Colesevelam(Ironwood Pharmaceuticals, Inc.)

Ironwood Pharmaceuticals $IRWD CEO Peter Hecht has some blockbuster expectations for one of his top clinical candidates. But he’s having a hard time convincing analysts and investors of that today after rolling out a disappointing batch of top-line data. The biotech reported Thursday morning that the high dose of its experimental drug — IW-3718 — for gastroesophageal reflux disease (GERD) not controlled by available meds hit the primary endpoint on significantly reducing heartburn severity for patients in a Phase IIb trial. Among patients taking a combination of 1500 mg IW-3718 and a proton pump inhibitor like Nexium, there was a 58% mean decrease in heartburn severity. That’s high, but there was also a high response for the PPI-only group, with a 46% drop. That 12-point separation was statistically significant, says Ironwood, with a p-value of 0.04. Analysts, though, were disapproving, noting they were looking for a 15-point or greater separation from the control group — as guided by the company. That issue came up quickly on the call this morning as analysts weighed the shortfall. Execs called it a clear success, even without hitting that 15% mark. In addition, the crew at Ironwood also conceded that the 500 mg and 1000 mg doses were not successful against all endpoints. On another key score, patients treated with IW-3718 1500 mg plus a PPI showed a mean decrease of 55.4% from baseline in regurgitation frequency compared to 37.9% in patients treated with a PPI alone. Ironwood shares slid 7% in early morning trading as investors weighed in on the data. Geoff Meacham at Barclays summarized the disenchantment with Ironwood today, which has billed IW-3718 as a drug worth $2 billion-plus per year in peak sales. While the data and validation of the patient reported outcomes (PRO) instrument support advancement into the planned Phase III (anticipated start in 2H18 ), we think the clinical meaningfulness of the 12-point reduction in heartburn severity will remain a point of debate. Moreover, even though there are no treatment alternatives or competitors in the refractory GERD category, we believe that investors will perceive IW-3718’s commercial potential as somewhat dampened given the lower than expected difference. We see a 2020 launch as more likely now but also view the company’s >$2B peak US sales target as potentially ambitious absent more detailed data. David Nierengarten at Wedbush also didn’t care for the nasty surprise, noting that the Phase III now looks “long, expensive and high-risk.” Armed with the data, Ironwood says that they will now take the data to the FDA and plan to set up a pivotal program to get started in the second half of 2018. This drug is a key catalyst for Ironwood, which sees this as a big addition to its Linzess franchise. “This is a real scientific breakthrough,” Hecht told analysts Thursday morning. “The results from this trial, demonstrating encouraging improvements in heartburn severity and regurgitation, appear to validate our approach of targeting bile acid reflux in patients with uncontrolled GERD in addition to suppressing acid with PPIs,” said Mark Currie, chief scientific officer at Ironwood, in a statement. “These data were consistent and robust across key endpoints, and reinforce our belief that IW-3718 may lead to meaningful symptom relief for patients with uncontrolled GERD.”