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Apraglutide moves toward a confirmatory phase III study for short bowel syndrome patients.
Shares of Ironwood Pharmaceuticals (IRWD - Free Report) have witnessed a strong surge in the past month, primarily driven by a stellar third-quarter performance as well as an upbeat revenue guidance for 2025. The stock has rallied 110.1% in a month against the industry’s decrease of 0.1%. IRWD shares have also outperformed the sector and the S&P 500 Index in this timeframe, as seen in the chart below.
IRWD Outperforms Industry, Sector & S&P 500 Index
Image Source: Zacks Investment Research
On Nov. 10, Ironwood reported solid third-quarter results, beating estimates for both earnings and sales, backed by the high demand for its sole marketed product, Linzess (linaclotide). Concurrently, IRWD raised its full-year 2025 revenue guidance to reflect this performance.
Linzess is approved for the treatment of irritable bowel syndrome with constipation (IBS-C) in adults and pediatric patients aged seven years and above. The drug is also approved for treating functional constipation (FC) in children and adolescents aged six to 17 years.
However, a single quarter's result cannot be a parameter while making an investment decision. Let’s analyze Ironwood’s strengths and weaknesses to understand how to play the stock amid the recent share price rally.
IRWD’s Strong Partnerships for Linzess Aid Top Line
Ironwood markets Linzess in the United States in collaboration with drug giant AbbVie (ABBV - Free Report) . The companies equally share Linzess’ brand collaboration profits and losses in the United States.
As reported by ABBV, Linzess generated net sales of $314.9 million in the United States, up 40% year over year, driven by strong demand growth in the third quarter.
Backed by the strong performance of Linzess during the third quarter, Ironwood raised its full-year 2025 revenue guidance. The company now expects total revenues of $290-$310 million for 2025, up from its previous guidance of $260-$290 million.
Ironwood also has agreements with Astellas Pharma and AstraZeneca (AZN - Free Report) related to the development and commercialization of Linzess in Japan and China, respectively. Both companies pay royalties to Ironwood on net Linzess revenues earned in their regions.
The above collaborations act as a source of revenue in the form of royalties for Ironwood.
IRWD's Pipeline Progress Amid Recent Setback
Ironwood is developing its next-generation GLP-2 analog, apraglutide, for treating patients with short bowel syndrome (“SBS”) with intestinal failure (“IF”) who are dependent on parenteral support (PS).
The company is now finalizing a confirmatory phase III study design for apraglutide for treating patients with SBS who are dependent on PS and plans to align with the FDA later in the fourth quarter of 2025.
Pending alignment with the FDA, Ironwood expects to initiate a confirmatory phase III study in the first half of 2026 for apraglutide in patients with SBS who are dependent on PS.
However, following a discussion with the FDA held in April, the company noted that a confirmatory phase III study will be required to seek approval of apraglutide for treating patients with SBS-IF. This, in turn, extended the timeline for the NDA filing completion and also potentially delayed the approval for apraglutide.
IRWD’s Valuation and Estimate Revision
From a valuation standpoint, Ironwood is trading at a discount to the industry. Going by the price-to-sales (P/S) ratio, the stock currently trades at 1.62 times trailing 12-month sales value, lower than 2.38 times for the industry. The stock is trading below its five-year mean of 4.27.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings per share (EPS) has remained stable at 16 cents over the past 30 days. During the same time frame, EPS estimates for 2026 have also remained stable at 40 cents.
Image Source: Zacks Investment Research
Stay Invested in IRWD Stock
We suggest investors retain this Zacks Rank #3 (Hold) stock for now. The fact that it is trading at a discount compared to the industry, its recent price rally, buoyed by the strong performance of Linzess during the third quarter, and the upbeat guidance for 2025, are likely to keep investors optimistic.
Despite the earlier setback, the company is making good progress with the development of apraglutide.
Ironwood’s recent developments with Linzess, pipeline progress and stable earnings estimates present an optimistic outlook as of now. However, the company’s heavy reliance on a single product for revenues and growth remains a concern.
Image: Shutterstock
IRWD Rises 110% in a Month: Should You Buy, Sell or Hold the Stock?
Key Takeaways
Shares of Ironwood Pharmaceuticals (IRWD - Free Report) have witnessed a strong surge in the past month, primarily driven by a stellar third-quarter performance as well as an upbeat revenue guidance for 2025. The stock has rallied 110.1% in a month against the industry’s decrease of 0.1%. IRWD shares have also outperformed the sector and the S&P 500 Index in this timeframe, as seen in the chart below.
IRWD Outperforms Industry, Sector & S&P 500 Index
Image Source: Zacks Investment Research
On Nov. 10, Ironwood reported solid third-quarter results, beating estimates for both earnings and sales, backed by the high demand for its sole marketed product, Linzess (linaclotide). Concurrently, IRWD raised its full-year 2025 revenue guidance to reflect this performance.
Linzess is approved for the treatment of irritable bowel syndrome with constipation (IBS-C) in adults and pediatric patients aged seven years and above. The drug is also approved for treating functional constipation (FC) in children and adolescents aged six to 17 years.
However, a single quarter's result cannot be a parameter while making an investment decision. Let’s analyze Ironwood’s strengths and weaknesses to understand how to play the stock amid the recent share price rally.
IRWD’s Strong Partnerships for Linzess Aid Top Line
Ironwood markets Linzess in the United States in collaboration with drug giant AbbVie (ABBV - Free Report) . The companies equally share Linzess’ brand collaboration profits and losses in the United States.
As reported by ABBV, Linzess generated net sales of $314.9 million in the United States, up 40% year over year, driven by strong demand growth in the third quarter.
Backed by the strong performance of Linzess during the third quarter, Ironwood raised its full-year 2025 revenue guidance. The company now expects total revenues of $290-$310 million for 2025, up from its previous guidance of $260-$290 million.
Ironwood also has agreements with Astellas Pharma and AstraZeneca (AZN - Free Report) related to the development and commercialization of Linzess in Japan and China, respectively. Both companies pay royalties to Ironwood on net Linzess revenues earned in their regions.
The above collaborations act as a source of revenue in the form of royalties for Ironwood.
IRWD's Pipeline Progress Amid Recent Setback
Ironwood is developing its next-generation GLP-2 analog, apraglutide, for treating patients with short bowel syndrome (“SBS”) with intestinal failure (“IF”) who are dependent on parenteral support (PS).
The company is now finalizing a confirmatory phase III study design for apraglutide for treating patients with SBS who are dependent on PS and plans to align with the FDA later in the fourth quarter of 2025.
Pending alignment with the FDA, Ironwood expects to initiate a confirmatory phase III study in the first half of 2026 for apraglutide in patients with SBS who are dependent on PS.
Notably, in January 2025, IRWD initiated the rolling new drug application (“NDA”) submission to the FDA for apraglutide for the given indication.
However, following a discussion with the FDA held in April, the company noted that a confirmatory phase III study will be required to seek approval of apraglutide for treating patients with SBS-IF. This, in turn, extended the timeline for the NDA filing completion and also potentially delayed the approval for apraglutide.
IRWD’s Valuation and Estimate Revision
From a valuation standpoint, Ironwood is trading at a discount to the industry. Going by the price-to-sales (P/S) ratio, the stock currently trades at 1.62 times trailing 12-month sales value, lower than 2.38 times for the industry. The stock is trading below its five-year mean of 4.27.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings per share (EPS) has remained stable at 16 cents over the past 30 days. During the same time frame, EPS estimates for 2026 have also remained stable at 40 cents.
Image Source: Zacks Investment Research
Stay Invested in IRWD Stock
We suggest investors retain this Zacks Rank #3 (Hold) stock for now. The fact that it is trading at a discount compared to the industry, its recent price rally, buoyed by the strong performance of Linzess during the third quarter, and the upbeat guidance for 2025, are likely to keep investors optimistic.
Despite the earlier setback, the company is making good progress with the development of apraglutide.
Ironwood’s recent developments with Linzess, pipeline progress and stable earnings estimates present an optimistic outlook as of now. However, the company’s heavy reliance on a single product for revenues and growth remains a concern.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.