Ironwood Initiates GERD Study, Shares Up - Analyst Blog

Ironwood Pharmaceuticals, Inc.'s IRWD shares jumped 5.51% after the company announced the initiation of a phase IIa study on its gastroesophageal reflux disease (GERD) candidate, IW-3718. Results from the study are expected in the first half of 2015.

The randomized, double-blind, placebo-controlled, multi-site phase IIa study (n = 90) will evaluate the efficacy, safety and tolerability of IW-3718 in GERD patients who have not shown adequate response to the current standard of care, proton pump inhibitor (PPI). Currently available PPIs include Eisai Co., Ltd.'s (ESALY) Aciphex. The study will compare the combination of IW-3718 and PPI to placebo plus PPI.

Data from previous non-clinical studies indicate that IW-3718 could have therapeutic use in the treatment of GERD.

Our Take

We are pleased with the pipeline progress at Ironwood. We believe that the successful development and subsequent approval of IW-3718 will reduce the company's dependence on Linzess (EU trade name: Constella). Linzess, indicated for irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC), is Ironwood's sole marketed product.

Ironwood co-markets the drug with Forest Laboratories Inc. FRX. Net sales of the drug, as reported by Forest Labs, were $51 million in the fourth quarter of 2013, up 48% sequentially.

Ironwood is working to drive Linzess sales and is also looking to broaden Linzess' label by expanding the targeted patient population and gaining approval for additional indications including opioid-induced constipation, pediatrics and the prevention of colon cancer.

Ironwood carries a Zacks Rank #3 (Hold). We expect investor focus to remain on the performance of Linzess, which has blockbuster potential. Some better-ranked stocks include Shire SHPG carrying a Zacks Rank #1 (Strong Buy).