Ironwood Pharmaceuticals has found a way to sustain its momentum, even in a downturn. The Cambridge, MA-based biotech company is announcing today it has secured $40 million in upfront payments by finding a partner to develop and commercialize its top drug candidate in Europe.
Ironwood said it is providing European development and commercial rights for linaclotide, its experimental drug for irritable bowel syndrome with constipation, to Barcelona, Spain-based Laboratorios Almirall. This deal provides Ironwood with $40 million upfront, another $15 million in payments for reaching near-term milestones, plus $40 million in payments before the drug is commercialized. Like most outlicensing deals, Almirall will pay the expenses of commercializing and seeking regulatory approval in Europe.
The real key to the deal, though, is that it will pay Ironwood an undisclosed percentage royalty on sales if linaclotide can become a marketed product. The royalties will escalate as revenues climb—which could enable Ironwood to retain half of the drug’s value in Europe over time.
“Almirall presented us with the best strategy to rapidly and effectively deliver linaclotide to the market, and terms that, should linaclotide meet our expectations, allow us to share approximately half of the long-term value of the product,” said Peter Hecht, Ironwood’s CEO, in a statement.
Ironwood was able to command those terms, even in a global recession, because linaclotide has rare potential, as Hecht pointed out last week at an Xconomy Forum held at Biogen Idec. There are fewer than 10 “substantial” drugs in the pharmaceutical industry in the final stage of development, outside of cancer and rare orphan diseases, Hecht said. When you whittle the list down to novel, first-in-class medicines in large markets, “there are really only two or three.”
Almirall, and Ironwood’s U.S. partner, New York-based Forest Laboratories, are betting on what may be a novel drug to fight irritable bowel syndrome and associated illnesses of the gut. Irritable bowel syndrome—a condition associated with cramping, abdominal pain, bloating, and constipation—affects an estimated one out of every five people in the U.S., according to the National Institutes of Health. It can mostly be controlled by diet and stress management, but can be disabling for some people, making it difficult to work, travel, or attend social events, according to the NIH.
Almirall was one of eight companies that were competing for the European partnership rights to linaclotide, says Jim O’Mara, Ironwood’s vice president of business development. The Spanish company won out, even though it offered less in upfront payments than others, because it offered the greatest percentage royalty on sales over the long-term, O’Mara says. He wouldn’t disclose those terms, but said the deal enables Ironwood to say it may capture half of the value of the program in Europe. Almirall has experience with mass marketing of big drugs for asthma, allergies, and cardiovascular diseaes. Its biggest product sales come through a license of Pfizer’s atorvastatin (Lipitor), the cholesterol-lowering medication that is the biggest selling drug in the world.
Pharmaceutical companies haven’t had much success with irritable bowel syndrome. Switzerland-based Novartis developed tegaserod maleate (Zelnorm), which reached $561 million in peak sales for treating the condition in 2006, despite “modest efficacy,” Hecht told me last November. That drug was yanked from the market in March 2007 after the FDA found it raised cardiovascular risks. Some analysts are predicting the Ironwood drug will exceed $1 billion in sales, although the company isn’t disclosing projections, O’Mara says.
Ironwood has come up with a different approach, an engineered protein fragment or peptide, designed in such a way that it can be packaged in an oral pill that pulls off a tricky balancing act. It has been made to withstand the harsh acids of the stomach, navigate its way into the gut, and act exclusively in that environment, without being absorbed throughout the body, where it can cause side effects, Hecht says. The drug is thought to act by stimulating secretions of fluids into the intestines, which softens stool, and helps people have easier bowel movements, Hecht says.
Last fall, Ironwood and Forest released results of a study of 420 patients which showed the drug significantly improved constipation symptoms and reduced abdominal pain. Researchers reported no serious side effects related to the drug, although 1 percent to 7 percent of patients on the medicine dropped out of the study because of diarrhea, according to a presentation at the American Society of Gastroenterology. The findings have prompted Ironwood and Forest to run four final-stage clinical trials, enrolling as many as 2,500 patients, to confirm whether the drug works well enough to deserve a spot on the market.
Two trials of linaclotide have begun for patients with chronic constipation, and two more for irritable bowel syndrome are expected to start soon, O’Mara says.