Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Jefferies analyst Amy Li downgraded Ironwood Pharmaceuticals , traded on (NASDAQ:IRWD), from Buy to Hold, significantly reducing the price target from $8.00 to $0.70. The downgrade follows concerns related to the Food and Drug Administration’s (FDA) focus on the lower than expected exposure levels of the drug candidate, apraglutide, in phase 3 clinical trials. According to InvestingPro data, the stock has already fallen over 41% in the past week, with the current price of $0.65 sitting near its 52-week low of $0.59.
Li’s analysis suggests uncertainty regarding the FDA’s efficacy questions, which were not fully addressed by the positive phase 3 and open-label extension (OLE) study results. The concerns also encompass whether the lower exposure to apraglutide is due to the method of dose administration, as theorized by Ironwood, or variations in the drug’s pharmacokinetics. Despite these challenges, InvestingPro analysis indicates the company maintains strong liquidity with a current ratio of 4.69, though its overall Financial Health score is rated as ’FAIR’.
The reassessment by Jefferies reflects a more cautious stance towards Ironwood’s stock, with Li indicating a need for further clarity on the company’s strategy to address the FDA’s concerns. The firm has adjusted their risk-adjusted product sales estimate for apraglutide to $206 million, assigning a probability of success at 50%, and has postponed the expected launch of the drug to 2029.
Ironwood Pharmaceuticals’ investors are now facing a period of uncertainty as the company works to clarify the FDA’s queries and define a clear path forward. The updated price target of $0.70 by Jefferies stands as a stark indicator of the challenges that lie ahead for Ironwood in its efforts to bring apraglutide to market.
In other recent news, Ironwood Pharmaceuticals has reported its fourth-quarter financial results, showing adjusted earnings per share of $0.02, which fell short of analyst estimates of $0.06. The company’s revenue for the quarter was $90.55 million, missing the consensus expectation of $92.5 million. Despite the earnings miss, Ironwood’s updates on its pipeline drug, apraglutide, have garnered attention. The company has initiated a rolling New Drug Application submission to the FDA, with completion anticipated in the third quarter of 2025. Additionally, Ironwood shared promising data from an open-label extension study, indicating that more patients are weaning off parenteral support with apraglutide treatment.
In terms of its marketed drug Linzess, Ironwood reported an 11% year-over-year growth in prescription demand for 2024, although U.S. net sales declined by 15% to $916.3 million compared to the previous year. Looking forward, Ironwood provided 2025 revenue guidance of $260-290 million, slightly below analyst expectations of $287.6 million. The company also anticipates Linzess U.S. net sales to be between $800-850 million in 2025. Meanwhile, Leerink Partners has adjusted its price target for Ironwood to $1.00 from the previous $3.00, maintaining a Market Perform rating, following the announcement of an additional Phase 3 trial for apraglutide. This requirement for further clinical testing introduces additional financial uncertainty for Ironwood.
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