Ironwood Pharmaceuticals, Inc. (IRWD) Earnings Call Transcript & Summary

Good afternoon, everyone. Thanks, Eric, and thanks to JPMorgan for the opportunity to present this afternoon. I also want to thank my team that -- for the great work they've done over the last year and also in helping me be reasonably ready if things -- if this is a good presentation, that's all because of them. If it's not so good, that's because of me. I was here a year ago, actually. And when I -- a year ago, I was actually basically literally 2 days into the job at Ironwood. And at that time, I'm sure I said, I know I said that I was really excited about the opportunities. And I can say a year later that I'm even more excited with the opportunities that we have at Ironwood, given what we've accomplished in 2019, which I'll take a few moments to go through and what we have as opportunities in front of us. And so hopefully, you'll also have a feeling about the possibilities for us to make a difference for GI patients and also to deliver value for shareholders and for our employees. So this is our usual collection of forward-looking statements. If you want more information, you can certainly check our website and our Investor Relations site. So Ironwood has a very clear mission. We're really dedicated to making the most difference we can for people suffering from GI diseases. And in the U.S., that's about 70 million people whose lives are being disrupted by GI diseases. And we believe and we have the capabilities to become the leading GI health care company in the U.S., and that's really the passion that is driving us. Let me say a little bit more about both that mission and that vision. As I mentioned, GI diseases is a huge issue for -- from a health care perspective. Actually, 2/3 of Americans will suffer symptoms related to GI symptoms on a weekly basis. And 1 in 5, these symptoms are really actually disrupting their life, from a health standpoint, from a social standpoint, from ability to work. And it's impacting and creates millions of visits to physicians, hospitals, emergency rooms. And the cost is really significant. I think this certainly has surprised me. Almost $140 billion of cost are linked to GI disease. This is actually more than heart disease, it's more than what we see from trauma or mental health. What's exciting for us is actually -- is the opportunity to make a difference here. In fact, 20% of these health care costs are associated with esophageal disease or GI pain. And we have either a product on the market or products in our pipeline that could make a real difference for people suffering from these symptoms. And we absolutely have the capabilities to do -- make a difference and to lead in the GI therapeutic area. And in fact, that's what we've been doing for the last 7 years since we launched LINZESS. We have a fantastic selling capability that is award winning. We have a tremendous capability in interacting and informing and educating consumers. And as exemplified with LINZESS, where 85% of the time a patient asks for LINZESS, they get a prescription for that. And we're driving science, both basic science and the understanding of things like the role of bile in reflux disease, the GCC antagonist science, the science of hypersensitivity in the gut. All of those are areas where we're pushing knowledge and science both for benefit of the development programs we have, but also to really help better understand disease. And you can see the number of other areas that we have capabilities. An important one that's highlighted there as well at the bottom is partnering, and we've been very fortunate to have a fantastic partnership with Allergan that's also helped us deliver leadership for LINZESS and also build these capabilities. Now we've been focused on 3 key priorities. I shared these 3 priorities a year ago, and we're continuing to work on them because we see this as key to really achieving leadership with LINZESS, leadership in the GI category and really delivering value for shareholders. Drive LINZESS sales growth, advancing our late-stage pipeline and then delivering sustainable profits. And I'll just take a few moments to go through each of these to show how we progressed in the last 12 months. So LINZESS, I'm really pleased to say that LINZESS is now the #1 prescribed medicine for IBS-C in chronic constipation patients. This was achieved in the second half of 2019 for the first time. We are able to say that in 2019, we delivered, with our partner, Allergan, $800 million in net sales in the U.S. and this was based on really strong volume growth, where we can -- saw 13% year-over-year growth in extended unit prescription demand, and that is slightly up actually from 2018, which I think is a remarkable achievement for a product in its seventh year on the marketplace. We also continue to lay the groundwork for future growth. We had a positive readout of a Phase IIIb study that looked at abdominal symptoms like bloating and abdominal discomfort that was positive in which we've been already bringing in educating physicians. And we maintained a really broad payer access, which is critical to making sure that patients that are suffering from IBS-C or chronic constipation, have access to LINZESS in an affordable way. And this leaves us with really strong momentum as we head into 2020. And I think many times you may hear of a brand achieving leadership or being a leader or being #1, I just wanted to show, in our case, what does that look like. This -- you can -- this is a chart that looks at monthly prescriptions, and you can see basically that by the end of the year, LINZESS had achieved the #1 position. But you -- it's passing lactose is one of the generic treatments, in -- for IBS and chronic constipation. But you can see the lead in the -- that we have over the other branded competitors in the category. It's a really remarkable and strong position and shows how strongly preferred LINZESS is by physicians and patients. So -- and LINZESS performance is translating into value for Allergan and for Ironwood. You can see that as -- the brand generated close to just over $500 million in brand contribution. We have a significant share of that, of course, and this strong growth at the top line and also of delivery of contribution is enabling us to be positioned for a really strong 2020, and so we wanted to share a bit of our guidance here. We do expect the demand growth to continue at a strong pace going forward. We are able to say that we believe price will be stable, that price will be stable in 2020. And we can talk more of that in the Q&A, but that's based on the fact that 80% of our access, 80% of the plans that we're on, that we'll maintain the position they are today in terms of the formulary status are positioned in availability to patients as well as the price. And we can continue the mid-single-digit growth that we saw in 2019 into 2020 based on the combination of strong continued volume growth and a more stable pricing situation. So I think this really sets us up for a fantastic 2020. And this -- the value that this is creating is not going to end, of course, in 2020. We have a very significant IP coverage, basically through the end of the next decade. And I'll come back to that in a moment just to say a word about that because I think you're all aware that we just announced the settlement of our fourth ANDA case with Sandoz, but I'll come back to that in a moment. The second priority was advancing the pipeline. And I'll just take a moment here to highlight a couple of things because I think particularly here, we've made a tremendous amount of progress since a year ago. When I was here last year, we had not actually started the Phase IIb study that we have for our abdominal pain product, 7246. And then -- and since then, in the course of 2019, we initiated the program and actually, we've completed enrollment and are now able to say that we will have data in the middle of 2020 -- delivered in the middle of 2020 from 7246, which is a -- as we said, is a nonopioid, basically analgesic pain medicine for lower GI pain, and we'll say more about that in a moment. Our second pipeline, 3718, is for treatment of refractory reflux disease, basically, patients that have -- are not getting their symptoms controlled on a standard PPI dose. This is, again, a very significant opportunity. If we're successful in getting the Phase III results positive and the drug approved, this would be basically the first new medical innovation for the treatment of reflux disease in 3 decades since the launch of the PPIs. And this, again, we'll be delivering in the second -- we say that we've been delivering that in the second half of the year. The study is challenging, we had expected that, and we signaled that in the third quarter but we are now up to 60% enrollment. And again, the team is working fantastic to make sure that we can bring in the study. And I'm also proud that the team has been able to really strengthen the GI development capabilities through the course of the year. Mike Shetzline, our Head of R&D, has brought in some new very capable and important leaders to the team. And excitingly, we are starting to leverage our GI Insight Center and using advanced analytic techniques to be able to help identify patients that we can enroll in studies. And really, in effect, basically getting the right patients faster to the right studies, which I think has been important into the success, particularly on 3718, the progress we're making and is a critical capability in the long term. So we're in a dramatically different place from a pipeline perspective than we were a year ago. A year ago, we had 2 exciting assets with positive data, but we hadn't been -- communicated clarity about when those studies would deliver. We actually hadn't started the Phase IIb study for 7246. And today, we are going to -- we've continued to confirm we will see data on both of those programs next year -- not next year, this year, we're in 2020. And then the last thing we said is we're going to focus on sustained profit delivery, and I think this is another example where the team has done some really excellent work. Of course, the separating or spinning out of the research group is a major part of delivering profitability. And I think kudos has to go both to the Ironwood and the Cyclerion teams, it's a very challenging task that was a tremendous amount of work and, I think, has been really successfully executed. And -- but it was not just that action. The team took a number of additional actions to make sure that we were going to be on track for profitability. We said that we would be profitable from day 1. And we were both on a GAAP and non-GAAP basis, that would have been in the second quarter of '19 -- '20, this year, which is the first quarter post the spin. And we were able to replicate that in the third quarter. And in fact, given the performance that we've had, we were able to raise guidance for the year. The other -- some of the things that went behind that to make sure that we really delivered that. We restructured our debt to lower cash interest. We did that over the summer, very successfully and really better manage our cash outflows to the cash coming in and putting us in a position to be -- really have the flexibility to maximize our pipeline as we -- and launch those products. We've implemented a number of cost optimization initiatives. The most important of that is we moved the company's headquarter from Kendall Square to Boston. That's going to be over the next 5 years, saving about $5 million in cash expense on our real estate costs. We reworked all of our ex U.S. agreements to basically simplify the agreements, allow our team to focus on what we do best, which is making a difference for patients in the U.S. and let our great partners, AstraZeneca in China and Astellas in Japan, also to do what they do best, which is building big successful brands in their markets. They're taking over the manufacturing, which is -- certainly, they're capable of and really allows us to focus, again, on the U.S. business. And the last thing that we did, we're in a exciting partnership with Alnylam, behind Givlaari. This is the treatment for acute hepatic porphyria, we -- helping them launch that program. We started that over the summer. And it's been a really exciting opportunity for our team. It's generated already, for LINZESS, significant net value because we've actually increased quite a bit the time that we're getting with gastroenterologists. We are really having success in finding these patients. And working with Alnylam has been a pleasure and I think there's going to be exciting news continuing through 2020 about what's possible together to make a difference for these patients that are really suffering. This is a terrible disease that in most cases has been really misdiagnosed. And they've -- Givlaari is something many of you have seen is an exciting product that really makes a -- almost a transformative difference for these patients. So that's the story of that third priority. So by all measures, I think we've had a very successful year. We had a clear set of priorities, a clear set of actions that we said we're going to do, and the team has done it and delivered it. So what do we have in store for 2020? I think on top of that base performance and the confidence that we now have in -- or that we have in LINZESS, a durable asset that's going to grow and generate profit for years, are some exciting catalysts. If we talk about LINZESS, we will be bringing to -- as we do every year, launching a new DTC campaign in the spring. That's going to be able to leverage the information that has come out of the Phase IIIb study on abdominal symptoms, being able to talk for the first time with consumers about bloating and abdominal discomfort, which is, for many people, the #1 symptom they face with IBS -- IBS-C, and we'll be -- we've already filed the sNDA on that. The team did a great job on that. And so we have the data added to the label. We also will, as I highlight, this is a catalyst, because I think it was -- has been a concern during the course of 2019, is that, again, we expect to see stable price in 2020 and that's going to contribute to the continued mid-single-digit growth. The other catalyst I have here is an exciting result that we had, which is that we've settled our fourth ANDA case. I think probably all of you are aware that we had a total of 5 ANDA cases. And this is the fourth one now settled for 2030. So the formulation patents by which -- that we focused on in these -- that were the focus of these cases ran to '31. And so to settle in 2030 is recognizing a very large portion, the vast majority of the value and the intellectual property protection, over basically about 90% of the value is protected through these settlements. We've also announced that discussions with the last ANDA case with Teva are continuing. We can't comment on that yet, but we certainly continue to be confident in our IP and our ability to translate that IP into value for patients and for shareholders. One of the things that we have gotten a couple of questions on post -- not a couple, actually multiple questions, is what about the 72-microgram. So we have 3 doses with LINZESS in the market. The cases, particularly, for example, recently, Sandoz focus on our 2 higher dose, the 142 and -- 145 and the 290 doses. And did not cover the 72-microgram. But -- so the status of the 72-microgram is that we have submitted multiple patents supporting that dose to the U.S. Patent Office. These patents have been approved and/or granted in multiple countries outside the U.S., Japan, the EU, Mexico, Canada. So they have been widely recognized. We expect them to be prosecuted as soon as this year. And we remain very confident in the IP behind that dose. The IPs in the formulation has really been driven by the incredible result of being able to take linaclotide or peptide, keep it stable at room temperature and be able to deliver it orally into the -- where it needs to be, in the lower GI tract. To do this with the 72 was even more difficult because it's such a small dose, 72-micrograms, and it required even further innovation. And so all of that IP -- the insights and the IP that was generated, continues to be in place for the 72, and so we remain very confident in that. And then as I mentioned, we've got 2 exciting data readouts this year behind the 2 major -- the 2 key projects that we have in our late-stage program, and we will continue to be very disciplined in our capital allocation and continue to deliver profit over the course of the year. So just in the rest of the remaining few minutes of the presentation, I just want to say a few more words about the 2 late-stage GI assets because we're very excited about both. The first one is 3718. This is a product for refractory GERD patients. There -- and its bile sequestering agent to treat one of the -- a key component of reflux disease that up until now, there really hasn't been a solution aside from surgery. People that have this type of a challenge, particularly with regurgitation, their only option up until now basically has been a fundoplication, which is a surgery where you wrap the stomach around the esophagus. And it's not an easy procedure at all. And so it gives you a sense of the unmet need that is present for some of these patients. We've looked at this in a number of studies. We're very confident that there's about 8 million to 10 million people that basically are refractory to standard dose PPI and what does that look like? These patients are basically taking multiple additional medicines and suffering from really significant reflux and regurgitation, in particular, regurgitation on a regular basis in a highly disruptive way. They are taking lots of antacids. They're trying H2s, higher double dosing PPIs, really not having any successful treatment. And to give you a sense, and this is from a 2019 study that we've done ourselves, some of this data, 75% of these people are having regurgitation more than a couple of times a week. So it's frequent and bothersome. And when we shared the profile of 3718 with these patients, 60% said they absolutely would want to try this product if it was approved and available and because of the, really, challenges they're facing with their life. And why are these people refractory? As I mentioned, this is a -- this product is designed to target bile -- sequestering bile in the stomach. And bile has been known to be a factor in reflux disease for a number of years. This is some of the -- part of the theory behind doing things like the surgeries to tighten up the lower esophageal sphincter. We know that bile, together with acid, generates more heartburn symptoms, creates worse damage in the esophagus. We know that it also actually causes a relaxation of the LES, which increases the number of reflux diseases -- episodes. We -- and to that sort of historic knowledge, we've actually started to add some new insight to kind of fully close the picture. This year, we found that there are actually receptors for bile acids in the muscle around the LES which sort of further links or explains why bile is -- causes relaxation of that muscle. And we've also -- we've known that bile plays a role in slowing down GI transit in delaying gastric emptying. We've done some additional work that just sort of confirms the scope of that, and it's quite significant. And of course, delayed gastric emptying has been showed to add to severity of reflux disease. So I think that we're continuing to build the science case that what we've seen in our Phase II study, that there is a clear rationale -- a mechanism, both for the role of bile and how our bile sequestering agent could have an impact on that. And you can see that we had strong results in our Phase II study with 53% of patients receiving a meaningful -- clinically meaningful reduction in heartburn severity and then over 50% seeing a reduction in frequency of regurgitation. So we've got a very high unmet need. We've got a clear mechanism that's causing the refractory GERD patients or at least is an important factor. We've got a mechanism that has been shown in the Phase II study to work, and we've got the GI capabilities to make this product a success. Closing out with an equally exciting product, 7246. This is targeting, again, as a nonopioid, lower GI pain medicine, analgesic. There are 50 million Americans that actually suffer from lower GI pain. We've known that linaclotide is an excellent pain medicine. The challenge that we've had is, is that how do we get it to patients beyond those that are constipated. One of the side effects of obviously treating constipation is diarrhea. And so it always limited both the dose, but more importantly, limited the patients that could benefit from the pain reduction effect that linaclotide created. And so the research team came up with another tremendous innovation from a formulation perspective, a delayed release form of linaclotide that only releases in the colon. Linaclotide has 2 effects: prosecretory, which happens primarily in the small intestine; and then a pain effect. And by -- the hypothesis was that by bypassing the small intestine, you could eliminate the impact on bowel habit and would be left with only the impact on pain. And in fact, that's exactly what we've seen when we've tested that. We -- they ran a Phase II study that looked at placebo, LINZESS, the immediate release form of linaclotide and 7246. On the left-hand side, you can see that from a pain-relief standpoint, they had a similar level of responders as we saw with LINZESS. That's despite the data on the right-hand side, which basically shows that these patients remain constipated. So even though that they were constipated, they matched the pain relief that we saw within LINZESS, that had the additional benefit of relieving that constipation. And so as a next step, we are conducting and have now finished enrollment, as I said, a Phase IIb study in IBS-D, represents a very significant opportunity, about 16 million patients, no good solution for pain into this treatment. The study is basically looking at using 7246 on top of standard treatments for diarrhea to manage that case. And then to be able to understand, do we see the same or better pain effect in these patients? And can we reconfirm that there is no impact on bowel habit. And so this is -- if this is a positive result, as I said in the earlier chart, you can see that this has a wide application, beyond IBS-D in terms of IBS patients that have pain problems and a number of other GI conditions that also suffer from pain. I should note also that we're taking linaclotide to doses that we've not used before. Particularly up to 1,200 micrograms, 4x the dose for linaclotide to see really how much benefit we can get from a pain perspective. So I'd like to close by sharing sort of what Ironwood could look like beyond 2020. You can see with LINZESS, we have already an exciting product that's on its way to being $1 billion-plus drug, a mega brand in its own right. But if you add that to that 3718 and 7246, 2 drugs that are designed to treat patient populations of a similar size as the LINZESS opportunity, I think you can understand the kind of growth that we can drive going forward and how much of an impact we can have on GI patients. So there, in 25 minutes, is the story of a tremendous year that we've had at Ironwood. And I think, hopefully, a clear picture of what we believe is a very exciting future. Thank you very much for your time.

Okay, so we're in the breakout session for Ironwood. Again, I'm Eric Joseph, one of the senior biotech analysts. Mark, maybe just by way of introduction, you can introduce who's up on the dias with you and we'll hop into Q&A.

Well, great. So again, thanks, everybody, that's here online and in person. I really appreciate your interest in Ironwood. I mentioned in the previous session that we have a great team that's done a great job in 2019, so I want to let us give our -- some of those members a chance to introduce themselves. So I'll let the people introduce themselves. Tom?

Tom McCourt, I'm the President and responsible for the commercial and the development teams.

Gina?

I'm Gina Consylman. I'm the Chief Financial Officer.

I'm Mike Shetzline. I'm the Head of Development, Chief Medical Officer for Ironwood.

And with that, we'd love to take your questions.

Maybe I can hop in first with a commercial one on LINZESS. We had the preannounced LINZESS performance for the full year, but -- and also guidance on growth expectations in 2020. But maybe I can get you to kind of elaborate on how you see the -- I guess break down where you see demand growth coming from, particularly as it relates to the additional abdominal symptom claims data generated earlier last year and as you look towards later with expansion in 2020.

So let me -- I'll repeat the question. So the question is could we talk about where we see growth coming in 2020 and, in particular, what role do we see the positive abdominal symptom data coming role playing. So with that, Tom, can I ask you to take that question?

Sure. I think as Mark mentioned just a moment ago, I mean, we're coming up a very, very strong year as far as growth demand; over 13% year-over-year increase in volume, which is really quite remarkable. In fact, the rate of growth actually increased from the growth we saw last year which was also a strong year. I think what we still see is while there's 30 million to 40 million Americans out there that suffer from IBS and chronic constipation, we're still getting roughly kind of the tip of the iceberg if you will in these people that have primarily pretty significant abdominal pain with constipation because there's a number of other options for patients that have simple constipation or chronic constipation. The challenge that we face commercially is most patients don't identify with abdominal pain and they really describe their symptoms more with bloating, discomfort, fullness, and these are symptoms that the patient more closely identifies with as does a physician which are problematic to treat. So the opportunity to be able to demonstrate that value and broaden our claims so we can use the language that physicians and patients use, we believe we can activate a broader population. And we've initiated that education with physicians earlier this year -- or last year, and we'll be initiating a broader consumer campaign to really activate these patients and enabling them to kind of raise their hand and ask for more effective therapy.

And I'm actually going to take the liberty as the CEO, or being the moderator of the group up here, and ask the question to Gina. So one of the questions we've gotten sort of offline is we've had this fun double-digit growth of 13% in 2019. People are excited about they're seeing the stability in pricing, but there have been some questions about the draw to mid-single-digit growth in 2019 -- 2020 and I wonder if you can say a little bit about that and also, some of the shape -- how do you see the shape of the growth occurring over the year?

Sure. So part of it is really just related to the success of the brand. If you think about how strong the growth has been over the years, especially from 2017 to 2018, we got a 12% year-over-year growth; and again, from '18 and to '19, we had a 13% year-over-year growth. On the volume side, the base is just so much larger, right? And so it's hard to continue to grow at that same magnitude year-over-year. One of the things that we've guided to is the mid-single-digit growth, so for net sales growth in 2020. We've also said stable prices in 2020 and as a result, you would think that the volume growth is probably mid-single digits as well. And one of the reasons that we've been able to say that is just because a few things. The base is larger and also, just to point out, a little bit of the seasonality impact that we see in Q1, just a reminder. In Q1 of every year, it's typically our softest quarter and that is really just because the number of Americans in high deductible plans, we have seen that the number of Americans have increased in these high deductible plans and, unfortunately, the deductibles are higher as well. So we see a moderation of growth in the first quarter and then we see a continuing and ramping up throughout the year. And traditionally, the fourth quarter of every year is our strongest quarter. And if I can just take a moment to talk about price, especially since I'm happy to talk about or excited to talk about price and where we're expecting price to be for 2020, especially as it relates to our last 2 years. In 2019, we had guided to mid- to high single-digit net price erosion. We've actually landed closer to the high end of that guidance and back in 2019, we were also expecting a moderation in the net price erosion in 2020. And we can go beyond that and not just say in moderation in 2020 net price, but we can say it's stable. And in my mind, stable price in 2020 is plus or minus a few percentage points. And part of the reason that we're confident in guiding to that is because, at this point, greater than 80% of our covered lives are roughly at the same price in 2020, the same contracting price in 2020 versus 2019. The other thing to keep in mind is that we've been able to do that and maintain that price while, at the same time, balancing affordable access for our patients. We have a $30 copay or less for greater than 80% of our patients. 80% of our patients do have unrestricted access. So it's a nice win for 2020.

Okay. Let's take another question from the analysts?

Can you speak to maybe sort of interest in inorganic growth opportunities? So why don't I ask [indiscernible]?

So the question for those on the line was do we have any interest in inorganic modes of growth and what have we -- do we see any opportunities in terms of assets beyond our pipeline. What I would tell you is, is that actually, our priority continues to be very clearly on maximizing sales growth, advancing our internal pipeline which we think is actually one of the best in the GI space and then, of course, delivering --- continuing to build on the first 2 quarters of profitability. And so that's where we need to keep the focus on the short term. We have done a full scan of the GI landscape and we've looked at over 90 diseases so we have a good understanding what the assets are, which ones would be potentially ones that we could add value to. And so, as we continue to evolve as a company, we can build our financial resources as we, I think, have demonstrated to our shareholders that we're absolutely delivering on these first 3 priorities. I think we will be in a position that in the future, if appropriate, we'll take a look at some inorganic priorities, but the bar will be higher because we have great internal opportunities and that's a more -- something that we'll look at further down the road. In the meantime, we've got to stay focused on these 3 core priorities. And I think for the time being, we'll hold on sort of saying any new -- making any specific comment.

And the timing of the [indiscernible]?

Yes. So the question was, is the -- sorry, repeat the question again? Sorry.

So it sounds like you have a couple of patent applications on the 72-microgram. Is the timing of those patents going to be issue [indiscernible]?

So what I can say -- I mean, we can't comment on the specific of the discussions that we're in with Teva, but what I can say is there's nothing preventing us from reaching an agreement with Teva on the -- certainly, on the 2 doses, the 145 and the 290. And, in fact, actually, one of the companies that we've settled with, Mylan, we settled with -- included the 72 dose. So there's nothing really preventing us from getting a solution and I think probably that's what we can say at this point.

And is there anything you can sort of [indiscernible]? Is there anything you can say about why it's taking this long to action those plans?

So I mean, the 72 was developed after the first 2 dose. As I said, have been trying to deliver such a small amount of active ingredient as a biologic into the GI tract was even more challenging than the original task and so that, sort of, since it was discovered later than -- the patents were submitted later and there's really not more of an explanation than that as this point. And so we've got them down at the Patent Office. We're very confident and, as I say, we could see progress on that this year. And, of course, we have fill -- the substance of the matter patent remains in effect and will be until 2026, so we have -- it's not a question of time needed to make sure the patents get issued and then, if necessary, if people file an ANDA on that, then we're in a position to challenge those. And based on what we've been able to do so far, I think we can -- have demonstrated a really strong ability to defend our IP. Other questions?

Just coming back to the price for a second. How much forward visibility do you have on net price sort of beyond 2020, particularly thinking about additional generics, Amitiza coming to the market? Is there any impact there or looking beyond '20?

It's a…

So repeat the question.

Oh sorry, yes. So the question really is what type of visibility do we have on net price beyond 2020. At this point, just heard me say that I'd be excited to guide to a stable net price in 2020 and that's because of the confidence that we have with the contracts that are signed and in place in 2020. It's difficult to predict price beyond 2020. Contracts are typically signed for a maximum of 2 years, say 1 to 2 years and even if a contract is signed and in place, if there's a new entrant for instance in the market, it's definitely an excuse for a pair to knock on your door and revisit that contract, reopen it. So it's one of the reasons that we don't want to commit long term to price. Maybe 2 other things. One at least is I certainly wouldn't want to commit to growing that price over time. I mean I just -- I think that's not the environment that we're in today. And the other thing is, is that as we're talking about net pricing, guiding to it, even for 2020, it certainly does not include any significant legislative change that could potentially arise from the change in presidential election, the cycle -- you name it, that are sort of things that are outside of what we're guiding to right now on price.

Eric, I just want…

Yes.

Eric, I just want to make sure we answer the second part of your question with regard to Amitiza, which I do think is -- has come up on occasion with some of the names driving today. So we're -- that will be going off patent over the next couple of years. When I look at Amitiza, I mean, it's a very different profile than linaclotide. When you look at the overall clinical performance, the effect on pain, the tolerability profile and in overall patient satisfaction that we see consistently in market research is they're 2 very different drugs with regard to the overall performance. And even though that we had real basically parity and access, we basically caught and exceeded them as far as market share and volume, even within 18 months, so these are clearly viewed as very different drugs. So as far as Amitiza going generic, I don't think that's a huge drug. These are -- like I said, these are very different drugs and we've been the -- we have been playing in a generic market already. I mean, generic MiraLAX has been available since the day we launched and that hasn't been an obstacle. I think the real strength of LINZESS is its clinical profile, the access we have in the [ pairs ] phase and the willingness for patients to raise their hand and ask for drug.

Other questions?

Maybe just touch on the landscape a little bit more. Could you just comment on what kind of exposure you're seeing or you anticipate [indiscernible]?

Sure and repeat the question, Tom?

Sure. So the question was specifically about the emerging competitors and even the recent competitors in the marketplace. And when I look at these 3 drugs and we think about Trulance, Motegrity and Zelnorm combined, account for less than 5% market share and largely have not been growing at a significant rate. So these are -- again, these promotility agents such as Zelnorm and Motegrity, certainly, are an attractive mechanism for a lot of different reasons for the GI community, but they don't have the pain component, the improvement in pain that we're seeing consistently with linaclotide. So I think when you look at our overall presence in the market as a market leader, we have a very strong position which is really built on the clinical performance for me and certainly access. So beyond those drugs, there's really not much in the pipeline. So we don't see any significant threats as far as emerging competitors which makes us feel very confident as far as the ongoing durability of performance of LINZESS in the upcoming years.

Other questions? Maybe just a shift in gears a little bit. Maybe just a question on IBS pain and 7246. I'm just curious to get a sense of just the size of the addressable IBS pain market and how you might characterize presentation of pain in terms of severity -- I guess consistency and duration in that patient population, also, use of pain relievers?

So Tom, why don't you talk about the -- sort of the size of the opportunity and your perspective on the presentation? And then, Mike, if you want to add anything in briefly after Tom, please do.

Sure. I think this has been a real evolution, particularly in the IBS space, where this all started with abdominal pain first. I mean the one common theme across all subtypes of IBS is the common theme that these people suffer from chronic, frequent abdominal symptoms and then their subcategory based on bowel habit. But for years, we didn't have anything to treat the pain. So the focus has always been first, manage the bowel habit because that's what we could do. I think where we have the opportunity is turn that around because the primary complaint that these people have is that, "I can't go," or "I go too often", is "I hurt." And to have a drug that is purely a pain drug for lower abdominal pain that appears to be very well tolerated and safe and you're looking at these patients that are suffering to struggle and many of these people in the past, they've been using opioids, which obviously, this is a bad thing for these patients and we have a unique opportunity here to offer them a solution that could be a real breakthrough. And, of course, we're not talking about just IBS-D here; we're talking about all forms of IBS eventually and other functional abdominal symptoms as well as organic diseases such as pain related to inflammatory bowel disease as well as diverticular disease. So we're very, very excited to see the upcoming dataset coming from 7246 and if we're right with regard to the pain mechanism how far can we go? We -- Mark mentioned that we're pushing, that this enables us to push the dose to a level that we've never been able to push to see how good a pain drug could this really be.

And Mike, anything to add?

Maybe just to add that this is one to me one of the very exciting programs that we have in GI, not just at Ironwood because the ability to conceptualize pain in IBS in particular from bowel habits is something that's been questioned all along. But I also want to remind people that the origins of IBS in general were always about pain. The differentiation between IBS-C and -D came basically almost 10 years after ROME was initiated and sort of worked on functional GI disorders and abdominal pain in general. So it's been about pain and now we finally have something that could specifically target pain, so real excited about moving that forward.

So I guess as we think about data from the Phase III trial later this year, how -- what would be a clinically meaningful differentiation relative to placebo to warrant further development?

If we see data similar to we saw in the IBS-C program for linaclotide, then that would be a clear win. I think we're looking for somewhere between 10% and 15% improvement in -- but also recall, we're looking at 2 different aspects of the benefit. We look at the pain overall for the numeric rating scale, the 11-point scale, to gauge their overall benefit, but we're also looking specifically as pain as how it's defined within IBS, meaning the 30% responder definition as well. So we'll have both of those approaches, but we certainly think with a 10% to 15% improvement, we certainly have a path forward. That would be within IBS-D, right? That's the 7246 study. So please recall we already have the positive IBS-C data, so we know the drug works in visceral pain. This study is just looking specifically at IBS-D and then we'll still have to work out the data as it comes out with IBS-D and what to do with other aspects of other indications.

I just want to add one additional point on 7246 because I didn't have the chance to fully touch on this in the presentation. We really need to demonstrate 2 things for this to be the potential that we hope it has for people suffering from GI pain. So Tom and Mike have talked about the potential to make a difference with pain and what that would look like, but, of course, the other thing is that we need to make sure there's no impact on bowel habit and we were very encouraged. We looked at it in healthy volunteers and saw no impact from 7246. We also -- as I mentioned in the presentation, in the IBS-C population, we didn't see that impact on bowel habit. And as I mentioned, we've completed enrolment in the study and, as any study, we have a monitoring and so it's clear that the data continues to be blinded but we haven't see any significant adverse events related to this. So I think the driving thing is we have to wait until we see the actual results and everything continues to reinforce that we have a drug that looks like it's not impacting bowel habit as well.

Yes. I also want to make sure that we're clear on the benefit of the drug. So Mark was -- Mike was talking about the incremental benefit over placebo. These 8 studies generally had very high placebo rates, but when you look at the actual relief of pain, we're talking about 40% to 50% improvement in pain, which is a pretty significant improvement for these patients. We're talking about basically this 15% delta is really incremental over the placebo effect.

Any other questions? We still have 4 minutes.

Maybe just take the program one step further. Assuming positive data, I guess, what visibility do you have right now on the registration for 7246, both in terms of the trial pertinence for registration in terms of number of trials and so forth, but also, I guess, scope of indication? Is it -- would it -- do you envision a registration program being focused on IBS-D or would you be able to potentially go broader across IBS?

Mike, and repeat the question.

Yes, the question was what about the future programs around 7246, recognizing that Phase II is in IBS-D, what would we need for registration programs specifically with IBS-D and what other indications might we be considering. So the current Phase II program, and we call it a Phase II program, but it's a fairly robust Phase II program, it wasn't that long ago that sponsors would do 2-, 3-dose Phase III studies and not do a Phase II study. And the reason I bring that up is because to me, this Phase II study could actually count potentially as a Phase III study, meaning that it's of adequate size and it's fairly well powered. That would mean we have to have discussions with the agency, so this still needs to be clarified with them, but there is an opportunity to potentially do just 1 additional IBS-D study to sort of pursue a registration program with IBS-D and then leave us open to explore other indications like we've talked about internally, other diseases that have a visceral hypersensitivity component, including aspects like inflammatory bowel disease. So IBD (sic) [ IBS-D ] clearly has a visceral hypersensitivity component. Physicians know that when patients have no residual inflammation, they still have persistent abdominal pain. So that is 1 area we're pursuing that we might want to take further. However, the low-hanging fruit is we're still in the visceral hypersensitivity domain around the IBS because we're focusing on IBS-D, we know we have an IBS-C, but there's another domain in the middle with mixed undifferentiated -- as I said, ROME was really founded on pain, so really looked at abdominal pain in general. The bowel frequency component only came in as drugs sought approval in that space. And so we definitely have an opportunity to then broaden the scope within IBS. We could go for IBS-D and then, in addition, have a program in non-D IBS, which would allow us to cover the whole landscape of IBS from an abdominal pain perspective.

Thanks, Mike. So I think we're just about at time. So I'll take liberty to have us stop there. Thanks for your time and your interest. Thanks to my colleagues here. I guess I can close by saying, I'm sure you've seen that we've had…