New Drug on Horizon: Linaclotide for Chronic Constipation and Irritable Bowel Syndrome - Constipation (Ironwood Pharmaceutical: IRWD)

Ironwood Pharmaceuticals, Inc., (NASDAQ: IRWD) an entrepreneurial pharmaceutical company, discovers, develops, and commercializes human medicines.

Its lead product candidate, linaclotide, is a guanylate cyclase type-C agonist that completed Phase III clinical trials for the treatment of patients with irritable bowel syndrome with constipation (IBS-C) and chronic constipation (CC).

 Ironwood Pharmaceuticals (NASDAQ: IRWD) has collaboration and license agreements with Forest Laboratories, Inc. to co-develop and co-market linaclotide in North America; Almirall, S.A to develop and commercialize linaclotide for the treatment of IBS-C, CC, and other lower gastrointestinal conditions; and Astellas Pharma Inc. to develop and commercialize linaclotide for the treatment of IBS-C, CC, and other gastrointestinal conditions in Japan, South Korea, Taiwan, Thailand, the Philippines, and Indonesia.

More about Linaclotide:

Linaclotide is a GC-C agonist in development for the treatment of irritable bowel syndrome with constipation (IBS-C) and chronic constipation (CC).

Complications of chronic constipation include haemorrhoids, faecal impaction (shown here on CT scan) and intestinal perforation | Photo: SPL

The clinical efficacy portion of the linaclotide development program is complete and two long-term safety studies are still ongoing.

Across four Phase 3 efficacy trials in patients with IBS-C or CC, linaclotide met all primary and secondary endpoints encompassing abdominal and bowel symptoms.

In these trials, diarrhea was the most commonly reported adverse event and the most commonly reported adverse event that led to study discontinuation. Most occurrences of diarrhea were reported as mild to moderate. More than 3,200 patients have enrolled in one of two ongoing 18-month open label safety studies.

In April 2012, US FDA notified the companies that it will require a three-month extension to complete its review of the data supporting the New Drug Application (NDA) for linaclotide for the treatment of irritable bowel syndrome with constipation (IBS-C) and chronic constipation (CC).

An additional analysis of existing data was recently requested by the FDA to further characterize the relative effect of the two doses of linaclotide that were studied in the Phase 3 CC clinical trials.

Since this analysis was submitted to the FDA within three months of the user fee goal date, the date has been extended by three months, in accordance with applicable regulation. No new data have been requested by the agency to complete the review. FDA action is now expected by September 2012. Ironwood and Forest continue to plan for a 2012 launch.

Ironwood is a relatively mid-cap pharmaceutical company with market capital of $1.43B as of July 2012. It currently has revenue of $71.22M with quarterly revenue growth of 29.70% and gross profit of $65.87M. In addition, it has total cash of $157.65millon which equates to about 1.47 cash per share. If the Linaclotide gets an FDA approval, Ironwood Pharmaceutical company will get $85M milestone payment from Forest Laboratories and $20M milestone from Almirall.

In my opinion, they have enough cash to reach their anticipated PDUFA date on September 2012. According to their recent 2^nd quarter highlights, they also have European MAA under review which we should be able to get a decision in the 2^nd half of 2012. They are also planning on gaining more market share by expanding global access to patient by filing CTA (FDA of China) which is also accepted for review.

I believe that management is very confident in launching the product commercially in 2^nd half of 2012. During Digestive Disease Week of 2012 which showcases more than 5,000 abstracts and lectures in Gastrointestinal research, medicine and technology also had positive reviews for the Linaclotide.

Market Need

IBS-C and Chronic constipation (CC) are chronic conditions characterized by frequent and bothersome abdominal and/or constipation symptoms. Patients with IBS-C experience frequent and recurrent abdominal pain and/or discomfort and constipation symptoms, such as infrequent bowel movements, hard/lumpy stools, and straining during defecation.

In 2010, approximately 40 million people in the U.S. suffered from symptoms of IBS-C or CC, of whom an estimated 18 million patients sought medical care. Patients are often treated with fiber and laxatives; however, according to market research, over 70 percent are not satisfied with current treatment options. This large, highly symptomatic, and dissatisfied patient population could benefit from new treatments.

In my opinion, this company should fare well in upcoming months. I definitely see an upside in stock price from this levels. After reading the recently published randomized trial results (http://www.nejm.org/doi/full/10.1056/NEJMoa1010863), I feel more confident in approval of this drug. There is definitely a need for new treatment in IBS-C and CC since current standard of therapy lacks patient satisfaction. After close consideration and research, my price target for this company is $16-17 in upcoming months with relative volatility due to its midcap.

Disclosure: May own shares in this company in next 72hours.

Sources: Ironwood Pharmaceutical, New England Journal of Medicine, Yahoo Finance, Reuters, Google images