Ironwood Pharmaceuticals, Inc. IRWD delivered break-even earnings for the second quarter of 2024, falling short of the Zacks Consensus Estimate of 17 cents per share. This marked a significant drop from the adjusted earnings of 31 cents per share reported in the year-ago quarter.
The company’s total revenues for the quarter stood at $94.4 million, missing the Zacks Consensus Estimate of $104 million and indicating a 12.1% decrease compared to the prior year, primarily attributed to a decline in collaborative arrangements revenues related to its flagship drug, Linzess (linaclotide).
Performance Overview
Collaborator AbbVie Inc. ABBV reported that Linzess, Ironwood’s key product, generated net sales of $211.2 million in the United States, marking a 22% drop year over year due to ongoing pricing pressures. Despite this, total prescriptions for Linzess increased by 11% year over year.
Both Ironwood and AbbVie share profits and losses from the Linzess brand equally. Ironwood’s share of net profit from U.S. sales of Linzess totaled $91.4 million, down nearly 12.8% year over year. This decline was impacted by a $30.0 million gross-to-net change in estimate recorded in the first quarter of 2024.
While collaborative revenues from U.S. Linzess sales fell short of the estimated $103.9 million, Ironwood’s royalty and other revenues saw a positive uptick, increasing by 15.3% from the prior-year quarter to reach $3 million.
The company’s operating expenses for the reported quarter amounted to $69.4 million, significantly lower than the $1.2 billion recorded in the year-ago quarter, which included a substantial one-time charge related to the acquisition of VectivBio.
At the end of June 2024, Ironwood held cash and cash equivalents amounting to $105.5 million, compared to $121.5 million as of March 31, 2024.
2024 Revenue Guidance
Ironwood revised its revenue guidance for 2024 downwards due to persistent pricing pressures affecting Linzess. Total revenues are now projected to range between $350 million and $375 million, lower than the earlier forecast of $405-$425 million. The company also anticipates U.S. sales of Linzess to fall within $900-$950 million, a revision from the previous expectation of a mid-single-digit decline.
Following the revised guidance, IRWD stock experienced a significant decline of 32.6% on August 8. Year to date, shares of Ironwood have plummeted by 64.6% in comparison to the industry’s decline of 5.2%.
Pipeline Progress
After the acquisition of VectivBio in June, Ironwood gained rights to develop and commercialize apraglutide, currently being evaluated in the pivotal phase III STARS study for reducing parenteral support dependency in adult patients with short bowel syndrome with intestinal failure (SBS-IF).
The company aims to submit a new drug application for apraglutide to the FDA for SBS treatment in adult patients dependent on parenteral support by the first quarter of 2025.
Additionally, Ironwood is advancing two other pipeline candidates, IW-3300 and CNP-104, targeting visceral pain conditions and primary biliary cholangitis, respectively.
The collaboration with COUR Pharmaceuticals on CNP-104 for PBC treatment is progressing well, with top-line data from the study expected in the later part of the third quarter of 2024.
Zacks Rank & Healthcare Stock Recommendation
Ironwood is currently rated as Zacks Rank #5 (Strong Sell). Investors looking for potential in the healthcare sector may consider Exact Sciences Corporation EXAS, currently holding a Zacks Rank #1 (Strong Buy).
Exact Sciences Corporation has seen positive adjustments in loss per share estimates for 2024 and 2025 over the last 60 days, with the stock witnessing a 22.6% decrease year to date. The company has shown consistent earnings performance, surpassing estimates in three out of the trailing four quarters with an average surprise of 56.19%.
