Ladies and gentlemen, thank you for standing by and welcome to the Ironwood Pharmaceuticals First Quarter 2020 Investor Update Conference Call. [Operator Instructions]I would now like to hand the conference over to one of your speakers today, Meredith Kaya. Ma'am, you may begin.

Good afternoon and thanks for joining us for our first quarter 2020 investor update. Our press release crossed the wire this afternoon and can be found on our website, www.ironwoodpharma.com.Today's call and accompanying slides include forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the current safe harbor statement slide as well as under the heading Risk Factors in our annual report on Form 10-K for the year ended December 31, 2019 and in our future SEC filings. All forward-looking statements speak as of the date of this presentation and we undertake no obligation to update such statements. Also included are non-GAAP financial measures, which should be considered only as a supplement to and not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of our press release for reconciliations of these measures to the most directly comparable GAAP measures.During today's call, Mark Mallon will begin with an overview of the quarter, Tom McCourt will review our commercial and pipeline performance and Gina Consylman will review our financial results and guidance. Mike Shetzline will be available during the Q&A portion of the call. We will be referring to slides via the webcast. For those of you dialing in, please go to the Events section of our website to access the webcast slides.With that, I'll turn the call over to Mark.

Thanks, Meredith and thanks, everyone, for joining us today. We hope you and your families are safe and healthy in these challenging and uncertain times. The Ironwood team are all in different locations today as we continue to work remotely.It has been just over one year since Ironwood was launched as a GI-focused healthcare company. We've made significant progress towards achieving our mission of advancing GI treatments and redefining the standard of care for millions of patients in need. We entered 2020 with a strong foundation and continued this momentum in the first quarter, highlighted by double digit LINZESS prescription demand growth, the advancement of our 3718 Phase III program for refractory GERD, the completion of patient dosing in our 7246 Phase II trial for abdominal pain associated with IBS-D and our fourth consecutive quarter of delivering profits.However, the first quarter was also marked by the beginning of an unprecedented time in the U.S. and around the world. The COVID-19 pandemic has caused substantial disruption to our lives, the health care system and the economy. Navigating this pandemic is a primary focus for all of us right now and so we plan to spend a good portion of today's call discussing the impact that it's having on our business, the actions we're taking in response and our unwavering focus, especially during these times, to deliver on Ironwood's vision and mission.First and foremost, the health and well-being of Ironwood teammates and their families as well as patients, health care providers and our broader communities is our primary focus. Both our headquarters and customer-facing employees have been working remotely since March 16. We've developed comprehensive plans for employees to resume in-person work practices and expect to begin implementing those plans as we determine it to be safe to do so and pending…

Thanks, Mark and good afternoon to everyone. LINZESS prescription demand grew 11% year-over-year in the first quarter, an impressive growth rate in our eighth year since launch and especially consider some of the headwinds that we typically face during the first quarter during each year as high deductible plans get reset. There was an increase in LINZESS demand during the first 2 weeks of the quarter, which we believe to be the result of patient stocking due to COVID-19.We also saw a meaningful increase in the number of 90-day prescriptions filled during the quarter, which we believe will help support patient compliance during this time. While it's early and uncertainties regarding the impact of COVID-19 remains, we are encouraged by the continued growth that we're seeing in the second quarter, reinforcing our confidence in the brand.LINZESS has established clear prescription market leadership within the category and remains a trusted brand amongst physicians. Studies indicate that a sick patient with chronic symptomatic disorder such as IBS-C are more likely to refill their prescriptions during this time because of the symptomatic nature, which serves as a regular reminder for patients to take their medication.For many patients, refilling this LINZESS prescription is often as easy as just calling the health care professional. Approximately half of total LINZESS prescriptions are refilled, meaning they are being filled by patients that are currently taking LINZESS and the majority of new prescriptions are patients who have had some experience with LINZESS. Estimates suggest approximately 10% to 14% of LINZESS patients are new to the LINZESS brand entirely.It is with this subset of patients we are seeing the largest negative impact due to the COVID-19 to date. There has been a sharp decline in patient visits to doctors' offices since mid-March due to the pandemic. And new patients…

Thanks, Tom. Over the next few minutes, I will highlight our first quarter financial performance, discuss some of the financial impacts we might see as a result of COVID-19 and share our expectations for the remainder of the year. Please refer to our press release for detailed financial information.Starting with our first quarter results. In the first quarter of 2020, total Ironwood revenues were $80 million, a 16% increase year-over-year. Revenues were driven primarily by $71 million in U.S. collaboration revenue combined with $5 million in sales of API as we complete the transition of manufacturing responsibilities over to our ex U.S. partners.LINZESS net sales were $172 million during the first quarter, a 7% increase year-over-year. The difference between net sales growth and prescription demand growth is primarily due to a decrease in inventory, partially offset by net price improvement.LINZESS commercial margin was 73% in the first quarter. The higher commercial margin for the brand in Q1 2020 compared to the first quarter last year was driven by higher LINZESS net sales and some cost savings resulting from the sales force being remote during the last 2 weeks of the quarter.The remote selling activities conducted by both Ironwood and Allergan are excluded from the U.S. LINZESS commercial collaboration. We expect a larger decrease in sales force spend in the second quarter due to the amount of time the field has already been resolved during the quarter. The total impact remains uncertain until we have more clarity around when we and Allergan will reactivate in-person promotion broadly.Now turning to earnings. GAAP net income was $3 million for the quarter. Non-GAAP net income was $7 million and adjusted EBITDA was $14 million during the first quarter of 2020. We recorded a net loss across each of these metrics during the first quarter…

Thanks, Gina. Before we open up the call for Q&A, I'd like to take a moment to recognize the team here at Ironwood. I've been incredibly impressed and proud of the organization's ability to remain focused during these difficult times. It's not easy trying to maintain a high level of execution on our business priorities, but the Ironwood team have managed to do just that. And so I would like to say thank you to everyone at Ironwood, the Ironwood community and for their hard work and dedication to advancing our vision of becoming a leading GI-focused health care company.And so now, we'd like to -- I think we're ready for questions. And so [Tanesha]? Tanesha, I'd ask if we have any questions? Tanesha, sorry. Did we have any question?

We do have a question from the line of Raghuram Selvaraju.

This is [Blair] calling on for Ram. Just a few questions for you. Do you think the prescriber patterns have changed dramatically as a result of the pandemic? And in what way would you say?

Tom, do you want to take that one?

Sure. I mean, no question. There has been significant changes, particularly with the reduction in office business, which have been down almost 70% based on the data we've seen so far. What we have been seeing is a migration to a telehealth, telemedicine model which a number of both primary care and GI physicians are embracing. And thus, we have been actively looking at that capability for some time. We've implemented a telemedicine program that is driven off our consumer campaign.And we have been talking and working with health care professionals to see how we can help them and how we can better enable this kind of capability. And I think moving forward, in talking to a number of these physicians, they've recognized how much more efficient [indiscernible] managing some of these patients can be through a telemedicine platform, even as patients will get more comfortable coming back to the office.So I do think things will change. I think we've got to continue to adapt and overcome and serve patients in the most effective way. And I think one of the things that I mentioned is with IBS-C and LINZESS, it's well poised to be able to be leveraged in that kind of remote consult. And we're seeing more and more of it. And I think it's largely helping us sustain the ongoing growth of the brand.

Awesome. And do you think the launch of GIVLAARI is going to be affected by COVID-19?

Go ahead, Tom, you can take that, too.

Okay, sure. Thanks, Mark. I can't comment on that specifically. What I can tell you is, one, as you know, this is a horrendous disease and this is an incredible breakthrough, which got us excited about playing a role in helping Alnylam bring this to patients. And, of course, our presence in the GI offices was a natural fit because this is where most of these patients are managed.That being said, we've identified a number of patients that are being actively pulled through the system. I think there may be some short-term impact, but everything I'm hearing from the pull-through side, the patient pull-through side, is we're continuing to pull patients through. We're getting patients on drug. And I think we need to continue to stay the course. It's still early to kind of interpret that. But I think certainly, the Alnylam team would be better equipped to more specifically answer kind of the question on actual demand.

Sure. And then going to the Phase III program for 3718, do you see that trial panning out as originally planned? Do you think any of the data or results could be compromised because of the delay?

Mike, can you take that?

Sure. Yes, for the Phase III program, we're committed to completing the Phase III program and recognize it as a fairly large development program. We have over 660 patients in the 2 clinical trials. We have had, to your point, impact in screening due to COVID-19. And like much of the industry, that has really impacted our ability to continue to enroll at the rate we wanted to, to meet our 2020 time line.However, we do have a very safe product we're administrating in that program, colesevelam, with the gastric retentive. So we do have an opportunity to do things remotely once patients are enrolled. So we have had a slowdown for screening. That has impacted enrollment. But we are very able to move patients through the study, given the safe product and the visit schedule that patients have. So we do think we can get patients through the study and we're committed to completing the Phase III and we'll be exploring all potential options in order to do so.And that continues to work actively with -- we continue to work actively with sites to better understand the reinitiation of screening and how that activity could best proceed so that we can better inform the expected time line to get to pre-COVID recruitment to define our ultimate end of study time line. And as we get further updates regarding path forward, we'll certainly share them with you.

Perfect. And last question for me. How critical do you think the allowance of claims is for that 72 dose?

So obviously, we are very -- I think as a quick answer on that, I mean, we're very encouraged by this. I think a large percentage of these do go on to get issues as expected. We remain very confident in our IP. And so we'll be monitoring and watching as the process continues.

And our next question comes from the line of Jacob Hughes.

With respect to the guidance, so knowing that this environment is highly uncertain, but could you provide any additional color on these comps underlining your adjusted EBITDA guidance? And any additional color on the revenue trends early in the second quarter?

Gina, would you give some additional thoughts?

Sure, Mark, I'm happy to. Thanks for the question. So I can start with maybe just talking about why we are comfortable providing the greater than $105 million EBITDA guidance while we were no longer reiterating the previous guidance line items. And one is that LINZESS is just off to a strong start in 2020, not just in Q1, but through Q2 as well. And this is probably what you're getting in your question. We certainly have some uncertainty related to the 3718 trial enrollment and the reduced in-person promotion. We've seen some favorability there. And while we certainly don't prefer it, it is adding to our P&L. And based on when states actually start to enroll, it will be determined when we are back in the field and when hopefully, we can increase our trial enrollment as well.There's obvious uncertainty as to the severity and the duration of the COVID-19 impact. But any negative offset from LINZESS demand and to be more specific on that, on the demand side, we are potentially monitoring changes from unemployment, just less disposable income for Americans. But we're also looking at it as potential price compression as well. So if you're thinking about it from a commercial side and the patients move to Medicaid, for instance, it includes a much higher rebate for us. And obviously, it's a lower net price. And given the uncertainty on that, it is one of the reasons that we're not guiding to the LINZESS top line and then obviously our Ironwood revenue.However, I will say that while we have some favorability and we have some negative offsets, we conducted or ran a range of models. And then the majority of those, we are still expected to result into a minimum adjusted EBITDA of $105 million for the year. We will, of course, continue to monitor the update and provide regular updates to you at least each quarter.

Okay. That's very helpful. And then just on as you get closer to the close of the transaction with AbbVie, could you -- just curious on any interactions you've had with the team and any potential changes to that relationship, whether that's on the marketing side or otherwise?

So I'll say a couple of words. And, Tom, you can also add thoughts. So first thing I want to say, the Allergan team has continued to stay really very focused and our always strong collaboration has continued. And I think it certainly comes through with the execution and the results in the first quarter and even into the second quarter. So the majority of the people have been in place and they're staying very engaged and we keep working on that.As we also said, we've had very preliminary sort of discussions with AbbVie because they've been sensitive to closing. We're still not quite close, although we're getting very close now. And so I don't really have any updates on that. Our interactions have been positive. We expect that they will be working to keep the momentum going and that we'll be working to keep everything moving forward smoothly.As we said before, the parameters of the arrangement, our partnership, basically continue largely as is. The key decision-making bodies of the joint development community and commercial committee and the rules that are governing those basically stay the same. And so we're ready to go full steam ahead. I don't know, Tom, if you have anything else to add to that?

Yes. Just a couple of things. First, as you know, it's been a terrific partnership with Forest as well as Allergan and now, AbbVie. And as we move forward, as I know Bill Meury is working closely with AbbVie on the integration, he's keeping us well informed. A good portion of the team will stay intact, particularly on the sales, sales management side, the number of people on the brand teams will be intact, which I think will aid in a smooth transition. And also, we agree on an overall brand plan at the beginning of every year, which obviously will stay intact, which really identifies the investment that we made in the plan and certainly the overall strategies that support the brand, both from a commercial side as well as the development side in 7246.As Mark mentioned, we've had some initial interactions with AbbVie, which have been very, very encouraging. I'm very excited about the opportunity to work with them. They have some very remarkable capabilities, particularly in the area of patient support and GI disease with Humira, that I think we can learn a lot from and I think will further enable us to better serve our patients.

And our next question comes from the line of Eric Joseph.

Just a couple from me. First, on the patient stocking pattern that you noted and you think you're seeing some benefit in the first quarter there. So can you quantify that for us a bit? Is that sort of a reflection of an increase in the number of 90-day prescriptions compared to prior quarters? And are you anticipating any shifts in channel inventory in second quarter or going forward in order to meet that pattern? And then I have a follow-up.

Tom, do you want to take that?

Yes. Sure. As far as the increase that we saw, we saw a bit of a surge for a couple of weeks in total RXs, which came back down, but we're still tracking double-digit growth year-on-year, but there was a pretty significant jump over a period of time. And we did also see this corresponding increase in 90 days. A larger percentage of the patients are requesting 90 days to make sure they have their medication for an extended period of time here.I think the overall trend line looks pretty stable from what we saw finishing last year into this year. And as you recall, we generally see a pretty significant dip in the first quarter and in spite of all that, the brand is just holding up remarkably well, particularly with the rate of refills, which has been very encouraging.As far as the channel, it's -- obviously, it tends to fluctuate quarter-to-quarter. Obviously, that's being closely monitored to make sure that we don't have any stock outs. But I don't think -- we certainly don't see any risk to the brand there, but we certainly do see quarter-to-quarter fluctuations in the overall inventory. But we haven't seen anything dramatic over the last quarter or 2 that we haven't seen before.

Okay. Okay. Got it. And I'm also curious to know whether at this point you have a sense of what the greatest sensitivities are to LINZESS demand from the reduced in-person promotion effort. I know it's hard at this point yet to know where -- when the new normal but it looks like beyond the pandemic. But I am curious to know whether you see any efficiencies on the commercial spend side and still being able to grow prescription volumes or whether we should expect a pattern of commercial spend sort of ramping back up on the other side of the pandemic.

Tom, you can take a stab at that. I might have a comment to add as well.

Absolutely. First of all, I think this is a very promotionally sensitive market. And there's no replacement for personal promotion. I think we're doing a yeoman's effort in supporting patients and also our customers remotely and virtually. And I think we're putting a number of innovative plans such as the telemedicine in place.But as far as personal promotion, we pushed it hard in the first quarter to get out of the gate strong and the sales force did an absolutely terrific job in driving -- continuing to drive double-digit growth. I think the other thing to keep in mind is we constantly evaluate and refine the overall selling model with regard to our reach, with regard to our frequency, who's going to make the calls.And we're in constant assessment of that. And as you know, we've changed it quite a bit over time, both with regard to the number of targets, the frequency of calls as the sales force has become increasingly more efficient. I do not see a replacement for in-office promotion, personal promotion. I think we're itching to get back into the office to continue to drive demand and broaden physician's view of who the appropriate patient is. So -- but I don't see any dramatic change of our overall selling effort as we kind of reengage in customers. So, Mark, if you have a couple of additional comments?

I just wanted to echo what you're saying and that one of the things I have always been impressed since I arrived at Ironwood is the -- how quick and smart -- both Allergan and Ironwood together have been at the sort of continuous improvement in their commercial plans.They're always looking at -- as we learn more about particular physicians, whether it's right at the rep or the district level or overall, as we're understanding how the market is evolving, of adjusting resources and key -- and both within sort of physician promotion and then also balancing between physician promotion and consumer promotion. So it's a team that's very used to and it's been, I think, one of the strengths is sort of optimizing. So rest assured they're going to continue that and that will be a focus.And then the other thing I just really been pleased, the way the team has sort of embracing some of the new technology and the new openness, I would say, of physicians and patients to leverage things like telemedicine to get their health care needs met. And so I've had a chance to interact with a number of teams and salespeople. They're all embracing, working with the virtual selling aid and virtual meeting capability.As Tom mentioned, we've got our own telemedicine program that we've scaled up nationally. And we're going to really be diving big and diving deep into some of these changes to see how we can leverage them to the benefit of patients and, ultimately, the business. So I'm encouraged with the way the team is responding. And rest assured, we're going to continue to focus on driving LINZESS' growth, but doing it as efficiently as we can.

Got it. Maybe just one last one on 7246. You've moved up time lines a little bit here with data expected this quarter. Just anything at all in terms of impact from the pandemic and gathering sort of the last legs of patient data, patient follow ups? Anything in the way of -- anything from the [tandem] that might impact sort of the integrity, the fidelity of that data set as we -- so the intended population base as we look to data this quarter.

Mike, you're going to take that, please?

Sure. Yes, we're pretty -- good opportunity in IBS-D, I think, which speaks to the medical need within that patient population and clear need for pain therapeutic for patients suffering with abdominal pain. So the ability to enroll that, I think, really speaks obviously to the testament for the patients and the patient need, but also the team did a great job to accelerate that. So we weren't really impacted on the recruitment side by COVID. We were able to get patients in and dose and actually get patients out sort of before COVID really took over much of the recruitment in clinical trials. And then much of what we did after that is sort of data cleaning, data management, data validation and all that. So we've been on track and we remain on track and we're committed to delivering it this quarter, as you mentioned.

[Operator Instructions] And we do have a question from Boris Peaker.

Great. Good. So first question is -- I think this may be for Gina, I don't know who else wants to maybe answer it, is you mentioned that there's a lower revenue per patient on Medicaid versus private insurer. I was wondering if you could quantify that. And also, is there a lower -- is there ability to get a 90-day scripts for Medicaid as there is on private payer? Just want to kind of understand that dynamic.

Gina, why don't you start with any perspective? And then Tom, also, if you have something to add, please do.

Sure. Sure. It's a great question. That's right. So we said approximately 50% of our book of business or our patient mix is commercial. And with the high unemployment, we are concerned on 2 fronts that maybe could lead to lower demand or maybe a possibility of those patients moving from commercial to Medicaid and we said it does include a higher rebate. We haven't quantified it. We don't distinguish our -- detail out the gross to net between commercial and Medicaid, but I'm quite comfortable saying it's a significant difference between commercial and Medicaid, as you can imagine.

And can Medicaid patients fill 90-day scripts just as easily as commercial? Or do they have any restrictions?

Mark, why don't I take that? Currently, they can only access, I believe they can only access 30-day supply, similar to Medicare patients as a similar restriction with regard to the quantity that they can actually access. But I think it's important to underscore the fact that we have over 50% -- or nearly 50% of our business is actually in Medicare Part D, which has been very stable. And the patients that we are -- that are at risk are commercial patients. But it's something, obviously, we're monitoring very closely. But from what we've seen so far, the demand is holding up very well. But obviously, it's something that certainly poses a risk to the price and volume of the brand.

Great. And my last question is on the 3718. I just want to know what percentage of total enrollment have you already enrolled in these Phase III studies? And in that context, I just want to understand in terms of data quality, what happens if a significant number of patients miss follow up appointments? Is there some point where you just take them out of the study? Or you just kind of accept the missing data? How does that work?

Mike, could you take that?

Sure. We have, as Tom mentioned, we have greater, now 72% actually of patients enrolled in the studies. And you're right. I mean we do have to closely monitor all our studies, which we do regardless of COVID-19 or not. But your point is valid in the setting of COVID-19 and some of the monitoring that takes place in the clinical program.It's important to make sure we can do that remotely. And again, it's an 8-week treatment course, so we do have the opportunity to schedule things and plan things and to get things done remotely. The team has made a great effort to achieve all that to ensure data integrity, trial integrity, patient safety. Clearly, patient safety is the most critical item on that list and we work diligently to ensure that with all our patients in all our studies. So we have had a very good success in maintaining that aspect of data integrity and trial safety. So we're really happy to be able to continue that in the 3718 program.

And we have no further questions. I will turn the call back over to Mark for closing.And we have no other questions at this time.And this does conclude today's conference call. You may now disconnect your lines.