IRWD

Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals First Quarter 2026 Investor Update Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Greg Martini, Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining us for our first quarter 2026 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 31st, 2025, 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 and 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, Thomas McCourt, our Chief Executive Officer, will begin with a brief overview. Tammi Gaskins, our Chief Commercial Officer, will provide a commercial update, including discussion of the commercial opportunity for apraglutide in Short Bowel Syndrome with Intestinal Failure. Michael Shetzline, our Chief Medical Officer, will discuss our pipeline, and I will review our financial results and guidance. Today's webcast includes slides. For those of you dialing in, please go to the events section of our website to access the accompanying slides separately. With that, I'll turn the call over to Thomas.

Good morning, everyone, and thanks for joining us today to review our first quarter 2026 financial guidance, results, and business updates. Earlier this year, we laid out our top priorities for 2026, which are maximizing LINZESS, advancing apraglutide, and delivering sustained profits and cash flow. We believe these priorities are key to achieving our goals of redefining standard of care for patients suffering from GI and rare diseases while maximizing shareholder value. During the first quarter, we made significant progress on each of these priorities. First, LINZESS, which continues to be the prescription leader for the treatment of irritable bowel syndrome with constipation and chronic idiopathic constipation. In its 14th year on the market, we reported an outstanding first quarter financial performance with 97% year-over-year net sales growth for LINZESS, driven primarily by improved net price and supported by 5% prescription demand growth.

These first quarter results position us well to achieve our full year 2026 financial guidance, which will return LINZESS to blockbuster status and will set a new all-time high for annual U.S. net sales for the brand since launch. We are also continuing to make progress in bringing LINZESS to younger age groups. In the first quarter, the FDA accepted a supplementary new drug application for LINZESS for the treatment of functional constipation in patients two to five years of age. The application received a priority review with a PDUFA target action date set for May 24th, 2026. At present, LINZESS is the only FDA-approved drug for the treatment of children seven years and older with irritable bowel syndrome with constipation and for children six to 17 years old for functional constipation.

If approved, the indication in children two to five years old for the treatment of functional constipation would further broaden the clinical utility of LINZESS in younger age groups, and we look forward to hearing from the FDA in the coming weeks. In the first quarter, we advanced our STARS-2 confirmatory phase III clinical trial, assessing apraglutide for the treatment in patients with Short Bowel Syndrome with Intestinal Failure, including completion of the clinical site feasibility, and we remain on track for the clinical site initiation in the second quarter. This past weekend, we had a chance to present findings at Digestive Disease Week meeting in Chicago from the LANDMARK survey, which underscored the need for therapies that address multiple dynamics dimensions of the burden of total parenteral nutrition based on real-world experience of patients suffering from Short Bowel Syndrome with Intestinal Failure.

The survey identified the reduction in days of total parenteral nutrition as the top priority for patients. At DDW, we also presented additional data from the long-term extension study of apraglutide showing a long-term safety profile consistent with previous studies. Dr. Michael Shetzline, our Chief Medical Officer, will share more details of these data later in the call. Finally, in the first quarter, we delivered strong profits.

With $40.8 million in GAAP net income and $76.7 million in adjusted EBITDA. Looking ahead for the year, we believe the cash flows from LINZESS will continue to fund development and commercialization of apraglutide, if approved, while simultaneously reducing our debt. With that, I'll hand the call over to our Chief Commercial Officer, Tammi Gaskins, for a LINZESS commercial update and an overview of the opportunity in Short Bowel Syndrome with apraglutide. Tammi?

Thanks, Tom, and good morning, everyone. As Tom highlighted, the first quarter U.S. net sales of $272.5 million for LINZESS represent a 97% increase compared to the first quarter of 2025, driven by significantly improved net price and 5% year-over-year demand growth for LINZESS. Now I'd like to share some additional context on these results. To start, improved year-over-year net price in the first quarter of 2026 was driven primarily by two factors. First, net price benefited from elimination of inflationary rebates across channels, including Medicaid. We expect that this benefit from reduced inflationary rebates to persist throughout 2026 as captured in our full year LINZESS U.S. net sales guidance.

The second factor that contributed to improved net price in the first quarter was favorable time phasing of gross to net rebate reserves as compared to the first quarter of 2025. Looking ahead in 2026, we expect reduced variability in sequential quarterly LINZESS U.S. net sales than occurred in 2025 as a result of more consistent net price across channels in 2026. Additionally, we recognized $104.2 million in U.S. brand collaboration revenue in the first quarter of 2026. This represents a 169% increase compared to $38.8 million in the first quarter of 2025. Now, in just a minute, Greg will speak to additional first quarter of 2026 financial results.

Moving on from LINZESS performance, I would like to spend a few minutes on the anticipated commercial potential of apraglutide for SBS-IF. For some context, SBS is a severe organ failure condition resulting from surgical resection of a significant portion of the small intestine, leading to a dependence on parenteral support to meet patients' nutritional needs for survival. On average, SBS-IF patients require 10 hours a day, six days per week of parenteral support with a severe quality of life burden. Parenteral support meets patients' nutritional needs for survival, but as highlighted by the LANDMARK survey, central line infections, fatigue, central line pain, and abdominal pain are all common, highly distressing challenges associated with parenteral support, thereby underscoring the need for therapies to address multiple dimensions of total parenteral nutrition.

Data from the STARS phase III clinical trial, which is the largest phase III trial in SBS-IF conducted to date, demonstrated a twofold relative PS volume reduction from baseline at 24 weeks with apraglutide once-weekly dosing as compared to placebo. Importantly, these longer-term data have demonstrated that more patients continue to wean off PS with longer exposure to apraglutide. In our phase III long-term extension study called STARS Extend, approximately 1 in 5 or 20% of patients achieved enteral autonomy as of January 2025. At DDW this week, we presented new data highlighting the long-term safety profile of apraglutide, which was pulled from the STARS clinical program. That includes the phase II STARS Nutrition trial, STARS phase III trial, and the ongoing open label extension STARS Extend trial.

These data for apraglutide showed a long-term tolerability and safety profile consistent with previous studies, low discontinuation rates due to treatment emergent adverse events, and no new safety observations. Based on the clinical data generated to date, we believe that apraglutide has the potential to reduce volume and days on parenteral support for patients with SBS-IF. Turning from data, let's look at the market size. We estimate that there are roughly 18,000 SBS-IF patients across the U.S., Europe, and Japan. Within that patient population, we estimate that there are more than 8,000 patients in the U.S. with SBS-IF who are dependent on parenteral support for three or more days a week. This group of patients dependent on parenteral support three or more days per week represents the total addressable SBS-IF market of more than $4 billion in the U.S.

Based on apraglutide's clinical profile and our market research, we believe that apraglutide has the potential to increase the number of GLP-2 treated patients, extend days on therapy, and achieve greater than $700 million in peak net sales in the U.S. With that, I'll turn the call over to Michael Shetzline, our Chief Medical Officer, to discuss apraglutide's ongoing clinical development. Mike?

Thanks, Tammi, and good morning, everyone. As you've heard today, we're very excited about the opportunity to help more patients with SBS-IF and have generated strong clinical data, some of which Tammi highlighted through our STARS and STARS Extend trials. Over the past few months, we've made significant progress as we move towards site initiation of our confirmatory phase III trial, STARS-2, this quarter.

STARS-2 is designed based on our interactions with the FDA to confirm and further support the positive data generated in the STARS phase III clinical trial. We plan to enroll 124 patients with SBS-IF in a 1-to-1 randomization. Enrollment will be for the overall SBS-IF patient population, which includes patients with both stoma and Colon-in-Continuity. Our primary endpoint for the study will be the same as our prior STARS phase III clinical trial, evaluating relative parenteral support volume change from baseline for the overall population at week 24. Secondary endpoints also to be measured at week 24 for the overall population include clinical response, defined as a 20% reduction in parenteral support volume, number of days off parenteral support per week, and enteral autonomy.

In designing the phase II trial, we've incorporated feedback from our prior FDA interactions and leveraged learnings from the positive STARS phase III trial. In preparing for the STARS-2 trial, we've taken steps to refine and optimize the dose administration instructions. A key consideration in designing STARS-2 was the dose selection, which we intended to confirm the efficacy and tolerability demonstrated in STARS, with patients receiving 3.5 mg once weekly of apraglutide. We're getting close to initiating clinical trial sites in anticipation of dosing our first patient and look forward to providing additional updates as we continue to progress. Before turning the call over to Greg, I'd like to take a few minutes to highlight our presence at DDW this week.

As you've heard, we had the opportunity to present pooled long-term safety data on apraglutide, as well as new findings from the LANDMARK survey, in which surveyed providers emphasized the importance of reducing patients dependent on total parenteral nutrition or TPN to improve quality of life, reduce line infections, and lower the risk of thrombosis. About 46% of the providers identified reducing the number of days per week on TPN as a priority attribute for future therapies, and an additional 30% prioritized reducing TPN hours per day. Survey results also highlighted the significant burden associated with long-term TPN dependence among patients with SBS. Our development strategy is informed by what we're hearing from patients in the medical community. The design of our STARS and STARS-2 clinical trials of apraglutide evaluate multiple dimensions of parenteral support dependence.

These real-world insights from providers and patients will help us better target the outcomes that most impact SBS patient lives. Our strong presence at DDW this past week further highlights our commitment to developing life-changing therapies for people living with gastrointestinal and rare diseases through enhanced research and a deeper understanding of the challenges these patients face. With that, I'll turn it over to Greg to review our financial performance in the first quarter. Greg?

Thanks, Mike. Good morning, everyone. I'm happy to walk through the highlights of our very strong first quarter financial performance, beginning on slide 12. In the first quarter, total revenue was $106.5 million. GAAP net income was $40.8 million, and adjusted EBITDA was $76.7 million. We ended the first quarter of 2026 with $220.5 million of cash and cash equivalents on the balance sheet, as well as $105.8 million in accounts receivable, which we expect to collect prior to the June 15th convertible note maturity.

As noted in prior updates, we plan to use cash on hand and cash flows generated throughout 2026 to reduce our total debt balance and plan to repay the 2026 convertible note in cash at maturity in June. We also expect to end the year with approximately $300 million of total debt on the balance sheet, less than 1x our expected 2026 adjusted EBITDA. Moving to financial guidance on Slide 13. We are reiterating our 2026 guidance at this time. This includes LINZESS U.S. net sales of between $1.125 billion and $1.175 billion. We continue to expect low single-digit percentage LINZESS prescription demand growth. We expect Ironwood revenues of between $450 million and $475 million, and we expect adjusted EBITDA of greater than $300 million.

In summary, 2026 is off to a great start with strong LINZESS performance, a significantly improved financial position relative to 2025, and the impending initiation of the STARS-2 confirmatory trial. We continue to make progress on executing on our strategic priorities as we strive to redefine the standard of care for patients living with GI and rare diseases. I'd like to close by thanking all of our employees, patients, caregivers, and advocates for their shared dedication to advancing life-changing therapies. Operator, you may now open up the line for questions.

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the queue in order. Your first question comes from the line of Mohit Bansal with Wells Fargo. Please go ahead.

Great. Thank you very much for taking my question, and congrats on all this progress. One question I have is on LINZESS. LINZESS has been very strong in first quarter of 2026. Wondering like the volume growth and improved pricing, It does seem like a very strong quarter. Would love to understand, like how what is your thought process on the guidance, given this quarter? Is there any one-time item that we need to think about here?

Thanks, Mohit. I think overall we're very encouraged by the first quarter results. Prescription demand, as you noted, 5% in the first quarter is slightly above our full year commentary on low single digits. That is a dynamic that we did anticipate. First quarter is in line with our expectations that are factored into our overall full year guidance. From an overall brand performance and improved net price, I would say again, first quarter was very much in line with our expectations. I think positions us very well for our full year guidance. One dynamic that we I called out in the prepared remarks is we don't expect the same fluctuation or volatility in quarterly net sales for the rest of this year as we saw in 2025.

I would expect more consistency in the quarterly phasing of LINZESS net sales for 2026, which puts us on a nice trajectory for the full year.

Very helpful. If I may ask one on the apraglutide as well. Well, I mean, in our chat at DDW, it does seem like there are a lot of patients who are on parenteral nutrition. The expert mentioned that about 70% of them probably could be SBS patients. In that context, first is like how under-penetrated the market is currently when you talk about GATTEX. With the ICD-10 code and all, how do you expect this to improve in terms of penetration of these GLP-2s in this market? Thank you.

Yeah. Tammi, do you wanna comment on that?

Sure. Thanks for the question, Mohit. Just to sort of start at the top, as I mentioned in my remarks, we look at the total SBS-IF population across U.S., Europe, and Japan as about 18,000 patients. We've distilled that further based on research and the patient claims data codes that you've talked about to identify about 8,000 plus patients who we see as most likely.

To be prescribed a GLP-2 therapy as based on the definition of having, requiring parenteral support three or more days a week. Now within that, and the numbers that I referenced from a total addressable market of $4 billion, that's looking essentially at that 8,000 patients times the price that we know for the currently available therapy of GATTEX. Within that opportunity today, we estimate based on public disclosures and available claims data, that about 1,500 to 2,000 of those patients are on GATTEX at any given time. There's still significant opportunity to increase GLP-2 utilization overall, and we believe in the potential of a brand such as apraglutide to also help improve adherence or days on therapy to really optimize treatment for those patients.

Helpful. Thank you.

Okay. Your next question comes from the line of Amy Lee with Jefferies. Please go ahead.

Hi, this is Kathy on for Amy. I just wanted to ask a quick question about your plans for lifecycle management for LINZESS after LOE. You've previously alluded to being able to pursue OTC for LINZESS. When can we get an update on that? Have you had any conversations with the FDA on any additional data that you would need to share? Thank you.

Thanks, Catherine. Mike, do you want to take over?

Sure. It's a good question. I mean, we've always been impressed with the performance of LINZESS and the availability of it for patients, and we have a tremendously large safety database for LINZESS use. We do think that the product has an opportunity for OTC. We are ongoing engagement with AbbVie, our partner, with a plan for OTC. We'll continue to do that. We look forward to updating you as we get more in the future.

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

Hi. Thanks for taking the questions. Just a couple on the STARS-2 trial. One just a clarification point. Are you stratifying CIC and stoma patients in STARS-2? What's your expectation for the proportion of those patients, those two different populations that are enrolled in the trial? Just in terms of learnings from the first phase III trial, how, specifically thinking about operationally, what are you doing to make sure your enrollment timelines remain on track? What's the overlap in sites versus what you used in the prior trial? Thank you.

Thanks, Jason. Mike.

Yeah. Thanks, Jason. From a stratification's a good question. For the STARS-2 program, we're not formally stratifying. This was actually an outcome from our discussions with the agency. It's clearly recognized by the agency and prescribers that CIC, Colon-in-Continuity, and stoma patients have a significant medical need and benefit from GLP-2 therapy. In our study, our endpoints now, both primary and secondary, are aligned with the overall population, which includes Colon-in-Continuity and stoma patients. However, we do need to show a benefit over the populations, so we'll actually track the recruitment of stoma and CIC patients. Again, to the point, there's no four stratification, but we'll align to get a representative group for both CIC and stoma patients as we've discussed with the agency.

In regards to the operational execution, I think it this SBS is a complex disorder, and we certainly did an excellent job in the original STARS program operationally. As you know, that was a very robust, largest SBS-IF study ever performed. We had a very well-executed trial, as demonstrated by the low placebo response and the 2x, as Tammi highlighted, the twice benefit in terms of differential support volume reduction. We're certainly leveraging that experience on the path forward to STARS-2, and we feel confident in our ability to execute STARS-2 as we did in the original STARS program. We'll continue to use sites we have used in the original trial. We're looking at all the sites carefully.

As you know, this is a rare disease, the number of patients per site is something we have to actively include, so we need to consider that in the calculus. That's as Tom mentioned, we did a lot of site feasibility already, and we're taking those learnings into as we initiate sites and prepare to dose patients in the near term.

Yeah, I think the other piece there, or the bottom line on this is, one, working with the sites where we know there's existing patients, and we certainly have a track record there, but this is also opening up additional sites 'cause this is all about recruiting patients as fast as we can. You know, we're certainly gonna make the most of the sites we have relationships with, but we've identified a number of additional sites, you know, that we believe we could also harvest patients from. I think we're excited to get rolling on this, and that'll be initiated in the upcoming weeks.

Thank you.

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

Good morning. Thanks for taking the questions. Maybe just on guidance again, sorry, you know, Tom or Greg, maybe just walk me through, you know, what went better than expected from a demand generation perspective in Q1. What are you keeping in mind or don't expect to recur to drive the decline in volume growth, you know, through the year that your guidance implies? Thanks.

Yeah. Thanks, Chase. This is Greg. I think as we gave our initial guidance for 2026, we had commented to the low single-digit prescription demand growth, and that is still our expectation for this full year. Part of the reason we had anticipated that we may see a slowing in growth relative to 2025 or prior years is as we enacted this pricing change, we expected that there would be some response and impact to prescription demand. We were really focused on how we could maximize net sales overall over the remaining life cycle of brand. We didn't expect that all of that would happen in the first quarter. We thought this would happen progressively throughout the year.

I would say Medicaid in particular is one of those areas that we would expect to potentially have reduced growth in the second half of 2026 or for later portions. That's really what's factored into the guidance and where the 5% was more in line with expectations to start the year.

Got it. Helpful. Maybe just on kind of gross to nets through the year. Obviously, there's been quite a bit of change as far as the calculation there over the last 24 months. Can you just help us with how we should think about it sequentially, kind of balancing all the different drivers, including, you know, some of the dynamics later in the year with the redesign?

Yes, absolutely. I would say, the biggest takeaway is full year, we feel very good about our overall forecast, the guidance we've provided, which implies more than 30% increase in net sales relative to 2025. I think to your point, there were quite a few fluctuations in net price throughout the quarters in 2025. In 2026, we don't expect that same dynamic to occur because we now have more consistent, or less variability in net price across channels. We do expect more consistent net sales in each quarter in 2026 than occurred in 2025. From a growth rate perspective, the quarterly year-over-year comparisons could have some anomalies, I'd say, such as the 97% year-over-year in Q1. From a dollar value, we expect more consistency in 2026.

Got it. Then just last for me on the expense side. $300 million on EBITDA is seeming like a pretty safe floor at this point. Is there any incremental expense kind of outside of STARS-2 that we should be considering that could kind of materially drive spend sequentially from here?

I think you hit on the key point is as we initiate activities associated with STARS-2, we do expect our R&D expenses will ramp up throughout the remainder of 2026. To your point, we continue to believe we'll be able to deliver greater than $300 million of adjusted EBITDA for the year.

Great. Thanks, guys.

Thank you.

Your next question comes from the line of [Thomas Rossi with Intron Health]. Please go ahead.

Good morning, everyone. [Thomas Rossi] calling from [Intron] here. Thanks for taking the questions. My first one is, can you talk us through the magnitude of the opportunity for LINZESS in functional constipation in two to five-year-olds and whether you anticipate any material revenues from this label expansion in H2?

Yeah. Thanks, Tom. I'm gonna ask TammI to speak to the opportunity we see with two to five-year-olds pending an approval.

Thanks, Tom. First, we're very excited about the potential opportunity to expand and offer a potentially offer a prescription therapy for an additional pediatric patient population. We do expect that, if approved, the two to five will support additional demand for LINZESS overall. We still see the adult IBS-C, CIC population as the main driver of growth over the next few years. Yes, all these additional pediatric indications add to supporting demand, but the real continued inflection will come from the adult population.

Thank you. That's really helpful. One more question, if I may. Average reimbursement for the Ironwood commercial expenses was down 9% this quarter versus the prior year. Is that around the right run rate we should assume going forward?

Yes. If you recall, in first quarter of 2025, we completed a restructuring of our organization, which reduced the Ironwood portion of the selling efforts for LINZESS. I would say first quarter 2026 is more representative of a run rate for the remainder of this year in terms of those reimbursements.

Perfect. Thank you very much.

Thanks, Tom.

We have no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.