Summary
- A catalyst is expected for Ironwood, in that it expects an IDMC decision for its phase 3 study IW-3718-302 using IW-3718 to treat patients with refractory GERD Q4 2020.
- The GERD market is expected to be roughly about $4.34 billion by 2025.
- Prescription demand for Linzess was up 9% in Q2 compared to the same time period in 2019; Ironwood has achieved 5 profitable quarters in a row thus far.
- Guidance of 2020 full-year total revenues of Linzess is expected to be between $360 million and $380 million.
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Ironwood Pharmaceuticals (IRWD) is making solid progress in terms of generating sales for its drug Linzess. It has a solid pathway to growing sales in the coming years, especially based on the most recent earnings report that was released. Besides the ongoing growth expected from Linzess, there also is an opportunity to expand in the refractory GERD market. This involves the use of IW-3718 to treat this patient population. It is a pretty large market opportunity. There are two ongoing clinical studies using IW-3718 to treat this patient population. The primary endpoint of the phase 3 studies was changed to be more in line with what the FDA and the company believe is suitable to obtain FDA approval. More will be detailed below, but one of the studies is having enrollment stopped so that the IDMC can assess the blinded portion for the prespecified criteria. This announcement is expected in Q4 of 2020, which if good, holds the ability to boost the stock price. I think that the stock should be good in the event the IDMC concludes that the trial is not performing well. That's because Ironwood already has its FDA approved drug Linzess.
Opportunity To Target Another Large Market
Linzess was approved to treat men and women with irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC). Well, Ironwood is in the process of evaluating another drug known as IW-3718 for the treatment of patients with refractory gastroesophageal reflux disease (GERD). Gastroesophageal reflux disease occurs when acid from the stomach comes up into the esophagus. It is okay if this happens sparsely, but when it happens often such as more than two times per week, it is likely GERD. Taking it one step further, I highlight the term "refractory" to coincide with GERD. Refractory GERD is a type of GERD that occurs even when the patient is taking a proton pump inhibitor (PPI). A PPI is standard of care for patients with GERD. Unfortunately, despite PPI treatment, patients don't stabilize in symptoms. Roughly about 30% of GERD patients end up with refractory GERD. The GERD market is expected to be roughly about $4.34 billion by 2025. It is a decline from the prior projection of $5.66 billion but that has to do with branded drugs going off patent and the use of generics. With that problem on hand, how will Ironwood Pharmaceuticals fit into patient use? It boils down to what I highlighted above. When a patient takes a SOC PPI for their GERD, they may not respond. When they don't respond to a PPI, then they must seek out an alternative drug. Well, IW-3718 is being made in mind for refractory GERD. Being as such, both phase 3 trials were designed to allow all patients to continue to take a PPI. However, they were then randomized to either take placebo or IW-3718. The key here is to see if adding in IW-3718, along with a PPI, helps these patients respond to treatment. In this case, Ironwood could target the multitude of patients who don't typically respond to generic treatments currently available. The two identical studies are as follows IW-3718-301 and IW-3718-302. Both of these studies had theirprimary endpoint changed after Ironwood spoke to the FDA. The newest primary endpoint is a change from baseline to week 8 in weekly heartburn severity scores. The reason for the change was to move to a continuous endpoint rather than evaluating a responder endpoint. The good news is that with the latest trial change for the second study, IW-3718-302, Ironwood will have a blinded look by the IDMC Q4 of 2020. This will give the company and its investors an idea if IW-3718 holds the potential to treat patients with refractory GERD. Final results would then be released in the first half of 2021.
