Ironwood Pharmaceuticals appoints KPMG as new auditor, dismisses EY

Ironwood Pharmaceuticals Inc. (NASDAQ:IRWD) announced that its Audit Committee has dismissed Ernst & Young LLP (EY) as its independent registered public accounting firm. The decision was made on July 3 after the committee solicited and reviewed competitive proposals from several accounting firms, including EY. EY was notified of the dismissal on the same day.

According to a press release statement and the company’s filing with the Securities and Exchange Commission, the reports issued by EY on Ironwood’s consolidated financial statements for the years ending December 31, 2024, and December 31, 2023, did not contain any adverse opinions or disclaimers, and were not qualified or modified regarding uncertainty, audit scope, or accounting principles.

The company stated that there were no disagreements with EY on accounting principles, financial statement disclosures, or auditing procedures during the fiscal years ended December 31, 2024 and 2023, and through the interim period up to July 3, 2025. However, EY’s report on Ironwood’s internal control over financial reporting as of December 31, 2024, did include an adverse opinion. EY identified material weaknesses in internal controls related to entity-level controls, information technology general controls, the financial statement close process, and expenditure controls. These weaknesses were previously disclosed in the company’s annual report for 2024 and did not result in a restatement of financial statements.

Ironwood has authorized EY to fully respond to inquiries from KPMG LLP, which has been appointed as the new independent registered public accounting firm effective July 3, 2025, for the fiscal year ending December 31, 2025. The company noted that it had not previously consulted KPMG on any accounting or auditing matters prior to the appointment.

A letter from EY to the SEC, dated Thursday, was included as an exhibit in the company’s SEC filing. Ironwood Pharmaceuticals’ Class A common stock is listed on the Nasdaq Global Select Market under the ticker IRWD.

In other recent news, Ironwood Pharmaceuticals has faced a series of downgrades from several analysts due to challenges related to its drug candidate, apraglutide. Craig-Hallum downgraded the company’s stock from Buy to Hold, citing concerns over the delayed approval of apraglutide and potential financial risks, including debt issues and the upcoming loss of exclusivity for its key product, Linzess. The price target was significantly reduced from $7.00 to $1.00. Similarly, Wells Fargo (NYSE:WFC) also downgraded Ironwood from Overweight to Equal Weight, with a price target drop to $1.00, following the FDA’s request for a new trial for apraglutide, which poses a considerable obstacle.

Jefferies analyst Amy Li further downgraded the stock from Buy to Hold, lowering the price target to $0.70, due to concerns about the FDA’s questions on apraglutide’s exposure levels during trials. Meanwhile, Leerink Partners reduced its price target to $1.00, maintaining a Market Perform rating, following the announcement of an additional Phase 3 trial requirement for apraglutide. The company is currently exploring strategic options, including a potential sale of Linzess-related cash flows, to manage these challenges.

Despite these setbacks, Ironwood’s CEO, Tom McCourt, remains optimistic about apraglutide’s potential as a blockbuster drug. The company has engaged Goldman Sachs & Co (NYSE:GS). LLC to explore strategic alternatives to maximize shareholder value. Investors are closely monitoring Ironwood’s steps to address the financial and regulatory hurdles associated with bringing apraglutide to market.

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