IRONWOOD PHARMACEUTICALS INC [IRWD] Filings

10-Q 1 irwd-20240930x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-34620

IRONWOOD PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware		04-3404176
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)


100 Summer Street, Suite 2300
Boston, Massachusetts		02110
(Address of Principal Executive Offices)		(Zip Code)

(617) 621-7722

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.001 par value	IRWD	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒		Accelerated Filer ☐

Non-accelerated Filer ☐		Smaller Reporting Company ☐

		Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of October 31, 2024, there were 160,028,388 shares of Class A common stock outstanding.

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks, uncertainties, and assumptions. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words “may,” “continue,” “estimate,” “intend,” “plan,” “will,” “believe,” “project,” “expect,” “seek,” “anticipate,” “could,” “should,” “target,” “goal,” “potential” and similar expressions may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements include, among other things, statements about the demand and market potential for our products in the countries where they are approved for marketing, as well as the revenues therefrom; the timing, investment and associated activities involved in commercializing LINZESS^® by us and AbbVie Inc. in the U.S.; the commercialization of CONSTELLA^® in Europe and LINZESS in Japan and China, as well as our expectations regarding revenue generated from our partners; the timing, investment and associated activities involved in developing, obtaining regulatory approval for, launching, and commercializing our products and product candidates, such as apraglutide, by us and our partners worldwide; our ability and the ability of our partners to secure and maintain adequate reimbursement for our products; our ability and the ability of our partners and third parties to manufacture and distribute sufficient amounts of linaclotide active pharmaceutical ingredient, finished drug product and finished goods, as applicable, on a commercial scale; our expectations regarding U.S. and foreign regulatory requirements for our products and our product candidates, such as apraglutide, including our post-approval development and regulatory requirements; the ability of apraglutide and our other product candidates to meet existing or future regulatory standards; the safety profile and related adverse events of our products and our product candidates; the therapeutic benefits and effectiveness of our products and our product candidates and the potential indications and market opportunities therefor; our ability and the ability of our partners to obtain and maintain intellectual property protection for our products and our product candidates and the strength thereof, as well as Abbreviated New Drug Applications filed by generic drug manufacturers and potential U.S. Food and Drug Administration approval thereof, and associated patent infringement suits that we have filed or may file, or other action that we may take against such companies, and the timing and resolution thereof; our ability and the ability of our partners to perform our respective obligations under our collaboration, license and other agreements, and our ability to achieve milestone and other payments under such agreements; our plans with respect to the development, manufacture or sale of our product candidates and the associated timing thereof, including the design and results of pre-clinical studies and clinical trials; the in-licensing or acquisition of externally discovered businesses, products or technologies, or other strategic transactions, as well as partnering arrangements, including the timing of potential clinical development and regulatory milestones and expectations relating to the completion of, or the realization of the expected benefits from, such transactions; our expectations as to future financial performance, revenues, expense levels, payments, cash flows, profitability, tax obligations, capital raising and liquidity sources, and real estate needs, as well as the timing and drivers thereof, and internal control over financial reporting; our ability to repay our outstanding indebtedness when due, or redeem or repurchase all or a portion of such debt, as well as the potential benefits of the capped call transactions described herein; asset impairments, and the drivers thereof, and purchase commitments; the status of government regulation in the life sciences industry, particularly with respect to healthcare reform and drug pricing; trends and challenges in our potential markets; trends and challenges in our potential markets; and our ability to attract, motivate and retain key personnel.

Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. These forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks and uncertainties, including those related to the effectiveness of development and commercialization efforts by us and our partners; preclinical and clinical development, manufacturing and formulation development of linaclotide, apraglutide, IW-3300 and our other product candidates; the risk of uncertainty relating to pricing and reimbursement policies in the U.S., which, if not favorable for our products, could hinder or prevent our products’ commercial success; the risk that clinical programs and studies, including for linaclotide pediatric programs, apraglutide and IW-3300, may not progress or develop as anticipated, including that studies are delayed or discontinued for any reason, such as safety, tolerability, enrollment, manufacturing, economic or other reasons; the risk that findings from our completed nonclinical studies and clinical trials may not be replicated in later studies and clinical trials may not be predictive of the results we may obtain in later-stage clinical trials or of the likelihood of regulatory approval; the risk that apraglutide will not be approved by the U.S. Food and Drug Administration or other regulatory agencies; the risk of competition or that new products may emerge that provide different or better alternatives for treatment of the conditions that our products are approved to treat; the risk that we are unable to execute on our strategy to in-license externally developed products or

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product candidates; the risk that we are unable to successfully partner with other companies to develop and commercialize products or product candidates; the risk that healthcare reform and other governmental and private payor initiatives may have an adverse effect upon or prevent our products’ or product candidates’ commercial success; the efficacy, safety and tolerability of linaclotide and our product candidates; the risk that the commercial and therapeutic opportunities for LINZESS, apraglutide or our other product candidates are not as we expect; decisions by regulatory and judicial authorities; the risk we may never get additional patent protection for linaclotide, apraglutide and other product candidates, that patents for linaclotide, apraglutide or other products may not provide adequate protection from competition, or that we are not able to successfully protect such patents; the risk that we are unable to manage our expenses or cash use, or are unable to commercialize our products as expected; the risk that the development of any of our linaclotide pediatric programs, apraglutide and/or IW-3300 is not successful or that any of our product candidates does not receive regulatory approval or is not successfully commercialized; outcomes in legal proceedings to protect or enforce the patents relating to our products and product candidates, including abbreviated new drug application litigation; the risk that financial and operating results may differ from our projections; developments in the intellectual property landscape; challenges from and rights of competitors or potential competitors; the risk that our planned investments do not have the anticipated effect on our company revenues; developments in accounting guidance or practice; Ironwood’s or AbbVie’s accounting practices, including reporting and settlement practices as between Ironwood and AbbVie; the risk that our indebtedness could adversely affect our financial condition or restrict our future operations; and the additional risks identified under the heading “Part I, Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission, or the SEC, on February 16, 2024. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur as contemplated, and actual results could differ materially from those anticipated or implied by the forward-looking statements.

You should not unduly rely on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report on Form 10-Q.

NOTE REGARDING TRADEMARKS

LINZESS^® and CONSTELLA^® are trademarks of Ironwood Pharmaceuticals, Inc. Any other trademarks referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. All rights reserved.

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	IRONWOOD PHARMACEUTICALS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2024 TABLE OF CONTENTS	Page

	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	5
	Condensed Consolidated Statements of Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023	6
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023	7
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2024 and 2023	8
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	41


	PART II — OTHER INFORMATION
Item 1A.	Risk Factors	43
Item 5.	Other Information	43
Item 6.	Exhibits	43

	Signatures	45

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Ironwood Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(unaudited)


	September 30,		December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	88,211	$	92,154
Accounts receivable, net		76,202		129,122
Prepaid expenses and other current assets		14,191		12,012
Total current assets		178,604		233,288
Property and equipment, net		4,795		5,585
Operating lease right-of-use assets		11,430		12,586
Intangible assets, net		3,067		3,682
Deferred tax assets		185,338		212,324
Other assets		6,285		3,608
Total assets	$	389,519	$	471,073
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	3,236	$	7,830
Accrued research and development costs		9,408		21,331
Accrued expenses and other current liabilities		33,566		44,254
Current portion of operating lease liabilities		3,173		3,126
Current portion of convertible senior notes		—		199,560
Total current liabilities		49,383		276,101
Operating lease obligations, net of current portion		12,882		14,543
Convertible senior notes, net of current portion		198,817		198,309
Revolving credit facility		400,000		300,000
Other liabilities		39,771		28,415
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value, 75,000,000 shares authorized, no shares issued and outstanding		—		—
Class A Common Stock, $0.001 par value, 500,000,000 shares authorized and 160,015,888 shares issued and outstanding at September 30, 2024 and 500,000,000 shares authorized and 156,354,238 shares issued and outstanding at December 31, 2023		160		156
Additional paid-in capital		1,390,549		1,355,195
Accumulated deficit		(1,699,991)		(1,698,615)
Accumulated other comprehensive loss		(2,052)		(3,031)
Total stockholders’ deficit		(311,334)		(346,295)
Total liabilities and stockholders’ deficit	$	389,519	$	471,073

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Ironwood Pharmaceuticals, Inc.

Condensed Consolidated Statements of Income (Loss)

(In thousands, except per share amounts)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues:
Collaborative arrangements revenue	$	91,592	$	113,739	$	260,865	$	325,182
Total revenues		91,592		113,739		260,865		325,182
Costs and expenses:
Research and development		29,827		32,985		86,030		80,409
Selling, general and administrative		36,113		36,046		110,682		119,647
Restructuring		16		4,685		2,520		17,696
Acquired in-process research and development		—		—		—		1,090,449
Total costs and expenses		65,956		73,716		199,232		1,308,201
Income (loss) from operations		25,636		40,023		61,633		(983,019)
Other income (expense):
Interest expense and other financing costs		(9,419)		(9,839)		(24,120)		(13,206)
Interest and investment income		1,152		1,748		3,690		17,777
Gain on derivatives		—		—		—		19
Other income (expense), net		(8,267)		(8,091)		(20,430)		4,590
Income (loss) before income taxes		17,369		31,932		41,203		(978,429)
Income tax expense		(13,723)		(17,982)		(42,579)		(51,385)
Net income (loss)		3,646		13,950		(1,376)		(1,029,814)
Less: Net loss attributable to noncontrolling interests		—		(1,371)		—		(28,662)
Net income (loss) attributable to Ironwood Pharmaceuticals, Inc.	$	3,646	$	15,321	$	(1,376)	$	(1,001,152)


Net income (loss) per share attributable to Ironwood Pharmaceuticals, Inc. stockholders — basic	$	0.02	$	0.10	$	(0.01)	$	(6.45)
Net income (loss) per share attributable to Ironwood Pharmaceuticals, Inc. stockholders — diluted	$	0.02	$	0.09	$	(0.01)	$	(6.45)

Weighted average shares used in computing net income (loss) per share attributable to Ironwood Pharmaceuticals, Inc. stockholders — basic:		159,706		155,886		158,810		155,240
Weighted average shares used in computing net income (loss) per share attributable to Ironwood Pharmaceuticals, Inc. stockholders — diluted:		160,232		186,891		158,810		155,240

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Ironwood Pharmaceuticals, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net income (loss) attributable to Ironwood Pharmaceuticals, Inc.	$	3,646	$	15,321	$	(1,376)	$	(1,001,152)
Other comprehensive income (loss), net of tax:
Currency translation adjustment		(1,021)		(307)		917		(307)
Defined benefit pension plan		(561)		(464)		62		(464)
Total other comprehensive income (loss), net of tax		(1,582)		(771)		979		(771)
Less: Other comprehensive loss attributable to noncontrolling interest		—		(19)		—		(19)
Comprehensive income (loss) attributable to Ironwood Pharmaceuticals, Inc.	$	2,064	$	14,569	$	(397)	$	(1,001,904)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Ironwood Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except share amounts)

(unaudited)


								Accumulated		Ironwood
	Class A			Additional				other		Pharmaceuticals, Inc.				Total
	Common Stock			paid-in		Accumulated		comprehensive		stockholders’		Noncontrolling		stockholders’
	Shares	Amount		capital		deficit		loss		equity (deficit)		interests		equity (deficit)
Balance at December 31, 2023	156,354,238	$	156	$	1,355,195	$	(1,698,615)	$	(3,031)	$	(346,295)	$	—	$	(346,295)
Issuance of common stock related to share-based awards	2,602,885		3		10,058		—		—		10,061		—		10,061
Share-based compensation expense related to share-based awards and employee stock purchase plan	—		—		8,385		—		—		8,385		—		8,385
Taxes paid related to net share settlement of share-based awards	—		—		(616)		—		—		(616)		—		(616)
Net loss	—		—		—		(4,162)		—		(4,162)		—		(4,162)
Other comprehensive income, net of tax	—		—		—		—		2,109		2,109		—		2,109
Balance at March 31, 2024	158,957,123	$	159	$	1,373,022	$	(1,702,777)	$	(922)	$	(330,518)	$	—	$	(330,518)
Issuance of common stock related to share-based awards and employee stock purchase plan	781,878		1		749		—		—		750		—		750
Share-based compensation expense related to share-based awards and employee stock purchase plan	—		—		8,570		—		—		8,570		—		8,570
Taxes paid related to net share settlement of share-based awards	—		—		(121)		—		—		(121)		—		(121)
Net loss	—		—		—		(860)		—		(860)		—		(860)
Other comprehensive income, net of tax	—		—		—		—		452		452		—		452
Balance at June 30, 2024	159,739,001	$	160	$	1,382,220	$	(1,703,637)	$	(470)	$	(321,727)	$	—	$	(321,727)
Issuance of common stock related to share-based awards	276,887		—		—		—		—		—		—		—
Share-based compensation expense related to share-based awards and employee stock purchase plan	—		—		8,329		—		—		8,329		—		8,329
Net income	—		—		—		3,646		—		3,646		—		3,646
Other comprehensive loss, net of tax	—		—		—		—		(1,582)		(1,582)		—		(1,582)
Balance at September 30, 2024	160,015,888	$	160	$	1,390,549	$	(1,699,991)	$	(2,052)	$	(311,334)	$	—	$	(311,334)

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								Accumulated		Ironwood
	Class A			Additional				other		Pharmaceuticals, Inc.				Total
	Common Stock			paid-in		Accumulated		comprehensive		stockholders’		Noncontrolling		stockholders’
	Shares	Amount		capital		deficit		loss		equity (deficit)		interests		equity (deficit)
Balance at December 31, 2022	154,026,949	$	154	$	1,348,600	$	(696,376)	$	—	$	652,378	$	—	$	652,378
Issuance of common stock related to share-based awards	1,319,154		1		1,628		—		—		1,629		—		1,629
Share-based compensation expense related to share-based awards and employee stock purchase plan	—		—		7,131		—		—		7,131		—		7,131
Net income	—		—		—		45,714		—		45,714		—		45,714
Balance at March 31, 2023	155,346,103	$	155	$	1,357,359	$	(650,662)	$	—	$	706,852	$	—	$	706,852
Issuance of common stock related to share-based awards and employee stock purchase plan	681,545		1		1,365		—		—		1,366		—		1,366
Share-based compensation expense related to share-based awards and employee stock purchase plan	—		—		8,265		—		—		8,265		—		8,265
Noncontrolling interests on acquisition of VectivBio Holding AG	—		—		—		—		—		—		26,218		26,218
Net loss	—		—		—		(1,062,187)		—		(1,062,187)		(27,291)		(1,089,478)
Balance at June 30, 2023	156,027,648	$	156	$	1,366,989	$	(1,712,849)	$	—	$	(345,704)	$	(1,073)	$	(346,777)
Issuance of common stock related to share-based awards	98,028		—		13		—		—		13		—		13
Share-based compensation expense related to share-based awards and employee stock purchase plan	—		—		7,906		—		—		7,906		—		7,906
Net income (loss)	—		—		—		15,321		—		15,321		(1,371)		13,950
Other comprehensive loss, net of tax	—		—		—		—		(752)		(752)		(19)		(771)
Balance at September 30, 2023	156,125,676	$	156	$	1,374,908	$	(1,697,528)	$	(752)	$	(323,216)	$	(2,463)	$	(325,679)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Ironwood Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Nine Months Ended
	September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(1,376)	$	(1,029,814)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,526		1,063
Loss on disposal of property and equipment		75		—
Share-based compensation expense		25,284		23,301
Change in fair value of note hedge warrants		—		(19)
Non-cash interest expense		1,489		1,473
Acquired in-process research and development		—		1,090,449
Deferred income taxes		26,986		41,316
Changes in assets and liabilities:
Accounts receivable, net		52,920		5,501
Prepaid expenses and other current assets		(2,179)		(1,881)
Operating lease right-of-use assets		1,156		1,067
Other assets		(971)		(354)
Accounts payable and accrued expenses		(14,456)		24,927
Accrued research and development costs		(11,923)		(11,470)
Operating lease liabilities		(1,614)		(1,479)
Other liabilities		11,418		3,513
Net cash provided by operating activities		88,335		147,593
Cash flows from investing activities:
Purchases of property and equipment		(142)		(62)
Acquisition of VectivBio Holding AG, net of cash acquired		—		(1,022,068)
Net cash used in investing activities		(142)		(1,022,130)
Cash flows from financing activities:
Proceeds from exercise of stock options and employee stock purchase plan		10,810		5,359
Taxes paid related to net share settlement of share-based awards		(737)		—
Repayment of 2024 Convertible Notes		(200,000)		—
Proceeds from revolving credit facility		150,000		400,000
Costs associated with revolving credit facility		(2,156)		(2,295)
Repayments of revolving credit facility		(50,000)		(75,000)
Net cash provided by (used in) financing activities		(92,083)		328,064
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(53)		(3)
Net decrease in cash, cash equivalents and restricted cash		(3,943)		(546,476)
Cash, cash equivalents and restricted cash, beginning of period		92,154		657,938
Cash, cash equivalents and restricted cash, end of period	$	88,211	$	111,462

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	88,211	$	110,164
Restricted cash		—		1,298
Total cash, cash equivalents, and restricted cash	$	88,211	$	111,462

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Ironwood Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Nature of Business

Ironwood Pharmaceuticals, Inc. (“Ironwood” or the “Company”) is a gastrointestinal (“GI”) healthcare company on a mission to advance the treatment of GI diseases and redefine the standard of care for GI patients. The Company is focused on the development and commercialization of innovative GI product opportunities in areas of significant unmet need, leveraging its demonstrated expertise and capabilities in GI diseases.

LINZESS^® (linaclotide), the Company’s commercial product, is the first product approved by the United States Food and Drug Administration (the “U.S. FDA”) in a class of GI medicines called guanylate cyclase type C agonists (“GC-C agonists”) and is indicated for adult men and women suffering from irritable bowel syndrome with constipation (“IBS-C”) or chronic idiopathic constipation (“CIC”) and for pediatric patients ages 6-17 years-old suffering from functional constipation (“FC”). LINZESS is available to adult men and women suffering from IBS-C or CIC in the United States (the “U.S.”), Mexico and Saudi Arabia, adult men and women suffering from IBS-C or chronic constipation in Japan, and IBS-C in China, and pediatric patients ages 6-17 years old with FC in the U.S. Linaclotide is available under the trademarked name CONSTELLA^® to adult men and women suffering from IBS-C or CIC and pediatric patients ages 6-17 years old with FC in Canada, and to adult men and women suffering from IBS-C in certain European countries.

The Company has strategic partnerships with leading pharmaceutical companies to support the development and commercialization of linaclotide throughout the world. The Company and its partner, AbbVie Inc. (together with its affiliates, “AbbVie”), began commercializing LINZESS in the U.S. in December 2012. Under the Company’s collaboration for North America with AbbVie, total net sales of LINZESS in the U.S., as recorded by AbbVie, are reduced by commercial costs incurred by each party, and the resulting amount is shared equally between the Company and AbbVie. Additionally, development costs are shared equally between the Company and AbbVie.

Outside of the U.S., the Company earns royalties as a percentage of net sales of products containing linaclotide as an active ingredient by the Company’s collaboration partners. AbbVie has an exclusive license from the Company to develop and commercialize linaclotide in all countries other than China (including Hong Kong and Macau), Japan and the countries and territories of North America (the “AbbVie License Territory”). In addition, AbbVie has exclusive rights to commercialize linaclotide in Canada as CONSTELLA and in Mexico as LINZESS. Astellas Pharma Inc. (“Astellas”), the Company’s partner in Japan, has an exclusive license to develop, manufacture, and commercialize linaclotide in Japan. AstraZeneca AB (together with its affiliates) (“AstraZeneca”), the Company’s partner in China, has the exclusive right to develop, manufacture, and commercialize products containing linaclotide in China (including Hong Kong and Macau) (the “AstraZeneca License Territory”).

In June 2023, the Company completed a tender offer to purchase 98% of the outstanding ordinary shares of VectivBio Holding AG (“VectivBio”), a clinical-stage biotechnology company focused on the discovery and development of treatments for severe, rare GI conditions for which there is a significant unmet medical need, at a price per share of $17.00, net to the shareholders of VectivBio in cash, without interest and subject to any applicable withholding taxes (the “VectivBio Acquisition”). In December 2023, the Company completed a squeeze-out merger under Swiss law to acquire all remaining outstanding ordinary shares in cash at a price per share of $17.00, and VectivBio Holding AG was merged with and into Ironwood Pharmaceuticals GmbH, a wholly-owned subsidiary of Ironwood organized under the laws of Switzerland (the “Squeeze-out Merger”). Through the acquisition, the Company is advancing apraglutide, a next-generation, synthetic peptide analog of glucagon-like peptide-2, for rare GI diseases, including short bowel syndrome with intestinal failure (“SBS-IF”), a severe malabsorptive condition. In February 2024, the Company announced positive topline results from its pivotal Phase III clinical trial, STARS, which evaluated the efficacy and safety of once-weekly subcutaneous apraglutide in reducing parenteral support dependency in adult patients with SBS-IF, and plans to submit a new drug application and other regulatory filings for apraglutide for use in adult patients with SBS who are dependent on parenteral support.

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The Company had a collaboration and license option agreement (the “COUR Collaboration Agreement”) with COUR Pharmaceutical Development Company, Inc. (“COUR”), a biotechnology company developing novel immune-modifying nanoparticles to treat autoimmune diseases. The COUR Collaboration Agreement granted the Company an option (the “Option”) to acquire an exclusive license to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104, a potential treatment for primary biliary cholangitis (“PBC”), a rare autoimmune disease targeting the liver. In the third quarter of 2024, the Company received from COUR the topline data from COUR’s Phase II clinical study for the treatment of PBC. In September 2024, the Company notified COUR of the decision not to exercise the option to acquire an exclusive license to CNP-104. As a result, the collaboration and license option agreement between the Company and COUR has terminated, and the Company retains no rights and has no obligations related to CNP-104.

These and other agreements are more fully described in Note 5, Collaboration, License and Other Agreements, to these condensed consolidated financial statements.

The Company is advancing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, such as interstitial cystitis / bladder pain syndrome (“IC/BPS”) and endometriosis. The Company has decided to end further recruitment for the Phase II proof of concept study in IC/BPS and analyze the data once all currently enrolled patients complete the full 12-week study assessment, which will inform the next steps on the program.

The Company was incorporated in Delaware on January 5, 1998 as Microbia, Inc. On April 7, 2008, the Company changed its name to Ironwood Pharmaceuticals, Inc. To date, the Company has dedicated a majority of its activities to the research, development and commercialization of linaclotide, as well as to the research and development of its other product candidates.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements and the related disclosures are unaudited and have been prepared in accordance with accounting principles generally accepted in the U.S. Additionally, certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (“SEC”) on February 16, 2024 (the “2023 Annual Report on Form 10-K”).

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments considered necessary for a fair statement of the Company’s financial position as of September 30, 2024, and the results of its operations for the three and nine months ended September 30, 2024 and 2023, its statements of stockholders’ equity (deficit) for the three and nine months ended September 30, 2024 and 2023, and its cash flows for the nine months ended September 30, 2024 and 2023. The results of operations for the three and nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for the full year or any other subsequent interim period.

Principles of Consolidation

The accompanying condensed consolidated financial statements as of September 30, 2024 include the accounts of Ironwood and its wholly-owned subsidiaries, Ironwood Pharmaceuticals Securities Corporation, Ironwood Pharmaceuticals GmbH, VectivBio AG, GlyPharma Therapeutic Inc. (“GlyPharma”), and VectivBio US, Inc. All intercompany transactions and balances are eliminated in consolidation.

For consolidated entities in which the Company owns less than 100% of the outstanding shares, the Company records net income (loss) and comprehensive income (loss) attributable to noncontrolling interests in its consolidated statements of income (loss) and comprehensive income (loss), respectively, equal to the percentage of the common stock ownership interest retained in such entities by the noncontrolling parties. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity.

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Use of Estimates

The preparation of condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles requires the Company’s management to make estimates and judgments that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. On an ongoing basis, the Company’s management evaluates its estimates, judgments and methodologies. Estimates and assumptions in the condensed consolidated financial statements include those related to fair value of assets acquired and liabilities assumed in acquisitions; revenue recognition; accounts receivable; useful lives of long-lived assets; impairment of long-lived assets, including goodwill; valuation procedures for right-of-use assets and operating lease liabilities; income taxes, including uncertain tax positions and the valuation allowance for deferred tax assets; research and development expenses; contingencies; defined benefit pension liabilities; and share-based compensation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, in the 2023 Annual Report on Form 10-K. During the three and nine months ended September 30, 2024, the Company did not adopt any additional significant accounting policies.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company did not adopt any new accounting pronouncements during the three and nine months ended September 30, 2024 that had a material effect on its condensed consolidated financial statements.

In October 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements: Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). The guidance in ASU 2023-06 aligns the disclosure and presentation requirements in the FASB Accounting Standards Codification with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC's removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. Any amendments not removed by the SEC by June 30, 2027 will not become effective. The amendments adopted in ASU 2023-06 will be applied prospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-06 may have on its disclosures in its condensed consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) (“ASU 2023-07”). The guidance in ASU 2023-07 expands prior reportable segment disclosure requirements by requiring entities to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and details of how the CODM uses financial reporting to assess their segment’s performance. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The ASU is required to be applied retrospectively upon adoption. The Company is currently evaluating the impact that the adoption of ASU 2023-07 may have on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of annual income tax disclosures by requiring greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. Upon adoption, ASU 2023-09 may be applied prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its disclosures in its annual consolidated financial statements.

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In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). The guidance in ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense captions. The standard is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Upon adoption, ASU 2024-03 may be applied prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2024-03 may have on its disclosures in its condensed consolidated financial statements.

Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the condensed consolidated financial statements upon future adoption.

3. Acquisitions

As described in Note 1, Nature of Business, on June 29, 2023, the Company completed the VectivBio Acquisition. The aggregate consideration paid by the Company to acquire the shares accepted for payment was approximately $1.2 billion. The Company financed the acquisition through proceeds from the borrowings under the Revolving Credit Agreement (as defined elsewhere below) and cash on hand.

The total purchase consideration for VectivBio is as follows (in thousands):


Cash consideration paid to selling shareholders⁽¹⁾	$	1,041,391
Cash consideration paid to settle VectivBio restricted stock units (“RSUs”) and stock options ⁽²⁾		78,003
Cash consideration paid to settle VectivBio warrants⁽³⁾		3,720
Transaction costs		26,270
Fair value of noncontrolling interest⁽⁴⁾		26,218
Total purchase consideration	$	1,175,602

(1)	The cash consideration paid to selling shareholders was determined based on the total number of the outstanding ordinary shares of VectivBio (the “VectivBio Shares”) tendered at closing of 61,258,315 at a per share price of $17.00.

(2)	The cash consideration paid to settle VectivBio RSUs and stock options issued under VectivBio’s equity incentive plans was determined based on the total number of underlying VectivBio Shares of 8,904,171 at a per share price of $17.00, less the exercise price for stock options.

(3)	The cash consideration paid to settle VectivBio warrants was determined based on the total number of VectivBio warrant shares outstanding at close of 324,190 at a per share price of $11.4757 calculated as the per share price of $17.00, less the exercise price of $5.5243 per share.

(4)	The fair value of the noncontrolling interest was determined based on the total number of VectivBio Shares outstanding at closing of 1,547,723 at the closing date of the tender offer, using the VectivBio closing share price on June 28, 2023 of $16.94.

On December 12, 2023, the Company completed the Squeeze-out Merger and paid $26.3 million to acquire all remaining outstanding VectivBio Shares in cash. As of December 31, 2023, there was no remaining noncontrolling interest in VectivBio.

The VectivBio Acquisition was accounted for as an asset acquisition under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable in-process research and development (“IPR&D”) asset, apraglutide, VectivBio’s lead investigational asset. Apraglutide is a next-generation, long-acting synthetic GLP-2 analog being developed for a range of rare GI diseases for the potential treatment of SBS-IF. The Company recognized the acquired assets and assumed liabilities based on the consideration paid, inclusive of transaction costs, on a relative fair value basis. In accordance with the accounting for asset acquisitions, an entity that acquires IPR&D assets in an asset acquisition follows the guidance in ASC Topic 730 Research and Development, which requires that both tangible and intangible identifiable research and development assets with no alternative future use be allocated a portion of the consideration transferred and recorded as research and development expense at the acquisition date. As a result, the Company recorded approximately $1.1 billion in acquired IPR&D expense related to the apraglutide IPR&D asset during the second quarter of 2023.

The following is the allocation of the purchase consideration based on the relative fair value of assets acquired and liabilities assumed by the Company (in thousands):


Assets acquired
Cash and cash equivalents	$	123,340

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Prepaid expenses and other current assets		10,867
Property and equipment		126
Intangible assets		4,100
Acquired in-process research and development		1,090,449
Total assets acquired	$	1,228,882
Liabilities assumed
Current liabilities		37,377
Other liabilities		15,903
Total liabilities assumed	$	53,280

Net assets acquired	$	1,175,602

Acquisition-related expenses include direct and incremental costs incurred in connection with the transaction, including integration-related professional services and employee retention-related benefits. Acquisition-related expenses exclude transaction costs included in the computation of total consideration paid. The Company tracked and disclosed acquisition-related expenses incurred through the end of the second quarter of 2024. For the six months ended June 30, 2024, the Company incurred acquisition-related expenses of $3.6 million, of which $1.1 million were included in selling, general and administrative expenses and $2.5 million were included in restructuring expense within the Company’s condensed consolidated statement of income (loss). The Company incurred acquisition-related expenses of $8.5 million and $53.8 million, respectively, for the three and nine months ended September 30, 2023, of which $3.7 million and $24.5 million, respectively, were included in selling, general and administrative expenses, $