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Ironwood's (IRWD) Q1 Earnings Beat, 2021 Guidance Muted

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Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) reported first-quarter 2021 adjusted earnings of 24 cents per share, which beat the Zacks Consensus Estimate of 22 cents. The company had reported adjusted earnings of 4 cents per share in the year-ago quarter.

Total revenues were up 11% year over year to $88.8 million, beating the Zacks Consensus Estimate of $85.6 million. The increase was driven by continued demand for its sole marketed drug, Linzess.

Quarter in Detail

As reported by partner AbbVie (ABBV - Free Report) , Ironwood’s sole marketed product — Linzess — generated net sales of almost $215.4 million in the United States, up 12% year over year. Ironwood and AbbVie equally share Linzess’ brand collaboration profits or losses. Sales growth was driven by strong demand for Linzess, partially offset by lower net price of the drug.

Ironwood's share of net profits from sales of Linzess in the United States (included in collaborative revenues) was $85.9 million in the first quarter, up 21% year over year.

Per data provided by IQVIA, volume of prescribed Linzess capsules in the first quarter increased about 12% year over year.

Revenues also include $2.7 million in linaclotide royalties, co-promotion and other revenues. The company recorded $0.2 million from sales of linaclotide API to its partners.

We note that Ironwood has agreements with two partners — Astellas Pharma and AstraZeneca (AZN - Free Report) — related to the development and commercialization of Linzess in Japan and China, respectively. Ironwood records royalties on sales of Linzess from these companies in their respective territories. The company also records royalties on sales of Alnylam Pharmaceuticals’ (ALNY - Free Report) Givlaari per an education and promotional agreement for the drug in the United States.

Selling, general and administrative expenses were down 24.1% year-over-year to $27.7 million during the first quarter. Research & development expenses declined 44.8% year-over-year to $15.5 million.

2021 Guidance Maintained

Ironwood reiterated its previous guidance for Linzess sales and total revenues in 2021. The company expects its total revenues to be between $370 million and $385 million, which suggests year-over-year decline. The Zacks Consensus Estimate for total revenues stands at $393.1 million. It expects U.S. sales of Linzess to grow 3%-5% in 2021.

The company expects adjusted EBITDA to be more than $190 million for the year.

Despite strong first-quarter results, shares of Ironwood were down 3.1% on May 6, presumably on lower-than-expected revenues outlook. In fact, the company’s shares have declined 7.9% so far this year compared with the industry’s decrease of 10.9%.

Pipeline Update

Following the failure of IW-3718, Ironwood had no clinical-stage candidate in its pipeline. The company plans to file an investigational new drug application for its pre-clinical candidate, IW-3300, in the second half of 2021 to support initiation of an early-stage clinical study. The company is developing the candidate as a potential treatment for visceral pain conditions such as interstitial cystitis/bladder pain syndrome and endometriosis.

Zacks Rank

Currently, Ironwood sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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