IRWD - NASDAQ

Thank you for standing by. My name, Celine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals Q2 2024 Investor Update Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Matt Roache, Director of Investor Relations. Please go ahead.

Thank you, Celine. Good morning, and thanks for joining us for our second quarter 2024 investor update. Our press release issued this morning can be found on our website. Today's call the accompanying slides include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current safe harbor statement slide, as well as under the heading Risk Factors in our annual report on Form 10-K for the year ended December 31, 2023, and in our subsequent SEC filings. All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements. Also included are non-GAAP financial measures, which should be considered only as a supplement to, not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures. During today's call, Tom McCourt, our Chief Executive Officer, begin with a brief overview; Mike Shetzline, our Chief Medical Officer will discuss our pipeline; and Sravan Emany, our Chief Operating Officer and Chief Financial Officer, will provide a commercial update to review our financial results and guidance. Andrew Davis our Chief Business Officer is available for the question-and-answer session following our prepared remarks. Today's webcast includes slides. So for those of you dialing in, please go to the Events section of our website to access the accompanying slide separately. With that I'll turn the call over to, Tom.

Thanks Matt. Good morning, everyone and thanks for joining us today. We continue to make progress across our strategic priorities in the second quarter. Starting with LIN

Yeah. Thanks, Tom, and good morning, everyone. I'll start with an update on the NDA submission for apraglutide for patients with short bowel syndrome, who are dependent on parenteral support. As Tom mentioned, we've made steady progress in preparing the NDA submission. Our plan is to pursue a rolling NDA review. The rolling review allows us to submit completed sections of the application, as they become available and continue to engage with the agency as we proceed with the submission process. We expect the rolling review process to begin in the fourth quarter. The early modules will include the non-clinical and clinical components. As we progressed work on the regulatory filing, in conjunction with our commercial planning activities, we decided to make enhancements to the presentation of the vial kit to optimize it for commercial use. As a result, we expect to fully complete the NDA submission in the first quarter of 2025. Moving to slide 8. As Tom pointed out, we continue to receive positive feedback on apraglutide's clinical profile, and believe it has the potential to improve the standard of care for patients living with SBS, who are dependent on parenteral sport, based on the combination of demonstrated efficacy, tolerability, and once-weekly dosing convenience. In cell-based assays of receptor activation apraglutide retained potency and selectivity at the GLP-2 receptor, compared with native GLP-2 and teduglutide and is uniquely designed to accelerate intestinal growth for improved gut function and absorption. Apraglutide is the only GLP-2 analog to achieve a statistically significant reduction in weekly parenteral support volume with once-weekly dosing. Patients achieved a clinically meaningful parenteral support reductions as early as week eight in the STARS Phase III study. In addition, we saw a powerful parental support volume reduction with apraglutide as some patients achieved two and three days off per week. Furthermore, seven patients were able to achieve enteral autonomy by week 24, including patients with a stoma versus none on placebo. Importantly, apraglutide demonstrated high rates of compliance and similar rates of adverse events were observed between treatment and placebo groups with no malignancies and discontinuations due to GI tolerability issues. We look forward to continuing to evaluate the robust data set from the largest ever GLP-2 study in short bowel syndrome with intestinal failure and plan to disclose further findings at additional medical meetings, including the American College of Gastroenterology meeting in October, where our Phase 3, subgroup analysis was accepted for an oral presentation. Before moving on, I'd like to take a moment to highlight that August is a Short Bowel Syndrome Awareness Month. As part of our unwavering commitment to people suffering from SBS, I want to say, a big thank you to this rare disease community of patients, advocates caregivers, investigators, and health care professionals for their dedicated support and ongoing devotion to raising awareness around the serious and chronic malabsorptive disorder. Moving to CNP-104 on slide 9. This is a tolerizing immune-modifying mono particle for the treatment of primary biliary cholangitis, which is a rare autoimmune disease that causes the livers bile ducts to slowly deteriorate and can lead the irreversible damage and scarring of the liver, ultimately requiring liver transplant. As a reminder, the Phase II study is a 42-patient placebo-controlled study evaluating safety, tolerability, pharmacodynamics and efficacy of CNP-104 in patients with PBC who are unresponsive to UDCA and/or Ocaliva. Top line results will be based on data through day 120 of treatment. A positive signal of liver function markers in addition to T cell response would further support the potential for CNP-104. Top line data from the Phase II proof-of-concept study in patients with PBC remains on track and we look forward to sharing top line results with you later this quarter. With that I'll turn it over to Sravan.

Thanks, Mike, and good morning, everyone. I'll begin on slide 11. As Tom mentioned earlier, LIN

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of David Amsellem with Piper Sandler. Please go ahead.

Thanks. Just a few. So as you think about 2025 and maximizing the net economics of LIN

Sure. So Good morning, David. Hope you're well. Why don't we start with the second component on CNP-104, I hand that over to Mike and then Andrew will answer the second question -- sorry, your first question regarding the contracting strategy. Mike?

Yeah. Thanks, David. Yes, the primary thing we're looking at really is in the top line results for the T cell response. We certainly believe that the T cell response and T cell effects will be a leading indicator of the clinical benefit and we'll also then evaluate several markers of liver function. And the linkage, obviously, between the T cell response and liver function is also equally important for us to look at. As I said we're on track to deliver that this quarter. What comes after that is a little bit premature at this stage right? This is the first-in-human study proof-of-concept study. We certainly look to learn a lot. But again, we did the deal primarily because we thought we'd have a good look at this T cell response and that this T cell response could be a leading indicator for clinical outcomes. So until we get that, we'll have to wait on what to determine to do after that.

Thanks, Mike. And then Andrew will respond regarding the contracting question.

Yeah, David thanks for the question. I mean, I think the point is net economics definitely is key for us as we look across the book of business from here to LOE. So I think that's fine as we look at our contracting strategy both for next year and the future. We'll really be looking at what the net economics that get driven over the life of the product.

The next question comes from the line of Amy Li with Jefferies. Please go ahead.

Hey, thanks so much for taking our question. On apraglutide given the Q1 2025 submission completion time line, do you still expect launch in 2025? And then also can you give us some color on how you are optimizing the commercial use kit? I know you alluded to it earlier. Is there going to be any formulation changes, format changes? Any color would be super helpful.

Yeah, sure. Thanks Amy, good morning. I'll take those questions. Look I think our view on approval could occur in 2025 or early 2026 depending on whether we receive priority or standard review. I think that standard review will be early 2026 from our perspective. With respect to the kit, look I think it's industry -- it's common industry practice that what's used commercially is different than what's used in clinical trials. I think we view -- we take a very long view on apraglutide here as we have IP out into the 2040s. And we want to make sure that the launch is as successful as possible. And so we've -- as we conducted human factor trials, we've learned ways to make the commercial bile kit presentation easier for patient use and we're implementing those changes. And so not to get into a lot of detail, but I think the goal here is to make it easier for patients to administer themselves.

Excellent. Thanks so much.

Your next question comes from the line of Mohit Bansal with Wells Fargo. Please go ahead.

Great. Thank you very much for taking my question. And I have two different questions. So one is it does seem like that the pricing pressure is more than you anticipated in last quarter. You said that it seems like earlier than anticipated and you did anticipate this pricing pressure starting 2025. So that's why like I think last quarter it was more like 2025 and onwards it should be similar to what you were previously expecting. But has anything changed in that thought process now that -- like how should we think about the revenue growth trajectory versus 2024 from now at this point? And then the second question is regarding CNP-104. Can you just remind us like when you saw the healthy voluntary study, which COUR did what kind of T cell responses they saw in those patients? And how could they -- how could -- how do you correlate that with the sickle patient trial?

So Mohit could you repeat the second part of that question? Did you -- was the question that the T cell response that COUR saw?

Yeah. I think that was the study. I don't know, it was a healthy voluntary study? Or was it -- I think it was a PBC study as well, right? I cannot recall. It was a 40-patient study, right?

Yeah, I can just put in some pieces of information I mean this is the first-in-human study for CNP in PBC patients, this 42-patient study. There's no other clinical data set. You may be referring to a study many years ago that was done with the COUR platform in celiac. That data was -- yes, celiac is a different autoimmune disease. It's a poly kind of valent autoimmune disease right gliadin the peptides of insults right for celiac have a lot of different epitopes and it's driven by a lot of different deamidated gliadin peptides and you can also externally challenge those T cells with gluten differently than the T cells that are primarily in the liver for PBC. So there are differences across those two diseases. But we certainly think our approach is a valid way to look at the potential benefit of this platform technology in the autoimmune disease like PBC. We're certainly using different techniques given the T cell -- antigen-specific T cell responses, but that's sort of how it plays out on the different diseases.

Yes. And then Mohit, with respect to the guidance, look, in Q1 I think as we mentioned, we did anticipate higher utilization for the full year 2024 and that was our best estimate at the time. Since Q1, we've seen higher than - even higher than anticipated Medicaid utilization of LIN

Got it.

[Operator Instructions] Your next question comes from the line of Jason Butler with Citizens JMP. Please go ahead.

Hi. Thanks for taking the question. Just a couple on apraglutide. Can you just talk about what the remaining gating items are to submitting the BLA and 1225? And then just as you continue to get ready for launch what is the work that you're doing? What is the feedback that you're getting from potential prescribers on the data?

Yes. Great. Mike, do you want to tackle that one in terms of outstanding remaining items of trial?

Sure. Yes. So for -- in terms of what's going on we've obviously made steady progress in preparing the NDA. We've had a focus obviously the quality of data package. The early modules that we're working on now will include the non-clinical and clinical components. We've continued to progress on the regulatory filing in conjunction with the commercial planning activities. Also have some additional information we've been giving as we talked about in terms of the best application of how to pursue the vial. We decided to make those enhancements to the presentation of the vial to optimize it commercially, and we're in the process of finalizing, the commercial supply chain and the supporting documentation for the CMC components of the application. And as I said, we -- as Tom and I both said, we expect to complete that in the quarter -- first quarter of 2025.

And then, with respect to the feedback, Mike on clinical profile from physicians and other key opinion leaders.

Yes, we've gotten great -- we continue to get great feedback from externals whether they be, prescribers people the KOLs the key opinion leaders thought leaders in the area. They really are quite impressed with the fact that we are the first and currently only once-weekly to hit the primary endpoint in SBS-IF. That was a pretty significant achievement. They certainly -- I think our tolerability profile is excellent as well. As Tom mentioned, we had an ad board to review that with a lot of externals and prescribers and really was very well received. So there's quite a lot of enthusiasm out there and we're looking to continue that engagement with the prescribers and the community and push forward to submission to get to market as early as possible.

Jason, this is Tom, and I'll ask Andrew to jump in here as well. But as we think about next steps this is really about preparing the market preparing the organization for a successful launch. We've already initiated some disease awareness programs. This is really about identifying patients and making sure that we get patients into the programs, these patient support programs, to get them on therapy as quickly as possible and retain them. One of the really big pieces of data that we -- nobody ever had access to is this implementation of the new ICD-10 codes, which are actually labeling a lot of these patients. And it's validated how many patients are really out there. But it also allows us to target and really guide our go-to-market strategy which is data that didn't exist before. So as the commercial team continues to evolve its go-to-market strategy, we're going to do our best to increase the overall awareness of the disease, proactively identify the patients and their location and then how do we align that with our commercial capabilities including certainly the sales force that's already in these offices, many of these offices and these patients hub services which is really going to be critical to be able to pull the business through. I don't know, Andrew, if there's anything else you'd like to comment beyond that?

No. I think you nailed it. I think we're excited here, Jason. I think we're getting great feedback.

Your next question comes from the line of Tim Chiang with Capital One. Please go ahead.

Thanks. Mike, could you talk a little bit about how much interaction or discussion you've had with patient advocacy groups in the short bowel syndrome disease area with apraglutide? I mean, what sort of responses have you gotten so far? And then just sort of -- have you already started to talk with payers on apraglutide?

Yes. Thanks, Tim. Go ahead, Sravan.

I apologize. Go ahead.

Yes. So we certainly have a strong link with the patient advocacy groups. This is a disease that has a very vocal and actually long-standing advocacy among patients who started way back decades ago five of them with Oley Foundation. So there's a lot of good networking out there by patients. And the feedback we've gotten from patients is very enthusiastic. Many have participated in our trial. The compliance in our trial has been very high. People have talked about how nice if I could say it that way the drug is from a utilization perspective. They don't suffer some of the adverse effects that they know other agents might be a little more common at achieving. So that overall has been very, very good. And obviously the weekly administration is just a big bonus in terms of -- you don't -- if you're not on parenteral support seven days a week and you have to take something every day, that's one position. But if you really only on a parenteral support four or five days a week, you have to take something more than that can be a little bit more work than you might want to do. And so the opportunity for the patient population to just have a weekly administration, really broadens the utility across the SBS-IF community. But in general, I could say it's been very, very positive.

Okay. Great. And Sravan, I have one follow-up, just on the LIN

Yes. So look, from a commercial margin perspective, I think since the spin, Tim, I think the company has been very focused on maximizing the brand profit and then improving it as much as possible. I think we had opened this year I think the -- based on our guidance we thought would be close to 70%. And I think our goal is -- I think our guidance reflects our best estimate in terms of our profit as of now and where we sit today.

Okay. And I know you did comment about the $17 million gross to net adjustment. But you're not going to get that in future quarters this year. Is that right?

Well I think the point of that is that we've adjusted our guidance down to $900 million to $950 million of net sales or LIN