Ironwood Pharmaceuticals, Inc. - Class A 2026 Q2 Earnings Call

Please go ahead. Good morning, and thanks for joining our second quarter 2026 investor update.

A press release issued this morning highlighting Q2 results can be found on our website. Today's call and accompanying slides include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current safe harbor statement slide, as well as under the heading Risk Factors in our annual report, Form 10-K, for the year ended December 31st, 2025, and in our subsequent SEC filings. All forward-looking statements speak as of the date of this presentation, we undertake no obligation to update such statements. Also included are non-GAAP financial measures, which should be considered only as a supplement to and not a substitute for or superior to GAAP measures.

To the extent applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures. During today's call, Thomas McCourt, our Chief Executive Officer, will review second quarter business highlights and strategic priorities. After Tom, Chief Commercial Officer Tammi Gaskins will provide an overview of second quarter LINZESS performance. Jeff Silber, our newly appointed Chief Medical Officer and Head of Research and Drug Development, will give a brief update on apraglutide. Ron Silver, our Interim Chief Financial Officer, will close our prepared remarks with a financial update before we open the call for questions. Jeff Ruberti, our Chief Strategy Officer, will also be available for the Q&A at the end of the call. Today's webcast includes accompanying slides. For those joining by phone, please visit the events section of our website to access the presentation.

With that, I'll turn the call over to Tom.

Thanks, Chris. Thanks everyone for joining us to review Ironwood's second quarter 2026 financial results and business update. Before I begin, in addition to welcoming Chris, who joined the team in June to lead our IR and communications efforts, I'd like to introduce two recent additions to the Ironwood leadership team, who you'll be hearing more from today and in the weeks and months ahead. First, I want to sincerely thank former Chief Medical Officer and Head of R&D, Mike Schutzelein, who retired after a distinguished career dedicated to advancing GI science and patient care. Most recently, he led the team through a major company milestone, the successful initiation of the confirmatory phase III STARS-2 trial. Last month, we welcomed Dr. Jeff Silber, Mike's successor, who brings more than 30 years of experience in the industry and academia.

Jeff is an accomplished leader in drug development from pre-clinical through submission, commercialization, and expanding value of brands through lifecycle management. Previously, chief medical officer at Vedanta Biosciences, he brings broad late-stage development expertise to Ironwood, having supported multiple successful new drug applications and valuable brands in leadership roles at AbbVie, EMD Serono, Merck KGaA, and Merck & Co. His leadership will be instrumental as we advance apraglutide through phase III and commercialization. I'd also like to introduce Ron Silver, our senior vice president, corporate controller, and chief accounting officer, who is serving as interim chief financial officer. Ron has been with Ironwood for eight years, serving in key financial leadership roles, providing him with deep knowledge of our business and strategy. His experience and leadership will be invaluable as we continue to execute against our priorities. Now, let's dive into the second quarter business updates.

At the beginning of the year, we outlined three key priorities for 2026: maximizing the performance of LINZESS, advancing apraglutide, and delivering sustained profitability and cash flow. These priorities remain central to achieving our mission to redefine standard of care for patients living with gastrointestinal rare disease while creating long-term shareholder value. During the second quarter, we made meaningful progress across each priority. Starting with LINZESS, the brand continues to demonstrate exceptional strength in its 14th year on the market and remains the prescription leader in both irritable bowel syndrome with constipation and chronic idiopathic constipation. We're pleased to report a second consecutive quarter of strong LINZESS performance, delivering $282.3 million in U.S. net sales, fueled by improved net price and mid-single-digit prescription demand growth. This outstanding performance supported our decision to raise our full year 2026 financial guidance.

Based on the updated outlook, LINZESS is positioned to grow more than 30% year-over-year, return to blockbuster status, and deliver the highest annual U.S. net sales in the product's history. We also achieved an important regulatory milestone during the quarter with the FDA approval of LINZESS for the treatment of functional constipation in pediatric patients two years of age and older. This is another important milestone establishing LINZESS as the only prescription therapy approved for functional constipation in this age group, addressing yet another unmet patient need. Turning to apraglutide. In June, we initiated the STARS-2 confirmatory phase III clinical trial evaluating apraglutide in adults with short bowel syndrome with intestinal failure, or SBS-IF. The trial is now actively recruiting patients, we continue to activate additional sites to drive enrollment.

STARS-2 will build on the positive data from the phase III STARS trial, which we believe demonstrates that apraglutide has the potential to be a best-in-class therapy for patients with SBS who are dependent on parenteral support. Our goal is to ensure apraglutide will be the first long-acting GLP-2 analog to market. Finally, we delivered strong financial results during the quarter, generating $51.3 million in GAAP net income and $83 million in adjusted EBITDA. We also repaid our $200 million convertible notes at maturity with cash on hand. Looking ahead, we expect to leverage LINZESS generating cash flow to further reduce our debt and we are well-positioned to end 2026 with a gross leverage below 1x, while maintaining resources necessary to advance and prepare for the potential commercialization of apraglutide. With that, I'll turn the call over to Tammi to provide some additional context on LINZESS.

Tammi? Great. Thanks, Tom, and good morning, everyone.

As Tom just stated, LINZESS delivered another strong quarter with U.S. net sales of $282.3 million. That's a 14% year-over-year increase driven by both demand growth and improved net price. Through the first half, LINZESS U.S. net sales reached $555 million, up 44% year-over-year, underscoring the strength and momentum of the brand. If I just double-click for a minute on demand, the slide you see shows year-on-year UTRX volume growth of 4% for quarter two and 5% year-to-date June. We expect this demand momentum to persist and anticipate mid-single digit demand growth for the full year, giving us the confidence to raise our full-year financial guidance.

Turning to price, the positive impact seen in Q1 from elimination of inflationary rebates across channels really continued to benefit net price as planned, in addition to favorable timing of gross to net rebate reserves as compared to the second quarter of 2025. Our full-year net sales guidance reflects the ongoing benefit of improved net price combined with anticipated reduced variability in sequential quarterly U.S. net sales as compared to 2025, really due to more consistent net price across channels. To that end, since demand volume is historically highest in the second half of the year, we expect quarterly performance to build, with the fourth quarter projected to deliver the highest net sales for 2026. This performance also highlights the significant unmet needs that LINZESS helps to address for millions of patients with IBS-C and CIC across the U.S.

The recent FDA approval for FC, functional constipation, down to two years of age further expands the reach of LINZESS and helps highlight its importance for an even broader range of patients. I'd like to hand the presentation over to Jeff Silber to highlight our progress advancing apraglutide.