Everyone who shorted after the halt yesterday is upside down now. Gonna get worse for them soon...
As I said do not let them doubt. "BEST CASE approval with both men and woman and no duration limits" JP Morgan:
JPM on IRWD "Best case early approval - no gender or duration limitations. Blockbuster potential. Reiterate Overweight". $21 target. Bst
August 30, 2012
Ironwood announced the approval of Linzess (linaclotide) for the treatment of both irritable bowel syndrome constipation (IBS-C) and chronic constipation. The approval comes as no surprise to us given the robust phase 3 data set in both indications. Recall, the PDUFA for linaclotide had been delayed by 3 months previously (from June to September) so the agency could better understand potential differences between doses in the CC trials (145mcg/d and 290mcg/d). This, coupled with initiation of an additional phase 3 trial in CC, did raise fears of approval only in the IBS-C indication, which did not happen. Of note, the 290mcg/d dose was not approved in CC, but we do not view this as a major set back. Importantly, based on the FDA press release, there does not appear to be any limitations on gender or duration of therapy (a best case). Looking forward, we expect full commercial launch by YE12. Given the unmet need in IBS-C / CC, we believe our and consensus 2013 Linzess estimates could prove conservative (2013 – cons: $153M; JPMe: $131M), despite the broad physician audience (PCPs and GIs) which Ironwood and partner Forest will have to market too (covered by J.P. Morgan analyst Chris Schott). We are reiterating our Overweight rating on IRWD shares.
Full commercial launch expected by YE12: Recall, Ironwood / Forest will finalize label / materials and Linzess will undergo a short “scientific launch.” This process is expected to take about 3 months. Given the large physician audience for Linzess, we believe it is prudent that Ironwood / Forest will be gathering physician feedback, etc., over the next several months, so to optimize the full commercial launch.
Market potential of linaclotide: We estimate 2015 worldwide Linzess sales of ~$750M and anticipate the drug reaches blockbuster potential in 2016. Our pricing assumption as of right now is $6/day (increasing price and duration of therapy overtime).