Ironwood drops AstraZeneca deal, slashes jobs
- Ironwood Pharmaceuticals on Tuesday said it dropped its licensing deal for AstraZeneca's lesinurad franchise, which includes Duzallo and Zurampic, saying that "test markets did not meet expectations."
- Ending the agreement will lead to the loss of 125 jobs — primarily field-based sales employees — and termination costs of $10 million to $13 million. It will save around $75 million to $100 million in full year 2019 operating expenses. Ironwood no longer expects to be cash flow positive in the fourth quarter of 2018 due to restructuring costs.
- "This action is not taken lightly, but it is an important decision that we believe enables us to allocate capital to the highest return opportunities and drive growth," CEO Peter Hecht said in a statement.
AstraZeneca's lesinurad franchise includes Zurampic (lesinurad) and the newly approved Duzallo (lesinurad and allopurinol), both on the market for uncontrolled gout. The deal with Ironwood, signed in April 2016, included an upfront fee to the big pharma of $100 million and up to $165 million in potential milestone payments. Ironwood had predicted peak U.S. sales of $300 million — but the math ultimately didn't work in Ironwood's favor.
In January 2018, Chief Commercial Officer Thomas McCourt said on an earnings call that Ironwood "initiated a robust study to explore a comprehensive set of marketing mix options for lesinurad in select test markets."
The aim of this was to create value for lesinurad based on scaled investments and marketing to drive higher promotional response. This included a consumer advertising campaign, and the loss 60 field-based sales representative jobs.
"As we launched Duzallo, the uptake was quite a bit slower than we expected … So we wanted to really understand what kind of promotional offer [would] accelerate its growth," CEO Peter Hecht told investors on the call.
"We certainly saw some promotional response but it just wasn't adequate."
Ironwood in July used a regulatory filing to announce the start of layoffs as the first step of its split into two independent, publicly-traded companies. That split is expected in the first half of 2019.
Ending the AstraZeneca pact will push the "new" Ironwood's focus onto its gastrointestinal assets. They include Linzess (linaclotide), on the market for irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC), along with a G.I. pipeline that includes linaclotide formulations for a pediatric IBS-C/CIC population and for IBS abdominal pain, as well as IW-3718, in Phase 2 testing for uncontrolled gastroesophageal reflux disease.
"Following the completion of separation expected in the first half of next year, new Ironwood will become a profitable company, exclusively focused on its industry-leading capabilities and G.I. diseases with multiple first in category assets, each with long expected IP coverage and the potential to help millions of patients with serious and chronic disorders," said McCourt.
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