Ironwood Pharmaceuticals and NPS Pharmaceuticals have plenty in common: both won FDA approval of their first drugs in 2012, and both are trying to prove to investors that they can successfully sell them. And now, both have sought out Wall Street to help them get it done.
Cambridge, MA-based Ironwood and Bedminster, NJ-based NPS both priced public offerings of stock late Tuesday, planning to raise more than $200 million combined. Ironwood priced 10.5 million shares at $13 apiece. Ironwood will raise as much as $136.5 million through the offering.
NPS has sold 6 million new shares to investors at $14.53 apiece. The offering would bring in about $87.2 million. Both offerings are expected to close on Friday.
Ironwood and NPS have different business models, but they both need the cash for similar reasons during crucial times for both companies. Ironwood will use the money to help support the U.S. roll out of linaclotide (Linzess), an oral pill for adults with chronic constipation and irritable bowel syndrome with constipation. NPS will continue its quest to become a global rare disease company, arming up to sell teduglutide (Gattex) on its own.
Ironwood was formed in 1998 and burned through more than $500 million in cash before winning FDA approval in August to sell linaclotide (Linzess), an oral pill for chronic constipation and irritable bowel syndrome in adults, in the U.S. Ironwood and partner Forest Laboratories have high hopes for the drug and have staffed up to prove it. With the help of a first-year marketing budget up to $300 million, Ironwood hired 160 sales reps and the larger Forest has directed another 1,300 to help sell the drug to primary care physicians and gastroenterologists. The two introduced linaclotide for sale in the U.S. on Dec. 17, and Ironwood is advancing plans to sell it in several other countries with the help of other large partners. Ironwood said last month that it intends to begin selling the drug in Europe during the second quarter with the help of partner Almirall. In Ironwood’s latest quarterly update, on April 23, it said about 70,000 prescriptions had been filled. The drug generated $4.5 million in net sales in the first quarter of 2013, well below consensus estimates from analysts. Still, Forest has said it expects $170 million in sales in its 2013 fiscal year. Ironwood’s stock is up 17 percent year to date, but it has slumped considerably since its first quarter report. Shares closed at $18.12 apiece on April 12. The Nasdaq Biotechnology Index, by comparison, is up 28 percent since Jan. 2.
NPS, meanwhile, scored its first FDA approval since it was founded in 1986 when the FDA in December approved teduglutide for adults with a rare disorder known as short bowel syndrome. The condition occurs after the partial or complete surgical removal of the intestine, usually due to cancer, trauma, or Crohn’s disease. NPS, which has burned about $1 billion of cash since its inception, doubled down on the drug in February, buying back the international rights to teduglutide (as well as a second drug for people who don’t produce enough parathyroid hormone) from Japan’s Takeda Pharmaceuticals, all part of a plan to build orphan drug franchises that it owns full ownership of. The patient population for teduglutide is small, but the tab is large: it sells for close to $300,000 for a year of treatment. NPS began selling the drug in February, and reported $654,000 in sales from 42 patients and 160 prescriptions during the first quarter. NPS hopes to have 200 to 300 patients on the treatment by the end of the year. NPS’ shares are up 59 percent since the beginning of the year.
JP Morgan Securities, Morgan Stanley, and Merrill Lynch are the underwriters for Ironwood’s offering and will have a 30-day option to buy about 1.6 million more shares. J.P. Morgan Securities and Morgan Stanley are NPS’ underwriters as well, and will have a 30-day option to purchase up to 900,000 additional shares.