Ironwood(US:IRWD)2025-05-12 20:36Acquisition and Collaboration - The Company acquired VectivBio Holding AG in June 2023 to advance apraglutide for short bowel syndrome patients[33]. - The Company has collaboration agreements with AbbVie and AstraZeneca for linaclotide, with shared development costs and profits[51]. - The Company’s collaboration with AbbVie for linaclotide includes a 50% share of net profits and losses from U.S. sales[55]. - The collaboration agreement with AstraZeneca includes tiered royalties starting in the mid-single-digit percent, increasing up to 20%, with potential milestone payments totaling up to $90 million[68]. Financial Performance - Collaborative arrangements revenue for the three months ended March 31, 2025, totaled $41.1 million, a decrease from $74.9 million in the same period of 2024[51]. - Collaborative arrangements revenue related to LINZESS sales in the U.S. decreased to $38,769,000 in Q1 2025 from $71,715,000 in Q1 2024, representing a decline of 46%[59]. - Total collaborative arrangements revenue for the same period was $39,394,000 in Q1 2025 compared to $72,455,000 in Q1 2024, a decrease of 45.5%[59]. - The Company recognized a $38.0 million reduction to collaboration revenue during the three months ended March 31, 2024, due to changes in estimates of sales reserves and allowances[58]. Expenses and Liabilities - The Company incurred $1.8 million in total research and development expenses under the linaclotide collaboration for North America during the three months ended March 31, 2025[54]. - The company incurred $3.1 million in selling, general and administrative costs for LINZESS sales in Q1 2025, down from $10.2 million in Q1 2024[59]. - The Company incurred $18.3 million in restructuring expenses during the three months ended March 31, 2025, primarily related to workforce reductions[131]. - Total accrued expenses and other current liabilities increased to $33,439,000 as of March 31, 2025, compared to $26,849,000 as of December 31, 2024[96]. Cash and Debt Management - As of March 31, 2025, the Company has cash and cash equivalents sufficient to meet projected operating needs for at least the next twelve months[34]. - The Company has long-term debt obligations, including convertible notes maturing on June 15, 2026[34]. - The estimated fair value of the 2026 Convertible Notes was $176,900,000 as of March 31, 2025, down from $186,600,000 as of December 31, 2024[89]. - The Company repaid the $200,000,000 aggregate principal amount of the 2024 Convertible Notes upon maturity in June 2024[99]. - The Revolving Credit Facility was increased from $500.0 million to $550.0 million in September 2024, with a maturity date extended to December 31, 2028[115]. - As of March 31, 2025, the outstanding principal balance on the revolving credit facility was $385.0 million, with total interest expense recognized of $7.149 million for the three months ended March 31, 2025[124]. Revenue and Royalty Income - Royalty revenue from Canada and Mexico combined was $0.6 million in Q1 2025, slightly down from $0.7 million in Q1 2024[60]. - The company recognized $0.8 million in royalty revenue from Europe and the Expanded Territory in Q1 2025, up from $0.7 million in Q1 2024[63]. - Under the license agreement with AbbVie, royalties based on sales volume in Europe are in the upper-teens percent, while royalties in the Expanded Territory are in the upper-single digits for the first five years[62]. - The company recognized $0.5 million in revenue related to development activities in Q1 2025, down from $0.7 million in Q1 2024[76]. Tax and Regulatory Compliance - The Company recorded an income tax expense of $1.1 million for the three months ended March 31, 2025, compared to $9.1 million for the same period in 2024[128]. - The Company adopted ASU 2023-09 on January 1, 2025, which improves transparency in income tax disclosures[43]. Asset Management - Total assets measured at fair value as of March 31, 2025, amounted to $75,083,000, with $53,563,000 in money market funds and $21,520,000 in commercial paper[87]. - The Company recorded a right-of-use asset of $10,600,000 and an operating lease liability of $14,900,000 as of March 31, 2025[94]. Interest and Currency Risks - The effective annual interest rate of the 2026 Convertible Notes was 1.9% as of March 31, 2025[109]. - The Company is exposed to a potential increase in annual interest expense of $2.6 million from a 10% change in the applicable interest rate on its $550.0 million Revolving Credit Facility[204]. - The fair value of the 2026 Convertible Notes is dependent on the price and volatility of the Company's Class A Common Stock, affecting the cash required at conversion or maturity[205]. - The company is exposed to foreign currency exchange rate risks due to international operations, with local currencies as functional currencies[207]. - The company does not currently hedge its foreign currency exchange rate risk, and fluctuations are not expected to materially impact results[207].