Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is expected to release data from a phase 2 study using CNP-104 for the treatment of patients with primary biliary cholangitis [PBC] in Q3 of 2024. This presents itself as one catalyst opportunity to look forward to this year. Another milestone to consider would be a New Drug Application [NDA] filing of apraglutide, which is being developed for the treatment of adult patients with short bowel syndrome [SBS] who are dependent on parenteral support [PS]. With positive phase 3 data on hand from the phase 3 STARS study for the treatment of patients with SBS-IF, it is in a position to not only file an NDA for these patients, but other regulatory applications across the globe.
This biotech is already marketing a drug with AbbVie (ABBV) by the name of Linzess. U.S. net sales of this drug were $256.6 million in Q1 of 2024, which was a 3% increase compared to the same time period in the prior year. Since its shares its profit with the big pharma it retained $71.7 million of it in Q1 of 2024. With regulatory filings of apraglutide for SBS-IF for multiple territories, plus a proof-of-concept study data readout expected for CNP-104 for PBC in Q3 of 2024, I believe that investors can benefit with any potential gains made.
CNP-104 For The Treatment Of Patients With Primary Biliary Cholangitis
As I noted above, CNP-104 is being developed to treat patients with primary biliary cholangitis. The use of this drug for the treatment of this patient population is being explored in an ongoing phase 2 proof-of-concept study. Before going over this mid-stage study, plus any catalysts to come out of it, it is first important to go over what primary biliary cholangitis is and what the possible market opportunity could be for it. Primary Biliary Cholangitis [PBC] is a type of liver disorder where progressive destruction of the bile ducts is possible. This is an autoimmune disorder and thus, the body mistakenly attacks the bile ducts of the liver leading to inflammation and destruction of them.
Even worse, PBC can lead to other problems like cirrhosis of the liver and/or liver failure. The destruction of bile ducts in the liver is not good because bile is a fluid responsible for aiding with digestion, for starters. Secondly, this fluid has other functions like helping the body to absorb fat, empty toxins and get rid of cholesterol. The symptoms that these patients experience depend upon the severity of the liver damage. In the early stages of disease, some symptoms that these patients experience are as follows:
- Nausea
- Fatty stools
- Fatigue
- Rapid weight loss
- Poor appetite.
The global primary biliary cholangitis therapeutics market size is projected to reach $1.4 billion by 2032. The thing is that the goal of the company though is to go after such PBC patients who don’t respond to currently available standard of care [SOC] therapies such as Ursodeoxycholic acid [UDCA] and/or Ocaliva [OCA].
To see if CNP-104 can help treat these patients with PBC, both Ironwood and its collaboration partner COUR Pharmaceuticals Development Company, Inc. [“COUR”] had initiated a phase 2 proof-of-concept study. This study is going to test the safety, tolerability, pharmacodynamic effects and efficacy of this drug for the treatment of these patients. This trial is expected to recruit up to 42 patients who are to be given one of the following doses:
- 4 mg/kg of CNP-104
- 8 mg/kg of CNP-104
- Placebo.
Primarily, this mid-stage study will be looking at safety. However, there will be some other efficacy endpoints. One such endpoint would be changed from baseline in liver fibrosis by FibroScan. Another one would be to measure the change from baseline in Serum Alkaline Phosphatase [ALP] levels.
What does ALP have to do with PBC? Well, a high level of this enzyme indicates that there are problems with the liver. Such problems could be broken liver ducts such as in PBC, fibrosis or other issue. The thing is that Ironwood has rights to CNP-104 as an immune modifying nanoparticle in the United States only.
Having said that, it believes that it could potentially have the first disease-modifying agent approved by the FDA for PBC. This remains to be seen, but it might have a competitor to deal with. Such a competitor would be Gilead Sciences (GILD) which acquired CymaBay for $4.3 billion. The reason it did so, is so that it could get its hands on seladelpar, which was developed for the treatment of patients with PBC. Not only did the FDA accept seladelpar for the treatment of these patients, but it set a Priority Review for it, with a PDUFA date of August 14th of 2024. There is a catalyst opportunity as it relates to the advancement of CNP-104 for PBC, which is that data from the ongoing phase 2 proof-of-concept study from it is expected to be released in Q3 of 2024.
Financials
According to the 10-Q SEC Filing, Ironwood Pharmaceuticals had cash and cash equivalents of $121.5 million as of March 31, 2024. This biotech does generate revenue with Linzess, but sales have been steady but not really exploding higher. Sales of this drug, as reported on by AbbVie, were $256.6 million in Q1 of 2024, which was a 3% increase. Thus, with the co-profit sharing between both companies in place, Ironwood only obtained $71.7 million.
As far as sales being steady, there is another item to note about sales for Linzess. The company had given a lower revised guidance for sales. Prior guidance as of February 15, 2024, was between $435 to $455 million. However, the new guidance as of May 9, 2024, is guided to be between $405 to $425 million.
This biotech’s cash burn is roughly $63.9 million per quarter. The truth is that it is going to need to raise additional funds in the coming months. What makes me say that? It is because in its 10-Q SEC Filing, it has provided guidance that its cash on hand will be enough cash runway to fund its operations for at least the next 12 months.
Risks To Business
There are several risks that investors should be aware of before investing in Ironwood Pharmaceuticals. The first risk to consider would be regarding the upcoming readout of the phase 2 proof-of-concept study, which is using CNP-104 for the treatment of patients with primary biliary cholangitis [PBC]. There is no assurance that the data to be released from this mid-stage study will turn out to be positive. Not only that, but there is no guarantee that the stock price will trade higher even if the data is good. The reason why is that data for CNP-104 is likely going to be compared to other PBC treatments like seladelpar from Gilead Sciences (GILD).
A second risk to consider would be in terms of the NDA filing of apraglutide, which is being developed for the treatment of patients with short bowel syndrome [SBS] who are dependent on parenteral support [PS]. Even if the NDA is filed, there is no guarantee that the FDA will accept it for review. Plus, there is no assurance that apraglutide will be approved for U.S. marketing.
A third risk to keep an eye on would be sale of Linzess. As I indicated above, revised guidance has been noted to be a mid-single digits percentage decline for FY 2024. Guidance of revenue is now expected to be lower, between $405 to $425 million. The thing here is that the reporting of lower than expected sales throughout this year could be a roadblock on the share price.
The fourth and final risk to consider would be in terms of the financial position that it is in. Again, the reason for this risk is quite simply because of what was stated in its 10-Q SEC Filing for guidance. It notes that it believes it has enough cash on hand to fund its operations for at least the next 12 months. This means that it is likely going to have to dilute or implement another financial instrument in the coming months to bring additional cash on board.
Conclusion
Ironwood Pharmaceuticals has been able to do quite well in trying to increase shareholder value. While it doesn’t appear that Linzess will move the stock price much in the near-term, it does at least have other candidates in its pipeline being explored. The most notable of which, would be the development of CNP-104 for the treatment of patients with primary biliary cholangitis [PBC].
It is expected that data from the ongoing phase 2 proof-of-concept study, using this drug to treat this patient population, will be released in Q3 of 2024. A second way for shareholder value to be increased would be with the NDA filing of apraglutide for short bowel syndrome [SBS], which should happen within a 1-year period of time.
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