Ironwood Pharmaceuticals Inc (IRWD) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ironwood Pharmaceuticals second-quarter 2012 investor update conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to introduce your host, Meredith Kaya. Please go ahead.

Good morning and thank you for joining us for our second-quarter 2012 investor update. Joining me for today's call is Michael Higgins, our Chief Operating Officer. We also have Peter Hecht, our Chief Executive Officer; Mark Currie, our Chief Scientific Officer; Tom McCourt, our Chief Commercial Officer; and Jim DeTore, our Vice President of Finance, available for the question-and-answer portion of the call.

By now you should have a copy of our press release, which crossed the wire earlier this morning. If you need a copy of the press release, you can go to our website, www.IronwoodPharma.com to find an electronic copy.

Some of the information discussed in today's call, particularly the information related to linaclotide, is based on information as of today, July 17, 2012, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. We do not undertake any obligation to update any forward-looking statements made during this call or contained in the accompanying slides as a result of new information, future events, or otherwise. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in our press release as well as the risks under the heading Risk Factors in our Quarterly Report on Form 10-Q for quarter ended March 31, 2012, and any of our future SEC filings.

I would now like to turn the call over to Michael.

Thanks, Meredith, and thanks to everyone on the call for joining us this morning. Over the next several minutes I am going to walk through some recent highlights on linaclotide, our broader pipeline, and our cash position. In previous quarterly updates, we have provided an in-depth discussion around our view of the linaclotide launch, including lessons learned from other successful launches. We will not be going through that level of detail this morning so I refer you to those previous investor updates, if you are interested in learning more.

As you know, our NDA for linaclotide is presently under review at the FDA. In April the FDA notified us and our US partner, Forest Laboratories, that it had extended the review period for our NDA for three months. The PDUFA date for linaclotide is now in September. We and Forest are working with the FDA during the interview process and continue to plan for a 2012 launch.

The MAA for linaclotide submitted by our European partner, Almirall, is also currently under review. Almirall submitted the MAA to the European Medicines Agency in September 2011 for linaclotide for the treatment of IBS-C, and they continually to work closely with EMA during the review process. We and Almirall are aligned in our vision for linaclotide, and have been working to develop a market access strategy that addresses the local market conditions in Europe, particularly given the significant pricing pressures and reimbursement hurdles for pharmaceutical products. The primary objective of this strategy will be to fully leverage the opportunity for linaclotide and enable broad access to patients.

Our preparation for launch with our commercial partners, Forest and Almirall, are on track and continue to progress. Similarly, we are working closely with our global operations partners towards a high quality and nimble supply chain with redundancy in critical modes. This has been a stated strategic imperative for many years and we have made considerable investments toward this goal and will continue to do so. We believe our integrated teams, including our commercial and supply-chain partners, are fully prepared to launch upon approval.

Astellas, our partner in Japan and other Asian territories, continues to advance linaclotide through clinical development. In the second half of this year, Astellas expects to begin enrolling patients in a Phase 2 trial with linaclotide in patients with IBS-C. Beyond our efforts in the US, Europe and Japan, we are also exploring opportunities in other parts of the world, such as South America and China, where we can enable access for linaclotide on a more global basis. There continues to be a lot of interest with several of these discussions continuing to progress nicely.

In addition to our partnership discussions in China, we have been working to facilitate clinical development of linaclotide, and in May we filed a clinical trial agreement with the State Food and Drug Administration for a Phase 3 trial in patients with IBS-C. We were excited to have recently been notified that the CTA was accepted for review. We believe there is a significant opportunity in China. However, keep in mind that the regulatory path to approval is long and our expectations are that we wouldn't reach commercialization for a number of years.

We previously described the long-term strategic intent of Ironwood and Forest to expand the potential of linaclotide by evaluating its utility for patients suffering abdominal pain and bloating, as well as for patients suffering other constipation-related disorders. While it is difficult to assess either the scope or exact timing of these activities, we have begun to explore the potential for linaclotide in these other areas. For example, we and Forest recently initiated a Phase 3b study to further characterize the effect of linaclotide on abdominal symptoms in more than 400 patients with chronic constipation.

In addition, we had a great experience with linaclotide at the Digestive Disease Week meeting this past May in San Diego. We and Forest presented 16 poster presentations and one oral presentation, but the bulk of the data focused on our linaclotide Phase 3 IBS-C results, and particularly the effect that linaclotide had on abdominal pain and other symptoms in these Phase 3 trials.

What really stood out for us this year, however, was the broad awareness of linaclotide's unique profile on the GI community. Given that this is a completely novel approach, we have spent considerable efforts educating this community over time and we're very pleased with the knowledge around some of linaclotide's key attributes.

While our focus remains largely on linaclotide, our broader pipeline, which is comprised of discovery research efforts and early development candidates in multiple therapeutic areas, continues to advance well. These therapeutic areas include gastrointestinal disease, central nervous system disorders, respiratory disease, and cardiovascular disease. Specifically, IW-9179, our second-generation GCC agonist, continues to advance well and we expect to initiate Phase 2 clinical studies with IW-9179 later this year in functional dyspepsia patients. As we have previously stated, we expect to spend a total of approximately $60 million to $70 million in 2012 on non-linaclotide R&D. Our total R&D expand included both non-linaclotide R&D, as I just mentioned, combined with linaclotide related R&D, which includes items such as our continued investment in the global supply chain and opportunities to expand the potential of linaclotide in other populations.

This leads to some of our corporate and financial updates. We continue to maintain a strong balance sheet ending the second quarter with approximately $158 million in cash. For the first six months of 2012, we have used approximately $93 million of cash for operations. We have several remaining potential precommercial milestones for linaclotide from our commercial partners, including $85 million from Forest upon NDA approval, and up to $20 million from Almirall upon commercialization in five of the primary countries in this territory. We believe this solid financial profile provides us with sufficient capital to effectively launch linaclotide, if approved.

With that, I would now like to open up the call to questions.

(Operator Instructions). Geoff Meacham, J.P. Morgan.

Good morning, and thank you for taking the question. A question for you, commercially, I guess for Tom. So, with the start of your Phase 3b, maybe help us with the impact of this incremental opportunity in CC other patient numbers or whatever demographic you can share with us.

Thanks, Geoff. Yes, I think -- and certainly I'll ask Mark to jump in here as well -- but I think, as we've mentioned over and over again, there is a huge opportunity within CC with these patients that have -- that, by definition, are CC patients, not IBS patients, but have significant abdominal symptoms that would include bloating, fullness, a number of other symptoms, which we think is really a huge opportunity for us. And I think the more we can understand how well these patients respond to the drug, obviously, the stronger case we can make that they are appropriate drugs -- appropriate patients for the drug and that this really becomes the drug of first choice for those patients.

Got you.

I would add to those thoughts, not only from the clinical trial, but from the patient interviewed in our PRO work. Certainly, the abdominal symptoms rank very high for the patients that have chronic constipation, and they were certainly grouped to those patients that had high rates of bloating as a major symptom, causing distress for those patients and also discomfort.

So I think that certainly supports what Tom and the commercial team are thinking around this patient population.

Okay. And then, just one more on the commercial side. Michael, you mentioned China and South America and, likely, a partnership for linaclotide. This is, I guess, outside of the Astellas and the Almirall regions. But maybe help us with how you are thinking about these markets. Is this as a partnership something that you guys would want to do? Some period preapproval, say six months or a year. Is it something that you'd want to get the label to better understand what the opportunity is in these emerging markets?

Yes, Geoff, it's Michael. I'll take that. The opportunities there, as you know, we've discussed a bit. We believe that the opportunity, both in China and South America, specifically in Brazil, we think the opportunity is there. We've done a fair amount of work on the prevalence. We know it's there. There is a need to create markets. So our discussions have really focused on finding the right partner to help advance the creation of the markets in those territories. So it's hard to predict when those partnerships ever come to fruition, so we've been actively having those conversations now. And we are not limiting ourselves to the exact timing of them. We are engaged actively in conversations right now. I won't ever predict when those will be complete, but we certainly are engaged in substantive conversations. So we don't think it's necessary to have specific clinical data, either in those territories or even launch date in the US. We think we can move forward with those.

But we'll see how they progress and we're going to look to find a partner who can help advance it and we're going to look to retain significant long-term value in all of those territories.

And so you are comfortable at this point with not needing a partner to enhance your regulatory probability of success. It's more of a commercial, straight up partnership.

Yes, well, I think we're comfortable with advancing the program. And I think what we're going to look for in each of these territories is the right partner that can help us with all aspects of the business. But we want to remain involved as we have across the globe. So we're going to be participants in any relationship that we establish this.

Got you. Okay. Thanks.

Graig Suvannavejh, Jefferies.

Good morning and thanks for taking my questions. I just have two. One is, just wondering if there was any progress you can report on on the commercialization efforts, whether they relate to aspects on reimbursement or the payer front as well as DDMAC materials.

And then, secondly, this is more of a modeling question. Just your R&D in the first half was a little higher than -- the first half of the year was a little higher than what I was expecting. Is that a good run rate for the second half? Thanks.

Why don't we have Tom take the first question and then Jim will give a little detail on the R&D numbers.

Could you repeat the first question? I just want to make sure I have --.

Yes, I just wanted to know if you could comment on any progress you're making just on general commercialization efforts, particularly on the payer front and perhaps DDMAC materials.

Sure. Yes, I think we feel very, very good as far as where we are overall with the commercial readiness. As you know, we've been working very closely with Forest, both preparing the sales organization, the promotional platform, and certainly preparing for the payer. And as you know, the payer space is a place where Forest has a particular competency that we're really leveraging. I think we have spent a great deal of time really understanding from the payer what does the value proposition need to be to really secure reimbursement. Because our number one objective here is to make sure that we can get drug to patient.

So I think we're feeling pretty good about the overall value proposition to the payer in terms of the clinical benefits and certainly making sure that we get price right to make sure that we can maximize availability to patients. So I think we are making good progress there. I think we've zeroed in on the right strategies and I think we are fairly confident we'll do well there.

With regard to DDMAC, which, as you know, is now OPDP. That will all depend on what final labeling looks like. We have the promotional materials ready to go. Obviously, they'll have to be tweaked once we get the final label to make sure that they are absolutely aligned. But we'll have to see what final labeling looks like and how we'll have to adapt the promotional platform so we can submit as quickly as possible, which enables us to get to commercialization as fast as we can.

Graig, it's Jim DeTore. On the expenses, particularly with R&D, we talked about the fact that we're going to continue to invest in robustness and redundancy of the supply chain. We've talked about the fact that, for linaclotide, and continue to expand usages of linaclotide in other populations such as the 3b study that was mentioned earlier. And then we have our $60 million to $70 million we've talked about in non-linaclotide.

I would say, all those investments will continue. In terms of trying to comment quarter to quarter, there is going to be choppiness quarter to quarter. So it's difficult to put a trend line to that, but I would say those investments will continue.

So, in terms of the second half, it's too difficult for you to give us some sense of whether it will be on a similar run rate to the first half?

I think the activities will continue, but how they come through quarter over quarter is difficult to predict at this time. We don't have any guidance in that area.

Okay. Thank you very much. And I'll get back in the queue.

Raghuram Selvaraju, Aegis Capital.

Thanks very much for taking my questions. Can you hear me? A couple of things regarding clinical development timing and formats. Could you give us some idea as to what the scope of the proposed Phase 3 trial in China for linaclotide is likely to be, if you know anything about that at this time? And that you could give us some idea of when IW-2143, the anxiolytic compound, is likely to enter the clinics and what the first proof of concept clinical study is likely to look like, again, with respect to what you already have determined at this time?

This is Mark. Thanks for the questions. Yes, I think when we look at the China opportunity, again, we are thinking very similar type of program that we ran in the US. But as Michael described, we are actively looking for partnership engagement in those -- in the China territory. That certainly will have a big influence on what our open design in the trial will be. But again, we think that they will move forward in a Phase 3-like program and somewhat similar to what we saw in the US Phase 3 program. It will be IBS-C, directed toward IBS-C development.

Then going to the BNC210, or now IW-2143, the anxiolytic compound, that compound we haven't really disclosed the next step for it. Obviously, we license in that compound from Bionomics. We have been working diligently on design of the -- further design on the Phase 1b, is the next real opportunity for that compound. We then, certainly, we'll look in more detail on the specific anxiolytic proof of concept study, but at this time we're not ready to give guidance on when that study and the specific design.

Okay. And then with respect to the Chinese regulatory pathway, is it going to be something that we should think about as similar to the European situation where, at least for the foreseeable future, your efforts there are going to be focused on potentially securing regulatory approval in IBS alone? Or are you seeking to potentially get formal labeling authorization in chronic constipation eventually in that territory?

Yes, I think you described it exactly the way we are thinking about it, which is the initial focus will be on IBS-C and then we will continue to explore the overall opportunity for lifecycle management in that territory.

Thank you.

Greg Wade, Wedbush.

Good morning, and thanks for taking my questions. Mark, could you please just contrast the Phase 3b and IBS or in chronic constipation that's proposed with the completed Phase 3 studies? What new information do you expect to glean and should we read into this new study in that there is not sufficient information for approval in chronic constipation, and this is the study that is hopefully going to get the product across the finish line in that sending? Thanks.

Thanks for the question, Greg. Relative to what we are doing with the Phase 3b, it's always been part of our lifecycle management plan. As Tom described, we really are trying to better understand the effect of the drug and patient population of chronic constipation that suffer from more, as Tom had previously described, the patients that have abdominal symptoms as not only to chronic constipation or the infrequency in bowel movements and hardness of stools, but patients that have these very distressing abdominal symptoms, particularly bloating.

So it really is a chance for us to further characterize that in this patient group that is what we think is somewhat of a subset of the overall chronic constipation group. Relative to readthrough, I would caution against that. I think we feel very confident in our package for chronic constipation. We think the data that we've generated has been highly consistent, very clearly effective, and we think we've got, again, a great safety profile for our molecule. So I would caution against that readthrough.

Great. Thanks for taking my questions.

The second part of the question?

It was whether we should read into (multiple speakers). I mean, what new information wasn't captured in the previous Phase 3s? I thought abdominal symptoms were captured in the two completed chronic constipation studies.

Yes, Greg, again, I think when we did the original chronic constipation study, it had a broad range of constipation patients throughout the spectrum. This is now looking more at the patient that suffers specifically from a higher degree of bloating in particular in the abdominal symptoms. So again, trying to get a better understanding, specifically how well the drug works in that specific group, and the strength in that profile that we think we've already gotten a good indication from, from our broad populations.

That's helpful. Thank you.

Juan Sanchez, Ladenburg.

Good morning, guys. With respect to the 3b trial, how long are you going to follow these patients for and what do you think is the commercial implications of positive data? One might think that a physician could assume that the IBS-C data could apply to this patient population as well and you don't need to make the investment, you know.

I think how long we are going to treat -- we are going to treat standard of what we have treated before with chronic constipation, we are treating now 12 weeks for the treatment period. Relative to the commercial --.

Just so I'm clear on your question, Juan, what do we think is the commercial benefit of a trial like this?

Yes. Because I will assume that the IBS-C data will be sufficient for the majority of physicians to conclude that there are this kind of bloating benefits in it.

I think that's true as far as our interpretation, but we have to be able to educate the prescribing physician on the spectrum of patients. And we feel very strongly that one of the key differentiators for this drug is its ability to improve symptoms, whether I call it IBS or chronic constipation. And as you know, there are a lot of patients out there that are defined as constipation, but have significant bloating and other abdominal discomfort symptoms.

So we want to make sure that we can actively educate -- identify and educate those patients where linaclotide really is, likely, the best treatment for those patients. And we want to be able to term talk in terms of both IBS and chronic constipation. So, we think this is a huge opportunity for us to further differentiate linaclotide from currently available therapies.

That's it. Thank you very much.

Rachel McMinn, Bank of America.

Not to beat a dead horse, but my question is also on the Phase 3b trials. Two questions there. One is, who is actually funding or running the trial and putting up the initial costs? Where are those costs going to come through on your P&L or on Forest's initially? I know everything is kind of trued up.

And then the second question is, what, given the discrepancy in doses that the FDA was looking at between constipation and IBS-C, I'm curious what doses you've decided to take forward into this study? Thanks.

I'll take the last one first real quickly because it's very direct. So we're doing both doses, the 145 and the 290 in the trial.

And from a financial presentation, you'll see 50/50 sharing 50% of the cost on our partners, 50% on our books in R&D, Rachel.

Okay. So you're just splitting the cost upfront. It's not like Forest is funding them first and then you're truing up later.

Right.

And then just a follow-up question on overall expenses on the SG&A line. Somebody asked about R&D, but can we use Q2 as a good run rate or were there any particular one-time costs that boosted the SG&A number?

Again, I'd say similarly we are building our commercial capabilities. We are building for a footprint for global companies so you have a lot of pieces there. So it's difficult to take one quarter. I understand the modeling need here, but while you're building a business, you're going to see some choppiness over the next few quarters as we build our business.

I'd say the one specific item that will be picked up later this year postapproval, to state the obvious, Rachel, is the salesforce -- just to remind everyone, the salesforce is not being brought -- the full salesforce is not being brought on board until after approval, so that will be an uptick later on in the year that will be a specific increase in expense. We've essentially done that so we minimized the impact prior to approval. But as Jim stated, we've already started to build the commercial infrastructure. We've got the regional sales managers on board and we are building the baseline. But charges for salesforce from both us and from Forest won't hit until after we have approval for the product.

I'm sorry. One last question. Have you said on the manufacturing front what level of manufacturing investment you're making this year?

We haven't provided specific detail on the level of investment, Rachel, but we have continued on both API to build inventory and from a drug product perspective, we are ensuring that we have redundancy. So we're making investments in additional drug product -- access to additional drug product manufacturing capabilities.

Great. Thanks so much.

Mario Corso, Caris & Co.

Good morning. A couple of things I wanted to ask about. On the 3b study, is the primary endpoint constipation, or would the primary end point be abdominal symptoms? And I'm assuming that part of this, on a postapproval basis, is to demonstrate that the higher dose may have benefit in abdominal symptoms whereas perhaps the higher dose does not have a benefit in constipation, which could be perhaps satisfactorily taken care of with a lower dose. And then in terms -- can you walk me through the OPDP process a little bit? I mean, I imagine postapproval you guys can tweak your materials in a few days; get it to OPDP. And my understanding is that they have to get back to you within 45 days and from there, I would imagine, it's kind of minor tweaks in a few days, perhaps to finalize things. But just curious if you would alter my thinking on that at all. Thanks very much.

Mario, this is Mark. Relative to the endpoint, we haven't disclosed specifically yet, but essentially look at it the same way we did our chronic constipation trial previously, so primary type endpoint theme is what we've done prior with the other symptoms being more secondary. And then I think --.

The OPDP response? Yes. Thanks for the question. I think you've got it right. As soon as we get labeled, we will make modifications to our core campaign, which we will submit to DDMAC. That will take a couple of -- a week or so to make sure that we have everything lined up and ready to go. Then they will take up somewhere around 45 days to review the materials. Then once we get the feedback back from OPDP, then we have to modify all other materials, not just the promotional materials, but certainly all the launch materials -- the training materials, etc., to make sure it is fully aligned with product labeling, which is going to take a few more weeks so we walk into our full commercial launch meeting. So that is really the critical path.

(Operator Instructions). Irina Rivkind, Cantor Fitzgerald.

Thanks. I just wanted to keep pursuing the DTC vein a little bit more. Do you anticipate launching the online DTC promotion immediately after the launch, or is this a tactic something that you plan to layer on later in 2013? Also, how do you think about periodically refreshing this campaign in terms of how you reach patients on the Internet such that there's new ways to keep bringing the information to them? Thanks.

Yes, Irina, thank you for the question and, as you know, this is a big -- this is a core piece of our promotional strategy. We know these people are highly symptomatic. We know that we can -- once we educate these people we'll respond significantly and quickly to see care or raise their hand and certainly ask for more effective therapy. So this is really a key part of the overall promotional effort.

As we mentioned before, as the digital space has become far more effective and efficient, we know that this population are high-information seekers and it's a great place and a wonderful opportunity for us to go out and communicate to patients. We certainly plan to do that as quickly as we can. Obviously, that will be dependent on the feedback we get from OPDP, and we certainly want to be able to engage the patient as fast as possible. So it would certainly be after we get feedback from OPDP on our promotional efforts. Included in that will be certainly some of the patient-related information, but we certainly want to go there as quickly as possible.

And as far as your second comment, with regard to the evolving technology and the opportunity, as you know, FDA's thinking around this space is evolving. And certainly, we want to make sure we're out on the forefront to make sure that we appropriately leverage this communication channel as effectively as we can. Because we know it has -- it can have a significant impact on how patients behave and how they engage in their physician.

And just a quick follow-up. Can you share with us how much the 3b trial is expected to cost and also when the data could be expected? That's the end. Thanks.

Irina, let me take that one. I think at this stage we are not comfortable to give any specific estimates on time or cost, but we'll keep you updated as we go forward and let you know, give you give you more details on that as we move forward.

Thanks.

I'm showing no further questions at this time. I will now turn the conference back over to management for closing remarks.

All right. Well, thank you again for joining us this morning. We are looking forward to preparing for launch and will keep you up to date over the coming months. Thanks, and have a great day.

Thank you. Ladies and gentlemen, that does conclude today's conference. You may all disconnect, and have a wonderful day.