Ironwood Pharmaceuticals Inc (IRWD) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ironwood Pharmaceuticals fourth-quarter 2014 investor update 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. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Meredith Kaya. Please go ahead.

Good afternoon and thanks for joining us for our fourth-quarter 2014 investor update. By now, you should have a copy of our press release which crossed the wire earlier this afternoon. 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 is based on information as of today, Thursday, February 12, 2015, 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 and on the current slide with the heading safe harbor statement as well as the risks under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended September 30, 2014, and any of our future SEC filings.

Joining me for today's call are Peter Hecht, Chief Executive Officer, who will provide introductory remarks, Tom McCourt, Chief Commercial Officer, who will give an update on Linzess, Mark Currie, Chief Scientific Officer, who will review our pipeline efforts, and Tom Graney, Chief Financial Officer, who will discuss our financial performance and guidance and then open it up to the question-and-answer portion of the call. Our speakers will be referring to slides available via the webcast. For those of you dialing in, it may be helpful for you to go to the event section of our website to access the webcast live if you haven't done so already. I would now like to turn the call over to Peter.

Thank you, Meredith. And, a snowy good afternoon to all of you from Cambridge. We made great strides delivering on our strategy in 2014. Linzess continued on a strong growth trend, and in the fourth quarter, we reported our first net profit for the US collaboration. A critical inflection point for Linzess, that over the coming years, will provide the opportunity for substantial operating leverage and increasing cash flows to the Company into at least 2031.

We also generated great momentum across our innovative R&D efforts with the initiation of five new clinical studies including two Ironwood programs and three Linaclotide studies with our partners. In 2015, we anticipate nine ongoing clinical studies with four data readouts expected during the year including the positive IW-3718 Phase IIa data that we reported last week.

2014 was a really exciting and productive year for us. It sets us up for a big 2015. I want to thank all of our Ironwood team members, our board members, our shareholders, partners, physicians, and the millions of patients we hope to benefit with our medicine for your continued commitment and support. It has been fundamental to our efforts over the past year, and we look forward to working with all of you going forward as we continue to advance our mission. With that, I will turn it over to Tom McCourt to provide an update on Linzess.

Thanks, Peter, and good afternoon, everyone. Linzess demonstrated strong commercial performance during the fourth quarter of 2014 with solid growth in prescription demand supported by an increase in physician prescribing, good payer access and reimbursement, and most importantly an ability to provide symptomatic relief to patients, all of which, driven by effective collaboration and execution on all fronts. More than 440,000 Linzess prescriptions were filled during the fourth quarter, a 12% increase quarter over quarter and 108% increase year-over-year.

Since launch, there have been over 2 million prescriptions filled by more than 530,000 patients. And, importantly, in mid-December, we surpassed Zelnorm in launch-aligned weekly prescriptions for the first time. A remarkable achievement when you consider that Zelnorm launched more than 10 years earlier into a far more favorable marketplace.

We believe the growth we've seen over the past several months is driven by our strong product offering, the outstanding efforts of our integrated selling effort with Actavis, and the multi-channel direct-to-consumer campaign that we launched in April, 2014. We have seen a strong response from our DTC efforts that resulted in greater than a 20% increase in weekly TRX above our pre-DTC trend, making this one of the strongest DTC campaigns in the industry over the last couple of years. Our DTC efforts are delivering a strong return on investment, and we continue to gain important insight into patient responses which we are leveraging to develop a new DTC campaign that we expect to launch this spring.

Patient persistency is strong, which in our view, is the key indicator for patient satisfaction. And, we are encouraged to see Linzess continuing to perform approximately 40% to 60% better on launch-align basis compared to Zelnorm and Amitiza. From a physician standpoint, we continue to expand our broad prescriber base with over 110,000 practitioners having written a Linzess prescription as of early January, 2015. Lastly, payers are recognizing the clinical and economic value of Linzess. As of December, 2014, over 70% of commercial or Medicare Part D patients had unrestricted access to Linzess with greater than 75% of commercially insured patients having the access to Linzess at a co-pay of $30 or less per month through either formulary coverage or the Linzess instant savings program.

We continue to grow the entire category prescription treatment options for adults with IBS-C and chronic constipation while capturing meaningful market share within the category which in turn is generating significant growth in prescriptions. Total prescription volume for the category during the fourth quarter of this year was up nearly 12% compared to the same period last year. And, in addition to growing the market, Linzess continues to build significant market share within the category.

Since initiating our DTC efforts 10 months ago, total prescription share for Linzess has grown over 50%. As you can see, on the pie chart on the left, if you dollar-ize both the prescription and OTC laxative treatments at a current WAC price of Linzess, this market could be over $9 billion. OTC laxatives represent the greatest potential, and we are very pleased to see that the majority of Linzess growth is coming directly from the OTC laxative market.

Looking ahead, we feel great about the response we're seeing in our patient awareness efforts and field force promotion. As we've seen in the past, it's fairly standard in the industry to see some softening in uptake in the early part of the year as people transition to new plans or work through their deductibles. But, we expect to see acceleration as the year progresses, supported by the initiation of our new DTC campaign this spring.

With more than 16 years of expected patent life remaining, and an estimated 40 million adult IBS-C and chronic constipation sufferers in the US, we believe we've only scratched the surface. We have the opportunity to bring this important treatment option to millions of additional patients generating great value for the brand.

Before I turn it over to Mark, I want to quickly highlight our excitement around the recent reported top-line Phase IIa data with IW-3718 refractory GERD. I, as well as several people here at Ironwood, worked in the GERD space for many years and fully recognize the significant unmet need in this refractory population. Refractory GERD is a highly prevalent disorder with a limited number of treatment options available.

Millions of GERD sufferers find relief from PPI such as Prilosec as we've learned firsthand that more effective heartburn relief can build huge brands. As you can see in this slide illustrating the growth of Prilosec over time, and there exists an estimated 8 million Americans still suffering from frequent and bothersome symptoms despite treatment of PPI that could benefit from better heartburn relief. We have more work to do as we continue to advance this program but believe it represents a huge opportunity -- opportunity potential and for new treatment options to millions of suffering patients. And, this opportunity is very well aligned with our scientific and commercial expertise. With that, I'll turn it over to Mark.

Before Mark speaks, it's Peter. For those of you that are trying to follow along with the presentation, we're having a little bit of audiovisual challenges. I think some of the slides are working, and some of them are not. The slides are already up on our website so you can follow along directly yourself, and they will be available after the call as well. We apologize if it's frustrating. We're doing the best we can. Mark, do you mind -- pick it up from there?

We generated great momentum in 2014 across our R&D efforts with the initiation of five new clinical studies in GI. This year, we anticipate a total of nine clinical studies ongoing with four data read-outs expected, including our recent Phase IIa data for IW-3718. In addition, we expect several more data readouts next year.

Let me begin with IW-3718. As you're aware, we reported top-line data from our Phase IIa refractory GERD study last week. Preliminary data from this study indicates 3718 improved heartburn and certain other symptoms associated with refractory GERD. Importantly, approximately two-thirds of the patients who tested -- who were tested for bile reflux tested positive. Validating our hypothesis that some patients with refractory GERD reflux bile acid.

In this subgroup of patients who tested positive for bile reflux and were treated in this study with 3718, we observed encouraging improvements in the relief of heartburn and certain other upper GI symptoms, often associated with refractory GERD when compared to patients receiving placebo. A few highlights from the bile reflux-positive subgroup data include a full 1-point drop in heartburn severity at week four relative to placebo. Heartburn severity was measured on a 10-point scale with a baseline of 3.5 in the overall study population.

In terms of heartburn frequency, study patients were heartburn-free approximately one day per week. Following 3718 treatment, heartburn free days increased to approximately 3.5 days total per week for week four. In comparison, placebo increased to a total of approximately 2.3 heartburn-free days per week. And, lastly, 56.3% of IW-3718-treated patients were responders regarding degree of relief of overall GERD symptoms versus 29.4% for the placebo-treated group.

Further, 3718 was generally well tolerated across all patient groups with constipation being the most common adverse event. We continue to analyze the comprehensive set of data from this trial and plan to present the full data at an upcoming science medical meeting. We are excited by this opportunity and have a lot of work to do. Since IW-3718 is minimally absorbed and the formulation is unable to be bridged with pharma-kinetic studies, we plan to focus on further formulation development to efficiently support advancement toward a final commercial product before entering into a Phase IIb trial for dose optimization.

Turning to the rest of our pipeline, I'll begin with Linaclotide. We and Actavis initiated two clinical studies during the fourth quarter of 2014. In October, we initiated a Phase II clinical study evaluating Linaclotide for the treatment of adults suffering from opioid-induced constipation, or OIC. This study is designed to provide us with data on whether Linaclotide can increase bowel movement frequency and impact other symptoms in adult OIC patients. With an estimated 8 million patients in the US suffering from OIC, we believe that if approved by the FDA, Linaclotide could be a potentially important treatment option. Enrollment is ongoing with data expected in the second half of 2015.

In November, we initiated a Phase III clinical trial of a 72-microgram dose of Linaclotide which we and Actavis are exploring for adult CIC patients. If approved, this will be an additional dose option that could provide a broader range of treatment options for physicians and the millions of adult patients in the US suffering from CIC, further accelerating the expansion of Linzess used with this indication. Enrollment is ongoing with data from this trial expected in 2016.

We and Actavis have made very good progress in developing the commercial formulation of Linaclotide colonic [release]. We expect to initiate a Phase IIb clinical trial with our colonic release formulation of Linaclotide in adult IBS-C patients in mid-2015. By separating out the aspect of the pharmacology of Linaclotide, we believe we have the opportunity to further enhance relief of the lower abdominal pain in IBS-C patients. We plan to continue to pioneer this space by potentially expanding our Linaclotide colonic release development efforts into additional GI disorders with severe lower abdominal pain as a predominant symptom such as other forms of IBS, ulcerative colitis, and diverticulitis.

Our global partners continue to make progress in advancing Linaclotide worldwide. Astellas initiated a Phase III clinical trial for Linaclotide in adult IBS-C patients in Japan. In addition, we and AstraZeneca recently completed enrollment in our Phase III trial of Linaclotide in IBS-C for China. Data from this trial are expected in the second half of 2015.

Moving on to our non-Linaclotide R&D efforts, in addition to the results of our Phase IIa trial with 3718 described earlier, we initiated a Phase IIa clinical study evaluating the ability of IW-9179 to provide relief of [Type 2] -- of diabetic gastroparesis symptoms. Like the 3718 Phase IIa study, this is an exploratory study evaluating a range of symptoms rather than specifying a primary endpoint and is expected to inform the path for further development. Enrollment is ongoing with data expected in the first half of 2016.

We also initiated a Phase I clinical study with IW-1973, our first sGC candidate with patient enrollment expected to begin in the coming weeks. We are evaluating 1973 for the potential treatment of cardiovascular diseases. Data from this study are expected in the second half of 2015.

In addition, we expect to advance our second sGC candidate, 1701, into a phase one clinical study in the second half of the year. As you can see, we have made a lot of progress during the past year, and we look forward to an exciting and productive year ahead as our pipeline continues to build and progress. With that, I'll now hand it over to Tom Graney to discuss our financial results for the quarter.

Thanks, Mark. Really exciting developments in R&D. And, thank you, everyone, for joining us this afternoon. I will be walking through some key financial highlights for the quarter. Please refer to our press release for the detailed financials from the fourth quarter and the full year.

As Peter mentioned, we achieved an important milestone, which I will discuss in detail in a minute, in the fourth quarter. The US Linzess collaboration with Actavis was profitable in just its eighth full quarter of launch. We ended 2014 with a strong balance sheet with $248 million in total cash and investments, and we used $23 million in cash from operations through the fourth quarter, down from $39 million in the third quarter. While there will be fluctuations on a quarterly basis due to factors such as the $15 million milestone payment we received from Astellas in the fourth quarter, we expect cash use to continue to decline over time, primarily due to revenue growth from Linzess and disciplined expense management.

We continued to see strong uptake for Linzess, which resulted in $93.8 million in net sales in the fourth quarter, up approximately 18% quarter over quarter. And, $297 million in net sales for the full year resulting in year-over-year growth of approximately 150%. Wholesaler inventory levels were higher at the end of the fourth quarter compared with the end of the third quarter but were within the expected two- to three-week range.

Moving to gross-to-net adjustments for the fourth quarter, we did see an increase compared to the third quarter to the mid-30% range, driven primarily by successful pull-through from important commercial contracts as well as a price increase taken early in 2015 that resulted in increased reserves at the end of 2014. For both competitive and commercial reasons, we and Actavis do not plan to provide specific inventory levels or gross-to-net details going forward. We will continue to point to total prescriptions and prescription growth as key performance indicators of the end-user demand for Linzess.

Subsequent to the end of the fourth quarter, effective January 5th, we and Actavis increased the price of Linzess by approximately 9.5% to its current list price of $9.24 per capsule. Importantly, as I mentioned previously, and as you can see on the right side of slide 13, we and Actavis achieved profitability for the US collaboration in just the eighth full quarter of launch.

Now turning to Ironwood's financial highlights for the quarter. GAAP revenue for the fourth quarter was $38.1 million, including $23.9 million in collaboration revenue from Linzess commercialization activities with Actavis in the US. Cost of revenue for the fourth quarter was $13.1 million compared with none in the third quarter. During the fourth quarter, Almirall lowered its inventory demand forecast in Europe due to increased commercial challenges in this territory. As a result of this forecast reduction and the fact that we have better insight into the launch trajectories outside of the US, we wrote down $11.4 million of inventory to an estimated net realizable value of $5 million. This write-down represents the primary driver of the increase in costs of revenue in the fourth quarter.

Lastly, we ended the year within our guided expense ranges for 2014 total operating expenses, which consisted of both R&D and SG&A expenses and 2014 combined marketing and sales expenses for Linzess. We look forward to 2015 in which we expect our total operating expenses to be in the range of $220 million to $250 million. This consists of $105 million to $120 million in R&D expenses and $115 million to $130 million in SG&A expenses. We also expect the combined Ironwood and Actavis total 2015 marketing and sales expense for Linzess to be in the range of $230 million to $260 million.

As we've discussed, we achieved the critical inflection point in the fourth quarter when the US collaboration achieved profitability. Now, with the continued growth of Linzess, and prudent management of operating expenses as reflected in our 2015 guidance, we anticipate delivering increased operating leverage going forward. Thank you, and with that, I will turn it back over to Patrick to begin the Q&A portion of the call.

(Operator Instructions)

Our first question comes Anupam Rama with JPMorgan. Your line is open.

Thanks for taking the question. Maybe a quick question for Mark on IW-3718 in GERD. What are you hearing from physicians about a potential primary endpoint in the phase IIb trial? Would you be looking at an individual endpoint such as heartburn-free or more of a global symptom responder-type of scale? Thanks.

Thanks for the question. We certainly are very excited about the trial. [We've dose-led] -- mentioned, we have a lot of work to do. We will focus with the experts on the data that we have. There is a lot of data we are still reviewing. And, specifically, we're excited that we were -- that we did have positive impact on the GERD symptoms. Obviously, the GERD symptoms have been used previously for getting drug approvals in this space. So, we think there's a path that's a little more straightforward, and at this time, that's about as far as we can go.

Great. Thanks for taking our question.

Our next question comes from Gary Nachman with Goldman Sachs. Your line is open.

Hi, good afternoon. I know you aren't giving these metrics going forward, but how much did inventory build contribute in the quarter going to the higher end of two to three weeks and the gross-to-net in the mid-30%? Will it stay roughly at that level? Is it a good proxy?

Thanks for the question, Gary. Going forward, as you heard, we're not going to be in a position to provide details on inventory and gross-to-net. But, what I can tell you is along with Actavis, we work with wholesalers to ensure that we have high service levels and believe that the two-to three-week range at the wholesaler level on average satisfies that requirement. We do work with our partners throughout the supply chain to ensure that we've got enough inventory in the channel to satisfy patient needs.

As far as gross-to-net, we view access as an important commercial strategy for us and always have since launch. We want to ensure that patients get access to the drug. We view investment behind access as part of our marketing mix, and we flux those investments where we think we're going to get the best return.

Okay. So, we should assume that it is a pretty good proxy going forward? At least for the time being?

Gross-to-net is a function of a number of different elements including our list price, but also our patient assistance program. Which as I said, we're going to flux where we think we can create the most value and ensure patient access.

Okay. Then, just a couple more. What's the non-Linaclotide R&D expense expected to be in 2015 out of the $105 million to $120 million total R&D? You've given that in the past. And then, the write-down of the API of $11 million, what exactly is going on in Europe? Why it has been such a struggle? Are you satisfied with the partnership with Astellas? Anything you could do there maybe to improve it? Thanks.

Okay.

Two questions. I'll take Europe. The first question I lost which was -- .

Non-linaclotide.

Non-linaclotide R&D. Can you speak to that, Tom?

Yes, Gary. We did provide guidance in 2014 on the split between Ironwood-only R&D and partnered R&D. Going forward for 2015, we've just provided overall guidance for total R&D.

Gary, it's Peter. With respect to Europe, I think the situation hasn't changed dramatically except that we continue to see negative input from Germany in terms of ability to launch the product, and our partner, Almirall is working very hard on the launch in -- now in 10 different countries. They're having success in a number of those countries. But, while Europe has been challenging, I would say overall, you see the same demographics in Europe with respect to unmet need in IBS and CC.

We have a terrific label for the product with Almirall in Europe. It's the first drug indicated for IBS of any kind in Europe. And, it's described as a visceral analgesic on the label. So, we're very pleased with the label. It is a new category, as I said, and we knew it would take time to build awareness, both with physicians and patients. And, importantly, in Europe, Almirall and other pharmaceutical companies don't have the ability to do direct-to-patient education the way that we can here. You can see what an important lever that is in the marketing in the US. So, we always knew with a new indication, new category, lack of DTC, it would be a longer, slower ramp. We do think ultimately there's a big opportunity in Europe and a big patient need. No question. Germany was a surprise, and something that we and Almirall are wrestling with.

Thank you.

(Operator Instructions)

Our next question comes from Ravi Mehrotra with Credit Suisse.

Hey, good afternoon. Thanks for taking my question. One on 3718. Can you just remind us of the intellectual property protection for that molecule?

Secondly, you talked about your new DTC campaign in spring. Can you just walk us through how you are going to adapt that DTC campaign versus the one you've just had? Thank you.

Hi, Ravi. This is Mark. So, as you know, 3718 is a very innovative formulation. What we're trying to do is target a gastric-retentive bile acid sequestrant so that we keep the bile acid sequestrant in the stomach and prevent bile acid from refluxing into the esophagus. So, it's a very novel approach. We have a number of filings in this area relative to that formulation, and we will continue to have patent filings in the future all around the innovations that we're doing.

This is Tom. I'll take the DTC ad question. We're absolutely delighted with the performance of what we've seen so far as far as the patients' reaction to the DTC campaign. We have learned a tremendous amount with regard to which segments of patients were responding and not responding on a messaging perspective but a creative perspective as far as the ad. So, we're going to apply those learnings to strengthen the ad. Obviously, we want to broaden the appeal and the motivation to a broader patient base. We've also learned a good deal about the media and the media buy and where we want to focus the geography as well as the various communication channels. Again, it has been a tremendous success so far. We've learned a lot. We think this is going to continue to push and certainly strength the impact of the DTC campaign moving forward.

Got it. Thank you.

Irina Koffler with Cantor Fitzgerald. Your line is open.

Thanks very much. For your API sales, should we assume that this is going to taper somewhat this year since the China trial is wrapping up this year, and Europe is still a little bit soft is the first question. Also, wondering if maybe you can give us an update on the pediatric program? And then, finally, what's the difference between the two sGC cardiovascular programs? Thanks.

Thanks, Irina. This is Tom. I will take the API question. We haven't provided revenue guidance at all. But, when it comes to API, we do record sales to the OUS partners, and we do not see it as being a material source of revenue for us next year.

So, with the pediatric program, we continue to have interactions with the FDA to firm up the exact program that we will move forward in that development program and to meet the PMR. Relative to the two sGC molecules, they both have very interesting properties that we think can be differentiating. So, we continue to advance both of them because we think they are potentially molecules that can go for two different types of indications. We haven't disclosed all of that data yet. But, again, we look forward to, as we demonstrate that potentially in the clinic, what we see in animals.

Thank you.

Our next question comes from David Maris with BMO Capital Markets. Your line is open.

Good afternoon. Couple questions. On 3718, did you -- it was dosed twice a day for four weeks. Did you see any improvement from -- was it a linear improvement over time that you saw? An improvement in week two, three, and four, which might suggest that a longer study, you'd see a bigger gain from one to three days, which is impressive enough. But, maybe that you would get to five days? Or, was it too small to even see a trend, maybe not statistically significant, but even a trend of that?

Then, separately, this isn't -- correct me if I'm wrong. This is not partnered with Activas. So, what's your thinking on that? Is that something that's on the table now? Or, will you wait until you get to the Phase II, or will you just try to take it all the way?

Mark, can you take the first part?

Yes. So, the -- yes, when we've looked through the data we certainly see encouraging trends over time, and so we do think that helps us confirm not only our excitement for what we're seeing at four weeks, but what we are seeing in the earlier time points.

And, with respect to the question of intellectual property and ownership status, David -- it's a good question. The intellectual property is Ironwood-developed. We have a small license agreement with Depomed with respect to the formulation. But, otherwise the rights are ours, and we have a very strong IP that we've developed in the house and continued to develop and will do so over the coming years. I think we feel very good about our ability here to continue to successfully develop and prosecute the product and to commercialize it in the US. We don't have any partnering plans at this time.

Okay. Thank you very much.

Our next question comes from Boris Peaker with Cowen. Your line is open.

Good evening. On Linzess, could you maybe expand a little bit to help us understand what fraction of patients are taking the drug chronically versus for short periods -- just periodically? And, on my question on 3718, do you have a sense if a twice-a-day drug is required for efficacy? Or, can patients take it to address specific episodes?

Boris, this is Tom. I will take the first one. With regard to what we're seeing in chronicity -- overall we know physicians are directing patients to take Linzess chronically, and what we're seeing as far as the persistency rates certainly support that. Certainly, both Zelnorm and Amitiza are also being used to treat chronic diseases. These are, as you know, very frequent, bothersome, and rapidly recurring symptoms. So, what we're seeing as far as chronicity of therapy looks very, very strong. And, again, I think that level of persistency is probably the best indicator of the clinical performance of the drug which we're very pleased with.

Mark, can you take the question on 3718?

So, yes, we studied this drug in the refractory GERD patients for twice a day, and that's really the only data we currently have. As the program moves forward, we will examine whether we will do once a day and what our dose-ranging willing be. At this point, we can only comment that we saw encouraging data with the twice-a-day dosing paradigm.

I think the only thing I would add there, Boris, is there's a very substantial unmet need in the category and really beyond trying to adjust PPI usage or timing of use of PPIs and so on. There's really nothing else out there to help these patients. So, we think there's really a very big opportunity to provide better solutions than are currently out there.

Great. Thank you very much for taking my questions.

Thank you.

Our next question comes from Mario Corso with Mizuho. Your line is open.

Yes, good evening. Thanks for taking my questions. A couple of things I wanted to ask about. On Linzess, in terms of direct-to-consumer spend, I know you don't quantify things. But, is it a more targeted program this year? Is the cost of DTC less in 2015 than 2014, or more similar?

On gross-to-net, did I hear correctly, was there a one-time effect in gross-to- net in the fourth quarter in that mid-30% which would lead me to believe maybe that's not the sustainable type of rate? And, I guess also on the DTC, spring? Are we thinking the early spring, late March, early April, right around the same time the program started last year?

And then, finally, one quick pipeline one. On sGC. Depending on which cardiovascular indication you're looking at, is there any surrogate measure of efficacy in the phase I study? Or, is it purely safety and PK?

That's going to be a good brain test for us. Four questions. Tom?

I have a few more, too.

Tom, can you take the two questions about DTC? One about the investment in 2015, and the second on timing?

Yes. So, first of all, the timing, we're roughly in the same area. There's still a lot of work to do between now and early spring, but you're in the right range, Mario.

With regard to the DTC spends, we've never given specific guidance on that. What I will tell you is we have constant in-market tests going on to really try to optimize the investment in the marketplace, and of course, different ads perform differently. We believe certainly the first commercial did very well. I think we've gained a lot of insight to strengthen the commercial. We're going to go out and do the exact same work as far as the market investments, and depending on what we see, we may invest more or less based on what the data guides us toward to really maximize the return on investment. And, like I said, this market has been very responsive to this type of promotion. We're very encouraged by what we're seeing so far and what we think we will see this spring and throughout the year.

Pulling up just a level there, Mario, what you are seeing is we were $256 million total sales and marketing investment in the launch year in 2013. We came in just over $250 million with a different marketing mix in 2014, and we've guided to roughly the same range in 2016. And, it's not that we're targeting that number. It's that we think that's following the data the best way to optimize the marketing mix to benefit as many patients as possible and maximize the value of the brand. But, we're very pleased by the operating leverage we're seeing behind that kind of investment. Tom, the second question was about gross-to-net.

Yep. Hi, Mario. Thanks for the question. We're really pleased with the level of access that patients have to Linzess as Tom McCourt mentioned in his presentation. There was not an adjustment in the fourth quarter. Any time you take a price increase, which we did at the beginning of January, you need to reserve for future rebates on sales at that higher price level. So, that was a component of the increase quarter over quarter, but it was not the majority. The majority of the increase was driven by, again, our successful pull-through of newly signed contracts in the second half of the year.

I'll take the sGC Phase I study. Certainly, we're -- the advantage of potentially looking in these type of cardiovascular studies in phase I. We can look at and follow some of the key PD, pharmacodynamic, measures not only the phamaco-kinetics and safety tolerability. We certainly will be looking at, as an example, blood pressure and several other cardiovascular endpoints.

Thank you. This ends our Q&A session for today. I will turn it back to management for closing remarks.

Thanks for your help, Patrick. And, thanks to all of you again for participating in this afternoon's call. Just to summarize for you, key points. Linzess demand continues to be very strong with a huge opportunity ahead for further growth of an asset that targets millions of patients and which has IP through at least 2031 so a very durable asset.

Second, we're making substantial progress against our R&D efforts and goals with nine clinical studies expected to be ongoing this year. Four of which are expected to have data readouts during the year including last week's positive Phase IIa data with IW-3718. For all of these, we're targeting diseases that affect millions of people, and we're very pleased by the successes we've had to date.

Finally, we're prudently allocating shareholder capital within our key value drivers and staying focused on our key goals for the year. We'll be around this evening and tomorrow so contact Meredith if you would like to follow up with any additional questions. Please have a good evening, and stay warm.

Ladies and gentlemen, thank you for participating in today's program. This concludes the program. You may all disconnect.