14.75 yesterday, with a 52 week range of $8.90-$16.49.

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