Cambridge, MA-based Ironwood Pharmaceuticals (NASDAQ: IRWD) and New York-based Forest Laboratories (NYSE: FRX) announced today that they have submitted an application to the FDA for approval of their drug linaclotide, a treatment for irritable bowel syndrome with constipation and chronic constipation.The application includes safety and efficacy data from two long-term safety studies and four placebo-controlled clinical trials. Those four trials involved more than 2,800 patients and showed that linaclotide, Ironwood’s lead drug candidate, provided a statistically significant improvement in abdominal and bowel symptoms when compared against a placebo.

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When biotech firms get bad news from the FDA, the fallout can have a dramatic impact on everyone from the CEO to the bench scientists. But Waltham, MA-based biotech firm Alkermes (NASDAQ:ALKS) was able to escape a disappointing regulatory ruling last month without any impact on its day-to-day operations, Richard Pops, the company’s chairman and CEO, says.

Perhaps it’s a testament to the 23-year old biotech company’s strength. Last month, the FDA turned down a request for approval of a once-weekly version of the diabetes drug exenatide (Bydureon), which has been co-developed by San Diego-based Amylin Pharmaceuticals (NASDAQ:AMLN), drug giant Eli Lilly (NYSE:LLY), and Alkermes. Though Alkermes’s stock price has dropped by more than 20 percent since the news, the company’s operations have remained the same and it hasn’t made any dreaded layoffs.

“The energy level around the company is so high,” Pops says. “It’s so interesting because when you’ve seen the Bydureon actions at the FDA, if you came to Alkermes, you’d realize that operationally nothing has changed.”

It often takes genuine optimism and stamina to overcome lumps in the biotech game. Pops certainly has both traits. He took over as CEO last September after taking a two-year break from the job, which he previously held from 1991 to 2007. Even more, however, the company has steady revenue from two marketed products, primarily from the long-acting schizophrenia drug risperidone (Risperdal Consta), which is marketed by its partner Johnson & Johnson (NYSE:JNJ). Its second product is its naltrexone formulation (Vivitrol) to treat patients trying to kick alcohol and opioid dependence.

Indeed, the Bydureon news was a setback for Alkermes’s bottom line. The drug was expected to be a new and important source of product revenue for the company in the years ahead. That potential income stream will be delayed by more than a year as Amylin expects to reply to the agency’s request for more data on the treatment by the end of 2011. Though the drug relies on Alkermes’s drug-delivery technology, the company has no day-to-day responsibility for producing the drug or working with regulators to get it approved, Pops says.

This is important because it allows Alkermes to focus its internal research and development, while letting Amylin and Lilly do the heavy … Next Page »

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Ironwood Pharmaceuticals (NASDAQ: IRWD), the Cambridge, MA-based biotech company, said today that it passed its fourth major clinical trial of its lead drug candidate. The company, along with its partner Forest Laboratories, said that their experimental drug linaclotide showed a statistically significant benefit on all four primary study goals, when compared against a placebo for patients who have irritable bowel syndrome with constipation. The companies have now passed all four pivotal studies of linaclotide, which is designed for patients with chronic constipation, as well as irritable bowel syndrome with constipation. The companies plan to seek FDA clearance to start selling the product for both uses in 2011.

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Peter Hecht is finally able to speak to the press about Ironwood Pharmaceuticals‘s landmark initial public offering, breaking the silence he was required to keep until last week to comply with quiet-period rules. And the CEO of Cambridge, MA-based Ironwood gave Xconomy a front-row perspective on the most talked about biotech IPO in recent history.

Ironwood (NASDAQ:IRWD), based on the promise of its lead drug linaclotide for chronic constipation, raised $203 million in its maiden public offering last month—a rare feat for biotechs nowadays, in light of public investors’ general aversion to the risky deals. The question of how Ironwood succeeded where many previous biotechs attempting IPOs have failed is likely to be discussed in industry circles and business schools for years.

Hecht shed some light on that big question during an hour-long interview yesterday afternoon. The founding chief executive of Ironwood began by hitting some familiar notes on his management philosophy, mainly that his firm has taken a long-term view on the biotech business and works first in the interest of its investors. While those may sound like the cornerstones of any business strategy, the way Hecht and his team have put them into practice over the past dozen years have made Ironwood into one of only a handful of Massachusetts-based biotechs worth more than $1 billion.

According to Hecht, Ironwood was fortunate to have already met many of the major institutional investors focused on healthcare before it launched the road show for its first public offering last year. This meant that some of the investors were already well acquainted with the company before hearing Hecht and his colleagues’ IPO pitch. Also, four of the large public equities buyers that participated in the firm’s IPO were previous investors in the company, which had raised more than $300 million in private financings before filing papers in November 2009 to go public. “They knew what they were getting into,” Hecht says.

Ironwood’s ability as a private company to raise money from traditionally public investment outfits—including Ridgeback Capital, Morgan Stanley Investment Management, Jennison, Maverick Capital, and Invus—helped the firm support its operations for the past five years without having to do an IPO. (Fidelity Biosciences, Polaris Venture Partners, and Venrock Associates were venture backers of Ironwood.) As Hecht notes, the company probably wouldn’t have been able to raise as much as it did in its IPO without the support of those investors as it advanced linaclotide to its current pivotal phase. During the past three years, the firm has also found partners to help commercialize linaclotide around the world: New York-based Forest Laboratories (U.S.); Spain’s Laboratorios Almirall (Europe); and Japanese drug-maker Astellas Pharma (Asia).

Indeed, the main attraction to Ironwood is linaclotide, which was the subject of utmost interest to investors during the firm’s IPO road show. The firm reported late last year that the drug passed two pivotal trials as a treatment for chronic constipation, and in the second half of this year the company is expected to deliver results of two more pivotal trials of the drug for treating constipation relate to irritable bowel syndrome. The company has estimated that up to 46 million Americans suffer from these conditions, and existing treatments haven’t been able to fully alleviate the abdominal pain and other symptoms these people experience. So the market for the firm’s experimental drug is significant.

“Back in July of last year when we started thinking about doing this [IPO], there was a general sense that this was a very good … Next Page »

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Cambridge, MA-based Ironwood Pharmaceuticals has some new evidence out this morning that its lead drug candidate is an effective treatment for patients with chronic constipation.

Ironwood and its partner, New York-based Forest Laboratories (NYSE: FRX) said last night that the drug, linaclotide, passed the test in a pair of pivotal clinical trials. A significant percentange of patients who got a once-daily dose of the drug experienced relief from their constipation, the primary goal of the studies, as well as relief from bloating and abdominal discomfort. The most common adverse events in patients on the Ironwood drug were diarrhea, flatulence and abdominal pain; 7.4 percent of patients taking the drug dropped out of the studies, compared to 4.2 of the patients who were on a placebo.

This result means that Ironwood and Forest essentially have two down, two to go with their clinical-trial plan for the new drug. About 1,270 patients were enrolled in these two constipation trials, and the companies expect results from two more pivotal trials among 1,600 more patients who have irritable bowel syndrome with constipation. Results from those trials are expected in the second half of 2010, the companies said. Forest has been quite bullish on this drug’s prospects, noting that estimated 26 million Americans have chronic constipation, there are few available therapies for it, and the Ironwood drug has a novel mode of action. The U.S. health care system spends more than $25 billion a year on treating irritable bowel syndrome, according to Forest Laboratories’ annual report. If approved, linaclotide could generated $572 million in annual sales by 2015, according to Tom Russo, an analyst with Robert W. Baird.

The results “confirm the potential for linaclotide to bring relief to the millions of patients suffering from many of the symptoms associated with chronic constipation,” said Forest CEO Howard Solomon in a statement. Ironwood CEO Peter Hecht noted that the company was glad to see the pivotal study results reproduce what was observed in smaller studies.

Ironwood has been able to raise more than $306 million since its founding, and accumulate more than $100 million in the bank now, thanks largely to having a drug with an unusual profile targeted at a common condition that’s tough to treat. Linaclotide is a peptide, and while most peptides are injected, Ironwood turned its drug into an oral pill that can withstand stomach acids, work its way into the intestines, and do its job there, without being absorbed into the bloodstream, where it can cause side effects, Hecht has said. The drug is thought to act by stimulating secretions of fluids into the intestines, which softens stool and helps people have easier bowel movements.

Forest Labs shares climbed almost 2 percent to $27.93 at 11 am Eastern today.

Digging a little further into the data, this drug doesn’t appear to help everybody. Both studies … Next Page »

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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, … Next Page »

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Microbia envisions a future in which specialty chemicals we take for granted, like the beta-carotene that goes in dietary supplements, will come from renewable sources instead of the usual petrochemicals. It won’t wean the world off oil, but it could enable this Lexington, MA-based company and its partners to claim they’re helping to green up the planet, all the while pursuing a $200 million market opportunity.

I heard the Microbia story last week during a conversation with CEO Richard Bailey. It’s kind of a twisting tale that begins with basic research at the Whitehead Institute for Biomedical Research in Cambridge and gave birth to a couple different companies along the way.

Before diving into all that, here’s the gist: Microbia now fashions itself as an industrial biotech company that has found ways to finesse yeast, bacteria and other fermentation materials into pumping out big-time yields of special chemicals. These new versions of carotenoid chemicals, like beta-carotene and canthaxanthin (used to make cheese look orange and salmon look pink, among other things), come from renewable sources instead of petrochemical derivatives.

The first two renewable products could arrive on the market in 2010 and generate as much as $200 million in revenue within the next three years, Bailey says. And he thinks Microbia can do it more cheaply, as long as oil is $50 a barrel or higher. (The price dipped to $39 a barrel a couple days after we talked.)

“Petroleum won’t be here forever,” Bailey says. “Green chemistry does sell, but it has to come at price parity,” to the existing methods.

How Microbia has gotten itself into this position is an interesting story about how science can lead down unpredictable paths. It was started in 1998 by scientists at the Whitehead Institute. The early work was heavy on how yeast strains become pathogenic, or diseased. This led to insights into how to turn yeast into a cheap, effective factory for all sorts of chemicals, Bailey says. The company put that knowledge to work via fee-based contracts with other companies, which reduced its cash burn for years, while another side of Microbia focused on using the knowledge to develop its own drugs.

Bailey, a veteran of Monsanto’s nutrition division, came on board as general manager to run the industrial side of the company back in 2002. At that time, the place had great science but needed some business strategy, in his view. “There was a lot of work on science; I’d argue too much,” Bailey says.

By 2006, as the drug development programs approached the hugely expensive pivotal trial stage, the industrial contracts couldn’t pay the bills anymore. “Even if we got paid by the wheelbarrow of cash every day, it wouldn’t be sufficient,” Bailey says. So management … Next Page »

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Ask Ironwood Pharmaceuticals CEO Peter Hecht what he’s trying to accomplish in the next six to 12 months, and he doesn’t tiptoe around. “We’re trying to build the next great pharmaceutical company,” Hecht says. “I know that sounds ludicrous, but I thought I’d just start out with our ambition first.”

It’s an open question whether he will achieve that, but it’s clear that Ironwood is serious. It’s a private biotech company with 150 employees in Cambridge, MA, that changed its name from Microbia in April. The company has raised a total of $231 million in its 10-year history, including a $50 million private round announced on Oct. 1, led by Morgan Stanley, right when Lehman Brothers and much of Wall Street was crumbling around it. Other investors include notable names like Venrock Associates, Polaris Venture Partners, and Fidelity Biosciences.

The investors are mainly betting on Ironwood’s lead drug candidate, linaclotide. It’s a novel compound for chronic constipation and for constipation from irritable bowel syndrome. One week after the financing announcement crossed the wire, Ironwood and its partner, New York-based Forest Laboratories, said a study of 420 patients 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. These results were promising enough for Ironwood and Forest to start up a program of four final-stage clinical trials, encompassing a total of 2,500 patients, to amass enough evidence to potentially bring this drug to the marketplace.

To hear Hecht tell the story, Ironwood didn’t start down this path because it had narrow expertise in a specific disease like diabetes, or in a particular technology platform, like RNA interference drugs. “We don’t have any of that,” he says. “I know it sounds hokey and trite and incredibly naïve, but we have really talented people and enormous passion.”

The strategy at Ironwood, Hecht says, is to look for great areas of medical need and work to develop drugs for them. Constipation from irritable bowel syndrome was one such area. The numbers of patients diagnosed with this condition is fuzzy, but Novartis tegaserod maleate (Zelnorm) reached $561 million in peak sales for treating this condition in 2006, despite “modest efficacy,” Hecht says. The drug was pulled from the market in March 2007 after the FDA found it raised cardiovascular risks.

The Ironwood drug has been designed to work differently than the Novartis product. … Next Page »

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