Full Press Release Details
Pharmaceuticals Reports Strong Fourth Quarter and Full Year 2019 Results, Exceeding Full Year 2019 Guidance; Provides Full Year
revenue of $428 million, driven primarily by
U.S. LINZESS (linaclotide) collaboration revenue-
-GAAP net income from continuing
operations of $59 million and adjusted EBITDA from continuing operations of $148 million for the full year 2019-
total revenue and adjusted EBITDA guidance incorporates previously
amended agreements with Astellas and AstraZeneca-
-Data readouts from MD-7246 Phase
II trial and IW-3718 Phase III trials expected in 2020-
Mass., February 13, 2020 - Ironwood Pharmaceuticals, Inc. (Nasdaq: IRWD),
a GI-focused healthcare company, today provided an update on its fourth quarter and full year 2019 results and recent business
"2019 brought us a catalyzing opportunity to become a
GI-focused healthcare company dedicated to advancing the treatment of GI diseases and redefining the standard of care for millions
of patients," said Mark Mallon, chief executive officer of Ironwood. "To do this, we are executing on our strategy
to drive LINZESS growth, advance our late-stage GI portfolio, and deliver sustainable profits. We made substantial progress in
2019 across each of these priorities and expect 2020 to be another pivotal year. We are already off to a strong start having settled
all outstanding LINZESS patent litigation, and we look forward to continued momentum through strong growth of LINZESS, top-line
data readouts from MD-7246 and IW-3718, and further revenue generation in 2020."
and Full Year 2019 Financial Highlights1
(in thousands, except for per share amounts)
| 4Q 2019 | 4Q 2018 | FY 2019 | FY 2018 | |
| Total revenues | $ 126,301 | $ 130,692 | $ 428,413 | $ 346,639 |
| Total costs and expenses | 76,708 | 100,831 | 308,290 | 497,309 |
| GAAP net income (loss) from continuing operations | 47,858 | 8,373 | 58,943 | (194,146) |
| GAAP net income (loss) | 47,858 | (15,493) | 21,505 | (282,368) |
| GAAP net income (loss) per share - basic | 0.31 | (0.10) | 0.14 | (1.85) |
| GAAP net income (loss) per share - diluted | 0.30 | (0.10) | 0.14 | (1.85) |
| Adjusted EBITDA from continuing operations | 54,515 | 33,427 | 147,791 | 304 |
| Non-GAAP net income (loss) | 47,090 | 6,643 | 85,497 | (105,975) |
| Non-GAAP net income (loss) per share | 0.30 | 0.04 | 0.55 | (0.69) |
and Full Year 2019 Corporate Highlights
net of commercial and R&D expenses, was $513.7
million for the full year 2019, compared to $444.8 million for the full year 2018. See U.S. LINZESS Full Brand Collaboration table
below and at the end of this press release.
| U.S. LINZESS Full Brand Collaboration 1 (in thousands, except for percentages) | Three Months Ended December 31, | Twelve Months Ended December 31, | ||
| 2019 | 2018 | 2019 | 2018 | |
| LINZESS U.S. net sales 2 | $231,155 | $205,239 | $803,204 | $761,214 |
| Allergan & Ironwood commercial costs and expenses | 44,678 | 59,353 | 228,593 | 257,767 |
| Commercial margin 2 | 81% | 71% | 72% | 66% |
| Allergan & Ironwood R&D Expenses | 16,344 | 16,887 | 60,870 | 58,599 |
| Total net profit on sales of LINZESS 2 | 170,133 | 128,999 | 513,741 | 444,848 |
Global Collaborations and U.S. Promotional Partnerships
Against 2019 Financial Guidance
| 2019 Results | Revised 2019 Guidance | Original 2019 Guidance 1 | |
| Total revenue | $428 million | $410 - $420 million | $370 - $390 million |
| Net interest expense | $34 million | ~$35 million | ~$35 million |
| Separation expenses 2 | $32 million | ~$30 million | $30 - $40 million |
| Restructuring expenses 3 | $4 million | ~$4 million | ~$3 - $4 million |
| Adjusted EBITDA from continuing operations 4 | $148 million | >$130 million | >$65 million |
| LINZESS net sales growth | 6% | Mid-single digit % increase | Low-to-mid single digit % increase |
revised its 2019 guidance in connection with its third quarter 2019 earnings update on October 31, 2019. Revised 2019 guidance
for total revenue and adjusted EBITDA from continuing operations reflects approximately $42.4 million in license and milestone
payments related to the amended ex-U.S. agreements with Astellas and AstraZeneca that were recognized in the third quarter of
expenses were $3.8 million in the fourth quarter of 2019.
expenses were largely incurred during the first quarter of 2019 in connection with the reduction in workforce commenced in February
2019. There was an insignificant amount of restructuring adjustments in the fourth quarter of 2019.
EBITDA from continuing operations is calculated by subtracting net interest expense, taxes, depreciation, amortization, fair value
of remeasurement of contingent consideration, mark-to-market adjustments on derivatives related to Ironwood's 2022 Convertible
Notes, impairment of intangibles, restructuring expenses, separation expenses, and loss on extinguishment of debt from GAAP net
income (loss) from continuing operations. In the second quarter of 2019, Ironwood began reporting in its financial statements
GAAP net income (loss) from continuing operations which excludes discontinued operations related to Cyclerion. See Non-GAAP Financial
In 2020, Ironwood expects:
| 2020 Guidance | |
| LINZESS net sales growth | Mid-single digit % increase |
| Total Revenue | $360 - $380 million |
| Adjusted EBITDA 1 | >$105 million |
EBITDA is calculated by subtracting net interest expense, taxes, depreciation, amortization, mark-to-market adjustments on derivatives
related to Ironwood's 2022 Convertible Notes, restructuring expenses, separation expenses, and loss on extinguishment of
debt from GAAP net income (loss).
Non-GAAP Financial Measures
Ironwood presents non-GAAP net income (loss) and non-GAAP net
income (loss) per share to exclude the impact of net gains and losses on derivatives related to our 2022 Convertible Notes that
are required to be marked-to-market, the amortization of acquired intangible assets, the fair value remeasurement of contingent
consideration associated with Ironwood's terminated U.S. license agreement with AstraZeneca for the exclusive rights
to all products containing lesinurad, and the impairment of intangible assets associated with Ironwood's subsequent notice
of termination of the lesinurad license agreement, if any. Ironwood also excludes restructuring, separation-related expenses and
loss on extinguishment of debt from non-GAAP net income (loss). These adjustments are reflected in the non-
GAAP net income (loss) in the fourth quarter and full year 2019
and 2018 presented in this press release. Non-GAAP adjustments are further detailed below:
| The gains and losses on the derivatives related to our 2022 Convertible Notes may be highly variable, difficult to predict and of a size that could have a substantial impact on the company's reported results of operations in any given period. | ||
| The acquired intangible assets associated with the terminated U.S. license agreement with AstraZeneca for the exclusive rights to all products containing lesinurad are valued as of the date of acquisition and are amortized over their estimated economic useful life, and management believes excluding the amortization of acquired intangible assets provides more consistency with the treatment of internally developed intangible assets for which research and development costs were previously expensed. | ||
| The contingent consideration balance associated with the terminated U.S. lesinurad license agreement with AstraZeneca is remeasured each reporting period, and the resulting change in fair value impacts the company's reported results of operations. The changes in the fair value remeasurement of contingent consideration do not correlate to the company's actual cash payment obligations in the relevant period. | ||
| Impairment of intangible assets is a non-cash charge that Ironwood considers to be non-recurring as it is associated with its notice of termination of the lesinurad franchise. As such, management believes that excluding the impairment of intangible assets provides more transparency into Ironwood's continuing operations. | ||
| Restructuring expenses are considered to be a non-recurring event as they are associated with distinct operational decisions. Included in restructuring expenses are costs associated with exit and disposal activities. | ||
| Separation expenses include costs associated with the spin-off of Cyclerion from Ironwood. These costs are considered non-recurring as the separation was a significant and unusual event. Certain of these expenses do not appear as non-GAAP adjustments used to calculate adjusted EBITDA from continuing operations, as such expenses are included as part of discontinued operations, and are therefore excluded from the calculation of GAAP net income (loss) from continuing operations. | ||
| Loss on extinguishment of debt is considered to be a non-recurring event as it is associated with a distinct financing decision. Included in loss on extinguishment of debt are costs associated with the extinguishment of the 8.375% Notes and a portion of the 2022 Convertible Notes. |
Ironwood also presents adjusted EBITDA from continuing operations,
a non-GAAP measure. Adjusted EBITDA from continuing operations is calculated by subtracting net interest expense, taxes, depreciation,
amortization, fair value of remeasurement of contingent consideration, mark-to-market adjustments on derivatives related to Ironwood's
2022 Convertible Notes, impairment of intangibles, restructuring expenses, separation expenses and loss on extinguishment of debt
from GAAP net income (loss) from continuing operations. The adjustments are made on a similar basis as described above related
to non-GAAP net income (loss), as applicable.
Ironwood also presents guidance on adjusted EBITDA, a non-GAAP
measure. Adjusted EBITDA is calculated by subtracting net interest expense, taxes, depreciation, amortization, mark-to-market adjustments
on derivatives related to Ironwood's 2022 Convertible Notes, restructuring expenses,
separation expenses and loss on extinguishment of debt from
GAAP net income (loss). The adjustments are made on a similar basis as described above related to non-GAAP net income (loss), as
Management believes this non-GAAP information is useful for
investors, taken in conjunction with Ironwood's GAAP financial statements, because it provides greater transparency and period-over-period
comparability with respect to Ironwood's operating performance. These measures are also used by management to assess the
performance of the business. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for
or as superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures
are unlikely to be comparable with non-GAAP information provided by other companies. For a reconciliation of non-GAAP net income
(loss) and non-GAAP net income (loss) per share to GAAP net income (loss) and GAAP net income (loss) per share, respectively, and
for a reconciliation of adjusted EBITDA from continuing operations to net income (loss) from continuing operations on a GAAP basis,
please refer to the tables at the end of this press release.
Ironwood does not provide guidance on GAAP net income (loss)
from continuing operations or a reconciliation of expected adjusted EBITDA to expected GAAP net income (loss) from continuing operations
because, without unreasonable efforts, it is unable to predict with reasonable certainty the non-GAAP adjustments used to calculate
adjusted EBITDA including, without limitation, the mark-to-market adjustments on the derivatives related to its 2022 Convertible
Notes. These adjustments are uncertain, depend on various factors and could have a material impact on GAAP net income (loss)
from continuing operations for the guidance period.
Ironwood will host a conference call and webcast at 8:30 a.m.
Eastern Time on Thursday, February 13, 2020 to discuss its fourth quarter and full year 2019 results and recent business activities.
Individuals interested in participating in the call should dial (866) 393-4306 (U.S. and Canada) or (734) 385-2616 (international)
using conference ID number 1975039. To access the webcast, please visit the Investors section of Ironwood's website at www.ironwoodpharma.com
at least 15 minutes prior to the start of the call to ensure adequate time for any software downloads that may be required. The
call will be available for replay via telephone starting at approximately 11:30 a.m. Eastern Time, on February 13, 2020 running
through 11:59 p.m. Eastern Time on February 27, 2020. To listen to the replay, dial (855) 859-2056 (U.S. and Canada) or (404) 537-4306
(international) using conference ID number 1975039. The archived webcast will be available on Ironwood's website for 14 days
beginning approximately one hour after the call has completed.
Ironwood Pharmaceuticals (Nasdaq: IRWD) is a GI-focused healthcare
company dedicated to creating medicines that make a difference for patients living with GI diseases. We discovered, developed and
are commercializing linaclotide, the U.S. branded prescription market leader for adults with irritable bowel syndrome with constipation
(IBS-C) or chronic idiopathic constipation (CIC).
We are also advancing two late-stage, first-in-category GI product
candidates: IW-3718 is a gastric retentive formulation of a bile acid sequestrant being developed for the potential treatment of
gastroesophageal reflux disease, and MD-7246 is a delayed-release