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Why Is Ironwood (IRWD) Up 6.9% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) . Shares have added about 6.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ironwood First Quarter Loss Wider than Expected, Sales Miss
Ironwood reported first-quarter 2017 adjusted loss of $0.33 per share, significantly wider than both the Zacks Consensus Estimate of a loss of $0.19 and the year-ago loss of $0.08 per share
Total revenue (collaborative revenues) in the quarter amounted to $52.2 million, down 20.9% from the year-ago period and also below the Zacks Consensus Estimate of $72 million. In the last-year’s first quarter quarter, the company recorded a milestone payment of $15 million from Astellas for the development of Linzess to treat adults with IBS-C in Japan, which was absent this quarter. Meanwhile, lower-than-expected sales of Linzess hurt the top line in the quarter.
The Quarter in Detail
Linzess generated U.S. net sales of $147.6 million, as reported by partner Allergan, down 15% sequentially but up 7.7% year over year.
Ironwood and Allergan equally share brand collaboration profits or losses. Ironwood's share of the net profits from the sales of Linzess in the U.S. (included in collaborative revenues) was $49.5 million in the first quarter, down 21.2% sequentially.
Differences in trade buying patterns - which resulted in destocking of approximately $20 million in inventory during the first quarter - and seasonality hurt sales of Linzess in the quarter.
According to data provided by IMS Health, Linzess prescriptions filled during the quarter crossed 700,000, up 17% from the year-ago period. Total Linzess volume growth included a greater than 20% increase in capsules.
Linzess received approval for IBS-C indication in Japan in Dec 2016 and was subsequently launched in Mar 2017.
Management was encouraged by the early uptake of the 72 mcg dose, which was also launched in Mar 2017. The company said that more than 70% of the patients treated with the 72 mcg dose were new Linzess patients previously on OTC drugs.
Zurampic raked in sales of $0.3 million in the quarter. Zurampic prescriptions filled during the quarter were 900, higher than 371 prescriptions filled in the previous quarter. The uptake of the drug has been slow and management expects sales to be nominal in 2017 as it works on educating physicians and patients as well as secure payer access.
During the reported quarter, selling and administrative (SG&A) expenses increased 53.6% to $55.6 million, primarily due to investments for the launch of Zurampic.
Research and development (R&D) expenses were $33.7 million, up 6% from the year-ago period due to costs associated with pipeline development.
2017 Guidance
The company now expects to use less than $100 million for operations in 2017, much higher than 2016 levels, given the full-year of commercial expenses related to the launch of Zurampic and to support the launch of Duzallo and pipeline advancement.
R&D expenses and SG&A expenses are expected in a range of $145–$160 million and $235–$250 million, respectively.
Total marketing and sales expenses for Linzess are still expected to be around the mid-to-high end of the $250–$280 million range.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimate. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 16.9% due to these changes.
Ironwood Pharmaceuticals, Inc. Price and Consensus
At this time, Ironwood's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. Following the exact same course, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
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Why Is Ironwood (IRWD) Up 6.9% Since the Last Earnings Report?
It has been about a month since the last earnings report for Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) . Shares have added about 6.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ironwood First Quarter Loss Wider than Expected, Sales Miss
Ironwood reported first-quarter 2017 adjusted loss of $0.33 per share, significantly wider than both the Zacks Consensus Estimate of a loss of $0.19 and the year-ago loss of $0.08 per share
Total revenue (collaborative revenues) in the quarter amounted to $52.2 million, down 20.9% from the year-ago period and also below the Zacks Consensus Estimate of $72 million. In the last-year’s first quarter quarter, the company recorded a milestone payment of $15 million from Astellas for the development of Linzess to treat adults with IBS-C in Japan, which was absent this quarter. Meanwhile, lower-than-expected sales of Linzess hurt the top line in the quarter.
The Quarter in Detail
Linzess generated U.S. net sales of $147.6 million, as reported by partner Allergan, down 15% sequentially but up 7.7% year over year.
Ironwood and Allergan equally share brand collaboration profits or losses. Ironwood's share of the net profits from the sales of Linzess in the U.S. (included in collaborative revenues) was $49.5 million in the first quarter, down 21.2% sequentially.
Differences in trade buying patterns - which resulted in destocking of approximately $20 million in inventory during the first quarter - and seasonality hurt sales of Linzess in the quarter.
According to data provided by IMS Health, Linzess prescriptions filled during the quarter crossed 700,000, up 17% from the year-ago period. Total Linzess volume growth included a greater than 20% increase in capsules.
Linzess received approval for IBS-C indication in Japan in Dec 2016 and was subsequently launched in Mar 2017.
Management was encouraged by the early uptake of the 72 mcg dose, which was also launched in Mar 2017. The company said that more than 70% of the patients treated with the 72 mcg dose were new Linzess patients previously on OTC drugs.
Zurampic raked in sales of $0.3 million in the quarter. Zurampic prescriptions filled during the quarter were 900, higher than 371 prescriptions filled in the previous quarter. The uptake of the drug has been slow and management expects sales to be nominal in 2017 as it works on educating physicians and patients as well as secure payer access.
During the reported quarter, selling and administrative (SG&A) expenses increased 53.6% to $55.6 million, primarily due to investments for the launch of Zurampic.
Research and development (R&D) expenses were $33.7 million, up 6% from the year-ago period due to costs associated with pipeline development.
2017 Guidance
The company now expects to use less than $100 million for operations in 2017, much higher than 2016 levels, given the full-year of commercial expenses related to the launch of Zurampic and to support the launch of Duzallo and pipeline advancement.
R&D expenses and SG&A expenses are expected in a range of $145–$160 million and $235–$250 million, respectively.
Total marketing and sales expenses for Linzess are still expected to be around the mid-to-high end of the $250–$280 million range.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimate. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 16.9% due to these changes.
Ironwood Pharmaceuticals, Inc. Price and Consensus
Ironwood Pharmaceuticals, Inc. Price and Consensus | Ironwood Pharmaceuticals, Inc. Quote
VGM Scores
At this time, Ironwood's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. Following the exact same course, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.