Ironwood Pharmaceuticals (IRWD) Q2 FY26 earnings call: guidance and Q&A

Inquired about the impact of net price changes on Linzess demand, specifically if earlier concerns about demand softening due to elimination of inflationary rebates have been alleviated.

Management confirmed that year-to-date EUTRX volume demand growth is tracking at 5%, modestly ahead of initial low single-digit projections. They expressed confidence in achieving mid-single-digit demand growth for the full year, attributing it to successful efforts with partners to ensure patient access across channels, including Medicaid.

“We've done a lot working with our partner to really help ensure ongoing access for patients across channels, and we think we're in a very good spot now to deliver in that mid-single digit range to the full year.”

asked by Jason Butler · answered by Unknown Speaker

Asked about the progress of site onboarding for the STARS II trial and strategies to accelerate enrollment timelines.

Management stated that it's early days but sites are activated and enrolling patients. They are actively ramping up the trial, activating more sites, particularly in the US where the original STARS trial had fewer sites. They plan to leverage strong support from the scientific steering committee and identify high-potential sites.

“I think the big thing here, Chase, is really the expansion of the number of sites, particularly in the US where we were with STARS. As you recall, there wasn't a lot of US sites. It was largely ex-US.”

asked by Jason Butler · answered by Thomas McCourt

Followed up on concerns about potential issues in the Medicaid patient population due to higher Linzess pricing after the elimination of inflationary rebates.

Management reiterated that while initial concerns existed, their efforts with partners and individual states have helped maintain access. They are confident that growth across channels, including Medicaid, will support the mid-single-digit demand growth projection for the full year.

“We've worked very hard at a state level with our payer to help maintain access across channels, including Medicaid, and we are still projecting to have our growth across channels to be in line with expectations to drive that mid-single-digit demand growth through the full year.”

asked by Mohit Bansal · answered by Unknown Speaker

Asked how the company plans to ensure that prior trial conduct issues, specifically improper dosing, do not recur in the STARS II trial, especially with more sites.

Management explained that the original STARS trial intended a 5mg dose but delivered 3.5mg due to kit and instruction issues. They have dramatically improved the kit, conducted human factor tests, and have drug exposure and kinetic data to ensure accurate 5mg delivery in STARS II, expressing high confidence in avoiding the previous error.

“what we've done since then, based on the root cause analysis on the delivery, we've dramatically improved the kit to avoid any kind of errors in instruction or implementation of the new kit.”

asked by Mohit Bansal · answered by Thomas McCourt

Inquired if the favorable time phasing of gross to net rebate reserves seen in Q1 and Q2 is expected to unwind in H2, and if the expectation for reduced Medicaid volume growth in H2 still holds.

Management stated they expect less variability in sequential quarterly net sales due to more consistent net price across channels. They do not anticipate an "unwinding" of favorability. For Medicaid, they are not seeing the dramatic reduction previously feared, and expect growth across channels to be in line with mid-single-digit demand growth for the full year.

“So, key takeaway, don't expect there to be an unwinding, if you will, of the due to changes in favorability quarter one quarter.”

asked by Dominic Rose · answered by Unknown Speaker

Asked for clarification on the Linzess net sales guidance, specifically why the high end increased by a higher magnitude than the bottom, and if there was conservatism related to IRA rebates.

Management clarified that the increase in guidance was consistent across both ends of the range, up by $25 million for each. The confidence to raise guidance was driven by the consistent mid-single-digit demand growth observed over two quarters.

“The increase in the guns was actually consistent on each end of the range. It was up by 25 million.”

asked by Chase Knickerbocker · answered by Jeff Ruberti

Asked for color on how R&D and SG&A expenses are expected to progress in Q3 and Q4, particularly regarding step-ups.

Management expects R&D expense to increase in the remainder of 2026 due to the ramp-up of the STARS II trial. A modest increase in SG&A expense is also anticipated. The exact increase will depend on the speed and number of sites activated for the trial.

“So for the remainder of 26, we do expect R&D expense to increase relative to the first half of the year. That reflects the ramp up of the STARS II trial we initiated in June.”

asked by Chase Knickerbocker · answered by Ronald Silver