Ironwood Pharmaceuticals Inc. CEO Mark Mallon said the company will seek to grow Linzess (linaclotide) and “continue to scan the environment” for more prospects in gastrointestinal (GI) conditions after the phase III fizzle in one of two identical experiments with IW-3718 in refractory gastroesophageal reflux disease (GERD).
A gastric-retentive formulation of the bile-acid sequestrant colesevelam, IW-3718 missed its endpoint in an early efficacy peek, and Boston-based Ironwood is quitting development while reducing headcount by 100 employees, or almost 35%. The failed study called IW-3718-302 had as its primary endpoint statistically significant lessening of heartburn severity in GERD-afflicted patients. Enrollment has stopped in the other study, known as IW-3718-301. Shares of the firm (NASDAQ:IRWD) closed Sept. 29 at $9.42, down 11 cents.
“We’re looking at commercial and late-stage GI assets,” Mallon said during a conference call with investors. “We have a significant amount of inbound queries. Every month, we’re seeing an increasing flow of opportunities, but we’ve set the bar high” in the space with the likes of Linzess, the guanylate cyclase-C agonist first approved in irritable bowel syndrome with constipation (IBS-C) in August 2012. Added to the label in January 2017 was chronic idiopathic constipation. Linzess is partnered with Abbvie Inc., of North Chicago. In late July, Abbvie reported second-quarter Linzess net sales of $218 million, beating consensus estimates of $187 million.
The planned moves with IW-3718 are expected to result in a total savings of greater than $95 million, excluding anticipated one-time expenses. Chief Financial Officer Gina Consylman said $45 million of the amount is related to staff cuts and the remaining $50 million falls into the category of cost avoidance in connection with shutting down the IW-3718 program. CEO Mallon said the board is regularly evaluating Ironwood’s options but he was “not ready to give any timeline” on when further actions might be disclosed.
In July, after talks with the FDA, the primary endpoint for the two trials was amended to baseline change in weekly heartburn severity score, reflecting “the agency’s preference for the use of continuous endpoint over a responder analysis in studies for GERD and other GI indications,” J.P. Morgan analyst Eric Joseph said at the time. The new endpoint was made consistent with that of the phase IIb study, so that the phase III program’s dual effort was “increasingly powered to detect a statistically significant treatment effect compared with proton pump inhibitor [PPI] treatment alone,” he wrote. Still, Northland analyst Tim Chiang said in a Sept. 15 report that “the market is ascribing little value to IW-3718.”
As many as 10 million people in the U.S. may suffer from refractory GERD, with about 6.5 million seeking treatment. In most cases, PPIs are used to deliver relief by suppressing production of stomach acid. When PPIs fall short, Ironwood's research suggests, reflux of bile from the intestine into the stomach and esophagus plays a key role. That’s why IW-3718 was designed to release in the stomach over an extended period of time, binding to bile that refluxes there. In the drug, colesevelam is paired with Acuform technology from Lake Forest, Ill.-based Assertio Therapeutics Inc. (formerly Depomed). With Acuform, swelling polymers allow tablets to be retained in the stomach for about eight to 10 hours vs. about three hours seen with immediate-release and some extended-release formulations.
Analyst Chiang had pegged the potential sales of IW-3718 at more than $600 million by 2030. That won’t happen now, as Morgan Stanley analyst David Lebovitz said Ironwood is “clearly at a strategic crossroads in a lot of ways.”
President Thomas McCourt maintained his faith in further mileage with Linzess. “What's been remarkable about the drug, even in the face of the pandemic, is the ongoing growth we're seeing. I think the bottom line is it's a very strong market leader. We don't see a real threat from emerging competition,” and the intellectual property is strong, he said. The idea of continued return on investment “seems very sound. I know we're completely aligned with Abbvie in that regard.” In early May 2018, Ironwood’s directors ratified spinning off the company's R&D programs into a new publicly traded company after activist investor Alex Denner, of Sarissa Capital, made known his plan to seek a seat on the company's board.
Earlier this year, Ironwood and Abbvie made public top-line data from a phase II trial evaluating MD-7246 in adult patients with abdominal pain associated with IBS with diarrhea (IBS-D). The effort didn’t meet its primary or key secondary endpoints. Development was discontinued. There had been cause for hope: A previous phase II bid in IBS-C showed that the delayed-release formulation of linaclotide numerically improved abdominal pain relative to placebo, with no effect on bowel function. MD-7246’s stumble was good news for San Diego-based Arena Pharmaceuticals Inc., with the olorinab in a phase IIb study called Captivate, testing the cannabinoid CB2 receptor agonist for abdominal pain associated with IBS-C as well as IBS-D. Top-line results are expected in the first quarter of 2021.
J.P. Morgan’s Joseph weighed in on the GERD blowup, saying in a report that, “with the company now lacking in proprietary development programs and absent a clear objective for strategic pipeline expansion in our view, the compelling growth opportunities for Ironwood as a stand-alone would seem somewhat exhausted.” As for Linzess, “indeed the franchise continues to perform steadily on both top and bottom lines,” he wrote in a report, looking ahead to “a sustained profitable outlook for the company after restructuring.”