Edited Transcript of IRWD earnings conference call or presentation 6-May-20 8:30pm GMT

It has been just over 1 year since Ironwood was launched as a GI-focused health care company. We’ve made significant progress towards achieving our mission of advancing GI treatments and redefining the standard of care for millions of patients in need. We entered 2020 with a strong foundation and continued this momentum in the first quarter, highlighted by double-digit LINZESS prescription demand growth, the advancement of our 3718 Phase III program for refractory GERD, the completion of patient dosing in our 7246 Phase II trial for abdominal pain associated with IBS-D and our fourth consecutive quarter of delivering profits.

However, the first quarter was also marked by the beginning of an unprecedented time in the U.S. and around the world. The COVID-19 pandemic has caused substantial disruption to our lives, the health care system and the economy. Navigating this pandemic is a primary focus for all of us right now, and so we plan to spend a good portion of today’s call discussing the impact that it’s having on our business, the actions we’re taking in response and our unwavering focus, especially during these times, to deliver on Ironwood’s vision and mission.

First and foremost, the health and well-being of Ironwood teammates and their families as well as patients, health care providers and our broader communities is our primary focus. Both our headquarters and customer-facing employees have been working remotely since March 16. We’ve developed comprehensive plans for employees to resume in-person work practices and expect to begin implementing those plans as we determine it to be safe to do so and pending relevant health authority guidance.

As demonstrated by our strong fourth quarter performance, we believe Ironwood is well positioned to face these challenging times, and we remain steadfast in our vision to become the leading U.S. GI health care company.

We are announcing today that we continue to expect to generate greater than $105 million in adjusted EBITDA in 2020 as we previously announced as part of our 2020 financial guidance. We’ve decided to withdraw the remainder of our 2020 guidance until we have greater clarity on the impact that COVID-19 may have on our business.

Before turning it over to Tom, I’ll close by saying that I remain confident in Ironwood, both today and its future. GI diseases affect an estimated 70 million Americans in the U.S. or 1 in every 5 Americans. Nearly 2/3 of Americans report being burdened by GI symptoms at least once per week. New innovative therapeutic approaches to treat GI diseases are needed and Ironwood is ready to lead in this important space.

As we look ahead, we’re focused on building a sustainable, profitable growth and enhanced value creation. We are investing thoughtfully into our growing business, and our capital allocation strategy is aligned with our 3 strategic priorities. We continue to deploy our capital towards driving LINZESS growth, advancing our late-stage pipeline and delivering sustainable profits.

As we mentioned when we provided our full year results, we are also exploring inorganic opportunities that we believe fit well within our strategy and can deliver significant patient and shareholder value. We remain disciplined and rigorous in our approach in this current environment and beyond.

With that, I’ll now turn it over to Tom.

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [4]

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Thanks, Mark, and good afternoon to everyone. LINZESS prescription demand grew 11% year-over-year in the first quarter, an impressive growth rate in our eighth year since launch, and especially consider some of the headwinds that we typically face during the first quarter during each year as high deductible plans get reset.

There was an increase in LINZESS demand during the first 2 weeks of the quarter, which we believe to be the result of patient stocking due to COVID-19. We also saw a meaningful increase in the number of 90-day prescriptions filled during the quarter, which we believe will help support patient compliance during this time. While it’s early and uncertainties regarding the impact of COVID-19 remains, we are encouraged by the continued growth that we’re seeing in the second quarter, reinforcing our confidence in the brand.

LINZESS has established clear prescription market leadership within the category and remains a trusted brand amongst physicians. Studies indicate that a sick patient with chronic symptomatic disorder such as IBS-C are more likely to refill their prescriptions during this time because of the symptomatic nature, which serves as a regular reminder for patients to take their medication.

For many patients, refilling this LINZESS prescription is often as easy as just calling the health care professional. Approximately half of total LINZESS prescriptions are refilled, meaning they are being filled by patients that are currently taking LINZESS and the majority of new prescriptions are patients who have had some experience with LINZESS.

Estimates suggest approximately 10% to 14% of LINZESS patients are new to the LINZESS brand entirely. It is with this subset of patients we are seeing the largest negative impact due to the COVID-19 to date. There has been a sharp decline in patient visits to doctors’ offices since mid-March due to the pandemic. And new patients are more likely to need to see their physicians to get a prescription. We expect growth in new patient starts to increase over time once local markets begin to open, patient visits increase and our field resumes in-person promotion.

Overall, the brand has continued to see growth in market share even in the face of these challenging market impacts. Between mid-March and mid-April, LINZESS outperformed its competitors within the prescription IBS-C and chronic constipation category across key demand metrics, including total volume growth, the size of LINZESS prescriptions and market share is now close to 40%.

All of this further strengthens LINZESS prescription market leadership. We and Allergan have implemented several initiatives to enable continued engagement with both health care practitioners and with patients during this time. We believe these changes will be important today and into the future given the evolution of how to best communicate with our customer.

First, we’ve implemented a broad telemedicine initiative following a successful pilot program in 2019. We believe that LINZESS is a fitting brand for telemedicine due to the prescription market leadership in the category, its demonstrated efficacy and safety profile, broad payer access and physicians’ confidence to diagnose and treat virtually.

Second, our DTC campaign, [Get Real] was launched in early April. We are leveraging both TV and radio with a strong call to action for patients to recognize that they may be suffering from IBS-C, a chronic disorder, not just occasional constipation. In doing so, we believe we can activate more patients to seek care and request LINZESS.

And third, we provided multiple new tools to the field force so they can conduct details virtually. While these activities cannot replace in-person interaction, I’ve been impressed by the level and depth of engagement on many of these virtual details.

Turning to LINZESS supply. We and Allergan remain focused on maintaining the availability of LINZESS for patients. We have not seen any significant impact on our ability to manufacture and supply LINZESS to the U.S. to date, and we’re closely monitoring the situation. We currently believe we have sufficient LINZESS supply on hand to meet the U.S. demand at this time.

Lastly and importantly, we just announced last week that the U.S. PTO issued notices of allowance for 2 patent applications covering the 72-microgram dose of LINZESS. If these patents’ applications proceed to grant, they expect to be issued in 2020 and expire in 2031. We believe these actions further speak to the strength of the innovation surrounding LINZESS.

Turning to our partnership with Alnylam and GIVLAARI, which was approved in November of last year for the treatment of acute hepatic porphyria, or AHP. Early results from our GI-focused efforts regarding physician identification of AHP patients and recognition of GIVLAARI as an effective treatment option is encouraging. Even during these uncertain times, we continue to work closely with Alnylam to identify opportunities to support AHP patient identification and treatment with GIVLAARI for porphyria patients.

Moving to our GI pipeline. 3718 and 7246 are key to driving the long-term value for our business. We believe that each of these product opportunities has the potential to help meet the unmet need of millions of patients.

Starting with 3718, our gastric-retentive bile acid sequestrant, currently in Phase III trials for potential treatment of refractory GERD. As of today, we have enrolled approximately 70% of patients into 2 trials, the majority of whom have completed the study. However, over 90% of the 3718 clinical sites has suspended patient screening due to COVID-19. And so our ability to enroll new patients has been substantially impacted. The sites are continuing to monitor the patients who are already enrolled in the trials, which the sites can do remotely. The safety of those patients is our highest priority.

Despite the current challenges, we are committed to complete the Phase III program. We no longer expect to report top line data in the second half of 2020 and are now working to achieve top line data as soon as possible in 2021. We plan to share more information as we gain certainty.

The unmet net medical need in refractory GERD remains high. We believe that 3718 has the potential to improve both heartburn and regurgitation symptoms, both of which are not completely resolved with PPIs and other treatment options.

Turning now to 7246, our delayed release formulation of linaclotide, currently in a Phase II trial for the treatment of patients with abdominal pain associated with IBS-D. We now expect to deliver top line results in the second quarter of 2020, earlier than our previous guidance of mid-2020. We believe 7246 has the potential to be a non-opioid pain-relieving agent for patients suffering from abdominal pain associated with certain GI diseases.

Our positive Phase II IBS-D results with 7246 support this hypothesis, as the data demonstrated that 7246 reduced abdominal pain similar to 290 micrograms of LINZESS with limited effect on bowel function. Additionally, a Phase I dose escalating study showed that 7246 did not affect bowel function in healthy volunteers when taking up to 3,000 micrograms once a day. If the Phase II IBS-D data are positive, we plan to conduct an end of Phase II meeting with the FDA with the goal of initiating a Phase III program in IBS-D in early 2021.

With that, I’ll turn it over to Gina.

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Gina R. Consylman, Ironwood Pharmaceuticals, Inc. – CFO, Senior VP & Treasurer [5]

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Thanks, Tom. Over the next few minutes, I will highlight our first quarter financial performance, discuss some of the financial impacts we might see as a result of COVID-19 and share our expectations for the remainder of the year. Please refer to our press release for detailed financial information.

Starting with our first quarter results. In the first quarter of 2020, total Ironwood revenues were $80 million, a 16% increase year-over-year. Revenues were driven primarily by $71 million in U.S. collaboration revenue combined with $5 million in sales of API as we complete the transition of manufacturing responsibilities over to our ex-U. S. partners.

LINZESS net sales were $172 million during the first quarter, a 7% increase year-over-year. The difference between net sales growth and prescription demand growth is primarily due to a decrease in inventory, partially offset by net price improvement. LINZESS commercial margin was 73% in the first quarter. The higher commercial margin for the brand in Q1 2020 compared to the first quarter last year was driven by higher LINZESS net sales and some cost savings resulting from the sales force being remote during the last 2 weeks of the quarter.

The remote selling activities conducted by both Ironwood and Allergan are excluded from the U.S. LINZESS commercial collaboration. We expect a larger decrease in sales force spend in the second quarter due to the amount of time the field has already been remote during the quarter. The total impact remains uncertain until we have more clarity around when we and Allergan will reactivate in-person promotion broadly.

Now turning to earnings. GAAP net income was $3 million for the quarter. Non-GAAP net income was $7 million, and adjusted EBITDA was $14 million during the first quarter of 2020. We recorded a net loss across each of these metrics during the first quarter of 2019 as we had yet to complete the separation from Cyclerion.

And lastly, a few quick remarks on cash. We generated $44 million in cash from operations, ending the quarter with a cash balance of $231 million. We believe this is a very strong position to be in, providing us with the capital to support our core business without the need to raise additional funds during these highly uncertain times. This, combined with the actions we took in 2019 to reduce our expenses, simplify our business and spread out our debt obligations, further increases our confidence in our financial position during this time.

We did not see any major disruptions to our financials as a result of COVID-19 in the first quarter. The 2 key areas that we believe could most meaningfully impact our financial performance for the remainder of 2020 are LINZESS and 3718.

On LINZESS, as Tom highlighted, we are encouraged by the demand growth we are continuing to see. However, we are monitoring for any impacts of COVID-19 on demand, including due to reduced in-person promotion or potential changes in patient access to health care and reimbursement. With millions of Americans losing their jobs and going on unemployment, we believe this could shift the patient mix away from commercial insurance, which currently represents approximately half of our business, towards Medicaid, which comes at a much higher rebate to us.

We have not seen much of this to date, but we are monitoring it closely. This, combined with any pressure on demand due to lower new-to-brand growth or otherwise may result in lower U.S. net sales in 2020 than originally expected. With that said, we are confident in the long-term growth potential for the brand.

On 3718, the delay in enrollment is expected to result in lower R&D spend in 2020 as some of these costs are now expected to be delayed into 2021. Note that we do expect aggregate clinical trial expenses for 3718 to increase over the duration of these trials. The potentially lower 3718 spend combined with expected cost savings associated with the remote sales force could result in favorability to Ironwood’s P&L in 2020.

Taking all of this into consideration, we are maintaining our full year 2020 guidance of expected adjusted EBITDA of greater than $105 million. We are focused on delivering profits and based on our preliminary estimates, believe the potential impact of COVID-19 to LINZESS U.S. net sales may be partially offset by the cost savings from the sales force being remote and the cost delays due to the impact to 3718 enrollment, which gives us confidence in our original guidance of greater than $105 million in 2020 adjusted EBITDA.

We are withdrawing the remainder of our 2020 financial guidance at this time due to the continued uncertainties around the potential for and magnitude of any COVID-19 related impacts.

In closing, we want to reiterate that due to the actions completed over the past year, and the LINZESS performance seen to date, we believe Ironwood is in a position of strength as we weather the storm and strive to continue to grow our business and deliver shareholder value.

With that, I’ll turn it back to Mark for some closing comments.

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [6]

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Thanks, Gina. Before we open up the call for Q&A, I’d like to take a moment to recognize the team here at Ironwood. I’ve been incredibly impressed and proud of the organization’s ability to remain focused during these difficult times. It’s not an easy time to maintain a high level of execution on our business priorities, but the Ironwood team have managed to do just that. And so I would like to say thank you to everyone at Ironwood, the Ironwood community and for their hard work and dedication to advancing our vision of becoming a leading GI-focused health care company.

And so now, we’d like to — I think we’re ready for questions. And so Tanesha, I’d ask if we have any questions? Tanesha, sorry. Did we have any questions?

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Questions and Answers

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Operator [1]

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We do have a question from the line of Raghuram Selvaraju.

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Blair Daniel Cohen, H.C. Wainwright & Co, LLC, Research Division – Associate [2]

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This is Blair Cohen on for Ram. Just a few questions for you. Do you think the prescriber patterns have changed dramatically as a result of the pandemic? And in what way would you say?

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [3]

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Tom, do you want to take that one?

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [4]

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Sure. I mean, no question. There has been significant changes, particularly with the reduction in office visits, which have been down almost 70% based on the data we’ve seen so far. What we have been seeing is a migration to a telehealth, telemedicine model which a number of both primary care and GI physicians are embracing. And thus, we have been actively looking at that capability for some time.

We’ve implemented a telemedicine program that is driven off our consumer campaign. And we have been talking and working with health care professionals to see how we can help them and how we can better enable this kind of capability. And I think moving forward, in talking to a number of these physicians, they’ve recognized how much more efficient these — managing some of these patients can be through a telemedicine platform, even as patients will get more comfortable coming back to the office.

So I do think things will change. I think we’ve got to continue to adapt and overcome and serve patients in the most effective way. And I think one of the things that I mentioned is with IBS-C and LINZESS, it’s well poised to be able to be leveraged in that kind of remote consult. And we’re seeing more and more of it. And I think it’s largely helping us sustain the ongoing growth of the brand.

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Blair Daniel Cohen, H.C. Wainwright & Co, LLC, Research Division – Associate [5]

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Awesome. And do you think the launch of GIVLAARI is going to be affected by COVID-19?

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [6]

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Go ahead, Tom, you can take that, too.

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [7]

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Okay, sure. Thanks, Mark. I can’t comment on that specifically. What I can tell you is, one, as you know, this is a horrendous disease, and this is an incredible breakthrough, which got us excited about playing a role in helping Alnylam bring this to patients. And of course, our presence in the GI offices was a natural fit because this is where most of these patients are managed.

That being said, we’ve identified a number of patients that are being actively pulled through the system. I think there may be some short-term impact, but everything I’m hearing from the pull-through side, the patient pull-through side, is we’re continuing to pull patients through. We’re getting patients on drug. And I think we need to continue to stay the course. It’s still early to kind of interpret that. But I think certainly, the Alnylam team would be better equipped to more specifically answer kind of the question on actual demand.

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Blair Daniel Cohen, H.C. Wainwright & Co, LLC, Research Division – Associate [8]

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Sure. And then going to the Phase III program for 3718, do you see that trial panning out as originally planned? Do you think like any of the data or results could be compromised because of the delay?

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [9]

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Mike, can you take that?

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Michael Shetzline, Ironwood Pharmaceuticals, Inc. – Chief Medical Officer, Senior VP & Head of Drug Development [10]

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Sure. Yes, for the Phase III program, we’re committed to completing the Phase III program and recognize it as a fairly large development program. We have over 660 patients in the 2 clinical trials. We have had, to your point, impact in screening due to COVID-19. And like much of the industry, that has really impacted our ability to continue to enroll at the rate we wanted to, to meet our 2020 time line.

However, we do have a very safe product we’re administrating in that program, colesevelam, with the gastric retentive. So we do have an opportunity to do things remotely once patients are enrolled. So we have had a slowdown for screening that has impacted enrollment. But we are very able to move patients through the study given the safe product and the visit schedule that patients have.

So we do think we can get patients through the study, and we’re committed to completing the Phase III, and we’ll be exploring all potential options in order to do so. And that continues to work actively with — we continue to work actively with sites to better understand the reinitiation of screening and how that activity could best proceed so that we can better inform the expected time line to get to pre-COVID recruitment to define our ultimate end of study time line. And as we get further updates regarding path forward, we’ll certainly share them with you.

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Blair Daniel Cohen, H.C. Wainwright & Co, LLC, Research Division – Associate [11]

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Perfect. And last question for me. How critical do you think the allowance of claims is for that 72 dose?

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [12]

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So obviously, we are very — I think as a quick answer on that, I mean, we’re very encouraged by this. I think a large percentage of these do go on to get issues as expected. We remain very confident in our IP. And so we’ll be monitoring and watching as the process continues.

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Operator [13]

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And your next question comes from the line of Jacob Hughes.

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Jacob William Hughes, Wells Fargo Securities, LLC, Research Division – Senior Analyst [14]

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With respect to the guidance, so knowing that this environment is highly uncertain, but could you provide any additional color on these [comps] underlining your adjusted EBITDA guidance? And any additional color on the revenue trends early in the second quarter?

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [15]

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Gina, would you give some additional thoughts?

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Gina R. Consylman, Ironwood Pharmaceuticals, Inc. – CFO, Senior VP & Treasurer [16]

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Sure, Mark, I’m happy to. Thanks for the question. So I can start with maybe just talking about why we are comfortable providing the greater than $105 million EBITDA guidance while we were no longer reiterating the previous guidance line items. And one is that LINZESS is just off to a strong start in 2020, not just in Q1, but through Q2 as well. And this is probably what you’re getting to in your question.

We certainly have some uncertainty related to the 3718 trial enrollment and the reduced in-person promotion. We’ve seen some favorability there. And while we certainly don’t prefer it, it is adding to our P&L. And based on when states actually start to enroll, it will be determined when we are back in the field and when hopefully, we can increase our trial enrollment as well.

There’s obvious uncertainty as to the severity and the duration of the COVID-19 impact. But any negative offset from LINZESS demand, and to be more specific on that, on the demand side, we are potentially monitoring changes from unemployment, just less disposable income for Americans. But we’re also looking at it as potential price compression as well.

So if you’re thinking about it from a commercial side and the patients’ move to Medicaid, for instance, it includes a much higher rebate for us and obviously, lower net price. And given the uncertainty on that, it is one of the reasons that we’re not guiding to the LINZESS top line and then obviously our Ironwood revenue.

However, I will say that while we have some favorability and we have some negative offsets, we conducted or ran a range of models. And then the majority of those, we are still expected to result into a minimum adjusted EBITDA of $105 million for the year. We will, of course, continue to monitor the update and provide regular updates to you at least each quarter.

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Jacob William Hughes, Wells Fargo Securities, LLC, Research Division – Senior Analyst [17]

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Okay. That’s very helpful. And then just on — as you get closer to the close of the transaction with AbbVie, could you — I’m just curious on any interactions you’ve had with the team and any potential changes to that relationship, whether that’s on the marketing side or otherwise?

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [18]

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So I’ll say a couple of words. And Tom, you can also add thoughts. So first thing I want to say, the Allergan team has continued to stay really very focused and our always strong collaboration has continued. And I think it certainly comes through with the execution and the results in the first quarter and even into the second quarter.

So the majority of the people have been in place, and they’re staying very engaged and we keep working on that. As we also said, we’ve had very preliminary sort of discussions with AbbVie because they’ve been sensitive to closing. We’re still not quite close, although we’re getting very close now. And so I don’t really have any updates on that.

They — our interactions have been positive. We expect that they will be working to keep the momentum going, and that we’ll be working to keep everything moving forward smoothly. As we said before, the parameters of the arrangement, our partnership, basically continue largely as is. The key decision-making bodies of the joint development community and commercial committee and the rules that are governing those basically stay the same. And so we’re ready to go full steam ahead. I don’t know, Tom, if you have anything else to add to that.

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [19]

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Yes. Just a couple of things. First, as you know, it’s been a terrific partnership with Forest, Astellas as well as Allergan and now AbbVie. And as we move forward, as I know Bill Meury is working closely with AbbVie on the integration, he’s keeping us well informed.

A good portion of the team will stay intact, particularly on the sales, sales management side, the number of people on the brand teams will be intact, which I think will aid in a smooth transition. And also, we agree on an overall brand plan at the beginning of every year, which obviously will stay intact, which really identifies the investment to be made in the plan and certainly the overall strategies that support the brand, both from a commercial side as well as the development side in 7246.

As Mark mentioned, we’ve had some initial interactions with AbbVie, which have been very, very encouraging. I’m very excited about the opportunity to work with them. They have some very remarkable capabilities, particularly in the area of patient support and GI disease with Humira that I think we can learn a lot from and I think will further enable us to better serve our patients.

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Operator [20]

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And our next question comes from the line of Eric Joseph.

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Eric William Joseph, JP Morgan Chase & Co, Research Division – VP & Senior Analyst [21]

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Just a couple from me. First, on the patient stocking pattern that you noted and you think you’re seeing some benefit in the first quarter here. So can you quantify that for us a bit? Is that sort of a reflection of an increase in the number of 90-day prescriptions compared to prior quarters? And are you anticipating any shifts in channel inventory in second quarter or going forward in order to meet that pattern? And then I have a follow-up.

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [22]

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Tom, do you want to take that?

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [23]

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Yes, sure. As far as the increase that we saw, we saw a bit of a surge for a couple of weeks in total Rxs, which came back down, but we’re still tracking double-digit growth year-on-year, but there was a pretty significant jump over a period of time. And we did also see this corresponding increase in 90 days. A larger percentage of the patients are requesting 90 days to make sure they have their medication for an extended period of time here.

So — but I think the overall trend line looks pretty stable from what we saw finishing last year into this year. And as you recall, we generally see a pretty significant dip in the first quarter, and in spite of all that, the brand is just holding up remarkably well, particularly with the rate of refills, which has been very encouraging.

As far as the channel, it’s — obviously, it tends to fluctuate quarter-to-quarter. Obviously, that’s being closely monitored to make sure that we don’t have any stock outs. But I don’t think — we certainly don’t see any risk to the brand there, but we certainly do see quarter-to-quarter fluctuations in the overall inventory. But we haven’t seen anything dramatic over the last quarter or 2 that we haven’t seen before.

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Eric William Joseph, JP Morgan Chase & Co, Research Division – VP & Senior Analyst [24]

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Okay. Okay. Got it. And I’m also curious to know whether at this point you have a sense of what the greatest sensitivities are to LINZESS demand from the reduced in-person promotion effort. I know it’s hard at this point to know where — when the new normal — but it looks like beyond the pandemic. But I am curious to know whether you see any efficiencies on the commercial spend side and still being able to grow prescription volumes or whether we should expect a pattern of commercial spend sort of ramping back up on the other side of the pandemic.

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [25]

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Tom, you can take a stab at that. I might have a comment to add as well. Go ahead.

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [26]

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Absolutely. First of all, I think this is a very promotionally sensitive market. And there’s no replacement for personal promotion. I think we’re doing a yeoman’s effort in supporting patients and also our customers remotely and virtually. And I think we’re putting a number of innovative plans such as the telemedicine in place. But as far as personal promotion, we pushed it hard in the first quarter to get out of the gate strong, and the sales force did an absolutely terrific job in driving — continuing to drive double-digit growth.

I think the other thing to keep in mind is we constantly evaluate and refine the overall selling model with regard to our reach, with regard to our frequency, who’s going to make the calls. And we’re in constant assessment of that. And as you know, we’ve changed it quite a bit over time, both with regard to the number of targets, the frequency of calls as the sales force has become increasingly more efficient.

I do not see a replacement for in-office promotion, personal promotion. I think we’re itching to get back into the office to continue to drive demand and broaden physicians’ view of who the appropriate patient is. So — but I don’t see any dramatic change of our overall selling effort as we kind of reengage in customers. So Mark, if you have a couple of additional comments?

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [27]

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I just wanted to echo what you’re saying, and that one of the things I have always been impressed since I arrived at Ironwood is the — how quick and smart the — both Allergan and Ironwood together have been at the sort of continuous improvement in their commercial plans. They’re always looking at — as we learn more about particular physicians, whether it’s right at the rep or the district level or overall, as we’re understanding how the market is evolving, of adjusting resources and key — and both within sort of physician promotion and then also balancing between physician promotion and consumer promotion. So it’s a team that’s very used to, and it’s been, I think, one of the strengths in sort of optimizing. So rest assured they’re going to continue that and that will be a focus.

And then the other thing I just really been pleased, the way the team is sort of embracing some of the new technology and the new openness, I would say, of physicians and patients to leverage things like telemedicine to get their health care needs met. And so I’ve had a chance to interact with a number of teams and salespeople. They’re all embracing working with the virtual selling aid and virtual meeting capability.

As Tom mentioned, we’ve got our own telemedicine program that we’ve scaled up nationally. And we’re going to really be diving big and diving deep into some of these changes to see how we can leverage them to the benefit of patients and ultimately, the business. So I’m encouraged with the way the team is responding. And rest assured, we’re going to continue to focus on driving LINZESS’ growth but doing it as efficiently as we can.

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Eric William Joseph, JP Morgan Chase & Co, Research Division – VP & Senior Analyst [28]

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Got it. Maybe just one last one on 7246. You’ve moved up time lines a little bit here with data expected this quarter. Just anything at all in terms of impact from the pandemic and gathering sort of the last legs of patient data, patient follow-ups? Anything in the way of — anything from the pandemic that might impact sort of the integrity, the fidelity of that data set as we — for the intended — to the population base as we look to data this quarter.

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [29]

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Mike, you’re going to take that, please?

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Michael Shetzline, Ironwood Pharmaceuticals, Inc. – Chief Medical Officer, Senior VP & Head of Drug Development [30]

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Sure. Yes, we’re pretty — good opportunity in IBS-D, I think, which speaks to the medical need within that patient population and clear need for pain therapeutic for patients suffering with abdominal pain. So the ability to enroll that, I think, really speaks obviously to the testament for the patients and the patient need, but also the team did a great job to accelerate that.

So we weren’t really impacted on the recruitment side by COVID. We were able to get patients in and dose and actually get patients out sort of before COVID really took over much of the recruitment in clinical trials. And then much of what we did after that is sort of data cleaning, data management, data validation and all that. So we’ve been on track, and we remain on track and we’re committed to delivering it this quarter, as you mentioned.

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Operator [31]

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(Operator Instructions) And we do have a question from Boris Peaker.

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Boris Peaker, Cowen and Company, LLC, Research Division – MD & Senior Research Analyst [32]

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Great. Good. So first question is — I think this may be for Gina, but I don’t know who else wants to maybe answer it, is you mentioned that there’s a lower revenue per patient on Medicaid versus private insurer. I was wondering if you could quantify that. And also, is there a lower — is there ability to get a 90-day scripts for Medicaid as there is on private payer? Just want to kind of understand that dynamic.

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [33]

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Gina, why don’t you start with any perspective? And then Tom, also, if you have something to add, please do.

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Gina R. Consylman, Ironwood Pharmaceuticals, Inc. – CFO, Senior VP & Treasurer [34]

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Sure. Sure. It’s a great question. That’s right. So we said approximately 50% of our book of business or our patient mix is commercial. And with the high unemployment, we are concerned on 2 fronts that maybe could lead to lower demand or maybe a possibility of those patients moving from commercial to Medicaid, and we said it does include a higher rebate.

We haven’t quantified it. We don’t distinguish our — detail out the gross to net between commercial and Medicaid, but I’m quite comfortable saying it’s a significant difference between commercial and Medicaid, as you can imagine.

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Boris Peaker, Cowen and Company, LLC, Research Division – MD & Senior Research Analyst [35]

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And can Medicaid patients fill 90-day scripts just as easily as commercial? Or do they have any restrictions?

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Thomas A. McCourt, Ironwood Pharmaceuticals, Inc. – President [36]

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Mark, why don’t I take that? Currently, they can only access — I believe they can only access 30-day supply, similar to Medicare patients has a similar restriction with regard to the quantity that they can actually access. But I think it’s important to underscore the fact that we have over 50% — or nearly 50% of our business is actually in Medicare Part D, which has been very stable. And the patients that we are — that are at risk are commercial patients. But it’s something, obviously, we’re monitoring very closely. But from what we’ve seen so far, the demand is holding up very well. But obviously, it’s something that certainly poses a risk to the price and volume of the brand.

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Boris Peaker, Cowen and Company, LLC, Research Division – MD & Senior Research Analyst [37]

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Great. And my last question is on the 3718. I just want to know what percentage of total enrollment have you already enrolled in these Phase III studies? And in that context, I just want to understand, in terms of data quality, what happens if a significant number of patients miss follow-up appointments? Is there some point where you just take them out of the study? Or you just kind of accept the missing data? How does that work?

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Mark Mallon, Ironwood Pharmaceuticals, Inc. – CEO & Director [38]

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Mike, could you take that?

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Michael Shetzline, Ironwood Pharmaceuticals, Inc. – Chief Medical Officer, Senior VP & Head of Drug Development [39]

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Sure. We have, as Tom mentioned, we have greater — now 72% actually of patients enrolled in the studies. And you’re right, I mean, we do have to closely monitor all our studies, which we do irregardless of COVID-19 or not. But your point is valid in the setting of COVID-19 and some of the monitoring that takes place in the clinical program. It’s important to make sure we can do that remotely.

And again, it’s an 8-week treatment course, so we do have the opportunity to schedule things and plan things and to get things done remotely. The team has made a great effort to achieve all that to ensure data integrity, trial integrity, patient safety. Clearly, patient safety is the most critical item on that list, and we work diligently to ensure that with all our patients in all our studies. So we have had a very good success in maintaining that aspect of data integrity and trial safety. So we’re really happy to be able to continue that in the 3718 program.

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Operator [40]

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And we have no further questions. I will turn the call back over to Mark for closing.

And we have no other questions at this time. And this does conclude today’s conference call. You may now disconnect your lines.