Ironwood Pharmaceuticals Reports Q2 2026 Results: Full Earnings Call Transcript

Ironwood Pharmaceuticals (NASDAQ: IRWD ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. 3 million in GAAP net income and $83 million in adjusted EBITDA.

S. 3 million, marking a 14% year-over-year increase, prompting the company to raise its full-year 2026 guidance, expecting a greater than 30% increase year-over-year. The company initiated the STARS 2 confirmatory Phase 3 trial for apraglutide, aiming to address significant unmet needs in patients with short bowel syndrome with intestinal failure (SBS-IF). Ironwood Pharmaceuticals repaid $200 million in convertible notes, aiming to further reduce debt and end 2026 with a gross leverage below 1x.

Management expressed confidence in continued demand growth for Linzess and emphasized strategic priorities including advancing apraglutide and maintaining financial discipline. Full Transcript Ian, Operator Hello everyone, my name is Ian and I will be your conference operator today. At this time I would like to welcome everyone to the Ironwood Pharmaceuticals Q2 2026 Investor Update conference call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Chris Stam, Vice President, Investor Relations and Communications. Please go ahead.

Chris Stam, Vice President, Investor Relations and Communications Good morning and thanks for joining our second quarter 2026 investor update. A press release issued this morning highlighting Q2 results 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, 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, Tom McCourt, our Chief Executive Officer, will review second quarter business highlights and strategic priorities. After Tom, Chief Commercial Officer Tammi Gaskins will provide an overview of second quarter Linzess performance. Next, Jeff Silber, our newly appointed Chief Medical Officer and Head of Research and Drug Development, will give a brief update on apraglutide.

Then Ron Silver, our Interim Chief Financial Officer, will close our prepared remarks with a financial update before we open the call for questions. Jeff Ruberti, our Chief Strategy Officer, will also be available for the Q&A at the end of the call. Today's webcast includes accompanying slides for those joining by phone. Please visit the Events section of our website to access the presentation and with that I'll turn the call over to Tom.

Thomas McCourt, Chief Executive Officer Thanks, Chris. Thanks everyone for joining us to review Ironwood's second quarter 2026 financial results and business update. Before I begin, in addition to welcoming Chris, who joined the team in June to lead our IR and communications efforts, I would like to introduce two recent additions to the Ironwood leadership team who you'll be hearing more from today and in the weeks and months ahead. But first I want to sincerely thank former Chief Medical Officer and Head of R&D Mike Shetzline, who retired after a distinguished career dedicated to advancing GI science and patient care.

Most recently, he led the team through a major company milestone, the successful initiation of the confirmatory Phase 3 STARS 2 trial. Last month we welcomed Dr. Jeff Silber, Mike's successor, who brings more than 30 years of experience in the industry and academia. Jeff is an accomplished leader in drug development from preclinical through submission, commercialization, and expanding value of brands through life cycle management.

Previously Chief Medical Officer at Vedanta Biosciences, he brings broad late-stage development expertise to Ironwood, having supported multiple successful new drug applications and valuable brands in leadership roles at AbbVie, EMD Serono, Merck KGaA and Merck & Co. His leadership will be instrumental as we advance apraglutide through Phase 3 and commercialization. I'd also like to introduce Ron Silver, our Senior Vice President, Corporate Controller and Chief Accounting Officer, who is serving as Interim Chief Financial Officer.

Ron has been with Ironwood for eight years serving in key financial leadership roles, providing him with deep knowledge of our business and strategy. His experience and leadership will be invaluable as we continue to execute against our priorities. Now let's dive into the second quarter business updates. At the beginning of the year we outlined three key priorities for 2026: maximizing the performance of Linzess, advancing apraglutide, and delivering sustained profitability and cash flow.

These priorities remain central to achieving our mission to redefine standard of care for patients living with gastrointestinal rare disease while creating long-term shareholder value. During the second quarter, we made meaningful progress across each priority, starting with Linzess. The brand continues to demonstrate exceptional strength in its 14th year on the market and remains a prescription leader in both irritable bowel syndrome with constipation and chronic idiopathic constipation. S.

net sales, fueled by improved net price and mid-single-digit prescription demand growth. This outstanding performance supported our decision to raise our full-year 2026 financial guidance. S. net sales in the product's history.

We also achieved an important regulatory milestone during the quarter with the FDA approval of Linzess for the treatment of functional constipation in pediatric patients 2 years of age and older. This is another important milestone, establishing Linzess as the only prescription therapy approved for functional constipation in this age group, addressing yet another unmet patient need. Turning to apraglutide. In June we initiated the STARS 2 confirmatory Phase 3 clinical trial evaluating apraglutide in adults with short bowel syndrome with intestinal failure, or SBS-IF.

The trial is now actively recruiting patients and we continue to activate additional sites to drive enrollment. STARS 2 will build on the positive data from the Phase 3 STARS trial, which we believe demonstrates that apraglutide has the potential to be a best-in-class therapy for patients with SBS who are dependent on parenteral support. Our goal is to ensure apraglutide will be the first long-acting GLP-2 analog to market. 3 million in GAAP net income and $83 million in adjusted EBITDA.

We also repaid our $200 million convertible notes at maturity with cash on hand. Looking ahead, we expect to leverage Linzess generating cash flow to further reduce our debt as well, and we are well positioned to end 2026 with a gross leverage below 1x while maintaining resources necessary to advance and prepare for the potential commercialization of apraglutide. With that, I'll turn the call over to Tammi to provide some additional context on Linzess. Tammi Gaskins, Chief Commercial Officer Thanks, Tom, and good morning everyone.

S. 3 million. That's a 14% year-over-year increase driven by both demand growth and improved net price. S.

net sales reached $555 million, up 44% year over year, underscoring the strength and momentum of the brand. Now if I just double-click for a minute on demand, the slide you see shows year-on-year TRx volume growth of 4% for Q2 and 5% year to date through June. We expect this demand momentum to persist and anticipate mid-single-digit demand growth for the full year, giving us the confidence to raise our full-year financial guidance.

Turning to price, the positive impact seen in Q1 from elimination of inflationary rebates across channels really continued to benefit net price as planned, in addition to favorable timing of gross-to-net rebate reserves as compared to the second quarter of 2025. S. net sales as compared to 2025, really due to more consistent net price across channels. To that end, since demand volume is historically highest in the second half of the year, we expect quarterly performance to build, with the fourth quarter projected to deliver the highest net sales for 2026.

, and the recent FDA approval for functional constipation (FC) down to 2 years of age further expands the reach of Linzess and helps highlight its importance for a new, broader range of patients. Now I'd like to hand the presentation over to Jeff Silber to highlight our progress advancing apraglutide. Jeff Silber, Chief Medical Officer and Head of Research and Drug Development Thanks, Tammi, and good morning everyone. I'm excited to be joining the Ironwood team at such an important time.

We work to bring apraglutide to patients suffering from SBS-IF as quickly as possible. Today I'd like to share my perspective on why the science behind apraglutide and what it could mean for patients is so compelling. There's a considerable unmet need for patients with SBS-IF. , IV fluids and nutrients, 10 hours per day, 6 days per week, creating a real burden to their quality of life.

Although parenteral support meets the nutritional needs that enable them to survive, patients continue to face many significant daily challenges, as highlighted in the landmark HCP survey that Ironwood presented at DDW last May. Central line infections, fatigue, central line pain and abdominal pain are all common and highly distressing challenges associated with parenteral support. These findings underscore the need for therapies that reduce patients' IV dependence and the associated burden of parenteral support while improving their quality of life.

One of the reasons I'm so excited to have joined Ironwood is the opportunity to help advance a therapy with the potential to address this significant unmet medical need. First, apraglutide is currently the only once-weekly GLP-2 analog with positive Phase 3 efficacy and safety data in adults with SBS-IF. Data from the STARS study, the largest Phase 3 clinical trial in SBS-IF conducted to date, demonstrated significant reductions in parenteral support requirements compared with placebo at week 24, with treatment effects observed as early as week 8.

As you can see in the graph on the left, at week 24 in the overall population, the reduction in weekly parenteral support volume in the apraglutide group was more than double that of the placebo group. In addition, a significantly greater proportion of patients receiving apraglutide were able to reduce their dependence on parenteral support by at least one day per week. Importantly, apraglutide was well tolerated in the STARS study, with an overall safety and GI tolerability profile that was similar to that of placebo. The graph on the right comes from our Phase 3 long-term extension study, STARS EXTEND.

About 90% of the patients enrolled in the STARS trial rolled over into STARS EXTEND, and the majority remained on treatment at the time of the analysis shown here. These longer-term data show that patients achieve further reductions in their parenteral support requirements with continued exposure to apraglutide. This translates into more patients achieving additional days off of parenteral support, with some reaching enteral autonomy, which is the ultimate goal for patients with SBS-IF. In fact, more than 1 in 5 patients enrolled in STARS EXTEND had achieved enteral autonomy as of January 2025.

We look forward to sharing additional STARS EXTEND updates in the future. The clinical profile we have observed to date reflects apraglutide's best-in-class differentiated molecular design, differentiating it from both native GLP-2 and other GLP-2 analogs. Apraglutide is long-acting, enabling convenient once-weekly dosing, and it's demonstrated a favorable tolerability profile that may support better treatment adherence. This is an important point because maintaining patients on therapy is a key factor in achieving full treatment benefit, including meaningful and sustained reductions in parenteral support.

When you put all this together—the clinical evidence, the favorable tolerability, and the convenience of once-weekly dosing—we believe that apraglutide has the potential to become the preferred GLP-2 treatment option for patients with SBS-IF, which we expect to expand the number of patients who may benefit from GLP therapy. Looking into the future, a uniquely differentiated GLP-2 analog like apraglutide has the potential to restore intestinal function in patients with other types of GI compromise beyond SBS-IF.

Today, however, our top priority is advancing apraglutide to patients with SBS-IF as quickly as possible, and to that end the confirmatory Phase 3 STARS 2 trial was initiated in June as planned and is now actively recruiting patients. STARS 2 is a 24-week global, randomized, double-blind, placebo-controlled trial. The primary endpoint is relative change from baseline in actual weekly parenteral support volume at week 24. As we continue to add clinical trial sites, we'll be leveraging the infrastructure and the relationships that we developed during the conduct of the STARS study.

As a reminder, the Phase 3 STARS study was the largest SBS-IF trial conducted to date with 68 global sites. , and identifying opportunities to accelerate enrollment. Successful execution of STARS 2 remains one of our highest priorities for Ironwood. As site activation continues, we expect enrollment to build and we're evaluating opportunities to accelerate the enrollment timeline.

We look forward to updating you on our progress in the coming months. In summary, if approved, we believe apraglutide's differentiated clinical profile, once-weekly dosing, and long-term data position it to meaningfully improve the treatment landscape for patients with SBS-IF. With that, I'll pass the call to Ron. Ron Silver, Senior Vice President, Corporate Controller & Chief Accounting Officer Thanks Jeff, and thanks Tom for the introduction.

I'm pleased to have the opportunity to join the call today and look forward to working closely with our investors and analysts as we continue to advance our strategic priorities with a focus on financial discipline and operational excellence. Turning to our financial results during the second quarter, total revenue was $113 million, GAAP net income was $51 million and adjusted EBITDA was $83 million. We ended the quarter with $79 million in cash and cash equivalents and $113 million in collaboration receivables. As Tom mentioned, we repaid our convertible notes at maturity in June.

Looking ahead, we intend to continue using operating cash flows to further reduce our debt balance. Based on our current outlook, we expect to end the year with less than $300 million of gross debt outstanding, further strengthening our balance sheet and financial flexibility. Now turning to guidance. Given the continued strength of Linzess and our very strong first half performance, I am pleased to share that we are increasing our full year 2026 guidance.

S. 2 billion, representing a greater than 30% increase year over year. This increase is driven by significantly improved net price and mid-single-digit Linzess prescription demand growth. Our revenue guidance has increased to between $460 million and $485 million and we expect adjusted EBITDA of greater than $310 million.

This increase in our guidance reflects both the strength of our underlying business and our confidence in continued execution on our priorities throughout the remainder of the year. Now I'd like to turn the call back over to Tom for some closing remarks. Thomas McCourt, Chief Executive Officer Thanks Ron. In summary, the second quarter was marked by strong commercial execution of Linzess, continued advancement of apraglutide with the initiation of STARS 2, and meaningful progress towards strengthening our balance sheet.