Meredith Kaya - Director, Investor Relations Peter Hecht - Chief Executive Officer Tom McCourt - Chief Commercial Officer Mark Currie - Chief Scientific Officer Michael Higgins - Chief Operating Officer.

Jason Gerberry - Leerink Partners David Maris – BMO Capital Gary Nachman - Goldman Sachs Mario Corso - Mizuho Carter Gould - JPMorgan Ram Selvaraju - Aegis Capital Boris Peaker - Cowen David Nierengarten - Wedbush Securities.

Good day, ladies and gentlemen. And welcome to the Ironwood Pharmaceuticals Second Quarter 2014 Investor Update Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions) As a reminder, this conference is being recorded. I would like to introduce your host for today’s conference, Ms. Meredith Kaya, Director of Investor Relations. You may begin. .

Good afternoon and thanks for joining us for our second quarter 2014 investor update. By now, you should have a copy of our press release, which crossed the wire earlier this afternoon. If you need a copy of the press release, you can go to our website, www.ironwoodpharma.com, to find an electronic copy.

Some of the information discussed in today’s call is based on information as of today, Monday, August 4, 2014 and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements.

We do not undertake any obligation to update any forward-looking statements made during this call or contained in the accompanying slides as a result of new information, future events or otherwise.

For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in our press release and on the current slide with the heading, Safe Harbor Statement, as well as the risks under the heading Risk Factors and our quarterly report on Form 10-Q for the quarter ended March 31, 2014, and any of our future SEC filings.

Joining me for today’s call are Peter Hecht, Chief Executive Officer, who will provide introductory remarks; Tom McCourt, Chief Commercial Officer, who will give an update on the commercialization of LINZESS; Mark Currie, Chief Scientific Officer, who will summarize our pipeline efforts; and Michael Higgins, Chief Operating Officer, who will review our financial performance and guidance and then open the call to your questions.

Our speakers will be referring to slides available via the webcast. For those of you dialing in, it maybe helpful for you to go to the Events section of our website to access the webcast slides, if you haven’t done so already. I would now like to turn the call over to Peter..

first, maximizing the benefit linaclotide can provide for patients around the world; second, advancing our robust GI pipeline and GC platform; third, leveraging our strong commercial capabilities; and fourth, prioritizing our investments in our key value drivers.

As we said many times before, primary care launches are challenging with millions of patients and thousands of physicians to be reached, but important primary care brands can make a difference for millions of patients and provide great value to shareholders. We are only 18 months into the LINZESS launch.

And as we pioneer this category, the brand is approaching profitability. LINZESS benefits from greater than 95% gross margins and strong intellectual property protection, which we expect to provide exclustivity to at least 2031, giving us at least 17 more years to maximize LINZESS.

With LINZESS expected to soon be a profit-generating asset and millions of additional appropriate patients still to be reached, this brand has the potential to deliver significant cash flows for many years to come. We have a lot of hard work in front of us and we are pleased with the success we have seen early on.

Linaclotide is and remains core to our strategy. Beyond linaclotide, we are leveraging our demonstrated leadership in guanylate cyclases and our therapeutic expertise in GI evaluating several product opportunities for the treatment of large, chronic and symptomatic conditions that target multi-billion dollar markets.

We have multiple opportunities for proof-of-concept data over the next 24 months. And with the strong commercial capabilities that we established so that we could maximize LINZESS in the U.S.

with our partner, Actavis, we are well positioned to utilize existing infrastructure and resources for additional product launches of internally or externally derived products over time. Total cash used for operations in the second quarter was approximately $36 million and we finished Q2 with $302 million in cash.

As we execute on our strategy, we will continue to prudently invest in our business and allocate our resources to the areas that we believe will create the most value for our fellow shareholders. With that, I will hand it over to Tom..

Thanks, Peter and good afternoon, everyone. It’s been another strong quarter for LINZESS. Over the last few months, we have seen a clear impact following the launch of our patient awareness efforts.

We are still in the early stages of growth for LINZESS, but the fundamentals are strong and demand continues to grow as awareness increases amongst physicians and patients and we continue to make good progress with payers. Importantly, we continue to receive positive feedback from patients and physicians as they gain experience with LINZESS.

In April, we and Actavis initiated a multi-channel direct-to-consumer or DTC effort to achieve three goals.

To increase awareness of IBSC and chronic constipation or CIC, to enable more effective patient physician communication that would strengthen new demand for LINZESS among appropriate patients, and to remind appropriate patients to refill their prescriptions.

We and Actavis are highly encouraged by the response we are seeing so far with the normal to immediate impact following the initiation of this effort. Demand for LINZESS has grown by 36% quarter-over-quarter with over 326,000 total prescriptions filled during the second quarter.

To further illustrate the impact that we are seeing from our patient awareness efforts, the chart on the right side of the slide is the LINZESS trend line prior to launching DTC compared to the actual LINZESS prescription growth following the initiation of DTC.

15 weeks following the initiation of DTC there is a 20% increase in total LINZESS prescription above the pre-DTC trend. Importantly, not only are we seeing strong demand for LINZESS, but our product is growing the entire category of prescription, treatment options for IBSC and CIC as well as capturing market share within the category.

This has been further strengthened by our recent consumer education efforts. We believe that growth of the categories coming from both new patients seeking care who were previously self-treating with OTC laxatives and patients actively managed by a physician and treated with OTC laxatives.

Over two-thirds of adult IBSC and CIC patients are treated with OTC representing an enormous opportunity for LINZESS ahead. LINZESS also gains substantial market share in the category over the past few months.

Just in the 15 weeks following the initiation of DTC new prescription and total prescription market share have increased approximately 2.5 percentage points representing a 38% increase in new prescription market share and a 36% increase in total prescription market share. We believe this is coming primarily from OTC laxatives.

We continued to establish strong fundamentals across a number of leading indicators strengthening the foundation upon which we build demand and appropriately accelerate growth in the marketplace.

We follow three categories of metrics; the physician’s ability and willingness to choose LINZESS for appropriate patients, the continued improvement in payer coverage and the demand from patients. We have made great progress across each of these in the recent period.

More than 81,000 healthcare practitioners have now prescribed LINZESS establishing a very broad and deep prescriber base. This was further supported by our DTC efforts in which we saw weekly new prescribers grow to more than 1200 per week, up from about 800 per week prior to initiating DTC.

Additionally, data are showing that more than 85% of prescriptions are being filled following a patient request. We continue to see big wins in the payer space and are pleased that they are continuing to recognize the significant unmet medical need in the therapeutic category and the value of LINZESS.

During the last quarter we signed key contracts with CVS Caremark Commercial, a national pharmacy benefit manager covering approximately 19 million lives as well as United Healthcare, a commercial formulary covering approximately 12 million lives. LINZESS will be available under both contracts at a Tier 2 co-pay or approximately $30 per month.

These decisions were effective July 1 and will provide better reimbursement for the patients. Lastly as I have been detailing over the last few minutes patients are responding very well to our consumer awareness efforts driving demand for LINZESS and persistency on LINZESS is strong.

We shared specific cohort data with you in the past and LINZESS continues to track well ahead of other launch analogs including Zelnorm. There continues to be a substantial growth in LINZESS prescription.

What we have been seeing over the last several months supported even future by DTC efforts is that more physicians are choosing LINZESS, more patients are asking for LINZESS. And the increased awareness and experience by both the patients and physicians is resulting in more demand for LINZESS.

And with over 375,000 patients having tried LINZESS at least once and considering there are over 40 million adult patients estimated to be suffering from IBS-C and CIC we have really only scratched the surface of the opportunity.

We see significant opportunity ahead in both IBS-C and CIC and through our efforts to gain additional approved indications, which Mark will talk about shortly. We believe there is even more opportunity in front of us to help millions of additional suffering GI patients.

We have had a great partnership with the team from Forest over the past several years through our development in commercialization of LINZESS and we are thrilled with the progress we have made to-date. We are looking forward to continuing these efforts with our new partner, Actavis.

The combined team continues to work very closely and is completely focused on bringing LINZESS to the millions of suffering adult patients with IBS-C and CIC in the U.S. With that, I will hand it over to Mark..

Thanks, Tom. We have made progress over the past few months advancing our pipeline of therapeutic candidate. Linaclotide and GC-C agonist are core to our R&D strategy, providing us with the opportunity to expand our already deep understanding and expertise in guanylate cyclases as well as in GI conditions.

Our goal is to obtain regulatory approval for other linaclotide indications and formulations and for additional therapeutic candidates for lower and upper GI condition, including another GC-C agonist and a gastric retentive bile acid sequestrant and advance our sGC platform, which has the potential for broad therapeutic utility.

Looking at a snapshot of our current pipeline, I will take a minute to highlight a few updates from the second quarter. First, we and Actavis initiated a development program for linaclotide in opioid-induced constipation or OIC. OIC is a growing problem in the United States due to the rapid increase in the use of opioids.

We are evaluating linaclotide in this area to see if it has the potential to provide relief of the GI dysfunction associated with OIC uses. We expect to begin enrolling patients in a Phase 2 clinical study later in the current quarter, with data expected in the second half of 2015.

Second, we and Actavis completed the non-clinical part of our pediatric post-marketing requirement for LINZESS. And we are pleased to now be working with the FDA on a plan to conduct clinical studies of LINZESS in pediatric patients.

Third, we and Actavis continuously evaluate our R&D opportunities with linaclotide and aim to efficiently prioritize our resources in what we believe are programmed with the potential for meaningful value creation.

Pending clarity on the clinical and regulatory paths, the companies have decided to de-prioritize and suspend our efforts to develop linaclotide in a fixed dose combination with the PPI.

Fourth, we are making good progress enrolling patients in our Phase 2a clinical study of IW-3718, our gastric retentive bile acid sequestrant for patients with refractory GERD. We continue to expect data from this program in the first half of 2015. And last, we have identified a second development candidate, IW-1701 in our sGC platform.

Given the breadth of potential indication for sGC stimulators, we see value in advancing multiple candidates with different pharmacological profiles. Our first two sGC candidate, IW-1701 and IW-1973 have the potential to target multiple severe cardiovascular diseases.

We expect to advance IW-1973 into clinical development in the first half of 2015 and advance IW-1701 into clinical development in the second half of 2015.

I would like to take a minute to highlight some of our nearer term opportunities in GI focusing on our strategy of building a leading GI therapeutic company, we are advancing multiple product candidates that each target large unmet needs in millions of patients.

Importantly, the product candidates we are advancing are based on innovative science that should benefit from strong intellectual property protection. I look forward to updating you on our progress on these efforts going forward. With that, I will now hand it over to Michael to review our financial results for the quarter..

Thanks Mark. It was a strong quarter and I will be providing you with you a lot of information. So I would like to start off with four key points from the quarter. First, there was strong demand for LINZESS during the second quarter with over 326,000 total prescriptions filled, an increase of roughly 36% from last quarter.

Second, with an average of about 29,000 LINZESS prescriptions filled each week for the past few weeks, we believe LINZESS brand profitability is within sight. Third, we reported an $8.9 million write-down in our linaclotide API inventory to net realisable value.

And fourth, approximately $36 million in cash was used for operations during the quarter, down from approximately $58 million in the first quarter of 2014. I am going to start with two additional topics that require a little explanation – little extra explanation this quarter.

One, the decrease in LINZESS wholesaler inventory and the impact it had on net sales. And two, the LINZESS brand approaching profitability. Let me start with LINZESS net sales. In the second quarter of 2014, LINZESS net sales in the U.S. were $ 62.7 million compared with $60.8 million in the first quarter of 2014, a 3% increase quarter-over-quarter.

The current slide illustrates the net value of total prescriptions for the quarter as compared to LINZESS net sales. Our focus on the second quarter, but the same calculations can be applied to first quarter of 2014 as well.

Looking at the graph, you will see the total dollarized prescription demand in the light green was approximately $65 million during the second quarter.

This is calculated by taking the 326,000 total prescriptions for the quarter as reported by IMS and multiplying it by $262, which is the LINZESS WAC price of $7.70 per pill during the period times 34, the average number of pills per prescription of LINZESS.

Gross to net adjustments for the second quarter were approximately 23% getting you to approximately $65 million in total prescription demand. Using the same calculation method, total prescription demand for the first quarter was approximately $49 million resulting in a $16 million increase quarter-over-quarter.

In order to fully understand LINZESS net sales for a given quarter, you also need to understand the change in wholesaler inventory. We ended the second quarter 2014 with the two to three weeks of inventory as compared to four to five weeks of inventory in the first quarter.

As you may recall, the additional weeks of inventory in the first quarter were added by wholesalers ahead of our DTC campaign. Using the midpoint of each of these for calculation purposes, results in a decrease of approximately two weeks of inventory during the quarter.

A $16 million increase in total prescription demand is offset by the two-week drawdown of approximately $14 million in wholesaler inventory during the second quarter resulting in a $2 million increase in LINZESS net sales quarter-over-quarter.

LINZESS net sales will vary quarter-over-quarter depending on a variety of factors including patient demand, wholesaler inventory levels, and actual gross to net. But over time, we believe that will track closely to the (TRX) curve.

One additional comment, effective July 1, we and Actavis increased the prize of LINZESS from a WAC price of $7.70 per pill to its current price of $8.43 per pill. This price increase did not impact sales in the second quarter of 2014.

Turning to the remainder of the LINZESS P&L, during the second quarter, total commercial costs and expenses were $79.4 million compared with $59.9 million during the first quarter of 2014. The increase in commercial expenses in Q2 was primarily due to costs associated with initiation of our DTC efforts including some upfront costs.

We anticipate continued fluctuations in total commercial spend quarter-over-quarter, but remain confident that the 2014 total LINZESS marketing and sales expense guidance will be in a range of $240 million to $270 million.

The 50-50 net profit share resulted in a payment to Ironwood of $1.8 million reported as collaborative arrangements revenue on Ironwood’s P&L. Included in this payment was $2.3 million a net profit share adjustment from Actavis through a reconciliation of commercial expenses. As Peter stated upfront, we are approaching profitability for LINZESS.

To provide some more details around this, LINZESS was averaged approximately 29,000 prescriptions per week over the last three weeks. If you dollarize this at the new price of $8.43, find that gross to net adjustment in the mid-20s and assumes 34 pills per bottle to get an amount when annualized to approximately $325 million.

And as we said before, we expect to achieve brand profitability in the range of $300 million to $350 million annually. To clarify we expect this level of revenue will be sufficient to cover total expenses for the brand including cost of goods, sales and marketing and R&D.

Now focusing on Ironwood’s specific financial highlights for the quarter, beginning with our balance sheet total cash and investments as of June 30 were $302 million.

Approximately $36 million of cash was used for operations during the quarter compared to $58 million in cash used during the first quarter of 2014 and $42 million in the fourth quarter of 2013.

We work to be very disciplined in how we allocate our capital and while there will be fluctuations on a quarterly basis, we expect cash use to continue to decline over time due to the disciplined expense management and revenue growth for LINZESS.

GAAP revenue for the second quarter was $6.8 million including $1.8 million in collaborative arrangements revenue associated with our share of LINZESS revenue in the U.S. Also included in revenue is approximately $5 million for the sale of linaclotide API to ex-U.S.

partners, amortization from our existing collaborations and royalty and milestone payments from CONSTELLA in Europe. Cost of revenue for the second quarter was $10.5 million compared with $1.9 million in the first quarter of 2014.

This significant increase in cost of revenue was primarily due to an $8.9 million write down of our linaclotide API inventory to net realizable value.

As we mentioned last quarter Almirall was unable to reach agreement with the German authorities on the reimbursement price that reflects its innovation and value and made a strategic decision to suspend commercialization of CONSTELLA in Germany this quarter.

We recorded this write-down of inventory primarily as a result of lower projected sales in the European market which was mainly due to the suspension. Total operating expenses excluding cost of revenues during the second quarter were $51.4 million as compared to $57.1 million in the first quarter.

R&D expenses for the second quarter were $22.1 million compared with $27.1 million last quarter and SG&A expenses for the second quarter were $29.3 million as compared with $30 million last quarter. Consistent with previous quarters, we expect that our operating expenses will continue to fluctuate quarter-over-quarter.

Finally, our net loss for the second quarter was $60.4 million or $0.44 per share versus a net loss of $49.6 million or $0.38 per share in the first quarter of 2014. The $8.9 million write-down in inventory had a $0.06 impact on the net loss per share for the second quarter.

With respect to Ironwood’s guidance for 2014, we reiterate that we expect our total operating expenses to be in the range of $215 million to $245 million consisting of $105 million to $120 million in R&D expenses and $110 million to $125 million of SG&A expenses.

In summary, LINZESS demand is growing, investments remain consistent with our guidance and our cash position is strong. Thank you. And I will turn it back over the operator to begin the Q&A portion of the call..

Thank you. (Operator Instructions) And our first question comes from Jason Gerberry of Leerink Partners. Your line is open.

Hi, good evening. Thanks for taking the questions, just a couple.

First on the business development front I know recently you guys have been discussing the potential to add other products to leverage the current sales force, just wondering if you can give us a little bit of color in terms of the types of product acquisitions that you might be looking at.

And then second can you just you remind us again the mechanics of the DTC program with the television ads with Actavis, when those ads run through and when you need to make a decision on whether or not to allocate a portion of the selling and marketing budget towards additional television ads? Thanks..

Sure. Thanks for the question Jason. It’s Peter I will take the first question. I think we should always start with LINZESS.

We built a commercial capability that we have in place including very strong selling capabilities, marketing, markets access, patient education efforts primarily to maximize the benefit that we believe we invest can offer to patients around the world. And we focused on working very closely with Activas to make sure we deliver on that.

Having said that, we do believe that over time, we can leverage that capability to help patients with additional therapies and we look quite broadly. We have some interesting things we have been looking at. I wouldn’t make any projections on likelihood or timing. Deals are always a life of their own.

But we are seeing some interesting projects and we do believe over time that we will find interesting opportunities that can create shareholder value and leverage the capabilities that we have.

Tom, do you want to talk about the DTC timing and process there?.

Sure. Jason thanks for this question. As I mentioned we are extremely pleased with what we are seeing so far and certainly the response to DTC both in demand as well as what we are seeing as far as overall market growth and our ability to capture share.

As far as allocation of investments we accounted for that in the original budget and certainly the guidance that Michael had just shared with you. So we certainly see continuing the DTC effort moving forward. Certainly we will constantly critically assess its performances as part of the overall marketing mix.

But right now we have allocated enough funding within the guidance (Technical Difficulty)..

Thank you..

Thank you. And our next question comes from David Maris with BMO Capital. Your line is open..

Good afternoon. Few questions, so I know you have standstill agreement with your partners, in each of your partnerships. Let’s say that Actavis or another company approached you and asked if you would consider a business combination or maybe I should ask it more open ended.

Under what situations could a partner under your current standstill agreements approach you to see if you want to discuss about – discuss a combination and what would be your disclosure requirements short of other company making a formal bid.

And then separately, two other questions, the dual classes of stock and the staggered board, if you could address and I know you have addressed it before but with the consolidating industry maybe some investors are wondering what’s next so maybe if you could just talk about usefulness of those.

And then lastly, an update on the Astellas program? Thank you..

David can you give us color on the last question what about you Astellas?.

I think of the last disclosure you had said that the data that Astellas was reviewing the data and they were determining what next steps I might just have old information, but….

Got it..

Didn’t update that since then?.

Got it. So this is Peter. I’ll take the first couple and maybe I can take them together and maybe Mark can help you on the Astellas question. I think I can combine questions and say we are very focused on our strategy to go the leading GI company.

We believe we can deliver drugs to patients that offer real benefit and that our current strategy has the opportunity to generate outstanding shareholder returns. And I think we strongly believe we can best do those things as a focused, tightly aligned, independent company.

We will work during the right everyday to continue to pursue that mission, but I would say broadly here among employees and among our key investors. We feel like we are just getting started and there is a ton of passion for the mission that we are all after. And we are very excited about what we see in front of us.

LINZESS is doing very well, as you have heard, it’s turning profitable 18 months into a primary care launch which isn’t too bad. It’s we are advancing a very strong pipeline with differentiated assets and multiple proof of concepts coming over the next 24 months.

Our innovation team is hard at work and by innovation I would say it’s not just in research innovation, but we have been able to attract really quite remarkable people in all the functions in the company, in development, in our commercial capabilities and really across the board. And I think we feel quite good about where we are.

With respect to the specifics of the mechanisms in place that you discussed I think really the main point would be to tell you we have been very transparent and very consistent for many years, since before the IPO frankly about what our mission is and how we measure ourselves against our goals and what our ambition is.

And a lot of those things serve as good alignment tools. I think investors have the opportunity to see what we are trying to do and can vote with their feet.

Mark, can you take the question about Astellas?.

Sure. So yes we continued actively work with Astellas. As you are aware, we had just gotten a very early glimpse of the data from that program before the last call. We have now seen more data and feel it’s very compelling with respect to the pharmacology. All the key end points were trending in the positive direction.

We clearly saw effect on the bowel habits of constipation, bowel movement. We also saw a clear effect on reducing abdominal pain. So right now, that’s about as far as we can comment other than we continue to actively plan for advancing the Phase 3 and work very closely with our partner Astellas..

Great. Thank you very much..

Thank you. And our next question comes from Gary Nachman of Goldman Sachs. Your line is open..

Hi, good afternoon. First, it sounds like you think LINZESS inventories will probably stay in that two to three week level, is that right or could it bounce around and just wanted to confirm your thinking on that.

And why did the inventory levels come down so much if demand is high as a result of the DTC campaign, if you can just give us a little more color on what may have caused that shift in the quarter?.

Yes. So Gary, its Michael, let me take the inventory piece, but maybe, Tom if you want to comment a little bit on the demand side because that’s the key to the whole equation. And then I will come back and reconcile inventory levels and give you a download on that in a second..

Again, I will go back to what we saw in response with DTC, we saw a clear inflection point shortly after we initiated the consumer awareness program and so the point of seeing the 36% increase in overall demand, quarter-over-quarter.

So the demand was quite strong, which obviously got up to second part of the equation that I think Michael will speak to you in terms of what effect that might had on inventory level based on what the buying would be..

Yes. So now, let me get at the kind of the inventory. I do think your comment about two to three weeks, I think what we are saying is, we have been in the approximately three weeks is kind of the way we phrase it.

The reason I still want to approximate is, as you know it fluctuates and the exact timing of an order could swing that easily at any point in time, but I think using three weeks as the baseline, that’s where we are this quarter, that’s where we were back in the fourth quarter.

As we stated, the reason that we saw that bump in the first quarter had to do with preparation for the change in demand, which was hard to predict at that time. So they took in more to make sure they were ready for it. We are actually happy about it. Now, they have come back and they have normalized.

So I think you should expect around three weeks is in the right zone and that’s where we will see, but you absolutely can see flux, a little bit of flux around that as we go forward..

Okay. And then the $79 million or so if commercial expenses for LINZESS to get to this, 240 to 270 for the full year, that run rate is obviously going to come down. So just tell us where that’s going come out of it. It sounds like it really won’t impact the extent of the commercials that you have been planning, but I just want to clarify that.

And then maybe for Mark, just on that six dose combo with the PPI, when do you think you will have clarity on the regulatory path and do you have actually discussions with the FDA around it already? Thanks..

Yes. So let me comment on the expense pieces. As we generally – we really try and emphasize is that the quarterly numbers, they are a little bit chunky and we try and focus on the full year because we have initiated, there are some start-up costs when you initiate any program, the ongoing costs are lower than that.

But we continue to expect as Tom has said to invest significantly into DTC program. But our confidence probably comes in because the start-up costs aren’t there and then you can adjust other parts to the overall plan. As Tom has said many times, we will continue to refine that mix, but we are not talking about dramatic changes.

We still will continue to invest in detailing. We will get the right mix on the DTC side of it, but we will balance it out in the next quarter and through the rest of the year to stay in that 240 to 270 range..

Mike, you want to take the second half of that?.

Sure. On the fixed dose combination, I think for us it’s more now on an issue of prioritization. We are so excited about colonic delivery and putting more and more efforts into that particular area. We think the return on our investment there will be a great return. Relative to depict those combinations, we haven’t gone to the FDA.

We reviewed it with a number of different regulatory consultants that have a great deal of FDA experience and with some of the things that were going on in the overall area around safety of the PPIs and kind of where that currently exist.

We think it’s best for us not to make those investments clinically right now, but to continue to watch and if anything changes we will certainly update the investor community..

Okay. Thank you..

Thank you. And our next question comes from Mario Corso of Mizuho. Your line is open..

Yes. Thanks. A couple of things I wanted to ask about, so on the DTC program is it, is there active investment right now or is there a low – are you planning buying more or are you presently buying more just wondering kind of the specifics there. And then with acquisition now fully owning Forest, what do you see there.

I mean do you see any disruption coming or do you see any new distractions or removal of distractions in the marketing side, is it related to LINZESS.

And then finally with the sGC program what do you think about a partnership at this point, you are moving forward on your own clearly, but that landscape has had some big deals, I am just wondering how you are thinking about that? Thanks very much..

I think we got them all Mario. Why don’t I take this second one first about Forest and the transition into Actavis. Maybe Tom you can take that question about the DTC campaign and its ongoing effort and Mark to the question on sGC.

With respect to Forest, I guess I would say more, as we told you for a number of years we have a very close collaboration between the two teams. We are coming up on seven years next month. And I would say both companies worked very hard to be good collaborators. It’s in our D&A in both cases.

And I think there is no question with the Actavis acquisition and integration, but we have seen a fair amount of turnover that you guys are seeing some of it at the executive level. But we are seeing it across functions and across leadership.

Having said that, LINZESS is a top priority for both companies and we are both working very hard to maintain and reestablish any new connections and to minimize any distractions or disruptions. I think that’s true in the marketing side.

You asked specifically on marketing, I would extend that again we have a very broad collaboration in the life cycle management area and in development and regulatory across the financial organizations. It’s a very close collaboration. So I think there is a lot of work going on after this on integration.

But we are feeling quite good about re-establishing all of those connections if any have been disrupted.

Tom do you want talk some about DTC ongoing efforts?.

Mario I just want to add to some of the comments Peter made. As you know Bill Murray has been a key integration point between us. And we have – he and I have active conversations on a regular basis to make sure that the integration is going as good as it possibly can.

And as far as the field activity which is the big part of this partnership the sales force is largely working shoulder to shoulder and that’s not dramatically changing. So I think we feel pretty good about how things are evolving. Certainly has these challenges, but we are certainly proactively trying to manage that very effectively.

As far as the media question is concerned, we do have an active media plan through the end of the year. So we generally you heavy up early on with regard to the media buy and then over time as you get more and more information based on how effective is it in a marketplace, you start adjusting it.

And we have learned a great deal in a very short period of time with regard to not only its impact, but how to best connect with our primary customer. And that enables you to further refine and improve the efficiency of the media buy. But we are going to continue to invest as long it makes sense.

And right now it’s having a very strong impact, so we feel good about it..

If I can follow on just a little bit, I think that we have known really from the outset that this ultimately is a patient driven disorder and one where the primary demand comes from the patient who is suffering highly symptomatic symptoms.

And we also knew as we took you guys through some data early in the year that despite very rigorous digital and other efforts during 2013, we had high-single digit patient awareness of the drug. And we got a long way to go still.

You can see the positive impact that the initial efforts are having, but there is enormous potential still to reach new patient. I think we’ll be investing in an ongoing way appropriately in patient education for a long time to come.

One of the things that’s interesting, again, you guys know this from so many of your companies, but marketing is become more and more of a science and less of an art over the last number of years with access to so much data. So, I think the specifics of where we invest and when and how we’ll continue to optimize and learn.

But you should expect this to be an ongoing part of the marketing mix going forward..

Mark, do you want to talk about the SEC?.

Sure. So, first off, thanks for the question, Mario and indeed exciting time to be working on guanylate cyclase and cyclase P&P. Obviously with the success we’ve had with LINZESS, and its effect on GTC and then with their – at the marketed brand for sGC.

So looking at sGC, we really view it and I think if you look at the Merck Bayer deal that recently quite large deal and quite exciting. I think we and Merck Bayer also look at in a very similar way, which is this is a platform opportunity, very large opportunity from a therapeutic point of view.

And we’re interest in maximizing the real benefit for patients in this area.

So, certainly from potential relative to Ironwood making its investment in this area, but also potentially finding partners that carried us opportunity – the view of this opportunity as a platform opportunity and to expand it to other therapeutic indications outside the cardiovascular area so, that’s about as far as we can comment for but, but we do think this is a very exciting area..

Thank you. Our next question comes from Geoff Meacham of JPMorgan. Your line is open..

Hi, good evening, this is Carter on for Geoff. Most of my questions have been asked already, but I guess could you provide the gross tenant discount for the quarter at least new comments are sounds like you’re still thinking that’s going to end up in the sort of mid 20% range.

And then with the broadening of the prescriber base, can you maybe give us a sense of how the mix between gastros and PCPs has changed. Thank you..

I will take this Michael, I want to take the gross to net is so, we – you’re right we do expected to be in the mid 20s overtime for this quarter as I stated in the comments about 23%..

As far as – this is Tom. As far as the prescriber base, we have 90% plus of the gastroenterologists have written and tend to be quite productive as a prescriber base. The new prescribers are largely coming from primary care – from primary care and other especially as we quite on.

I think the really key inside that we’re seeing is the high willingness for physicians to honor a patient request. As I mentioned over 85% of patient demand is being ordered.

So, and that’s largely driving the broadening of the prescriber base, but as far as the concentration of the prescriber base, gastroenterologists are writing still a large portion of the prescriptions probably somewhere in the range of 30% and 40% considering it represents about 9,000 prescribers and they continue to grow as a primary care prescriber base grows as well..

Thank you..

Thank you. And our next question comes from Ram Selvaraju of Aegis Capital. Your line is open..

Thanks very much for taking my questions.

These are primarily gear towards the earlier stage pipeline and how the formulation and route of administration pharmacokinetic profile of the cardiovascular targeted candidates differ from the pharmacokinetic profile route of administration for LINZESS, per se and what studies you’ve already done to look at the distribution of the soluble guanylate cyclase candidates in the cardiovascular context, if you could give us some color on that.

Thank you..

Yes. So, let’s – I think we knew may need kind of clarify few things.

So, let’s talk about our GTC formulations and linaclotide formulations for LINZESS first, so that we get that clarify so, those formulations are particularly the colonic delivery, we’re using very established methods and technology for being able to target a molecule, so that it starts to become active and released lower down into the small intestine and then it’s delivered into the colon.

So, that effort is ongoing and essentially it’s very different than our current product, which is an acute release, that molecule LINZESS comes out into stomach and then it spreads throughout the small intestine and large intestine as it goes down the intestine.

So, well it did make you aware those are two concepts there, relative to soluble guanylate cyclase with the very broad distribution of expression of that molecular target. So, that targets in the cardiovascular system for sure.

You can find it in blood vessel, you can find it in smooth muscle cell, but also it’s outside the cardiovascular system that we are also interested in.

So, making molecules that have very broad volume of distribution so that we can get out to potentially targets, such as fiber blasts are that are outside the core cardiovascular system is one of the very interesting areas we are pursuing, so that we can potentially have anti-fibrotic activity in addition to the cardiovascular effect, having molecule with much longer half-life than the current product out there.

So, again, for us it’s more about kind of design molecules that have pharmacology that will be extended, sustained action and also have a much broader volume of distribution so that they can target potentially fiber blasts or metabolic targets that are outside the cardiovascular system..

Okay.

And just to clarify, do you have a specific disease indication at this time that would set those parameters into which you are planning to conduct clinical development in a more formal way or is that still to be decided?.

Yes. So, there is actually several. You can think of the fibrotic diseases, so you can think about IPF, so potentially going outside the cardiovascular system and getting to the fiber blasts there.

There are certainly several hypothetical ones that we are examining and then trying to understand which might be the best, certainly renal fibrosis relative to potentially in sustained hypertension, where fibrosis and renal failure starts to develop and also hepatic fibrosis.

So, all of those are potentially in the mix, but again, will target cardiovascular diseases first and then move from there outside the cardiovascular diseases to the more speculative targets as we move forward..

Thank you..

Thank you. And our next question comes from Boris Peaker of Cowen. Your line is open..

Thank you for taking my questions.

I just wanted to know in terms of commercial as the DTC efforts gain traction, how does the severity of the new patients compared to the initial adopters?.

I mean, it’s a great question. I think initially clearly we were getting more severe patients. I think the biggest transformation that what is likely to drive that change is going to be the patients themselves asking for more effective therapy.

And so they are largely, not only the physicians, the physicians are clearly broadening their view of who the appropriate patient is, but also patients themselves by activating and informing those patients to more effectively communicate their desire and needs, it’s going to also broaden into more mild-to-moderate patient population..

And how do you see that kind of changing the average duration of treatment or maybe there is kind of a bimodal model, however you would like to look at it?.

I mean, I don’t think we know the answer to that yet. Certainly, based on previous experience that we had – that I personally had with Zelnorm, we saw there was, there was not a dramatic change in the annual days of therapy for instance of when we saw more mild-to-moderate disease, because these patients still suffer over 100 to 120 days a year.

So, it may not be – the symptoms may not be as intense, but they are still very bothersome even in what we would consider mild-to-moderate disease, which is really going to be the driver of persistency and adherence..

And my last – go ahead sorry….

It’s okay. I just want to pile along a little bit and say although it’s attempting to have a sort of simple little equation that you can reduce this to days of therapy, it’s a complicated thing. It’s a very large heterogeneous patient population and multiple things you’re happening at once.

It’s not just you’re broadening the patient type, but you’re reminding patients to refill their prescription and that has an impact on days of therapy and there are a number of other variables moving. So, we’ll watch together with you..

Great. And my last question, you mentioned in response to the prior question, there is now more general practitioners prescribing.

I’m just curious if that’s having any kind of impact on reimbursement particularly partly combination of less severe patients, but also may be general practitioners either not having the expertise or desire to dedicate the effort to gaining reimbursement..

Yes, I think we’ve made – as you know we’ve made really good progress with the payer and for the most part we came in with a very strong value proposition with payers and we’re able to secure pretty broad reimbursement – access and reimbursement and that continues to move in a very positive direction.

And I think there is really a handful of large payers that we haven’t been able to kind of button things down on, but we’re not hearing any real objections from the peers, I mean, they clearly see that there is an unmet medical need, they clearly see that the physicians don’t have what they need to manage these patients and for the most part, they’re really positively responding to our efforts to contract in a more formulized way..

Very well. Thank you very much for taking my questions..

Thank you. And our next question comes from (indiscernible) of Cantor Fitzgerald. Your line is open..

Thanks for taking the questions. So, I had one on the clinical and one on commercial. On the clinical, it looks like you’ve recently strengthen your label warnings against pediatric usage. I’m trying to reconcile this with the idea that you also are planning pediatric trial even though the label now does not use the drug in kid.

So, could you help me understand that and then the second question is this on your joint commercialization plan with Actavis. At this point, do you expect that to have signoff on your plan for next year and are you expecting any reduction in the joint spending next year from 2014. Thanks..

Mark will you take the first question..

Sure. So relative to the pediatric label, we’ve really just updated the pediatric label. It’s not strengthened any – it’s more detailed relative to the mechanism of action of the desk that we saw in the very one-week neonatal mice.

And actually what we’re very excited about it now that we have really worked out the first PMR that we have completed with the FDA, we’re now at a state where we are finishing up kind of the planning stage for what our pediatric trials will look like. So, for us, it’s an exciting time.

We think we’ll be in starting to begin those studies, not in the – not too distant future and it would really that change in the label and the information that we provided the FDA relative to the neonatal mice study that will allow us to move forward so with – again for us the chance to go ahead and start studying in patients and particularly patients and understand the risk and benefit for the drug and potentially move forward as the product there..

Tom, can you talk to the commercial plan for 2015..

Yes, we’re in active discussion with that right now as a team plans that out for next year. Obviously this is arena as you know is a shift in kind of how they approach their budgeting process. So, we’re putting to that together actually earlier than we have done in the past.

As far as what you can expect to see on the expense side, we’re still in the investment mode. We’re still building awareness and educating and helping physicians recognized the benefit of the drug and we clearly see a stepping point out there amongst physicians as they gain experience.

Their use begins to accelerate, but you got to get them to that point, which they – it becomes almost routine as opposed to the need to actually think about it this appropriate patient for LINZESS.

And obviously we will continue to refine the marketing mix in terms of what is the call plan looks like, what is the investment in physician promotion as well as consumer piece. So, I think it’s a big early to expect that we’re actually reduced the expenses. I think we’re going to really let the data in form where and how much we should invest.

But so far certainly looking at the promotional response that we’re seeing on the physician side as well the payer side, there is still very positive and very promotionally responsive. And I think we’re going to let the data guide our decision as far as what the appropriate investment should be..

Michael, can you add a little bit of color on overall guidance for investment against the brand?.

Sure. I think as Tom said the team is focused – right now is focusing on the specifics of the plan for next year and the exact numbers on the commercial side. Mark and team are also spending time of the commercial side.

But as I mentioned in my comments, our expectation is all-in we still think that $300 million to $350 million is all-in and expenses for the entire brand is still the right – kind of the right guidance, the right range. And so we are still feeling comfortable with that.

So that at least gives you some parameters for the all-in investment how that is allocated across the different components will – the team will determine that as we go forward..

Again to reiterate that $300 million to $350 million captures all selling and marketing expenses, investments in R&D to support life cycle management and cost of goods..

Okay..

That’s an all-in number, I think you should be comfortable that number at least the foreseeable future..

Okay. Thank you very much..

Thank you. And our next question comes from David Nierengarten of Wedbush Securities. Your line is open..

Hi, guys, thanks for taking the questions.

So kind of to follow-up on an earlier question, maybe just take roughly your revenue per script according to roughly 240,000 scripts in Q1 and 320 some thousand in Q2, your revenue per script drops roughly 20%, so is that because of the milder patients being prescribed and maybe being on 10 days of therapy a month versus 25 or 30, or how are you thinking about that I mean can you put a fine tune number on the increase in less severe patients and their days of therapy or is that still – you are still working that out?.

David, it’s Michael. Let me comment first because I think you are combining two things that probably shouldn’t be combined. So Tom can speak in detail to kind of the transition of patients, but I think you are combining comments we made about transitioning mild to moderate with the actual revenue.

You’re calculating something in terms of the revenue per script, you are not factoring in the change from a – an inventory perspective. So I think what you did is you took the net sales number as reported and you divided by the total number of prescriptions which is the reason I have spent a lot of time describing how inventory impacted.

The part of the equation you are missing from this quarter is that there was a significant drawdown and inventory reduction in more than two weeks for the quarter. So I think that’s why your numbers are off.

I think if you would like, we can comment further on kind of the change in the movement from mild to moderate patients but I think that’s the sole reason for your change in the math there..

Just to be clear on the financials, I don’t know I want to make sure we are not leaving any confusion. There was not a substantial change in revenue per prescription over the course of the first and second quarter. They are quite comparable. During the first and second quarters, their WAC price didn’t change.

The gross to net number was close and the pill count was quite close. So those are the three components that will make up price per script. Starting July 1, we did take a price increase. You’ll see a higher dollars per script going forward than we saw in the second quarter. I hope that clarifies..

Maybe I didn’t take into account the inventory build in Q1 on that but I did do it in Q2 but alright and so going forward, though you expect the days on therapy to change.

So it’s fair to say that?.

Though I don’t know that we know that days of therapy will change, again our previous experience, certainly this category is even the moderate, even many of the mild, mild patients are quite adherent to therapy. So again I think it’s something we will continue to monitor moving forward.

But the adherence has been very strong to therapy to-date but we will certainly have more information as move forward..

Thanks..

At this time, I am showing no further questions. I would like to turn the call back over to Mr. Hecht for any closing remarks..

Thank you very much for your help today, Vincent. And thanks to all of you for your participation and your attention. We look forward to speaking with you forward more fully over the next couple of days and over the quarter. You know where to find us if you have further questions. And again, thank you very much.

We are looking forward to an exciting second half of the year. Have a good evening..

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes your program. You may all disconnect. Everyone have a great day..