Ironwood Winds Up Debt Offering
Entrepreneurial pharmaceutical company, Ironwood Pharmaceuticals, Inc. (IRWD) recently announced that it has completed the offering of $175 million Linaclotide PhaRMA 11% notes. The note will be due on or before June 15, 2024 with quarterly interest (11%) paying tenure beginning on June 15, 2013.
Principal amount of the notes will be paid quarterly from March 15, 2014. The amount of principal paid will be the difference between 7.5% of net US sales of Linzess (linaclotide) in the preceding quarter and accrued and unpaid interest on the notes.
The placement agent for this transaction was Morgan Stanley (MS).
Ironwood Pharma intends to use the funds from the transaction to support the commercial launch of its lead product Linzess. The net proceeds will also be used to fund its research and development (R&D) expenses.
We note that Ironwood Pharma and partner Forest Laboratories, Inc. (FRX) are co-promoting Linzess in the US. Linzess is approved by the US Food and Drug Administration (:FDA) in August 2012 for the treatment (once-daily) of adults suffering from irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (:CIC).
In the EU, approval came in November 2012 under the trade name Constella. Ironwood Pharma is collaborating with Almirall, S.A. in the EU for the drug. Ironwood Pharma is also working with its Japanese partner, Astellas Pharma (ALPMY) for the development of linaclotide in Japan and other Asian countries.
Our Recommendation
Currently, we have an Outperform long-term recommendation on Ironwood Pharma. The company carries a Zacks #1 Rank (Strong Buy) in the short run.
Other Zacks #1 Rank stocks include Valeant Pharmaceuticals International, Inc. (VRX) and Astellas Pharma.
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