UPDATE: Morgan Stanley Downgrades Ironwood Pharmaceuticals to Equal-Weight on Lower Linzess Sales Estimates
In a report published Wednesday, Morgan Stanley analyst David Friedman downgraded the rating on Ironwood Pharmaceuticals (NASDAQ: IRWD) from Overweight to Equal-Weight, and lowered the price target from $21.00 to $18.00.
In the report, Friedman noted, “We model peak WW sales of ~$2bn, and believe the stock is pricing in sales of this magnitude. Linzess' advantages are its strong benefits on both bowel movements and pain, with relatively limited side effects aside from diarrhea in ~14-20% of pts (typically mild/moderate, led to discontinuation in ~4-6% of pts). The unmet need in CC and IBS-C is large. Many people remain untreated, and of those that are treated with current therapeutic options (diet, laxatives, Amitiza), a majority remain unsatisfied. We believe an effective therapy, such as Linzess, could make a big impact on these markets. Linzess' cost is a concern as the CC and IBS-C markets are dominated by generic and OTC drugs, but we see a competitive cost/benefit profile and use mainly in a laxative refractory patient population.”
Ironwood Pharmaceuticals closed on Tuesday at $16.77.
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