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Ironwood's (IRWD) Q2 Earnings Beat, 2021 Guidance Raised

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Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) reported second-quarter 2021 adjusted earnings of 34 cents per share, which significantly beat the Zacks Consensus Estimate of 23 cents. The company had reported adjusted earnings of 16 cents per share in the year-ago quarter.

Total revenues were up 16% year over year to $104 million, beating the Zacks Consensus Estimate of $95.6 million. The increase was driven by continued demand for its sole marketed drug, Linzess, which drove the company’s collaboration revenues.

Shares of Ironwood were up 2.7% on Aug 5, following strong quarterly results and increased revenues guidance. In fact, the company’s shares have gained 16.7% so far this year against the industry’s decrease of 11%.

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Quarter in Detail

As reported by partner AbbVie (ABBV - Free Report) , Ironwood’s sole marketed product — Linzess — generated net sales of almost $259.3 million in the United States, up 18% 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 the sales of Linzess in the United States (included in collaborative revenues) was $100.3 million in the second quarter, up 16% year over year.

Per data provided by IQVIA, volume of prescribed Linzess capsules in the second quarter increased about 14% year over year.

In May, the company entered into an agreement with Teva (TEVA - Free Report) , granting the latter rights to market generic version of 72mcg Linzess in the United States beginning Mar 31, 2029. With this settlement, the company restricted entry of generic Linzess in the United States for a few years.

Revenues also include $3.7 million in royalties and other revenues. The company recorded $0.6 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' Givlaari per an education and promotional agreement for the drug in the United States. We note that the agreement with Alnylam will expire on Sep 30, 2021 but Ironwood will continue to receive royalties for promotional activities for one year following termination of the agreement.

Selling, general and administrative expenses were down 21.9% year over year to $27.1 million during the second quarter. Research & development expenses declined 44.9% year over year to $12.2 million.

Raises 2021 Guidance

Ironwood raised its guidance for Linzess sales growth as well as for total revenues in 2021. The company expects its total revenues to be between $390 million and $410 million, compared with the previous guidance of $370 million and $380 million. The Zacks Consensus Estimate for total revenues stands at $401.7 million. It expects U.S. sales of Linzess to grow by 6%-8% in 2021 (previously 3%-5%).

The company expects adjusted EBITDA to be more than $210 million for the year versus more than $190 million previously.

Pipeline Update

Currently, Ironwood has 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 in early 2022. 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 carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.