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Ironwood Pharmaceuticals, Inc. Message Board

  • rob_cos rob_cos Mar 15, 2012 1:42 PM Flag

    Morgan Stanley target is $22

    March 18, 2011
    Ironwood Pharmaceuticals, Inc.
    Linaclotide Has $2+Bn Sales Potential; Initiate OW, PT $22

    Conclusion: We are initiating coverage of IRWD with
    an OW rating and $22 PT. While approval of linaclotide,
    Ironwood’s key value driver, is expected since the only
    hurdle remaining is low-risk stability testing, we believe
    the Street underestimates linaclotide’s sales potential in
    chronic constipation (CC) and irritable bowel syndrome
    with constipation (IBS-C). We see linaclotide as one of a
    few potential blockbuster drugs in late stage dev’t with
    its solid therapeutic profile driving peak sales >$2bn.
    Our OW is a longer-term call as we do not expect most
    on the Street to focus on this name until peri-launch
    (likely ~mid-‘12). However, it can be hard to time
    interest in an impending launch. Thus an OW rating,
    even if a bit early, makes sense to us.

    The Key Debate is How Big Will Linaclotide Be?
    We see sig. potential for linaclotide in CC and IBS-C as:
    1) the once-daily pill has shown benefits on both pain
    and bowel movements with relatively limited side effects
    in 4 positive Ph 3 trials, 2) the unmet need is real with a
    majority of currently treated patients being unsatisfied,
    3) the cost of the most commonly used over-the-counter
    laxatives is sig., making linaclotide’s cost less of an
    issue, and 4) there is limited current competition and
    potential future competition is at least several yrs away
    and unproven in the more important IBS-C market.
    Zelnorm Is a Good Comparison for Early Launch
    Novartis’ Zelnorm was the 1st drug approved for IBS-C
    (‘02), and was removed from the market in ‘07 due to
    safety problems unrelated to linaclotide. Peak sales
    prior to removal were >$550mn. We expect linaclotide’s
    early launch to be incrementally better than Zelnorm’s
    and its later launch to be more sustained as linaclotide
    has a stronger efficacy and safety profile and physician
    awareness about IBS/CC in general has increased.

    Upcoming Catalysts: 1) Ph 3 IBS-C data at DDW
    (May), 2) linaclotide NDA (3Q11) and MAA filing (2H11).

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