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Investing.com -- Shares of Ironwood Pharmaceuticals , Inc. (NASDAQ:IRWD) plunged 36% as the company announced a significant workforce reduction and provided disappointing revenue guidance for the full year. The biopharmaceutical firm, which specializes in gastrointestinal and rare diseases, disclosed plans to cut its workforce by approximately 50% in an effort to focus on the development of apraglutide, a treatment for short bowel syndrome (SBS).
The market’s reaction comes after Ironwood’s announcement fell short of the consensus expectations for full-year 2025 revenue, which was projected to be $339.3 million. The company’s strategic reorganization aims to streamline its operations and reduce costs, particularly those associated with its flagship product, LINZESS. Despite the expected growth in LINZESS prescription demand, the company is facing pricing pressures that have necessitated cost reductions.
Ironwood expects to incur restructuring charges of about $20 to $25 million, primarily within the first half of 2025. However, it anticipates that the reorganization will yield annual operating expense savings of approximately $55 to $60 million, translating to a $40 to $45 million benefit to annual profits, net of the impact on collaborative arrangements revenue.
In addition to the restructuring, Ironwood has promoted Greg Martini to Chief Financial Officer and Tammi Gaskins to Chief Commercial Officer. The company remains optimistic about the potential of apraglutide, given the encouraging data from the open label extension study and the initiation of a rolling New Drug Application (NDA) submission.
JMP Securities analyst Jason Butler provided a perspective on the company’s updates, stating, "Corporate restructuring acknowledges continued headwinds for LINZESS but prioritizes apraglutide, which we continue to view as the long-term value driver; we reiterate our Market Outperform rating on Ironwood Pharmaceuticals while lowering our risk-adjusted, DCF-derived price target from $23 to $14. Yesterday, Ironwood provided a business update including 1) 2025 guidance for LINZESS; 2) corporate restructuring to maximize profitability of LINZESS and investment in apraglutide; and 3) revised NDA submission timelines for apraglutide (3Q25 vs. prior 1Q25) to enable potential inclusion of long-term extension results in the product label.”
Ironwood expects 2025 total revenue to range from $260 to $290 million. The adjusted EBITDA is projected to be over $85 million. The company’s strategic focus is now firmly on advancing apraglutide and ensuring long-term growth, despite the immediate negative response from the market.
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