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Ironwood (IRWD) Q3 Earnings Top, Sales Hurt by Lower Price

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·4 min read
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Ironwood Pharmaceuticals, Inc. IRWD reported third-quarter 2021 adjusted earnings of 33 cents per share, which beat the Zacks Consensus Estimate of 31 cents. The company had reported adjusted earnings of 23 cents per share in the year-ago quarter.

Total revenues of $103.7 million missed the Zacks Consensus Estimate of $105.1 million. Revenues were flat year over year.

Shares of Ironwood were down 2.1% on Nov 4, following the mixed quarterly results. However, the company’s shares have gained 10.5% so far this year against the industry’s decrease of 13.5%.

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Zacks Investment Research

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Quarter in Detail

As reported by partner AbbVie ABBV, Ironwood’s sole marketed product — Linzess — generated net sales of almost $252.7 million in the United States, up 4.8% year over year. Ironwood and AbbVie equally share Linzess’ brand collaboration profits or losses. The sales growth was driven by strong demand for Linzess, partially offset by lower net price of the drug and inventory channel fluctuations.

Ironwood's share of net profits from the sales of Linzess in the United States (included in collaborative revenues) was $100.4 million in the third quarter, almost flat year over year.

Per data provided by IQVIA, volume of prescribed Linzess capsules in the third quarter increased about 12% year over year.

The company did not record any sales of linaclotide API to its partners during the third quarter.

We note that Ironwood has agreements with two partners — Astellas Pharma and AstraZeneca AZN — related to the development and commercialization of Linzess in Japan and China, respectively. Ironwood records royalties on sales of Linzess from these companies in their respective territories.

Selling, general and administrative expenses were down 20.6% year over year to $27.7 million during the third quarter. Research & development expenses declined 49.7% year over year to $10.9 million.

Maintains 2021 Guidance

Ironwood reiterated its previous guidance for Linzess sales growth as well as for total revenues in 2021. The company expects its total revenues to be between $390 million and $410 million. The Zacks Consensus Estimate for total revenues stands at $408.9 million. It expects U.S. sales of Linzess to grow by 6%-8% in 2021 (previously 3%-5%).

The company expects adjusted EBITDA to be more than $210 million for the year.

Pipeline Update

Currently, Ironwood has no clinical-stage candidate in its pipeline. The company plans to file an investigational new drug application for its pre-clinical candidate, IW-3300, in the second half of 2021 to support initiation of an early-stage clinical study in the first quarter of 2022. The company is developing the candidate as a potential treatment for visceral pain conditions such as interstitial cystitis/bladder pain syndrome and endometriosis.

In a separate press release, Ironwood announced that it signed an option agreement with privately-held COUR Pharmaceuticals Development Company, a biotech developing novel immune-modifying nanoparticles (CNPs). The agreement grants Ironwood an option to gain exclusive license to COUR Pharmaceuticals’ products containing CNP-104 Particle, which will be developed as a treatment of primary biliary cholangitis (“PBC”). COUR Pharmaceuticals will initiate a clinical study to evaluate the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients by the end of this year. Ironwood will choose to exercise its option based on data from the study.

Ironwood will pay $20 million in upfront and near-term payments related to the clinical study to be conducted by COUR Pharmaceuticals on CNP-104. COUR Pharmaceuticals will be eligible to receive up to an additional $475 million in option exercise payment and commercial milestones and royalties on any potential net sales.

Ironwood Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Ironwood Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Ironwood Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Ironwood Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Ironwood Pharmaceuticals, Inc. Quote

Zacks Rank

Currently, Ironwood carries a Zacks Rank #5 (Strong Sell).

Xencor XNCR is a better-ranked drug stock, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Loss per share estimates for Xencor have narrowed from 75 cents to 33 cents for 2021 and from $3.14 to $2.92 for 2022 in the past 60 days. The company delivered an earnings surprise of 98.25%, on average, in the last four quarters.

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