Ironwood Completes $175 Million Debt Offering
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD) today announced the completion of a debt offering of $175 million. Ironwood intends to use the net proceeds from this transaction to fund its research and development efforts and to support the commercial launch of LINZESS™ (linaclotide), in addition to general corporate purposes.
Ironwood issued $175 million in aggregate principal amount of Linaclotide PhaRMASM 11% Notes due on or before June 15, 2024. The notes bear an annual interest rate of 11%, with interest paid quarterly beginning June 15, 2013, and principal expected to be paid quarterly beginning March 15, 2014. After the interest-only period, Ironwood will make quarterly payments on the notes equal to the greater of (i) 7.5% of net sales of LINZESS in the United States for the preceding quarter (“the synthetic royalty amount”) and (ii) accrued and unpaid interest on the notes (“the required interest amount”). Principal on the notes will be repaid in an amount equal to the synthetic royalty amount minus the required quarterly interest amount, when this is a positive number, until the principal has been paid in full. Given the principal payments on the notes are based on the synthetic royalty amount, which will vary from quarter to quarter, the notes may fully be repaid prior to the final maturity date in 2024.
The notes are solely secured by a security interest in a segregated bank account established to receive the required interest amount (during the interest-only period) or the synthetic royalty amount (after the interest-only period), and all amounts credited from time to time to this account. The notes are not convertible into Ironwood equity. The notes may be redeemed at any time prior to maturity, in whole or in part, at the option of Ironwood at specified redemption premiums.
“This non-dilutive financing enhances our cash position and provides us with additional strategic optionality as we continue to advance our broader pipeline and execute on the launch of LINZESS,” said Michael Higgins, Chief Financial Officer and Chief Operating Officer of Ironwood Pharmaceuticals. “The structure of this financing provides us with financial flexibility as we continue working toward our goal of building an enduring pharmaceutical company that helps people lead better lives.”
Prior to the completion of this transaction, Ironwood ended 2012 with approximately $168 million of cash, cash equivalents, and available-for-sale securities.
The notes have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent an applicable exemption from the registration requirements of the Securities Act.
Morgan Stanley acted as sole placement agent for the notes.
LINZESS is the first and only guanylate cyclase-C (GC-C) agonist approved by the FDA for the treatment of both irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC) in adults. LINZESS is a once-daily capsule that helps relieve the abdominal pain and constipation associated with IBS-C, as well as the constipation, infrequent stools, hard stools and incomplete evacuation associated with CIC. The recommended dose is 290 mcg for IBS-C patients and 145 mcg for CIC patients. LINZESS should be taken at least 30 minutes before the first meal of the day.
LINZESS is thought to work in two ways based on nonclinical studies. LINZESS binds to the GC-C receptor locally, within the intestinal epithelium. Activation of GC-C results in increased intestinal fluid secretion and transit and a reduction in visceral pain, which is thought to be mediated by decreased activity of pain-sensing nerves. The clinical relevance of the effect on pain fibers in nonclinical studies has not been established.
In placebo-controlled Phase III clinical trials of more than 2,800 adults, LINZESS was shown to reduce abdominal pain in IBS-C patients and increase bowel movement frequency in both IBS-C patients and CIC patients. Improvement in abdominal pain and constipation occurred in the first week of treatment and was maintained throughout the 12-week treatment period. Maximum effect on abdominal pain was seen at weeks 6-9 and maximum effect on constipation occurred during the first week. When a subset of LINZESS-treated patients in the trials were switched to placebo, they reported their symptoms returned toward pretreatment levels within one week, while placebo-treated patients switched to LINZESS reported symptom improvements. LINZESS is contraindicated in pediatric patients up to 6 years of age. The use of LINZESS in pediatric patients 6 through 17 years of age should be avoided. In nonclinical studies, administration of a single, clinically relevant adult oral dose of linaclotide caused deaths in young juvenile mice. LINZESS has not been studied in pediatric patients. In adults with IBS-C or CIC treated with LINZESS, the most commonly reported adverse event was diarrhea.
Ironwood and Forest Laboratories, Inc. are co-promoting LINZESS in the United States. Linaclotide was also approved by the European Commission for the treatment of adults in the European Union with IBS-C and will be marketed under the brand name Constella® through a license agreement between Ironwood and Almirall, S.A. Ironwood also has partnered linaclotide with Astellas Pharma Inc. for development and commercialization in Japan and certain other Asian countries and with AstraZeneca for development and commercialization in China.
About Ironwood Pharmaceuticals
Ironwood Pharmaceuticals (NASDAQ: IRWD) is an entrepreneurial pharmaceutical company dedicated to the art and science of great drugmaking. Ironwood is located in Cambridge, Mass. To learn more, visit www.ironwoodpharma.com.
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