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Ironwood Pharmaceuticals Provides First Quarter 2015 Investor Update

May 5, 2015 4:02 PM

– LINZESS® (linaclotide) U.S. net sales of $95.5 million in first quarter 2015 –

– Total LINZESS prescriptions increased approximately 90% in first quarter 2015 compared to first quarter 2014 –

– Reported positive top-line data from IW-3718 Phase IIa study for refractory GERD –

– Advanced sGC platform with initiation of first candidate, IW-1973, into Phase I study –

– Established agreement with Exact Sciences to co-promote Cologuard® –

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD) today provided an update on its first quarter 2015 and recent business activities.

“Strong fundamentals continued to fuel LINZESS prescriptions and net sales growth, resulting in another solid quarter of profitability for the LINZESS brand, and we expect at least 16 years of continued expansion ahead for the U.S. linaclotide franchise,” said Peter Hecht, chief executive officer of Ironwood. “Our innovative pipeline continues to advance, with positive Phase IIa data for IW-3718 and several important inflection points expected later this year, including up to four additional clinical data readouts. We are also excited to apply our strong commercial capabilities through a collaboration with Exact Sciences to co-promote their innovative colon cancer diagnostic, Cologuard.”

First Quarter 2015 and Recent Highlights

LINZESS® (linaclotide)

Research & Development

Ironwood continues to advance its innovative pipeline. During 2015, the company expects up to ten ongoing clinical studies and five clinical data readouts, including the recent positive IW-3718 Phase IIa data.

Global Partnerships for Linaclotide

Cologuard® Co-Promote

Corporate and Financials

Conference Call Information

Ironwood will host a conference call and webcast at 4:30 p.m. Eastern Time, on Tuesday, May 5, to discuss its first quarter 2015 and recent business activities. Individuals interested in participating in the call should dial (877) 643-7155 (U.S. and Canada) or (914) 495-8552 (international) using conference ID number 26622828. To access the webcast, please visit the Investors section of Ironwood’s website at www.ironwoodpharma.com at least 15 minutes prior to the start of the call to ensure adequate time for any software downloads that may be required. The call will be available for replay via telephone starting at approximately 7:30 p.m. Eastern Time, on May 5, running through 11:59 p.m. Eastern Time on May 12, 2015. To listen to the replay, dial (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (international) using conference ID number 26622828. The archived webcast will be available on Ironwood’s website for 14 days beginning approximately one hour after the call has completed.

About LINZESS (linaclotide)

LINZESS® is the first and only guanylate cyclase-C (GC-C) agonist approved by the FDA and is indicated for the treatment of both irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC) in adults. LINZESS is a once-daily capsule that helps relieve the abdominal pain and constipation associated with IBS-C, as well as the constipation, infrequent stools, hard stools and incomplete evacuation associated with CIC. The recommended dose is 290 mcg for IBS-C patients and 145 mcg for CIC patients. LINZESS should be taken at least 30 minutes before the first meal of the day.

LINZESS is thought to work in two ways based on nonclinical studies. LINZESS binds to the GC-C receptor locally, within the intestinal epithelium. Activation of GC-C results in increased intestinal fluid secretion and accelerated transit and a decrease in the activity of pain-sensing nerves in the intestine. The clinical relevance of the effect on pain fibers, which is based on nonclinical studies, has not been established.

In placebo-controlled Phase III clinical trials of more than 2,800 adults, LINZESS was shown to reduce abdominal pain in IBS-C patients and increase bowel movement frequency in both IBS-C patients and CIC patients. Improvement in abdominal pain and constipation occurred in the first week of treatment and was maintained throughout the 12-week treatment period. Maximum effect on abdominal pain was seen at weeks 6-9 and maximum effect on constipation occurred during the first week. When a subset of LINZESS-treated patients in the trials were switched to placebo, they reported their symptoms returned toward pretreatment levels within one week, while placebo-treated patients switched to LINZESS reported symptom improvements. LINZESS is contraindicated in pediatric patients under 6 years of age. The use of LINZESS in pediatric patients 6 through 17 years of age should be avoided. In nonclinical studies, administration of a single, clinically relevant adult oral dose of linaclotide caused deaths due to dehydration in young juvenile mice. The safety and efficacy of LINZESS in pediatric patients under 18 years of age have not been established. In adults with IBS-C or CIC treated with LINZESS, the most commonly reported adverse event was diarrhea.

Ironwood and Actavis plc are co-promoting LINZESS in the United States. Linaclotide is marketed by Almirall, S.A. for the treatment of adults with moderate to severe IBS-C in Europe under the brand name CONSTELLA®. Ironwood also has partnered with Astellas Pharma Inc. for development and commercialization of linaclotide in Japan and with AstraZeneca AB for development and commercialization in China.

About CONSTELLA (linaclotide)

Linaclotide is a guanylate cyclase-C receptor agonist (GCCA) with visceral analgesic and secretory activities. Linaclotide is a 14-amino acid synthetic peptide structurally related to the endogenous guanylin peptide family. Both linaclotide and its active metabolite bind to the guanylate cyclase-C receptor, on the luminal surface of the intestinal epithelium. Through its action at GC-C, linaclotide has been shown to reduce visceral pain and increase GI transit in animal models and increase colonic transit in humans. Activation of GC-C results in an increase in concentrations of cyclic guanosine monophosphate (cGMP), both extracellularly and intracellularly. Extracellular cGMP decreases pain-fiber activity, resulting in reduced visceral pain in animal models. Intracellular cGMP causes secretion of chloride and bicarbonate into the intestinal lumen, through activation of the cystic fibrosis transmembrane conductance regulator (CFTR), which results in increased intestinal fluid and accelerated transit.

Linaclotide was discovered by scientists at Ironwood and is marketed by Almirall, S.A. for the treatment of adults with moderate to severe IBS-C in Europe under the brand name CONSTELLA, through a license agreement between the two companies.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals (NASDAQ: IRWD) is focused on creating medicines that make a difference for patients, building value to earn the continued support of our fellow shareholders, and empowering our team to passionately pursue excellence. We discovered, developed and are commercializing linaclotide, which is approved in the United States and a number of other countries. Our pipeline priorities include exploring further opportunities for linaclotide, as well as leveraging our therapeutic expertise in gastrointestinal disorders and our pharmacologic expertise in guanylate cyclases to address patient needs across the upper and lower gastrointestinal tract. Ironwood was founded in 1998 and is headquartered in Cambridge, Mass. Connect with us at www.ironwoodpharma.com or on Twitter at www.twitter.com/ironwoodpharma; information that may be important to investors will be routinely posted in both these locations.

LINZESS® and CONSTELLA® are trademarks owned by Ironwood Pharmaceuticals, Inc. Any other trademarks referred to in this press release are the property of their respective owners. All rights reserved.

Important Safety Information

WARNING: PEDIATRIC RISK

LINZESS is contraindicated in pediatric patients under 6 years of age. In nonclinical studies,administration of a single, clinically relevant adult oral dose of linaclotide caused deaths dueto dehydration in young juvenile mice. Use of LINZESS should be avoided in pediatricpatients 6 through 17 years of age. The safety and efficacy of LINZESS has not beenestablished in pediatric patients under 18 years of age.

Contraindications

Warnings and Precautions

Pediatric Risk

Diarrhea

Adverse Reactions

Please see full Prescribing Information including Boxed Warning:

http://www.frx.com/pi/linzess_pi.pdf

This press release contains forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, including, but not limited to, statements about development, launch and commercialization plans for linaclotide and our product candidates; commercial efforts for linaclotide and the drivers, timing, impact and results thereof; market size, growth and opportunity, and potential demand for linaclotide and our product candidates, as well as their potential impact on applicable markets; growth in LINZESS U.S. net sales relative to total LINZESS prescription growth and the drivers thereof; the potential indications for, and benefits of, linaclotide and our product candidates; the anticipated timing of pre-clinical, clinical and regulatory developments; the design, timing and results of clinical and pre-clinical studies; expected periods of patent exclusivity; the strength of the intellectual property protection for our product and product candidates; potential business development activity and the timing and impact thereof; profitability of the U.S. LINZESS brand collaboration with Actavis plc; and our company's financial performance and results, and guidance and expectations related thereto, including our projected 2015 operating expenses, revenue growth, operating leverage, and 2015 marketing and sales expense for LINZESS. Each forward‐looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statement. Applicable risks and uncertainties include, but are not limited to, those related to pre-clinical and clinical development, manufacturing, and formulation development; the risk that findings from our completed nonclinical and clinical studies may not be replicated in later studies; decisions made by U.S. regulatory authorities, the U.S. Patent and Trademark Office and their foreign counterparts; the risk that we may never get sufficient patent protection for linaclotide and our product candidates; intellectual property rights of competitors or potential competitors; efficacy, safety and tolerability of linaclotide and our product candidates; competition in disease states; the commercial potential of linaclotide and our product candidates; the risk that our planned investments do not have the anticipated effect on our company revenues, linaclotide or our product candidates; the risk that we are unable to identify and execute on business development opportunities in a cost-effective and timely manner or that such opportunities do not have the impact expected; the risk that we are unable to manage our operating expenses over the year due to foreseeable or unforeseeable events or occurrences; and the risk that we and Actavis are unable to commercialize LINZESS within the guided range of expenses. Applicable risks also include those that are listed under the heading "Risk Factors" and elsewhere in Ironwood's Annual Report on Form 10-K for the year ended December 31, 2014, in addition to the risk factors that are listed from time to time in Ironwood's Annual Reports on Form 10‐K, Quarterly Reports on Form 10‐Q and any other subsequent SEC filings. Ironwood undertakes no obligation to update these forward-looking statements to reflect events or circumstances occurring after this press release. Except as otherwise noted, these forward-looking statements speak only as of the date of this press release. All forward‐looking statements are qualified in their entirety by this cautionary statement. Further, Ironwood considers the net profit for the U.S. LINZESS brand collaboration with Actavis in assessing the product’s performance and calculates it based on inputs from both Ironwood and Actavis. This figure should not be considered a substitute for Ironwood’s GAAP financial results. An explanation of our calculation of this figure is provided in the U.S. LINZESS Brand Collaboration table and related footnotes accompanying this press release.

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

March 31,2015

December 31,2014

Assets
Cash, cash equivalents and available-for-sale securities $ 215,865 $ 248,334
Accounts receivable, net 33,849 25,839
Inventory 4,950 4,954
Prepaid expenses and other current assets 9,212 10,603
Total current assets 263,876 289,730
Property and equipment, net 27,477 29,826
Other assets 14,175 13,957
Total assets $ 305,528 $ 333,513
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses $ 33,232 $ 35,948
Current portion of capital lease obligations 1,177 1,152
Current portion of deferred rent 5,006 4,992
Current portion of deferred revenue 7,191 7,191
Current portion of long-term debt 13,207 11,258
Total current liabilities 59,813 60,541
Capital lease obligations 2,268 2,571
Deferred rent 9,935 10,522
Deferred revenue 7,191 8,989
Notes payable 158,159 162,338
Total stockholders’ equity 68,162 88,552
Total liabilities and stockholders’ equity $ 305,528 $ 333,513

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

Three Months Ended March 31,

2015 2014
Collaborative arrangements revenue $ 28,932 $ 14,605
Cost and expenses:
Cost of revenue 12 1,924
Research and development (1) 26,641 27,144
Selling, general and administrative (1) 30,346 29,924
Total cost and expenses 56,999 58,992
Loss from operations (28,067 ) (44,387 )
Other expense (5,155 ) (5,239 )
Net loss $ (33,222 ) $ (49,626 )
Net loss per share—basic and diluted $ (0.24 ) $ (0.38 )

Weighted average number of common shares used in net loss per share — basic and diluted

141,278 129,745

(1) Non-cash compensation expenses reflected in the condensedconsolidated statements of operations are as follows:

Research and development

$

2,054

$

2,690

Selling, general and administrative

$

3,372

$

3,384

U.S. LINZESS Brand Collaboration1

Revenue/Expense Calculation

(in thousands)

(unaudited)

Three Months Ended

March 31,

2015 2014

LINZESS U.S. net sales2

$ 95,489 $ 60,812

Commercial costs and expenses3

58,151 59,916
Net profit on sales of LINZESS $ 37,338 $ 896
Ironwood’s share of net profit $ 18,669 $ 448

Ironwood’s selling, general and administrative expenses4

$ 7,688 $ 7,999
Profit share adjustment5 $ (1,220 ) $ —
Ironwood’s collaborative arrangement revenue $ 25,137 $ 8,447
1 Ironwood collaborates with Actavis on the development and commercialization of linaclotide in North America. Under the terms of the collaboration agreement, Ironwood receives 50% of the net profits and bears 50% of the net losses from the commercial sale of LINZESS in the U.S. The purpose of this table is to present calculations of Ironwood’s share of net profit (loss) generated from the sales of LINZESS in the U.S. and Ironwood’s collaboration revenue/expense; however, the table does not present the research and development expenses related to LINZESS in the U.S. that are shared equally between the parties under the collaboration agreement. For the three months ended March 31, 2015, net profit for the U.S. LINZESS brand collaboration with Actavis was $15.2 million, calculated by subtracting $58.2 million in commercial costs and expenses and $22.1 million in research and development expenses, from LINZESS U.S. net sales of $95.5 million.
2 For the three months ended March 31, 2014, certain costs related to the LINZESS co-pay assistance programs were recorded as sales and marketing expenses. Beginning in the third quarter of 2014, and following the integration of Forest Laboratories, Inc. with Actavis plc., these costs are recorded as gross-to-net adjustments.
3 Includes cost of goods sold incurred by Actavis as well as selling, general and administrative expenses incurred by Actavis and Ironwood that are attributable to the cost-sharing arrangement between the parties.
4 Includes Ironwood’s selling, general and administrative expenses attributable to the cost-sharing arrangement with Actavis.
5 Ironwood or Actavis may incur additional expenses related to certain contractual obligations, resulting in an adjustment to the company’s share of the net profits as stipulated by the collaboration agreement.

Ironwood Pharmaceuticals, Inc.

Media Relations

Trista Morrison, 617-374-5095

Director, Corporate Communications

[email protected]

or

Investor Relations

Meredith Kaya, 617-374-5082

Director, Investor Relations

[email protected]

Source: Ironwood Pharmaceuticals, Inc.

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