Thank you for standing by. My name is Kath, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals First Quarter 2024 Investor Update Call. .

[Operator Instructions] I would now like to turn the call over to Matt Roache, Director of Investor Relations. Please go ahead. .

Thank you, Kath. Good morning, and thanks for joining us for our first quarter 2024 investor update. Our press release issued this morning can be found on our website. Today's call and 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 Financial Officer, will provide a commercial update to review our financial results and guidance. 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. .

maximize LINZESS; advance our GI pipeline; and deliver sustained profits and cash flow. .

In the first quarter of 2024, LINZESS maintained its strong demand momentum with prescription volume increasing 10% year-over-year, supported by a robust new-to-brand prescription growth of 18% and versus the prior year, marking the fifth consecutive quarter of double-digit new-to-brand growth.

As you may have seen in our press release this morning, based on information provided by AbbVie, we recorded an adjustment to the first quarter collaborative arrangement revenue as a result of a gross-to-net change in estimate for LINZESS related to the year ended December 31, '23 which led to our revised full year '24 outlook.

Sravan will provide more detail on the impact of this onetime adjustment later on the call. .

Moving to our pipeline. We made important progress across our development programs in the quarter. Most notably, we believe we have transformed our company with a positive topline results in February from the Phase III STARS trial, evaluating the efficacy and safety of apraglutide in patients with short bowel syndrome with intestinal failure.

These positive Phase III results demonstrate the potential of apraglutide as the first and only weekly GLP-2 therapy for the treatment of adults with short bowel syndrome who are dependent on parenteral support, if approved. .

Following the topline results shared in late February, we have continued to analyze a robust data set of the STARS Phase III and new data was submitted as a late-breaking abstract and selected for an oral presentation at the upcoming Digestive Disease Meeting.

These data further strengthen the clinical profile of apraglutide, which we're eager to share with the broader GI medical and scientific community. Based on the combination of demonstrated efficacy, tolerability and once-weekly dosing, we are confident that apraglutide has a high probability of approval.

We believe these 3 distinguishing factors will drive uptake, compliance and improvement in quality of life for patients, reinforcing our belief that apraglutide has the potential to achieve $1 billion in peak net sales. .

We are now focused on ensuring a successful path forward to commercialization, an area where we have significant expertise and a track record of success.

We are working swiftly and plan to file the NDA as soon as possible with a label focused on adult SBS patients who are dependent on parenteral support and continue to expect a commercial launch in 2025.

We estimate that there's approximately 17,000 adult patients across the United States and Europe who suffer from short bowl syndrome with intestinal failure, with a significant portion of these patients still untreated by GLP-2s.

We have the commercial infrastructure already in place and expect only incremental investments needed to launch apraglutide successfully.

We are well on our way with the launch planning and believe we are equipped to commercialize apraglutide, if approved, with a strong sales presence already established in the offices of GI specialists across the United States. .

We are confident the positive results from the STARS trial coupled with our proven track record of effective commercial execution position us uniquely in the market.

We're excited to leverage our expertise to maximize the potential for apraglutide and drive meaningful impactful outcomes for patients with short bowel syndrome who are dependent on parenteral support. .

First, LINZESS continues to deliver robust demand growth and is driving meaningful cash flows for Ironwood which we expect to continue until generic entry in 2029.

Second, we believe we have transformed our company with a positive Phase III results from the STARS trial which reinforce our conviction in apraglutide's high probability of approval and long-term revenue and profit growth potential. Finally, we're excited to see the Phase II topline results from CMP-104 later this year.

We believe CMP-104 has the potential to be a disease-modifying therapy for the treatment of primary biliary cholangitis. With that, I'll hand it over to Mike to discuss apraglutide and our pipeline in more detail.

Mike?.

Thanks, Tom, and good morning, everyone. We're pleased with the progress we made across our pipeline programs in the first quarter. I'll begin with apraglutide for short bowel syndrome in patients dependent on parenteral support.

We're very proud of the positive results from the pivotal global Phase III STARS study which is the largest ever GLP-2 trial in short bowel syndrome with intestinal failure, generating a robust data set across 68 sites and 18 countries. .

An important aspect of the STARS Phase III study design was the rigorous optimization of parenteral support volumes prior to treatment. That resulted in a low placebo rate, which intern generated a robust treatment effect for apraglutide in this patient population.

Apraglutide is the only once-weekly GLP-2 to meet its primary endpoint of relative change from baseline in actual weekly parenteral sport volume at week 24 with a 2x treatment effect relative to placebo driven by both stoma and colon-in-continuity populations. .

As a clinician myself, I'm thrilled about apraglutide's strong profile, including the convenience of once-weekly administration and its potential to benefit a patient community in need of new treatment options. .

Summarized on Slide 9, I'm excited by the demonstrated efficacy in the primary endpoint in both stoma and colon-in-continuity patient populations at 24 weeks. With further analysis of the data, we're also excited by the rapid onset of treatment effect observed at week 8 and onward throughout the study.

The fact that some patients in both stoma and colon-in-continuity populations reached enteral autonomy or a complete weaning off of parenteral support and the low prevalence of reported injection site reactions and abdominal distension, which are in line with placebo. .

Overall, we believe apraglutide's differentiated profile, including its demonstrated efficacy and tolerability and convenience of once-weekly dosing support our belief in apraglutide's high probability of approval and potential to improve the standard of care for patients who short bowel syndrome who are dependent on parenteral support.

We're very much looking forward to the upcoming DDW meeting and presenting data, which we believe further supports and enhances the clinical profile of apraglutide.

We also 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 meetings later this year. .

In addition to the positive Phase III results from apraglutide in short bowel syndrome with intestinal failure, we also announced positive results from our exploratory STARGAZE trial of apraglutide in patients with steroid-refractory gastrointestinal acute graft versus host disease.

The primary objective of the trial was to evaluate the safety and tolerability of once-weekly apraglutide in steroid-refractory acute GVHD patients treated with standard of care. Results up to day 91 showed that apraglutide in acute GVHD was well tolerated with an acceptable safety profile, the study's primary objective. .

In addition to evaluating safety, secondary endpoints assessed efficacy via lower GI and all organ responses. The majority of patients responded to treatment by day 28 and day 56, all lower GI responders at day 28 maintained their response through day 56 and 91.

We're encouraged by the data on safety, tolerability and maintenance of response and expect to present additional data at a future medical congress. The STARGAZE study will continue through its 2-year endpoint when apraglutide will be evaluated for safety and efficacy. .

Moving to CNP-104 on Slide 10. In the first quarter, COUR completed patient enrollment for the Phase II proof-of-concept study in patients with PBC and are on track to report topline results in the third quarter of this year.

The CNP-104 Phase II study is of 42 patient placebo-controlled study evaluating the safety, tolerability, pharmacodynamics and efficacy of CNP-104 in patients with PBC who are unresponsive to UDCA and/or Ocaliva. Top prime results will be based on data through day 120 of treatment.

The strong immunology underpinning the CNP program is focused on targeting the specific PDC-E2 antigen and responsible for the T cell-driven pathology of PBC. Last year, we saw early data showing favorable PDC-E2 specific T cell responses in patients treated with CNP-104.

In the topline results anticipated in the third quarter, we're looking for a demonstrated T cell response, which we believe is a leading indicator of clinical benefit.

The study will also evaluate several markers of liver function, a positive signal on liver function markers in addition to the T cell response could further support the potential for CNP-104.

We believe CNP-104 has the potential to be the first disease-modifying therapy for patients suffering with PBC as there are no therapies on the market today that address the root cause of the T cell-driven immune destruction of the liver bile ducts. With that, I'll turn it over to Sravan. .

Thanks, Mike, and good morning, everyone. I'll begin on Slide 12. As Tom mentioned earlier, LINZESS carried the positive demand momentum into the first quarter. This is now the 12th year on market for LINZESS. And as you can see, prescription demand remains remarkably strong.

LINZESS volume rose 10% year-over-year in the first quarter, while new-to-brand prescriptions increased 18% compared with the first quarter of 2023, reinforcing that patients and healthcare professionals continue to choose LINZESS. .

We believe the strong demand momentum and success of LINZESS will continue as a result of high treatment satisfaction with both patients and healthcare professionals, combined with increased utility from the pediatric syndication, class-leading formulary access, guideline recommendations, focused commercial execution and new patient start acceleration.

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I'd like to take a moment to provide additional details on the LINZESS gross to net change an estimate that was reflected in the first quarter of 2024 on Slide 13. In the first quarter, AbbVie reported U.S. net sales of $257 million, an increase of 3% year-over-year.

Based on information subsequently provided by AbbVie, Ironwood estimates a $60 million adjustment to LINZESS U.S. net sales, representing the difference between AbbVie's gross to net estimates made in 2023 and actual subsequent payments made.

As a result of this change in estimate, Ironwood recorded a $30 million reduction to collaborative arrangements revenue. With this adjustment, total Ironwood revenue in the first quarter was approximately $75 million, down 28% year-over-year. .

Turning to our first quarter financial performance slide on -- performance on Slide 14. Q1 LINZESS U.S. net sales, as reported by AbbVie, were $257 million, an increase of 3% year-over-year. LINZESS' commercial margin, excluding the gross to net change in estimate, was 71% in the first quarter of 2024 compared to 73% in the first quarter of 2023.

As I noted a few moments ago, Ironwood revenue was $75 million, driven primarily by U.S. LINZESS collaboration revenue of $72 million. Revenues in Q1 were lower year-over-year primarily due to the $30 million change in estimate recorded to collaborative arrangements revenue..

As a result, GAAP net loss was $4 million, and adjusted EBITDA was $13 million. In the first quarter, Ironwood generated approximately $45 million in cash flow from operations, and ended the quarter with $122 million in cash and cash equivalents. After repaying $25 million of the outstanding principal balance on our revolving credit facility in cash.

As of the end of March, the outstanding drawn balance on the revolver was $275 million. In the near term, we continue to expect to settle our 2024 convertible notes that mature on June 15, through a combination of cash on hand and undrawn revolver capacity. Regarding capital allocation.

We are in a fortunate position with meaningful cash flow generation for LINZESS, which we believe will be sufficient to fund all ongoing operations, and we do not anticipate the need to access the capital markets for incremental funding to support the potential apraglutide launch and further progress our development programs. .

Next, I'll review our updated 2024 guidance on Slide 15. As a result of LINZESS' gross to net change in estimate in the first quarter, for full year 2024, we now expect LINZESS U.S. net sales decline in the mid-single digits percent. Ironwood revenue of between $405 million and $425 million, and adjusted EBITDA of greater than $120 million. .

To wrap up, we made significant advancements across our portfolio in the first quarter. We look forward to sharing additional detail from the apraglutide STARS Phase III study at Digestive Disease Week later this month, which we believe will further enhance its clinical profile of apraglutide.

With the positive STARS data readout, we believe we are well on our way to diversifying our portfolio and extending our growth horizon beyond LINZESS.

Looking ahead, we are focused on moving quickly to get apraglutide approved and to patients with SBS who are dependent on parenteral support as soon as possible and executing across our strategic priorities by advancing our other GI pipeline assets, driving robust LINZESS demand growth and delivering sustained profits and cash flow. .

I want to close by thanking all of our employees, patients, caregivers and advocates for their shared dedication to advancing and supporting therapies for GI diseases. Operator, you may now open up the line for questions. .

[Operator Instructions] Your first question comes from the line of David Amsellem with Piper Sandler. .

So a couple of questions here. I know you've got the data coming at DDW. But I just wanted to get some additional color on what you mean about efficacy across both stoma and colon-in-continuity patients.

And I guess what I'm getting at is just within the CIC subgroup, is their statistical separation? I know what you had shown at 48 weeks, but is the statistical separation say at earlier time points, say, 24 weeks or 12 weeks. So just help us understand that. And if you can't answer it, that's fine, but I thought I'd ask the question anyway. .

And then secondly, on 104, what do you have to see in order to move forward? Help us understand how you're thinking about the bar for continued advancement. I'll leave it there. .

David. So we're very excited about the data from apraglutide. And a lot has been discussed around CIC versus stoma. It's just critical to remember that the primary endpoint included both stoma and colon-in-continuity patients.

So we clearly think we have a high probability of approval for the whole population, stoma and CMC based on the fact that colon-in-continuity patients contributed to the primary endpoint.

That was quite distinct from what happened with the regulatory precedent that GATTEX set, where they really didn't see a meaningful contribution for the colon-in-continuity patients.

So we continue to believe that the potency of the asset is well established now with this Phase III data and that that's given us the opportunity for once-weekly therapy.

And what you'll see at DDW is a further rollout of the colon-in-continuity specific data which certainly gives us even more confidence in the efficacy in colon-in-continuity patients.

And we certainly fully support the submission we're going to do for the whole population and have a high probability of success for approval in colon-in-continuity and stoma patients. .

In addition, there will be a fair amount of tolerability data which will further support the differentiation of apraglutide from other GLP-2 therapies in the class. We've really learned a lot from the pivotal trial data in terms of the safety and tolerability.

And you'll see details on events and numbers at DDW, which really support a very safe and well-tolerated profile. And in principle, most all events were actually in line with placebo. So we think it's a very good profile for commercial success. .

And the next question you asked was on CNP, okay? What we plan -- what we hope to see in CNP as we discussed the real strength of the CMC program is the science behind the immunology and what we know about the pathology of PBC. It's a PDC-E2-driven disease.

And we can test the T cells that destroy the bile ducts with PDC-E2 to determine if treatment with CNP-104 modulates or reprogram those T cells. So we're really looking for a demonstrated T cell effect that shows that those T cells are no longer pathologic, no longer prone to destroying bile ducts.

And in combination with that, we're looking for a meaningful clinical outcome, and that's why we have a number of liver function assessments in the trial as well. And this 120-day assessment that give us the opportunity to look at that demonstrated T cell response and the potential opportunity to improve liver function assessment. .

Your next question comes from the line of Chase Knickerbocker with Craig-Hallum. .

Maybe just digging in a little bit on the gross-to-net adjustment from last year.

Can you just talk to us about kind of what that was specifically as far as probably by payer channel? Or just however you think it's best to break that down just a little bit more detail around exactly what that $60 million adjustment was that was not accounted for by AbbVie?.

Yes. So first of all, Chase, thank you for your question. I'd say that -- I'll taking zooming out first, I would say the fluctuations in gross-to-net relating to shift in channel mix are common and their normal occurrence within this industry, as you know. It's something that happens on a periodic basis for us, really isn't this material.

I think the change in estimate for us was based on information that AbbVie provided subsequent to their reporting. And it was the difference between the gross-to-net during the year and the actual invoices they got. And it was primarily associated with government and contractual rebates.

I think that's the color probably can give you in terms of where we were. .

That's helpful. Maybe one for Mike. Can you just talk around kind of next steps with the APRA NDA? Certainly looking forward to the data, just maybe specifically on the filing.

Have you had your Type B meeting or is that scheduled for soon? And then kind of talk a little about what's left to be done with all the data work that you've been doing in the background to prepare the submission. .

Yes, sure. That's good question. And clearly, that's our key priority. Our #1, 2 and 3 priorities is the APRA submission. So it's all hands on deck as for that. We clearly continue to look at the data. That's what resulted in the DDW oral abstract acceptance. So we're very excited about that. That's going to support, obviously, getting the data out.

But also all that data is part and parcel to the submission and aligns with everything we're trying to do to get the submission in and on track. So we're currently not planning the pre-NDA meeting, which we'll do as well. And we're really looking forward to moving that submission forward as expeditiously as possible.

We're still targeting a potential launch in 2025. And as we get more granular on the submission timelines, we'll certainly make that available. .

Okay. And then just last for me on CNP-104. Just to confirm for investors, when we get that data in 3Q, that will be both T cell response, and we will also be able to see that liver function data.

Is that right, Mike?.

Yes. We plan to talk about the T cell -- the demonstrated T cell effects. So obviously, prove the point of the program, which is the reprogramming and the immunology around the PDC-E2 specific antigens. So we plan to share that as well as liver function outcomes as well. Remember, it's a 120-day study. It's a Phase II study.

It's the first in-human study for CNP-104, and so that is a sort of early time frame. You may know that things like obeticholic acid and CymaBay and those products went out to a year.

But we clearly think based on the science and the technology and why we did the deal, that we have an opportunity to see a real early clinical endpoint in those liver function assessments. .

Great. And then just last Sravan, I'll come back to you. Just on guidance. I mean, looking at it, it certainly seems really the only material changes to your guys' expectations was this $30 million adjustment.

Is that fair to say as far as the Medicaid changes on the rebate cap this year, everything else is the same as far as your expectation goes on your revenue expectations in 2024 from LINZESS. .

Yes. So I would say that our guidance now is reflective of the onetime adjustment.

As you can see, had the -- based on AbbVie's reporting that I think we would have been relative to our performance of the brand continues to be really strong with double-digit demand growth, the pricing headwinds that we would have faced or we anticipated having a high single-digit price erosion and low single-digit revenue growth, we're kind of there outside of the onetime out-of-period adjustment.

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I think the only other comment that I would make on this is, as you can see, the demand is really remarkable with regard to what kind of growth we're seeing in year 11, year 12 for the brand, which we obviously want to continue to nurture. And what we do know is there's really kind of 3 things that are driving that.

Certainly, the high treatment satisfaction, no question. But I think the other piece is payer access, which is part of the marketing mix. Now what we will be doing moving forward, is really working with our partner to continue to evolve that marketing mix so we can really optimize the value that LINZESS can create.

So we have been doing this from day 1 as we've evolved the marketing mix, we've reduced the investment and increase the profit of the brand.

As we move forward, I think we're seeing very durable growth in brand demand and what we really want to focus on now is what is the right appropriate marketing mix and investment to continue to drive profits to the bottom line. .

Your next question comes from the line of Amy Li with Jefferies. .

On apraglutide, what is your current internal estimate on durability of treatment? And will we get any data at DDW to support potential differentiation on this [indiscernible] Additionally, can you give us any updates on how you're thinking about the addressable market for APRA post the ICD-10 codes being put in place late last year? And how many of these patients do you have access to with your current sales force?.

Mike, why don't you start with the first one? I'll answer the second one. .

So thanks, Amy. So in terms of durability, I suspect you mean more longer term. I mean, clearly, as the only once-weekly available therapy, we certainly think that Phase III data supports the weekly administration and sort of the pharmacokinetics and pharmacodynamics really lend itself to that once-weekly dosing.

So the data speaks for itself in that regard. It's a once-weekly therapy. I think in terms of longer term, right, the actual ideal goal for most patients is enteral autonomy, where they could come off all parenteral support. In that setting, they often would need continued GLP-2 therapy to maintain that intestinal growth.

Then from that going forward, it will be up to them, obviously, and they're position a caretaker to understand how that long-term plays out.

But the reality is in patients with short bowel who have limited bowel epithelium, they benefit from continued therapy from the GLP-2 because as we've seen with other GLP-2 therapies, when you come off it, used to often revert back to a need for parenteral support. .

And then on the question about the ICD-10 codes and our overall sales force, just taking a step back again, our level of access to the major GI practices across the United States is probably unparalleled from our perspective. We've got over 90 sales reps calling on these practices and leading clinicians.

Specifically with the ICD-10 codes, we're really excited about this development, honestly, Amy Li. I think the big thing for us is that these ICD-10 codes are starting to shed real light on how many patients are actually are. I think you've heard a little bit on some of the things you've hosted yourself about differences in what the estimates are.

I think there have been 7,000 or so patients that have been identified already to date through the ICD-10 codes in just a few months. It just reinforces our estimates as more data comes to light about how many patients there are.

And our presence across the United States, I think our ability to capture share with our best-in-class product with our -- as an overall profile with apraglutide having once-weekly administration, demonstrated real efficacy across the both stoma and CIC patient populations.

And then now, as you'll see in a few weeks, the safety and tolerability data of being equivalent to placebo. I think that is -- I think, our ability to penetrate that and capture share to be a billion dollar brand is insight. We feel confident about it. .

Your next question comes from the line of Jason Butler with Citizens JMP. .

First one is for APRA.

Can you maybe talk about the work you're doing pre-commercial to build awareness of the brand and beyond just obviously presentation of data? What work you're going to do this year to prepare the market for the drug? And then just secondly, on LINZESS, can you maybe speak to the contribution of the pediatric market to growth this quarter and looking forward into 2024.

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Yes. So Tom, why don't you handle the first one and then maybe I'll take the second part of the question, if that works. .

I mean, remind me, the first question was... .

The brand awareness, the activity. .

Sure. So as far as the prelaunch activities, we are just in the midst of launching a disease education program targeted primarily on the GI community which will probably stretch into a digital platform for patients and for patients to seek better understanding and options.

So this is really about increasing the awareness of who these patients are, how debilitating this disease is and the need for more effective therapy. And through that exercise, a big objective here as far as overall impact on performance is identifying available patients within these large GI practices as well as the academic centers of excellence.

We've been very, very encouraged by the feedback that we're getting from the key opinion leaders in the center of excellence as far as the response rate and the acceptance of apraglutide in the clinical trials and they're all looking forward to working in a very collaborative way, not just as far as educating people, but also how do we really work with the patients to help them through the process to get better care.

So we're -- I think we're very well positioned to prepare our go-to-market strategy. And of course, that work has been ongoing, and we're just in the early stages of implementing the disease awareness program.

Do you want to take the LINZESS question?.

Yes, I'll happy do that. So Jason, so I think on your question about the pediatric launch and its progress, I think we are clearly, I think, overall, I think since the launch has started, we're really positive about pediatric indication. We're still early in the launch, frankly.

But to date, we're really encouraged by the strong new-to-brand prescription volume growth. I think Tom mentioned earlier on the call that 18% new-to-brand growth that specifically a large portion of that growth on a year-over-year basis is in the 72-microgram dose, which is the approved dose for the 6- to 17-year-old patient group.

So it's embedded in those numbers. And I think it's part of what's sustaining our long-term growth here for LINZESS as we're in year 12. .

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

I have a couple of questions. So one on the guidance again, thanks for clarification. But one thing I wanted to ask was that typically, this happens because your -- you had a particular mix in the, Mike, for government versus commercial and that mix change subsequently because you don't know it until you get the receipts and all.

Are you expecting similar mix, which like the updated mix for 2024 as well? I'm asking because by our math, the impact that you are modeling is a little bit more than $60 million. So that's the first question. .

And the second question is on ALP with CNP-104. So if I look at drugs like Seladelpar, there was an impact on ALP by month 1 and then at month 3, it was more like stabilized, after that, it was not an incremental impact. So isn't 120-day enough to see benefit? I appreciate the mechanisms are different.

So how should we think about benefit on endpoints like ALP there. .

Mike, why don't you go first and then I'll answer the guidance question. .

Yes. Thanks. It's a good question because, as you know, the regulatory like precedent is around alk phos that's clearly how obeticholic acid got approved and what CymaBay's gone through right now. So it clearly is an approved path for accelerated approval, which is not full approval.

You may know CymaBay's actually added pruritus in that to sort of help balance that need. Alk phos is a very nonspecific sort of effect on liver function in a lot of ways because it really speaks to how the bile is moving through the liver.

So it's very important to understand that if you give something like obeticholic acid, which is a bio acid mimetic, it actually increases bile flow. One of the early benefits you'll get from that is improved alk phos. It's also not necessarily part and parcel that that's aligning with liver function improvement.

And that's why obeticholic acid had to have a post-marketing commitment to show a benefit in liver function more broadly with histology which incidentally did not meet needs at the time. So it is important to understand what alk phos is there for. And as you highlighted, our mechanism is completely different.

We're actually targeting the root cause of PBC, which is the T cell-driven bile duct destruction. So we clearly believe that we can affect the T cells and then reprogram those T cells so they no longer attack the bile ducts, we'll see clinical improvement. And then to your point, the time line for that clinical improvement, we're going to learn.

We clearly think we have an opportunity to see it early given the specificity of PDC-E2 and the specificity of this therapy. That's why we have a 120-day look, but we're certainly going to learn from that. And that's why we have this combination of need, meaning to demonstrate a T cell response and the liver function improvement.

So certainly, the different mechanism is important to understand. And also, it's very important to realize that we're actually going for a very disease-modifying approach, not just moving bile flow through the liver better, which is a biomarker for potential benefit for liver disease. .

So on your guidance question, Look, I think on high level, I'd say again. One, I think from our perspective, and it's -- the guidance we gave for 2024 accounts or the mix we anticipate in 2024, it's our 2024 guidance.

We expect to still see high single-digit prescription demand growth, and I think the decline is as stated, based on our overall annual guidance. This is a onetime adjustment. We've been pretty good as a brand over the last several years and anticipating with our estimates as with respect to what that mix is in a channel.

Channel mix is pretty fluid and predicting LINZESS net sales can move in a positive or in a negative directions has always been true, but we've been pretty good about it over the years.

And I think at this point, we're still expecting to deliver a mid-single-digit decline, as I said before, and that's predominantly driven by the onetime out-of-period adjustment. Outside of that, I think we would have been in line with guidance for the full year. .

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

Mike, I was just looking back at the secondary endpoints from the STARS study, do you guys plan on showing, I guess, the earlier week data from the CIC patient population at DDW, especially with the secondary endpoints that you didn't need statistical significance on. .

Yes, Tim, if you're referring to sort of specifically things like enteral autonomy or things you might see at 24 weeks versus the key secondaries at 48, the answers is yes. And we certainly think that data further supports our conviction of good efficacy in both stoma and CIC patient populations.

So yes, we plan to see that -- to have that at DDW as well as sort of the decrease in parenteral support volume and the relative change from baseline in that capacity as well. The DDW have planned oral presentation. It's obviously still in development, but we have a lot done on it already, and it's very data heavy.

I think you'll be very impressed with the amount of data. We're certainly clearly very excited by it because it clearly supports our conviction that the drug is approvable and works in both colon-in-continuity and stoma patients. So we really are looking forward to sharing that more broadly with the community. .

Mike, just one follow-up. Why is the placebo effect so high in these studies? Because I noticed on your third secondary endpoint, the placebo rate was almost 44%.

Can you comment on that?.

Yes. I mean I think the key to realize there is that the primary endpoint placebo response was 12.5%, right? And that's the key driver for the study's positivity statistically and the path to approval. So I think that's a key thing to keep aware of. The other thing to realize is the 48-week endpoints never had been tested in a GLP-2 therapy before.

And there can be a tendency for placebo response to change during a clinical trial.

And it's also important to realize that what we're actually talking about here, placebo response is different at 24 weeks on the primary endpoint, meaning it's the relative change from baseline versus the 1 day off, which is the third key secondary, you alluded to, that's 44%.

And then in addition, we instituted a new design in this trial, which is the winning algorithm. So that's clearly played forward through the study. We're going to analyze that data real cost carefully to make sure we understand it.

But there is a potential opportunity for the winning algorithm, which would be in place for both placebo and drug-treated patients could elevate the placebo response with later time points in the study.

Because early in the study, it might be more volume-driven, whereas as people wean, then you may fall under the year an output threshold of 10% and you make it exposed to weaning out. We're still looking into that, but that's clearly one thing on the list to figure out if that's what made the 48-week endpoint, we'll see the response so high.

And one final point to realize even though the placebo response was high at the third key endpoint on the CIC population, APRA was still numerically superior.

So when we get to this sort of aspect of approvability, that fact that APRA still did numerically better will be a positive in terms of not looking at it like we're worse than placebo or things like that. That's not the case.

And then given the things we talked about on the primary and the first key secondary being positive in the whole population, we clearly think that bodes well for a high probability of success for approval for both populations. .

And maybe just one last follow-up, Mike. Are some of these items, do you think that you could get them on the label? Because I think those would be important, especially in the colon-in-continuity patient population. .

Yes. I think we're going to work to get everything in the label we can. We certainly think the drug works very well in both patient populations. One of the reasons we included those additional secondaries was for exactly that reason. However, that challenge is higher now, obviously, because they didn't meet statistical significance.

But as I mentioned, both are numerically better. So we certainly have a strong confidence for approvability. .

Ladies and gentlemen, that concludes our Q&A session and today's call. Thank you all for joining. You may now disconnect..