Ladies and gentlemen, thank you for standing by. My name is Sharell and I will be your conference operator today. At this time, I would like to welcome everyone to the Ironwood Pharmaceuticals Q2 2023 Investor Update Conference Call. [Operator Instructions]. I would now like to turn the call over to Matt Roache, Director of Investor Relations. Your line is now open.

Thank you, Sharell. Good morning, and thanks for joining us for our second quarter 2023 investor update. Our press release issued this morning can be found on our website. 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 in the year ended December 31, 2022, and in our subsequent 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 a reconciliation of these measures to the most directly comparable GAAP measures. During today's call, Tom McCourt, our Chief Executive Officer, will review our strategic priorities and our pipeline; and Sravan Emany, our Chief Financial Officer, will provide an update on the commercial performance of LINZESS, discuss the recent addition of apraglutide to our portfolio through the -- through our acquisition of VectivBio and review our financial results and updated guidance. Andrew Davis, our Chief Business Officer, is available for the question-and-answer session following our prepared remarks. Mike Shetzline, our Chief Medical Officer, is unable to attend today's call as he's out for personal reasons unrelated to Ironwood's business. While we do not know how long Mike may be out, we will provide updates as appropriate. Today's webcast includes slides. So, for those of you dialing in, please go to the Events section of our website to access the accompanying slides separately. With that, I'll turn the call over to Tom.

Thanks, Matt. Good morning, everyone, and thanks for joining us today. I'm excited to provide an update on our progress on what has been a transformative quarter at Ironwood. First, I'm pleased to announce that we are increasing our full year LINZESS U.S. net sales and Ironwood revenue guidance based on the strong performance of LINZESS. Second, LINZESS received FDA approval to treat pediatric patients age of six years to 17 years old for functional constipation, further expanding the clinical utility of the brand and its growth potential. Finally, we're excited to have completed the tender offer to acquire VectivBio, including their key GLP-2 asset apraglutide. If successful and approved, we believe apraglutide has the potential to become the new standard of care for patients suffering from short bowel syndrome with intestinal failure and achieve $1 billion in peak net sales. We believe the continued success of LINZESS combined with our expanding pipeline as is well positioned to realize our vision of becoming the leading GI health care company. Let's turn to Slide 6 for a brief overview of our strategic priorities. First, maximize LINZESS. LINZESS continues to see robust prescription demand growth, profitability and widespread acceptance among health care practitioners as a leading branded prescription treatment for adults with IBS-C and chronic idiopathic constipation. In the second quarter, U.S. net sales and prescription demand both increased 9% year-over-year, demonstrating that the momentum of the brand remains strong. In June, LINZESS received FDA approval for pediatric patients age of six years to 17 years for functional constipation, making LINZESS the first and only prescription therapy indicated for the use in this population, which has a high unmet medical need and limited treatment options. We're extremely proud of this achievement for Ironwood, but more importantly, for patients. Moving on to our…

Thanks, Tom, and good morning, everyone. I'm happy to provide additional details on what was a very exciting and transformative quarter for Ironwood. Starting on Slide 9. As Tom mentioned a few moments ago, both LINZESS U.S. net sales and prescription demand grew 9% year-over-year. This strong growth was driven in part by a 15% increase in new-to-brand prescriptions year-over-year, reinforcing the patients and health care professionals continue to choose LINZESS in a growing market. We believe the strong demand momentum for LINZESS is a result of high treatment satisfaction with both patients and health care professionals, combined with the support of class-leading formulary access, guideline recommendations and focused commercial execution. In addition, as previously mentioned, LINZESS was granted a new indication in June for the treatment of functional constipation, which affects roughly 6 million patients ages six years to 17 years old in the United States. Since the FDA approval, our talented sales team has been in the field educating customers. Thus far, feedback has been very positive, and health care professionals are excited by the ability to prescribe LINZESS to help this new patient population. In early July, we also began promoting LINZESS to pediatric gastroenterologists in specific geographies and will assess future promotional expansion based on market response from these efforts. We look forward to providing updates later in the year as we gain more insights into this opportunity, which will help inform optimal investment and the net sales potential in 2024. Moving on to our acquisition of VectivBio on Slide 10. We are thrilled to have apraglutide as part of our GI portfolio for the following reasons: we have high conviction in apraglutide's clinical program in the Short Bowel Syndrome with intestinal failure based on its mechanism of action, designed for enhanced potency, extended half-life and…

[Operator Instructions]. Your first question comes from the line of Tim Chiang with Capital One. Your line is now open.

Hi, thanks. I've just got a few questions. I think maybe the first question is on the improved pricing for LINZESS. Could you just sort of comment on what the dynamics are for LINZESS in the second half of the year? How things have changed a little bit from the first half of the year for LINZESS?

Yes. So, thanks, Tim. Good to hear from you. So, I think from a pricing perspective, for the first few quarters, we experienced favorable pricing relative to our initial guidance and expectations. And I think as we disclosed, that's due to favorable channel mix. First half pricing trends have been improved our outlook for the full year. And as you can imagine, when you have the volume of LINZESS, a slight shift in the mix is going to have a meaningful change. And so, I think that's essentially where we're at.

Got it. And then maybe just a follow-up on apraglutide. I mean obviously, you've adjusted the time line for the top line readout. Is there any change -- is it really just screening related? Is that the reason for the push out on the release of the date of data?

Yes. So, I think we always said is -- I think the key here, Tim, is that we elected to enroll all the patients that made it successfully through the STARS study and the screening process. And so, as Tom mentioned, we have a commitment to those patients and a commitment to those sites. And in order to maintain the global diversity of the trial, we believe this is beneficial for the patients and our overall global development opportunity. And so, we're excited that the trial enrollment is completed, and we've got 164 patients. And with that, I think we'll have something to report out in the first quarter of next year.

Tim, this is Tom. I think this is a discussion that we had, obviously, with the Vectiv team. And the process of screening these patients is pretty robust and challenging. And we're asking patients to go through an awful lot during the screening process. So, we felt obligated to really include them into the trial. We felt it was absolutely the right thing to do. We had good alignment with VectivBio on that. Plus, it certainly strengthens the overall diversity of the study as we think about a global program as we think about the future filings of the product. So, we are absolutely delighted with where the program is at. Certainly, everything looks right where it needs to be. And I think we have great conviction and confidence in the clinical development program at this point.

And two final points on top of that, which is one that it's an extra 20 patients in the trial in the study. And then two, notwithstanding the extra 20 patients, we still expect to have a 2025 launch, and there's no impact from our perspective on the timing of our commercial launch.

Got it. Thanks. The details are very helpful. Thanks.

Your next question comes from the line of Boris Peaker with TD Cowen. Your line is now open.

Good morning, and congratulations on strong LINZESS results. I guess I just have two questions, one on LINZESS and the other one on the GLP-2. So, on LINZESS, can you comment where the sales growth is coming from? Is there a particular demographic that you're seeing expansion uptake or maybe any kind of specific type physicians, general practitioners versus GI docs? Or is this kind of across the board? And on the GLP-2 side, my question is, why -- what are your thoughts on the generic Gattex? Why we haven't seen one? And when we may be seeing one?

Andrew, why don't you kind of take the first crack...?

Yes. So, on that first question on LINZESS, it's really across the board that we're seeing growth. And so, we're excited by that. And as we said in the prepared remarks, we're seeing continued growth in the market, and we're continuing to see physicians choose LINZESS when those patients present.

I mean, Boris, the other -- I think part of that, too, is certainly, the pediatric indication was a strong endorsement of the overall profile of the drug, which I think has a significant halo effect. I'm sure we'll better understand what we think the upside potential is for pediatrics. It's still early. But Andrew and the team are taking -- really evaluating how promotional responsive this is to really understand how hard we can push or how hard we should push on the investment side. But I think this is -- I mean, as you know, it continues to be a remarkable drug to see this kind of linear growth and even acceleration in growth, particularly with the new to brand to see a 15% increase in new to brand at this point on the base business that we have, this is pretty remarkable.

Yes. And so, we're just seeing these new patients continue to compare [ph]. And then I think the other piece is a strong profile remains the same, right, clinically, huge patient satisfaction. I think the things that have made LINZESS success over the last 11 years for us, I think the -- have continued here. And then, Andrew, do you want to take a crack at the Gattex question as well?

Yes. So, on generic Gattex, I mean, tough to say what's going through another pharmaceutical manufacturers' mind on what they're doing strategy-wise. But at the end of the day, peptides are not always easy drugs to make an easy drug to bring to market. I think there's a number of kind of market dynamics for a generic to make it challenging. So, we haven't seen it yet. I think maybe not the most unexpected outcome for us at this point.

Yes. Boris, I mean as far as we're concerned, that's nothing but good news. When you look at kind of where Gattex in and when you look at the profile, of apraglutide with regard to its potency and its half-life, I mean this really could be a significant advancement in care for patients.

Andrew, Congratulations. And thanks, taking my questions.

Your final question comes from the line of David Amsellem from Piper Sandler. Your line is now open.

Thanks. So, on the Gattex generic question, I know it's hard to make. It's a peptide and all that. But I guess my question here is, to the extent that Gattex does lose exclusivity, how are you thinking about payer dynamics for apraglutide? How are you thinking about pricing for apraglutide? So just help us understand the commercial implications of a loss of exclusivity for Gattex. And then secondly, for the STARGAZE study in acute graft versus host, to the extent that you do have a proof of concept, is that something you intend to take forward? Or is that something you'd look to partner at given that it's outside the GI realm? How are you thinking about that? Thank you.

Yes, Andrew, why don't you start with the first one?

So, on the generic Gattex question, I think maybe it's a little bit early on where we are in terms of for us to specifically guide on price. But I think I can say that this is certainly something that we considered and modeled out when we did the transaction. So regardless of if there's a Gattex generic or there's not, I think we feel quite comfortable about the investment we've made here and the strong opportunity there is rapidly tied in the future. And with respect to the STARGAZE trial, look, I think where we're at is we just recently completed the preplanned interim analysis, and it supported to continue the study without any changes, where we are with the study and the recruitment, we probably, as Tom mentioned, we'll have something in the first quarter to kind of report out in terms of data. And at that point in time, I think depending on the -- where the trial is, I think we'll -- and what the data says, we'll evaluate options.

Yes. I think the big part here is what is -- where is the greatest opportunity for value creation. And obviously, that's something that we'll critically assess. I mean I don't think we're at this point we're tied to any specific outcome, we'll evaluate. I think a lot of it has to do with what the profile ends up looking like as to how assertive we would be in this space. But I think we're very data-driven. We're very evidence-driven. It will certainly make a good choice. And we're -- I mean, this is a huge unmet medical need. Keep in mind, the biggest problem here is the GI problems associated with this. And when that occurs, obviously, the GI community is involved and consulted. So, they certainly would play a role even though they don't directly often care for these patients, they're often consulted on these patients. Operator?

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.