- Ironwood Pharmaceuticals will lay off 100 workers, or 35% of its current staff, after announcing Tuesday that its experimental heartburn drug failed to reduce disease severity in a key clinical trial. The company plans on shelving the drug, the company's only wholly-owned asset.
- The moves will save $50 million in research and development costs through 2021, while annual savings related to the layoffs will be $45 million, the company said. Ironwood also plans to refocus its commercial arm around maximizing sales of its marketed product, the irritable bowel syndrome pill Linzess.
- Linzess, which is partnered with AbbVie, has been on the market since 2012. But Ironwood only reported its first profitable year in 2019. A second drug, and one that was wholly owned by Ironwood, could have expanded the company's sales and profits.
Ironwood has tried to focus its business on gastrointestinal disease, and last year spun off a slate of drugs aimed at metabolic, lung and orphan disorders into a company called Cyclerion Therapeutics. With the failure of heartburn drug IW-3718, it is now left with an empty drug pipeline. Another experimental drug, the AbbVie-partnered MD-7246, failed earlier this year in Phase 2 studies to reduce pain in IBS patients.
IW-3718's failure came at a planned interim analysis of a Phase 3 trial. The analysis found that treatment with the drug, along with another type of heartburn medicine called a proton pump inhibitor, would not significantly reduce disease severity when compared to the proton pump inhibitor alone. The finding also prompted Ironwood to end recruitment in a second, similarly designed Phase 3 trial.
With the failure, company executives emphasized expanding sales of Linzess. "We believe there is more growth ahead with Linzess," CEO Mark Mallon said in a call with analysts. He said he believes it can achieve annual sales of more than $1 billion.
But Ironwood can't rely on that growth forever. Earlier this year, it signed agreements with generic drugmakers that set a date for low-cost competition to enter on March 31, 2029, giving the company only so much time to develop and launch new products.
Mallon said the company frequently reviews new gastrointestinal drugs in development to consider whether to license them or acquire the companies that developed them. "There's clearly unmet need, and there's innovation coming forward in a number of GI categories," he said.
He would not commit to a timeline for making those strategic moves, however.
The company has been marked by layoffs in the past four years. As recently as 2016, it had 674 employees, but will be down to 210 following the latest moves. As it readied for the Cyclerion split, Ironwood laid off around 75 employees, in addition to 160 job cuts that were unrelated to that split. Cyclerion launched with 94 employees.
Ironwood shares fell 7% in morning trading to about $9 apiece.
Editor’s note: This story has been updated to correct that MD-7246 has failed in clinical trials.