Ironwood Pharmaceuticals, Inc.’s (IRWD) first-quarter 2013 loss of 87 cents per share compared unfavorably with the year-ago loss of 34 cents per share. Results were primarily hurt by higher selling, general and administrative (SG&A) and collaboration expense. The Zacks Consensus Estimate hinted at a loss of 70 cents per share.
Total revenues in the first quarter of 2013 were down to $3.3 million from $12.2 million in the year-ago period. Revenues were below the Zacks Consensus Estimate of $6 million.
We note that Ironwood’s sole marketed product is Linzess (linaclotide). It is marketed for the treatment (once-daily) of adults suffering from irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (:CIC). Ironwood co-markets the drug with Forest Laboratories, Inc. (FRX). Forest Labs and Ironwood share Linzess revenues generated in the US equally. Net sales of the drug, as reported by Forest Labs came in at $4.5 million in the first quarter of 2013 as compared to $19.2 million in the last quarter. We note that in the final quarter of 2012 Linzess sales primarily consisted of initial trade stocking.
We remind investors that on Dec 17, 2012, the companies announced the US launch of Linzess. The launch followed the approval of the drug by the US Food and Drug Administration (:FDA) in Aug 2012.
In the EU, approval came in Nov 2012 under the trade name Constella. Ironwood is collaborating with Almirall, S.A. in EU for the drug. The product is expected to be launched in the UK and Germany by Jun 30, 2013.
Ironwood is also working with its Japanese partner, Astellas Pharma Inc. for the development of Linzess in Japan, South Korea, Taiwan, Thailand, the Philippines and Indonesia and with AstraZeneca (AZN) in China. Currently, Astellas is evaluating it in a phase II trial for IBS-C with results expected in the second half of 2013. Ironwood and AstraZeneca expect to initiate a phase III trial evaluating linaclotide in adult IBS-C patients in the second half of 2013.
The company is looking to broaden the Linzess label by incorporating additional patient populations and indications. To further analyze the effect of Linzess on abdominal symptoms in patients suffering from CIC, Forest Labs and Ironwood have initiated a phase IIIb clinical trial. Results from the trial are expected in the second half of 2013. Ironwood plans to initiate additional trials to evaluate Linzess for additional gastrointestinal disorders.
During the quarter, SG&A expenses surged 104.5% to $33.4 million. The massive increase was primarily attributable to Linzess commercialization costs. For 2013, Ironwood continues to expect total investment in sales and marketing for Linzess in the range of $250 – $300 million.
Research and development (R&D) expenses amounted to $32.8 million, an increase of 11%, as the company continues to develop Linzess. In 2013, Ironwood expects to invest approximately $60–$75 million in R&D expenses not pertaining to linaclotide.
Ironwood carries a Zacks Rank #3 (Hold) in the short run. We expect investor focus to remain on the market performance of Linzess. Stocks, which currently look attractive in the pharma space include Athersys Inc. (ATHX), carrying a Zacks Rank #1 (Strong Buy).
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