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What changed in IRONWOOD PHARMACEUTICALS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of IRONWOOD PHARMACEUTICALS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+474 added−465 removedSource: 10-K (2025-03-31) vs 10-K (2024-02-16)

Top changes in IRONWOOD PHARMACEUTICALS INC's 2024 10-K

474 paragraphs added · 465 removed · 386 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

120 edited+30 added−27 removed161 unchanged
Biggest changeWe are also conducting open label extension studies to further evaluate the efficacy, safety and tolerability of apraglutide in SBS-IF and to support potential submissions of marketing applications for apraglutide in the U.S., European Union, or E.U., and Japan. ● We are also conducting a Phase II exploratory study, STARGAZE, to evaluate apraglutide in patients with steroid-refractory gastrointestinal acute Graft versus Host Disease, or aGvHD, a life-threatening condition that occurs when immune cells from the donor attack a recipient’s healthy cells after an allogeneic hematopoietic stem cell transplant, and expect data in the first quarter of 2024. ● Through the COUR Collaboration Agreement, we and COUR are developing CNP-104 for the treatment of PBC, a rare autoimmune disease targeting the liver.
Biggest changeWe are also conducting an open-label extension study, STARS Extend, to further assess the safety of apraglutide in adult patients with SBS-IF. ● Apraglutide has also been studied in patients with steroid-refractory gastrointestinal acute Graft versus Host Disease, or aGvHD, a life-threatening condition that occurs when immune cells from the donor attack a recipient’s healthy cells after an allogeneic hematopoietic stem cell transplant.
AbbVie has rights to develop and commercialize linaclotide in all countries worldwide other than China (including Hong Kong and Macau) and Japan. CONSTELLA is the first, and to date, only drug approved in the European Union, or E.U., for IBS-C. CONSTELLA first became commercially available in certain European countries beginning 2013.
AbbVie has rights to develop and commercialize linaclotide in all countries worldwide other than China (including Hong Kong and Macau) and Japan. CONSTELLA is the first, and to date, only drug approved in the European Union, or E.U., for IBS-C. CONSTELLA first became commercially available in certain European countries beginning in 2013.
FDA inspections of non-clinical and clinical trial sites to assure compliance with GLP and GCP requirements; and ● U.S. FDA review and approval of the NDA, which may be subject to post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and any post-approval studies required by the U.S. FDA.
FDA inspections of non-clinical and clinical trial sites to assure compliance with GLP and GCP requirements; and ● U.S. FDA review and approval of the NDA, which may be subject to post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and any post-approval studies required by the U.S.
(together with its affiliates), or AbbVie, in the U.S. and all countries worldwide other than China (including Hong Kong and Macau) and Japan, AstraZeneca AB (together with its affiliates), or AstraZeneca, in China (including Hong Kong and Macau) and Astellas Pharma Inc., or Astellas, in Japan. ​ We also aim to leverage our leading development and commercialization capabilities in GI to bring additional treatment options to GI patients.
(together with its affiliates), or AbbVie, in the U.S. and all countries worldwide other than China (including Hong Kong and Macau) and Japan, AstraZeneca AB (together with its affiliates), or AstraZeneca, in China (including Hong Kong and Macau) and Astellas Pharma Inc., or Astellas, in Japan. ​ We also aim to leverage our development and commercialization capabilities in GI to bring additional treatment options to GI patients.
The Hatch ‑ Waxman Act also provides three years of exclusivity for approved applications for drugs that are not new chemical entities, if the application contains the results of new clinical investigations (other than bioavailability studies) conducted or sponsored by the applicant that were essential to approval of the application.
The Hatch-Waxman Act also provides three years of regulatory exclusivity for approved applications for drugs that are not new chemical entities, if the application contains the results of new clinical investigations (other than bioavailability studies) conducted or sponsored by the applicant that were essential to approval of the application.
The results of the non-clinical and clinical studies, together with other detailed information, including the manufacture and composition of the product candidate, are submitted to the U.S. FDA in the form of an NDA requesting approval to market the drug. The U.S. FDA approval of the NDA is required before marketing of the product may begin in the U.S.
The results of the non-clinical studies and clinical trials, together with other detailed information, including the manufacture and composition of the product candidate, are submitted to the U.S. FDA in the form of an NDA requesting approval to market the drug. The U.S. FDA approval of the NDA is required before marketing of the product may begin in the U.S.
A marketing authorization may be granted only to an applicant established in the E.U. The centralized procedure provides for the grant of a single MA by the European Commission that is valid in all E.U. Member States and through the EEA Member States – Norway, Iceland and Liechtenstein.
A marketing authorization may be granted only to an applicant established in the E.U. The centralized procedure provides for the grant of a single marketing authorization by the European Commission that is valid in all E.U. Member States and through the EEA Member States – Norway, Iceland and Liechtenstein.
We and AbbVie continue to explore ways to enhance the clinical profile of linaclotide by studying linaclotide in additional indications, populations, and formulations to assess its potential to treat various conditions.
We and AbbVie continue to explore ways to enhance the clinical profile of LINZESS by studying linaclotide in additional indications, populations, and formulations to assess its potential to treat various conditions.
There have been and likely will continue to be health care reform efforts. For example, federal legislation enacted in 2021 eliminates a statutory cap on Medicaid drug rebate program rebates effective January 1, 2024. As another example, the Inflation Reduction Act, or IRA, of 2022, contains various drug pricing and payment provisions.
There have been and likely will continue to be health care reform efforts. For example, federal legislation enacted in 2021 eliminated a statutory cap on Medicaid drug rebate program rebates effective January 1, 2024. As another example, the Inflation Reduction Act, or IRA, of 2022, contains various drug pricing and payment provisions.
The Federal Food, Drug and Cosmetic Act, or FDCA, and other federal and state statutes and regulations, as well as similar foreign regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-marketing requirements and assessments, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.
The Federal Food, Drug and Cosmetic Act, or FDCA, and other federal and state statutes and regulations, as well as similar foreign regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-marketing requirements and assessments, post-approval monitoring and reporting, sampling, pricing reimbursement and import and export of pharmaceutical products.
FDA approved our Supplemental New Drug Application, or sNDA, to include a more comprehensive description of the effects of LINZESS in its approved label. ​ In addition, we and AbbVie have established a nonclinical and clinical post-marketing plan with the U.S. FDA to understand the safety and efficacy of LINZESS in pediatric patients. In August 2021, the U.S.
FDA approved our supplemental new drug application to include a more comprehensive description of the effects of LINZESS in its approved label. ​ In addition, we and AbbVie have established a nonclinical and clinical post-marketing plan with the U.S. FDA to understand the safety and efficacy of LINZESS in pediatric patients. In August 2021, the U.S.
The following chart shows our revenue for the U.S. and the rest of the world as a percentage of our total revenue for each of the years ended December 31, 2023, 2022, and 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 2021 U.S. 97.8 % 98.1 % 97.8 % Rest of world 2.2 % 1.9 % 2.2 % ​ 100.0 % 100.0 % 100.0 % ​ Revenue attributable to our linaclotide partnerships comprised substantially all of our revenue for each of the years indicated.
The following chart shows our revenue for the U.S. and the rest of the world as a percentage of our total revenue for each of the years ended December 31, 2024, 2023, and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 2022 U.S. 97.1 % 97.8 % 98.1 % Rest of world 2.9 % 2.2 % 1.9 % ​ 100.0 % 100.0 % 100.0 % ​ Revenue attributable to our linaclotide partnerships comprised substantially all of our revenue for each of the years indicated.
We have pending patent applications in certain countries worldwide that, if issued, will expire between 2029 and 2044 and which include claims covering the linaclotide molecule, methods of using linaclotide to treat GI disorders, the current commercial formulations of linaclotide and uses thereof to treat GI disorders and delayed release and other potential formulations of linaclotide.
We have pending patent applications in certain countries worldwide that, if issued, will expire between 2029 and 2045 and which include claims covering the linaclotide molecule, methods of using linaclotide to treat GI disorders, the current commercial formulations of linaclotide and uses thereof to treat GI disorders and delayed release and other potential formulations of linaclotide.
OTC laxatives make up the majority of the treatments in the U.S. for IBS-C and CIC, according to our research. LINZESS is the number one prescribed branded treatment in the U.S. for adults with IBS-C and CIC, according to 2023 data from IQVIA Inc. National Prescription Audit.
OTC laxatives make up the majority of the treatments in the U.S. for IBS-C and CIC, according to our research. LINZESS is the number one prescribed branded treatment in the U.S. for adults with IBS-C and CIC, according to 2024 data from IQVIA Inc. National Prescription Audit.
No company may market a new drug in the U.S. until it has submitted a new drug application, or NDA, to the U.S. FDA, and the U.S. FDA has approved it. The steps required before the U.S. FDA may approve an NDA generally include: ● conducting non-clinical laboratory tests and animal tests in compliance with U.S.
No company may market a new drug in the U.S. until it has submitted an NDA to the U.S. FDA, and the U.S. FDA has approved it. The steps required before the U.S. FDA may approve an NDA generally include: ● conducting non-clinical laboratory tests and animal tests in compliance with U.S.
Symptoms of IBS-C include abdominal pain, discomfort and/or bloating and constipation symptoms (e.g., incomplete evacuation, infrequent bowel movements, hard/lumpy stools), while CIC is primarily characterized by constipation symptoms. Greater than 65% of IBS-C patients suffer from bloating and/or discomfort at least one time per week, according to the Lieberman Survey. Linaclotide—U.S. In August 2012, the U.S.
Symptoms of IBS-C include abdominal pain, discomfort and/or bloating and constipation symptoms (e.g., incomplete evacuation, infrequent bowel movements, hard/lumpy stools), while CIC is primarily characterized by constipation symptoms. 6 Table of Contents Greater than 65% of IBS-C patients suffer from bloating and/or discomfort at least one time per week, according to the Lieberman Survey. Linaclotide—U.S. In August 2012, the U.S.
Eligible drugs generally include single source brand-name drugs or biological products that 23 Table of Contents have been on the market without therapeutically-equivalent generic or biosimilar alternatives for a specified number of years with certain exceptions (e.g., orphan drugs indicated for only one rare disease or condition and drugs with less than $200 million in annual Medicare expenditures).
Eligible drugs generally include single source brand-name drugs or biological products that have been on the market without therapeutically-equivalent generic or biosimilar alternatives for a specified number of years with certain exceptions (e.g., orphan drugs indicated for only one rare disease or condition and drugs with less than $200 million in annual Medicare expenditures).
Eligible products must target conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the E.U. or, if there is, the new medicinal product will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods of therapy or improving existing ones.
Eligible products must target conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the E.U. or, if there is, the new medicinal product will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods of 20 Table of Contents therapy or improving existing ones.
The granted, unexpired Chinese patents, which will expire between 2029 and 2032, the granted Japanese patents, which will expire between 2026 and 2036, some of which are subject to granted and potential patent term extension, and the granted patents in other foreign jurisdictions, which will expire between 2026 and 2034, some of which may be subject to potential patent term extension, contain claims directed to the linaclotide molecule, pharmaceutical compositions of linaclotide for use in treating GI disorders, and room temperature stable formulations of linaclotide.
The granted, 12 Table of Contents unexpired Chinese patents, which will expire between 2029 and 2032, the granted Japanese patents, which will expire between 2026 and 2036, some of which are subject to granted and potential patent term extension, and the granted patents in other foreign jurisdictions, which will expire between 2026 and 2034, some of which may be subject to potential patent term extension, contain claims directed to the linaclotide molecule, pharmaceutical compositions of linaclotide for use in treating GI disorders, and room temperature stable formulations of linaclotide.
Failure to comply with U.S. FDA requirements can have negative consequences, including adverse publicity, warning or untitled letters from the U.S. FDA, mandated corrective advertising or communications with doctors or patients, and civil or criminal penalties. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.
Failure to comply with U.S. FDA requirements can have negative consequences, including adverse publicity, warning or untitled letters from the U.S. FDA, mandated corrective advertising or communications with doctors or patients, and civil or criminal penalties. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses. In January 2025, the U.S.
Our collaborative arrangements revenue may continue to fluctuate as a result of the timing and amount of royalties from sales of linaclotide in the markets in which it is currently approved, or any other markets where linaclotide receives approval, as well as clinical and commercial milestones received and recognized under our strategic partnerships outside of the U.S.
Our collaborative arrangements revenue may continue to fluctuate as a result of the timing and amount of royalties from sales of linaclotide in the 8 Table of Contents markets in which it is currently approved, or any other markets where linaclotide receives approval, as well as clinical and commercial milestones received and recognized under our strategic partnerships outside of the U.S.
Foreign Corrupt Practices Act, or FCPA, which prohibits U.S. corporations and their representatives from offering, promising, authorizing, or making payments to any foreign 19 Table of Contents government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad. The scope of the FCPA encompasses certain healthcare professionals in many countries.
Foreign Corrupt Practices Act, or FCPA, which prohibits U.S. corporations and their representatives from offering, promising, authorizing, or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad. The scope of the FCPA encompasses certain healthcare professionals in many countries.
In addition, the statutory control regime could be supplemented by the voluntary control of advertising of medicinal products by self-regulatory bodies. 22 Table of Contents If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
In addition, the statutory control regime could be supplemented by the voluntary control of advertising of medicinal products by self-regulatory bodies. If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
A certification that provides the date a listed patent will expire, but does not challenge the validity, 17 Table of Contents enforceability or infringement of the patent, is called a “Paragraph III” certification. FDA can approve the ANDA or 505(b)(2) application containing the Paragraph III certification upon expiration of the patent. Within 20 days of the acceptance by the U.S.
A certification that provides the date a listed patent will expire, but does not challenge the validity, enforceability or infringement of the patent, is called a “Paragraph III” certification. FDA can approve the ANDA or 505(b)(2) application containing the Paragraph III certification upon expiration of the patent. Within 20 days of the acceptance by the U.S.
Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation. ​ Data Privacy and Security Laws ​ Pharmaceutical companies may be subject to U.S. federal and state health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information.
Many of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation. ​ 23 Table of Contents Data Privacy and Security Laws ​ Pharmaceutical companies may be subject to U.S. federal and state health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information.
FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current GMP 15 Table of Contents requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ● satisfactory completion of any U.S.
FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current GMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ● satisfactory completion of any U.S.
To obtain a marketing authorization to market a medicinal product in the EEA, an applicant must submit an MAA, either in accordance with a centralized procedure administered by the EMA or one of 20 Table of Contents the procedures administered by competent authorities in E.U. Member States (decentralized procedure, national procedure or mutual recognition procedure).
To obtain a marketing authorization to market a medicinal product in the EEA, an applicant must submit an MAA, either in accordance with a centralized procedure administered by the EMA or one of the procedures administered by competent authorities in E.U. Member States (decentralized procedure, national procedure or mutual recognition procedure).
The contents of our website are not incorporated by reference into this report and you should not consider information provided on our website to be part of this report. ​ PART II OTHER INFORMATION
The contents of our website are not incorporated by reference into this report and you should not consider information provided on our website to be part of this report. ​ ​ 25 Table of Contents ​ PART II OTHER INFORMATION ​
Available Information You may obtain free copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after they are electronically filed or furnished to the SEC, on the Investors section of our website at www.ironwoodpharma.com or by contacting our Investor Relations department at (617) 621-8395.
Available Information You may obtain free copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after they are electronically filed or furnished to the SEC, on the Investors section of our website at www.ironwoodpharma.com or by contacting our Investor Relations department at 617-374-5230.
We are also eligible to receive payments in the commercial period for manufacturing supply equal to cost-plus manufacturing mark-up and tiered royalties of up to a mid-double-digit percentage on product sales continuing until the later of (i) expiration of regulatory exclusivity in Japan, or (ii) expiration of the last valid patent claim that provides exclusivity to apraglutide in Japan, or the Royalty Term.
VectivBio is also eligible to receive payments in the commercial period for manufacturing supply equal to cost-plus manufacturing mark-up and tiered royalties of up to a mid-double-digit percentage on product sales continuing until the later of (i) expiration of regulatory exclusivity in Japan, or (ii) expiration of the last valid patent claim that provides exclusivity to apraglutide in Japan, or the Royalty Term.
Not accounting for any patent term adjustment, regulatory patent term extension or terminal disclaimers, and assuming that all annuity and/or maintenance fees are paid timely, any U.S. and foreign patents granted from the pending patent applications would be expected to expire in 2042. Government Regulation Our business is subject to government regulation in the U.S., E.U., and in other countries.
Not accounting for any patent term adjustment, regulatory patent term extension or terminal disclaimers, and assuming that all annuity and/or maintenance fees are paid timely, any U.S. and foreign patents granted from the pending patent applications would be expected to expire in 2042. 13 Table of Contents Government Regulation Our business is subject to government regulation in the U.S., E.U., and in other countries.
Linaclotide production consists of three phases—manufacture of the API (sometimes referred to as drug substance), manufacture of finished drug product and manufacture of finished goods. We and/or our partners have commercial supply agreements with multiple third-party manufacturers for the production of linaclotide API.
Linaclotide production consists of three phases—manufacture of the active pharmaceutical ingredient, or API (sometimes referred to as drug substance), manufacture of finished drug product and manufacture of finished goods. We and/or our partners have commercial supply agreements with multiple third-party manufacturers for the production of linaclotide API.
FDA has also established an Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review process. That office serves as a focal point for combination product issues for agency reviewers and industry.
FDA has also 17 Table of Contents established an Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review process. That office serves as a focal point for combination product issues for agency reviewers and industry.
Women represent approximately 50% of our employee base, 20% of our leadership team (vice president and above) and 33% of our board of directors (including our board and audit committee chairs).
Women represent approximately 50% of our employee base, 30% of our leadership team (vice president and above) and 33% of our board of directors (including our board and audit committee chairs).
FDA approval of an NDA. The U.S. FDA also may require post marketing testing, known as Phase IV testing, REMS, and surveillance to monitor the effects of an approved product or to place conditions on an approval that restrict the distribution or use of the product.
FDA also may require post marketing testing, known as Phase IV testing, REMS, and surveillance to monitor the effects of an approved product or to place conditions on an approval that restrict the distribution or use of the product.
The granted U.S. patent in this patent family claims a method of treating SBS, and the pending U.S. and foreign patent applications contain composition-of-matter claims to ultrapure compositions of apraglutide, methods of manufacturing apraglutide, and methods of treatment using apraglutide.
The granted U.S. patent in this patent family claims a method of treating SBS at certain doses, and the pending U.S. and foreign patent applications contain composition-of-matter claims to ultrapure compositions of apraglutide, methods of manufacturing apraglutide, and methods of treatment using apraglutide.
Under the terms of the amended and restated license agreement, Astellas is obligated to pay royalties to us at rates beginning in the mid-single-digits percent and escalating to low-double-digits percent, based on aggregate annual net sales in Japan of products containing linaclotide API.
Under the terms of the amended and restated license agreement, Astellas is obligated to pay royalties to us at rates beginning in the mid-single-digits percent and escalating to low-double-digits percent, based on aggregate annual net sales in Japan of products containing linaclotide active pharmaceutical ingredient, or API.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by the Department of Health and Human Services, or HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional 24 Table of Contents reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance. ​ In addition to federal regulation, many states have begun to focus on efforts to regulate privacy and data security.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by the HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance. ​ In addition to federal regulation, many states have begun to focus on efforts to regulate privacy and data security.
The Centers of Medicare & Medicaid Services, or CMS, annually selects a specified number of negotiation-eligible drugs from those drugs with the highest total Medicare Part B or D expenditures over a preceding 12-month period.
The CMS annually selects a specified number of negotiation-eligible drugs from those drugs with the highest total Medicare Part B or D expenditures over a preceding 12-month period.
FDA publication, Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book, six granted European patents, most of which have been validated in available European countries, ten granted Japanese patents, three granted Chinese patents, 49 issued patents in other foreign jurisdictions, and numerous pending U.S., foreign and Patent Cooperation 13 Table of Contents Treaty, or PCT, patent applications.
FDA publication, Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book, six granted European patents, most of which have been validated in available European countries, ten granted Japanese patents, three granted Chinese patents, 61 issued patents in other foreign jurisdictions, and numerous pending U.S., foreign and Patent Cooperation Treaty, or PCT, patent applications.
FDA granted marketing authorization for the treatment of CIC in adults who have not experienced relief of their bowel symptoms by using laxative therapies at the recommended dosage for at least one month.
FDA for the treatment of CIC in adults who have not experienced relief of their bowel symptoms by using laxative therapies at the recommended dosage for at least one month.
In this case, the relevant General Safety and Performance Requirements, or GSPRs of the MDR will apply to the safety and performance of the drug delivery device component. 21 Table of Contents Orphan Medicinal Product Designation and Exclusivity .
In this case, the relevant General Safety and Performance Requirements, or GSPRs of the MDR will apply to the safety and performance of the drug delivery device component. Orphan Medicinal Product Designation and Exclusivity .
Restrictions in coverage or decreases in third-party reimbursement for our products could have a material adverse effect on our sales, results of operations and financial condition.
Restrictions in coverage or decreases in third-party reimbursement for our products could have a material adverse effect 22 Table of Contents on our sales, results of operations and financial condition.
Key elements of our strategy include: Maximize LINZESS ● Leveraging our U.S.-focused commercial capabilities in marketing, reimbursement, patient engagement, and sales to expand the commercial potential of LINZESS. ● Exploring development opportunities to enhance the clinical profile of LINZESS by studying linaclotide in additional indications, populations, and formulations. ● Collaborating with global partners who share our vision, values, culture, and processes to develop and commercialize linaclotide outside of the U.S. ​ Advance GI pipeline ● Advancing our GI pipeline programs, highlighted by apraglutide for the potential treatment of SBS-IF and CNP-104 for the potential treatment of PBC. ● Evaluating strategic partnership options for our wholly owned GC-C agonist, IW-3300, for the potential treatment of IC/BPS and endometriosis. ​ Deliver sustained profits and cash flows ● Executing our strategy by delivering sustainable profits and cash flows. ● Applying a thoughtful and disciplined capital allocation strategy to deliver value for our shareholders over the long-term. ​ 11 Table of Contents Competition Linaclotide competes globally with certain branded and generic prescription therapies and over-the-counter, or OTC, products for the treatment of IBS-C and CIC, or their associated symptoms.
Key elements of our strategy include: Maximize LINZESS ● Leveraging our U.S.-focused commercial capabilities with our partner, AbbVie, to expand the commercial potential of LINZESS. ● Exploring development opportunities to enhance the clinical profile of LINZESS by studying linaclotide in additional indications, populations, and formulations. ● Collaborating with global partners who share our vision, values, culture, and processes to develop and commercialize linaclotide outside the U.S. ​ Advance GI pipeline ● Advancing our GI pipeline programs, highlighted by apraglutide for the potential treatment of SBS-IF. ● Evaluating strategic partnership options for our wholly owned GC-C agonist, IW-3300, for the potential treatment of IC/BPS and endometriosis. ​ Deliver sustained profits and cash flows ● Executing our strategy by delivering sustainable profits and cash flows. ● Applying a thoughtful and disciplined capital allocation strategy to deliver value for our shareholders over the long-term. ​ Competition Linaclotide competes globally with certain branded and generic prescription therapies and over-the-counter, or OTC, products for the treatment of IBS-C and CIC, or their associated symptoms.
Non-clinical tests include laboratory evaluation of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate. The conduct of the non-clinical tests must comply with federal regulations and requirements including GLP.
FDA. 14 Table of Contents Non-clinical tests include laboratory evaluation of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate. The conduct of the non-clinical tests must comply with federal regulations and requirements including GLP.
LINZESS is available to adult men and women suffering from IBS-C or CIC in the United States, or the U.S., Mexico, and Saudi Arabia, to adult men and women suffering from IBS-C or chronic constipation in Japan, IBS-C in China and for pediatric patients ages 6-17 with FC in the U.S.
LINZESS is available to adult men and women suffering from IBS-C or CIC in the United States, or the U.S., and Mexico, adult men and women suffering from IBS-C or chronic constipation in Japan, and adult men and women suffering from IBS-C in China, and pediatric patients ages 6-17 years old with FC in the U.S.
We are currently in the process of planning for the commercial launch of apraglutide, if successfully developed and approved, for commercialization, in the U.S. and with partners in territories outside the U.S. For example, we granted AKP an exclusive license to sublicense, develop, commercialize and exploit products derived from apraglutide in Japan.
We are currently in the process of planning for the commercial launch of apraglutide, if approved, for commercialization, in the U.S. and with partners in territories outside the U.S. For example, we granted AKP an exclusive license to sublicense, develop, commercialize and exploit products derived from apraglutide in Japan. We are considering potential partnerships in other territories outside the U.S.
The first patent family includes one granted U.S. patent and five pending U.S. non-provisional patent applications, as well as 27 pending foreign patent 14 Table of Contents applications related to apraglutide.
The first patent family includes one granted U.S. patent and five pending U.S. non-provisional patent applications, as well as 27 pending foreign patent applications related to apraglutide.
AbbVie is commercializing CONSTELLA in a number of European countries, including the United Kingdom, Italy and Spain for adults with IBS-C. AbbVie has exclusive rights to commercialize linaclotide in Canada as CONSTELLA and in Mexico as LINZESS. CONSTELLA became commercially available in Canada in 2014 for adults with IBS-C or CIC.
AbbVie is commercializing CONSTELLA in a number of European countries, including the United Kingdom, Italy and Spain for adults with IBS-C. AbbVie has exclusive rights to commercialize linaclotide in Canada as CONSTELLA and in Mexico as LINZESS.
In September 2020, based on Phase IIIb data demonstrating the efficacy and safety of LINZESS 290 mcg on the overall abdominal symptoms of bloating, pain and discomfort, in adult patients with IBS-C, the U.S.
In September 2020, based on the Phase IIIb data of linaclotide 290 mcg on the overall abdominal symptoms of bloating, pain and discomfort, in adult patients with IBS-C, the U.S.
To establish and maintain this culture, we have a simple vision in mind: to make Ironwood an environment rooted in valuing each employee for who they are. ​ This begins with ensuring our workforce represents the diverse populations we serve and reflecting our DE&I principles in our employee-related trainings and policies.
To establish and maintain this culture, we have a simple vision in mind: to make Ironwood an environment rooted in valuing each employee for who they are. ​ Our workforce represents the diverse populations we serve and reflects our diversity principles in our employee-related trainings and policies.
Until the launch of LINZESS, the only available branded prescription therapy for IBS-C and CIC in the U.S. was AMITIZA® (lubiprostone), which was approved for the treatment of CIC in 2006, for the treatment of IBS-C in 2008, and for the treatment of opioid induced constipation in 2013.
Until the launch of LINZESS, the only available branded prescription therapy for IBS-C and CIC in the U.S. was AMITIZA® (lubiprostone), which is approved for the treatments of CIC, IBS-C and opioid induced constipation.
Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies. In the E.U., the advertising and promotion of medicinal products are subject to both E.U. and E.U.
The regulatory authorities may also impose specific obligations as a condition of the MA. Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies. In the E.U., the advertising and promotion of medicinal products are subject to both E.U. and E.U.
Additionally, approximately 20% of our employees are racially or ethnically diverse and in 2023, approximately 40% of our new hires were racially or ethnically diverse (excluding Europe-based employees, for which race and ethnicity is not disclosed). We are focused on fostering an environment where employees feel included and empowered.
Additionally, approximately 20% of our employees are racially or ethnically diverse and in 2024, approximately 20% of our new hires were racially or ethnically diverse (excluding Europe-based employees, for which race and ethnicity is not disclosed). We seek to foster an environment where employees feel included and empowered.
The Hatch-Waxman Act grants five years of exclusivity when a company develops and gains NDA approval of a new chemical entity that has not been previously approved by the U.S. FDA. This exclusivity provides that the U.S.
FDA’s previous findings of safety and effectiveness for a reference product. The Hatch-Waxman Act grants five years of regulatory exclusivity when a company develops and gains NDA approval of a new chemical entity that has not been previously approved by the U.S. FDA. This exclusivity provides that the U.S.
In reviewing the NDA for such a product, however, U.S. FDA reviewers could consult with their counterparts in the device center to ensure that the device component of the combination product met applicable requirements regarding safety, effectiveness, durability and performance.
FDA reviewers could consult with their counterparts in the device center to ensure that the device component of the combination product met applicable requirements regarding safety, effectiveness, durability and performance.
FDA approval of ANDAs and 505(b)(2) applications for generic drugs for the conditions of approval (for example, indication or dosage form) that required new clinical investigations that were essential to approval; it does not prohibit the U.S. FDA from accepting or approving ANDAs or 505(b)(2) NDAs for generic drugs that do not include such conditions of approval. Paragraph IV Certifications.
FDA approval of ANDAs and 505(b)(2) applications for generic drugs for the conditions of approval (for example, indication or dosage form) that required new clinical investigations that were essential to approval; it does not prohibit the U.S.
AbbVie is solely responsible for the further development, regulatory approval and commercialization of linaclotide in those countries and funding any costs. 9 Table of Contents License Agreement with AbbVie (All countries other than the countries and territories of North America, China (including Hong Kong and Macau), and Japan) In April 2009, we entered into a license agreement with Almirall, S.A., or Almirall, or the European License Agreement, to develop and commercialize linaclotide in Europe (including the Commonwealth of Independent States and Turkey) for the treatment of IBS-C, CIC, and other GI conditions.
License Agreement with AbbVie (All countries other than the countries and territories of North America, China (including Hong Kong and Macau), and Japan) In April 2009, we entered into a license agreement with Almirall, S.A., or Almirall, or the European License Agreement, to develop and commercialize linaclotide in Europe (including the Commonwealth of Independent States and Turkey) for the treatment of IBS-C, CIC, and other GI conditions.
FDA and from promoting an approved drug in a manner inconsistent with the approved label. ​ We are also subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws, for activities related to sales of any of our products or product candidates that may in the future receive marketing approval.
Healthcare Compliance ​ We are also subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws, for activities related to sales of any of our products or product candidates that may in the future receive marketing approval.
FDA may not approve any other applications to market the same drug for the same indication for seven years following product approval unless the subsequent product candidate is demonstrated to be clinically superior. Absent a showing of clinical superiority, the U.S.
FDA may not approve any other applications to market the same drug for the same indication for seven years following product approval unless the subsequent product candidate is demonstrated to be clinically superior on the basis of greater efficacy or safety, or by providing a major contribution to patient care. Absent a showing of clinical superiority, the U.S.
As many as 11.5 million adults suffer from IBS-C and as many as 28.5 million adults suffer from CIC in the U.S., based on Rome II criteria from the Lieberman GI Patient Landscape Survey performed in 2010, or the Lieberman Survey.
Linaclotide IBS-C and CIC are chronic, functional GI disorders that afflict millions of sufferers worldwide. As many as 11.5 million adults suffer from IBS-C and as many as 28.5 million adults suffer from CIC in the U.S., based on Rome II criteria from the Lieberman GI Patient Landscape Survey performed in 2010, or the Lieberman Survey.
For example, for apraglutide, we compete with companies that are commercializing or developing drugs for SBS, such as Takeda, which currently distributes the GLP-2 analog teduglutide, marketed as GATTEX® (teduglutide) in the U.S. and REVESTIVE® (teduglutide for injection) in Europe, and Zealand Pharma A/S, which is developing the GLP-2 analog glepaglutide for the treatment of SBS and which submitted an NDA to the U.S.
For example, for apraglutide, we compete with companies that are commercializing or developing drugs for SBS, such as Takeda, which currently distributes the GLP-2 analog teduglutide, marketed as GATTEX® (teduglutide) in the U.S. and REVESTIVE® (teduglutide for injection) in Europe, and Zealand Pharma A/S, or Zealand, which is developing glepaglutide, a long-acting GLP-2 analog, for the potential treatment of SBS for patients who are dependent on PS and is expecting to initiate an additional Phase III clinical trial in 2025 .
Our communication and engagement efforts seek to offset competitive talent challenges in the biopharmaceutical industry and employees’ higher expectations of their employers. To this end, we utilize a variety of channels to facilitate open and direct communication, including frequent town hall meetings, Ironwood intranet, CEO blog, leadership engagement opportunities, regular communications regarding business updates, and employee engagement surveys.
To this end, we utilize a variety of channels to facilitate open and direct communication, including frequent town hall meetings, Ironwood intranet, CEO blog, leadership engagement opportunities, regular communications regarding business updates, and employee engagement surveys.
Maximize LINZESS ● We recognized $430.5 million in collaborative arrangements revenue related to sales of LINZESS in the U.S. during the year ended December 31, 2023, a n increase of $31.7 million compared to the year ended December 31, 2022.
Maximize LINZESS ● We recognized $340.4 million in collaborative arrangements revenue related to sales of LINZESS in the U.S. during the year ended December 31, 2024, a decrease of $90.1 million compared to the year ended December 31, 2023.
Under the terms of the amended and restated agreement, we transferred all manufacturing responsibilities in China (including Hong Kong and Macau) to AstraZeneca, and we are entitled to receive non-contingent payments totaling $35.0 million in three installments through 2024, of which $15.0 million remained outstanding at December 31, 2023.
Under the terms of the amended and restated agreement, we transferred all manufacturing responsibilities in China (including Hong Kong and Macau) to AstraZeneca, and we were entitled to receive non-contingent payments totaling $35.0 million in three installments through 2024, with the final installment collected during the first quarter of 2024.
FDA may not accept, or approve, an application for a generic drug, whether the application for such drug is submitted through an ANDA or a through another form of application, known as a 505(b)(2) application.
FDA may not accept, or approve, an application for a generic drug, whether the application for such drug is submitted through an ANDA or a through another form of application, known as a 505(b)(2) application. This type of NDA authorizes the U.S. FDA to approve a follow-on product on the basis of, among other things, the U.S.
Upon commercialization, we will pay royalties to COUR in the high-single digits to low-double digits percentage of the aggregated annual net sales in the U.S. of products containing CNP-104, and COUR will be eligible to receive commercial milestone payments of up to $440.0 million over the term of the agreement. ​ Development and Commercialization Agreement with AKP ​ In March 2022, VectivBio entered into a development and commercialization agreement with Asahi Kasei Pharma Corporation, or AKP, in which VectivBio granted an exclusive license to AKP, with the right to sublicense in multiple tiers, to develop, commercialize and exploit products derived from apraglutide in Japan. ​ Pursuant to the terms of the development and commercialization agreement with AKP, VectivBio received an upfront payment of JPY 3,000 million ($24.6 million at date of agreement) and is eligible to receive development related payments of JPY 1,600 million in the aggregate ($13.1 million at date of agreement), development milestones of JPY 1,000 million ($8.2 million at date of agreement) and up to JPY 19,000 million ($155.8 million at date of agreement) of commercial and sales-based milestone payments.
In addition, AstraZeneca may be required to make milestone payments totaling up to $90.0 million contingent on the achievement of certain sales targets and is required to pay tiered royalties to us at rates beginning in the mid-single-digits percent and increasing up to twenty percent based on the aggregate annual net sales of products containing linaclotide in the territory. ​ 9 Table of Contents ​ Development and Commercialization Agreement with AKP ​ In March 2022, VectivBio entered into a development and commercialization agreement with Asahi Kasei Pharma Corporation, or AKP, in which VectivBio granted an exclusive license to AKP, with the right to sublicense in multiple tiers, to develop, commercialize and exploit products derived from apraglutide in Japan. ​ Pursuant to the terms of the development and commercialization agreement with AKP, VectivBio received an upfront payment of JPY 3,000 million ($24.6 million at date of agreement) and development-related payments of JPY 1,600 million in the aggregate ($13.1 million at date of agreement) and is eligible to receive development milestones of JPY 1,000 million ($8.2 million at date of agreement) and up to JPY 19,000 million ($155.8 million at date of agreement) of commercial and sales-based milestone payments.
By leveraging the knowledge base and expertise of our experienced commercial team and the insights of each of our linaclotide commercialization partners, we continually improve our collective marketing strategies.
We are also coordinating efforts with our linaclotide partners to launch and maintain an integrated, global linaclotide brand. By leveraging the knowledge base and expertise of our experienced commercial team and the insights of each of our linaclotide commercialization partners, we continually improve our collective marketing strategies.
AMITIZA is being commercialized in the U.S. by Takeda Pharmaceuticals Limit ed, or Takeda. AMITIZA also is being commercialized for the treatment of adults with CIC in certain European countries, including the United Kingdom and Switzerland by Sucampo AG, and for the treatment of chronic constipation in Japan by Mylan N.V.
Takeda Pharmaceuticals Limited, or Takeda’s AMITIZA is approved for commercialization in the U.S. and in certain European countries, including the United Kingdom and Switzerland by Sucampo AG, for the treatment of adults with CIC, and for the treatment of chronic constipation in Japan by Mylan N.V. Authorized generic versions of AMITIZA have been available in the U.S. since January 2021.
Manufacturers who fail to negotiate or offer the MFP can face significant civil money penalties or excise tax liability on sales of that drug. The first drugs were selected in 2023 and the MFP for those drugs will take effect in 2026.
Manufacturers who fail to negotiate or offer the MFP can face significant civil money penalties or excise tax liability on sales of that drug.
Ongoing clinical trials authorized under CTD with at least one active site in the E.U. on January 30, 2025 must be transitioned to CTR. Active site in the context of transitioning means that the last visit of the last subject, or the other trial-related interventions with the subject specified in the protocol will take place after January 30, 2025.
Active site in the context of transitioning means that the last visit of the last subject, or the other trial-related interventions with the subject specified in the protocol, will take place after January 30, 2025. 19 Table of Contents Clinical trials with no active sites authorized under CTD do not need to be transitioned even if the global trial is still ongoing outside the E.U. after the transition deadline.
Item 1. Business Our Company We are a gastrointestinal, or GI, healthcare company dedicated to advancing the treatment of GI diseases and redefining the standard of care for GI patients. We are focused on the development and commercialization of innovative GI product opportunities in areas of significant unmet need, leveraging our demonstrated expertise and capabilities in GI diseases.
Item 1. Business Our Company We are a biotechnology company developing and commercializing life-changing therapies for people living with gastrointestinal, or GI, and rare diseases. We are focused on the development and commercialization of innovative GI product opportunities in areas of significant unmet need, leveraging our demonstrated expertise and capabilities in GI diseases.
Among other provisions, the IRA imposes a yearly cap ($2,000 in 2025) on out-of-pocket prescription drug prices in Medicare Parts B and D. In addition, the IRA requires Medicare to negotiate Medicare prices for certain high-cost drugs and biologicals, including both physician-administered products covered under Medicare Part B benefit and self-administered drugs covered under the Medicare Part D benefit.
In addition, the IRA requires Medicare to negotiate Medicare prices for certain high-cost drugs and biologicals, including both physician-administered products covered under Medicare Part B benefit and self-administered drugs covered under the Medicare Part D benefit.
FDA approved LINZESS as a once-daily treatment for pediatric patients ages 6-17 years-old with FC, making LINZESS the first and only FDA-approved prescription therapy for FC in this patient population.
The boxed warning and contraindication previously applied to all children less than 18 years of age and less than 6 years of age, respectively. In June 2023, the U.S. FDA approved LINZESS as a once-daily treatment for pediatric patients ages 6-17 years-old with FC, making LINZESS the first and only FDA-approved prescription therapy for FC in this patient population.
Under these laws, data protection authorities can impose substantial potential fines for breaches of the data protection obligations. European data protection authorities may interpret the GDPR and national laws differently and impose additional requirements, which add to the complexity of processing personal data in or from the EEA, United Kingdom or Switzerland.
European data protection authorities may interpret the GDPR and national laws differently and impose additional requirements, which add to the complexity of processing personal data in or from the EEA, United Kingdom or Switzerland. ​ Human Capital ​ As of December 31, 2024, we had 253 employees.
Sales and Marketing The marketing and sale of pharmaceutical products are subject to comprehensive governmental regulation both within and outside the U.S. ​ Within the U.S., numerous federal, state and local authorities have jurisdiction over, or enforce laws related to, such activities, including the U.S. FDA, U.S. Drug Enforcement Agency, Centers for Medicare & Medicaid Services, the U.S.
Within the U.S., in addition to the U.S. FDA, numerous federal, state and local authorities have jurisdiction over, or enforce laws related to, such activities, including the U.S. Drug Enforcement Agency, Centers of Medicare & Medicaid Services, or CMS, the Department of Health and Human Services, or HHS, the U.S.
An sNDA for a new indication typically requires clinical data similar in type and quality to the clinical data supporting the original application for the original indication, and the U.S. FDA uses similar procedures and actions in reviewing such sNDAs as it does in reviewing NDAs. Adverse event reporting and submission of periodic reports are required following U.S.
FDA uses similar procedures and actions in reviewing such sNDAs as it does in reviewing NDAs. 18 Table of Contents Adverse event reporting and submission of periodic reports are required following U.S. FDA approval of an NDA. The U.S.
U.S. FDA Approval Process In the U.S., pharmaceutical products are subject to extensive regulation by the U.S. FDA.
Department of Justice, state Attorneys General, state departments of health and state pharmacy boards. U.S. FDA Approval Process In the U.S., pharmaceutical products are subject to extensive regulation by the U.S. FDA.
It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the U.S.
It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the U.S. FDA center that has primary jurisdiction for review of drug-device combination products where the jurisdiction is unclear or in dispute.
LINZESS became commercially available in Mexico in 2014, and in Saudi Arabia in 2023, for adults with IBS-C or CIC. ​ Astellas has rights to develop, manufacture and commercialize linaclotide in Japan. Astellas began commercializing LINZESS in Japan for adults with IBS-C in 2017, and for adults with chronic constipation in 2018.
Astellas began commercializing LINZESS in Japan for adults with IBS-C in 2017, and for adults with chronic constipation in 2018. AstraZeneca has rights to develop, manufacture and commercialize linaclotide in China (including Hong Kong and Macau). In 2019, AstraZeneca began commercializing LINZESS in China for adults with IBS-C.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we, or our independent registered public accounting firm, determine that our internal controls over financial reporting are not effective, or we discover areas that need improvement in the future, these shortcomings could have an adverse effect on our business and financial results, and the price of our Class A Common Stock could be negatively affected. ​ Further, we are dependent on our partners for information related to our results of operations.
Biggest changeIf we are not able to remediate these material weaknesses, or if we identify additional material weaknesses in the future, it could have an adverse effect on our business and financial results, and our ability to meet our reporting obligations could be negatively affected, each of which could negatively affect the trading price of our Class A Common Stock. ​ In connection with the audit of our consolidated financial statements for the year ended December 31, 2024, we and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting and we determined that our internal control over financial reporting was not effective as of December 31, 2024.
Our business would be materially adversely affected if we and our partners are not able to receive approval for reimbursement of our products from third-party payors on a broad, timely or satisfactory basis; if reimbursement is subject to overly broad or restrictive prior authorization requirements; or if reimbursement is not maintained at satisfactory levels or becomes subject to prior authorization.
Our business would be materially adversely affected if we and our partners are not able to receive approval for reimbursement of our products from third-party payors on a broad, timely or satisfactory basis; or if reimbursement is subject to overly broad or restrictive prior authorization requirements; or if reimbursement is not maintained at satisfactory levels or becomes subject to prior authorization.
If such policies are not favorable, or if linaclotide is improperly imported or is counterfeited, our business and financial results could be adversely affected. ​ In some foreign countries, particularly Canada, the countries of Europe, Japan and China, the pricing and payment of prescription pharmaceuticals is subject to governmental control.
If such policies are not favorable, or if linaclotide is improperly imported or is counterfeited, our business and financial results could be adversely affected. ​ In some foreign countries, particularly Canada, the countries of Europe, Japan and China, the pricing and payment of prescription pharmaceuticals are subject to governmental control.
FDA, EMA, or other applicable comparable foreign regulations in the E.U. and other jurisdictions may significantly change in a manner rendering our clinical data insufficient for approval. In addition, apraglutide may be also regulated as a drug and device combination product by the U.S. FDA, EMA and comparable foreign regulatory authorities.
FDA, EMA, or other applicable comparable foreign regulations in the E.U. and other jurisdictions may significantly change in a manner rendering our clinical data insufficient for approval. In addition, apraglutide may also be regulated as a drug and device combination product by the U.S. FDA, EMA and comparable foreign regulatory authorities.
FDA, EMA or other regulatory authorities also may require additional clinical trials, which may be costly or delay, limit, prevent or otherwise impact regulatory submission or approval. Satisfaction of U.S. FDA, EMA or other applicable regulatory requirements is costly, time-consuming, uncertain and subject to unanticipated delays.
FDA, EMA or other regulatory authorities may also require additional clinical trials, which may be costly or delay, limit, prevent or otherwise impact regulatory submission or approval. Satisfaction of U.S. FDA, EMA or other applicable regulatory requirements is costly, time-consuming, uncertain and subject to unanticipated delays.
In the E.U., the orphan designation for apraglutide may not be maintained at the time of grant of the marketing authorization if the EMA and COMP do not consider that there is sufficient confirmatory evidence to support that the criteria orphan designation continue to be met.
In the E.U., the orphan designation for apraglutide may not be maintained at the time of grant of the marketing authorization if the EMA and COMP do not consider that there is sufficient confirmatory evidence to support that the orphan designation criteria continue to be met.
Any limitations in our ability to use tax loss carryforwards to offset taxable income could adversely affect our financial condition. ​ If the distribution of the shares of Cyclerion Therapeutics, Inc., or Cyclerion, common stock in connection with the Separation is not generally tax- free for U.S. federal income tax purposes, we and our stockholders could be subject to significant tax liabilities. ​ The distribution, together with certain related transactions, is intended to qualify for tax-free treatment to us and our stockholders for U.S. federal income tax purposes.
Any limitations in our ability to use tax loss carryforwards to offset taxable income could adversely affect our financial condition. ​ If the distribution of the shares of Cyclerion Therapeutics, Inc., or Cyclerion, common stock in connection with the Separation is not generally tax- free for U.S. federal income tax purposes, we and our stockholders could be subject to significant tax liabilities. ​ The distribution of the shares of Cyclerion common stock in connection with the Separation, together with certain related transactions, is intended to qualify for tax-free treatment to us and our stockholders for U.S. federal income tax purposes.
Furthermore, if these measures prevent us or any of our partners from selling linaclotide on a profitable basis in a particular country, they could prevent the commercial launch or continued sale of linaclotide in that country. ​ CONSTELLA was first launched in certain European countries for the symptomatic treatment of moderate to severe IBS-C in adults in the second quarter of 2013 and our partner, AbbVie, is currently commercializing CONSTELLA in a number of European countries.
Furthermore, if these measures prevent us or any of our partners from selling linaclotide on a profitable basis in a particular country, they could prevent the commercial launch or continued sale of linaclotide in that country. ​ CONSTELLA was first launched in certain European countries for the symptomatic treatment of moderate to severe IBS-C in adults in the second quarter of 2013 and our partner, AbbVie, is currently commercializing CONSTELLA in a number of European countries and in Canada.
Within the U.S., federal laws and regulations include: ​ ● federal healthcare program anti-kickback laws, which prohibit, among other things, persons from offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for, or the purchasing or ordering of, a good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid; ​ ● federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, information or claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply to manufacturers for reasons including providing coding and billing advice to customers or engaging in prohibited off-label promotional activities; ​ ● federal Health Insurance Portability and Accountability Act of 1996, which prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information on certain types of entities, which include many healthcare providers with whom we interact and health plans with which we may interact; ​ ● the Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products prior to approval or for off-label use and regulates the distribution of samples; ​ ● the 21 st Century Cures Act, which amends Section 114 of the Food and Drug Administration Modernization Act of 1997 to define healthcare economic information and the circumstances under which healthcare economic information may be disseminated; ​ ● federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to 43 Table of Contents government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and ​ ● the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with physicians, certain non-physician practitioners and teaching hospitals to the federal government for re-disclosure to the public; and ​ There are also state law equivalents of certain of the above federal laws, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts, which laws include anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, state transparency laws, state laws limiting interactions between pharmaceutical manufacturers and members of the healthcare industry, and state laws governing the privacy and security of health information in certain circumstances. ​ Other laws and regulations have also been enacted by various states to regulate the sales and marketing practices of pharmaceutical or biopharmaceutical manufacturers.
Within the U.S., federal laws and regulations include: ​ ● federal healthcare program anti-kickback laws, which prohibit, among other things, persons from offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for, or the purchasing or ordering of, a good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid; ​ ● federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, information or claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply to manufacturers for reasons including providing coding and billing advice to customers or engaging in prohibited off-label promotional activities; ​ ● federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information on certain types of entities, which include many healthcare providers with whom we interact and health plans with which we may interact; ​ ● the Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products prior to approval or for off-label use and regulates the distribution of samples; ​ ● the 21 st Century Cures Act, which amends Section 114 of the Food and Drug Administration Modernization Act of 1997 to define healthcare economic information and the circumstances under which healthcare economic information may be disseminated; ​ ● federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and ​ ● the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with physicians, certain non-physician practitioners and teaching hospitals to the federal government for re-disclosure to the public. ​ There are also state law equivalents of certain of the above federal laws, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts, which laws include anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers, state transparency laws, state laws limiting interactions between pharmaceutical manufacturers and members of the healthcare industry, and state laws governing the privacy and security of health information in certain circumstances. ​ Other laws and regulations have also been enacted by various states to regulate the sales and marketing practices of pharmaceutical or biopharmaceutical manufacturers.
We are also required to offer to repurchase the Convertible Senior Notes upon the occurrence of a fundamental change, which could include, among other things, any acquisition of our company (other than an acquisition in which at least 90% of the consideration is Class A Common Stock listed on The Nasdaq Global Select Market or The New York Stock Exchange), subject to the terms of each of the indenture governing the Convertible Senior Notes.
We are also required to offer to repurchase the Convertible Senior Notes upon the occurrence of a fundamental change, which could include, among other things, any acquisition of our company (other than an acquisition in which at least 90% of the consideration is Class A Common Stock listed on The Nasdaq Global Select Market or The New York Stock Exchange), subject to the terms of the indenture governing the Convertible Senior Notes.
The foregoing, or the perception of the foregoing, may have the following effects, among others: ​ ● sales of our products may be impaired; ​ ● regulatory approvals for our products may be delayed, denied, restricted or withdrawn; ​ ● we or our partners may decide to, or be required to, change the products’ labeling or send product warning letters or field alerts to physicians, pharmacists or hospitals; ​ ● reformulation of the products, additional nonclinical or clinical studies, changes in labeling or changes to or re-approvals of manufacturing facilities may be required; ​ 33 Table of Contents ● we or our partners may be precluded from pursuing approval of our products in new territories or from studying additional development opportunities to enhance our products’ clinical profiles, including within new or existing indications, populations or formulations, as well as in potential combination products; ​ ● we may be required to create a Risk Evaluation and Mitigation Strategy, or REMS, plan, or similar actions in other jurisdictions which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers or other elements to assure safe use; ​ ● our or our products’ reputation in the marketplace may suffer; and ​ ● government investigations or lawsuits, including class action suits, may be brought against us or our partners. ​ Any of the above occurrences could prevent us from achieving or maintaining market acceptance of our product candidates, if they are approved, and could significantly harm our business, results of operations, and prospects, prevent sales of our products, increase expenses and impair our and our partners’ ability to successfully commercialize our products. ​ Linaclotide has been prescribed to millions of patients since its launch in the U.S. and other territories beginning in December 2012.
The foregoing, or the perception of the foregoing, may have the following effects, among others: ​ ● sales of our products may be impaired; ​ ● regulatory approvals for our products may be delayed, denied, restricted or withdrawn; ​ ● we or our partners may decide to, or be required to, change the products’ labeling or send product warning letters or field alerts to physicians, pharmacists or hospitals; ​ ● reformulation of the products, additional nonclinical studies or clinical trials, changes in labeling or changes to or re-approvals of manufacturing facilities may be required; ​ ● we or our partners may be precluded from pursuing approval of our products in new territories or from studying additional development opportunities to enhance our products’ clinical profiles, including within new or existing indications, populations or formulations, as well as in potential combination products; ​ ● we may be required to create a Risk Evaluation and Mitigation Strategy, or REMS, plan, or similar actions in other jurisdictions which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers or other elements to assure safe use; ​ ● our or our products’ reputation in the marketplace may suffer; and ​ ● government investigations or lawsuits, including class action suits, may be brought against us or our partners. ​ 34 Table of Contents Any of the above occurrences could prevent us from achieving or maintaining market acceptance of our product candidates, if they are approved, and could significantly harm our business, results of operations, and prospects, prevent sales of our products, increase expenses and impair our and our partners’ ability to successfully commercialize our products. ​ Linaclotide has been prescribed to millions of patients since its launch in the U.S. and other territories beginning in December 2012.
FDA approved LINZESS as a once-daily treatment for adult men and women suffering from IBS-C or CIC. Although we and AbbVie completed additional nonclinical and clinical studies in adults that were required by the U.S. FDA in connection with the approval of LINZESS, LINZESS remains subject to ongoing U.S.
FDA approved LINZESS as a once-daily treatment for adult men and women suffering from IBS-C or CIC. Although we and AbbVie completed additional nonclinical studies and clinical trials in adults that were required by the U.S. FDA in connection with the approval of LINZESS, LINZESS remains subject to ongoing U.S.
Even though we have orphan drug designation for apraglutide in the U.S. and in the E.U., we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products. Based on available preclinical and clinical data, both the U.D.
Even though we have orphan drug designation for apraglutide in the U.S. and in the E.U., we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products. Based on available preclinical and clinical data, both the U.S.
If a third party claims that we or our partners infringe its intellectual property rights, we may face a number of issues, including, but not limited to: ​ ● infringement and other intellectual property claims which, regardless of merit, may be expensive and time- consuming to litigate and may divert our management’s attention from our core business; ​ ● substantial damages for infringement, which we may have to pay if a court decides that the product at issue infringes on or violates the third party’s rights, and, if the court finds that the infringement was willful, we could be ordered to pay treble damages and the patent owner’s attorneys’ fees; ​ ● a court prohibiting us from selling our product unless the third party licenses its rights to us, which it is not required to do; ​ ● if a license is available from a third party, we may have to pay substantial royalties, fees or grant cross- licenses to our intellectual property rights; and ​ ● redesigning our products so they do not infringe, which may not be possible or may require substantial monetary expenditures and time. ​ If we fail to comply with our obligations or have disagreements over contract interpretation in agreements under which we license intellectual property and other rights from third parties or otherwise experience disruptions to our business relationship with our licensor, the scope of our intellectual property or technology rights could be narrowed and we could lose license rights that are important to our business. ​ Licensing of intellectual property is of critical importance to our business and involves complex legal, business, and scientific issues.
If a third party claims that we or our partners infringe its intellectual property rights, we may face a number of issues, including, but not limited to: ​ ● infringement and other intellectual property claims which, regardless of merit, may be expensive and time- consuming to litigate and may divert our management’s attention from our core business; ​ ● substantial damages for infringement, which we may have to pay if a court decides that the product at issue infringes on or violates the third party’s rights, and, if the court finds that the infringement was willful, we could be ordered to pay treble damages and the patent owner’s attorneys’ fees; ​ ● a court prohibiting us from selling our product unless the third party licenses its rights to us, which it is not required to do; ​ ● if a license is available from a third party, we may have to pay substantial royalties, fees or grant cross- licenses to our intellectual property rights; and ​ ● redesigning our products so they do not infringe, which may not be possible or may require substantial monetary expenditures and time. 48 Table of Contents ​ If we fail to comply with our obligations or have disagreements over contract interpretation in agreements under which we license intellectual property and other rights from third parties or otherwise experience disruptions to our business relationship with our licensor, the scope of our intellectual property or technology rights could be narrowed and we could lose license rights that are important to our business. ​ Licensing of intellectual property is of critical importance to our business and involves complex legal, business, and scientific issues.
In addition, LINZESS was first launched in China for the treatment of IBS-C in adults in November 2019, and our partner AstraZeneca, is currently commercializing LINZESS in China (including Hong Kong and Macau). The pricing and reimbursement strategy is a key component of our partners’ commercialization plans for CONSTELLA in Europe and LINZESS in Japan and China.
In addition, LINZESS was first launched in China for the treatment of IBS-C in adults in November 2019, and our partner AstraZeneca, is currently commercializing LINZESS in China (including Hong Kong and Macau). The pricing and reimbursement strategy is a key component of our partners’ commercialization plans for CONSTELLA in Europe and Canada and LINZESS in Japan and China.
Our revenues may suffer if our partners are unable to successfully and timely conclude reimbursement, price approval or funding processes and market CONSTELLA in key member states of the E.U. or LINZESS in Japan or China, or if coverage and reimbursement for either CONSTELLA or LINZESS is limited or reduced.
Our revenues may suffer if our partners are unable to successfully and timely conclude reimbursement, price approval or funding processes and market CONSTELLA in key member states of the E.U. and Canada or LINZESS in Japan or China, or if coverage and reimbursement for either CONSTELLA or LINZESS is limited or reduced.
Accordingly, notwithstanding receipt of the 56 Table of Contents IRS private letter ruling and the opinion, the IRS could determine that the distribution and certain related transactions should be treated as taxable transactions for U.S. federal income tax purposes. ​ If the distribution, together with certain related transactions, fails to qualify as a transaction that is generally tax-free under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, in general, for U.S. federal income tax purposes, we would recognize taxable gain with respect to Cyclerion’s distributed common stock and our stockholders who received shares of Cyclerion common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. ​ General Risk Factors ​ We may not be able to manage our business effectively if we lose any of our current management team or if we are unable to attract, motivate and retain key personnel. ​ We may not be able to attract, motivate or retain qualified management and scientific, clinical, operations and commercial personnel due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses, particularly in the greater-Boston area.
Accordingly, notwithstanding receipt of the IRS private letter ruling and the opinion, the IRS could determine that the distribution and certain related transactions should be treated as taxable transactions for U.S. federal income tax purposes. ​ If the distribution, together with certain related transactions, fails to qualify as a transaction that is generally tax-free under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, in general, for U.S. federal income tax purposes, we would recognize taxable gain with respect to Cyclerion’s distributed common stock and our stockholders who received shares of Cyclerion common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. ​ General Risk Factors ​ We may not be able to manage our business effectively if we lose any of our current management team or if we are unable to attract, motivate and retain key personnel. ​ We may not be able to attract, motivate or retain qualified management and scientific, clinical, operations and commercial personnel due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses, particularly in the greater-Boston area.
As supervisory authorities issue further guidance on personal data export mechanisms or where the standard contractual clauses cannot be used, we could incur additional compliance costs, complaints, and/or regulatory investigations and, if we are unable to otherwise transfer personal data among jurisdictions in which we operate, our services and geographical location or segregation of our relevant systems and operations could be affected. ​ In addition, in the U.S., we are subject to the California Consumer Privacy Act, or CCPA, as amended by the CPRA, which became effective on January 1, 2023 (the CPRA, together with CCPA, the California Privacy Law).
As supervisory authorities issue further guidance on personal data export mechanisms or where the standard contractual clauses cannot be used, we could incur additional compliance costs, complaints, and/or regulatory investigations and, if we are unable to otherwise transfer personal data among jurisdictions in which we operate, our services and geographical location or segregation of our relevant systems and operations could be affected. ​ In addition, in the U.S., we are subject to the CCPA, as amended by the CPRA, which became effective on January 1, 2023 (the CPRA, together with CCPA, the California Privacy Law).
Despite our security measures, our large and complex information technology and infrastructure (and those of our partners, vendors and third-party providers) may be vulnerable to attacks by hackers or breached due to employee, partner, vendor or third-party error, malfeasance or other disruptions.
Despite our security measures, our large and complex information technology and infrastructure (and those of our partners, vendors and third-party providers) are vulnerable to attacks by hackers and may be breached due to employee, partner, vendor or third-party error, malfeasance or other disruptions.
In addition, we may not be able to prevent, alone or with our partners, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S. ​ Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, as well as the potential for public announcements of the results of hearings, motions or other interim proceeding or developments, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. ​ Risks Related to Our Finances and Capital Requirements ​ We incurred significant losses from our inception in 1998 through the year ended December 31, 2018, and we may incur losses in future periods. ​ In recent years, we have focused primarily on developing, manufacturing and commercializing linaclotide, as well as developing our other product candidates.
In addition, we may not be able to prevent, alone or with 51 Table of Contents our partners, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S. ​ Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, as well as the potential for public announcements of the results of hearings, motions or other interim proceeding or developments, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. ​ Risks Related to Our Finances and Capital Requirements ​ We incurred significant losses from our inception in 1998 through the year ended December 31, 2018, and we may incur losses in future periods. ​ In recent years, we have focused primarily on developing, manufacturing and commercializing linaclotide, as well as developing our other product candidates.
FDA or a foreign regulatory authority regarding such products. Furthermore, we or our partners may fail to adequately monitor, identify or investigate adverse events, or to report adverse events to the U.S. FDA or foreign regulatory authority accurately and within the prescribed timeframe.
FDA or a comparable foreign regulatory authority regarding such products. Furthermore, we or our partners may fail to adequately monitor, identify or investigate adverse events, or to report adverse events to the U.S. FDA or a comparable foreign regulatory authority accurately and within the prescribed timeframe.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The Nasdaq Stock Market or other regulatory authorities. ​ We expect that the price of our Class A Common Stock will fluctuate substantially. ​ The market price of our Class A Common Stock may be highly volatile due to many factors, including: ​ ● the commercial performance of our products in the countries in which they are approved, as well as the costs associated with such activities; ​ ● any third-party coverage and reimbursement policies for our products; ​ ● market conditions in the pharmaceutical and biotechnology sectors; ​ ● developments, litigation or public concern about the safety of our products or our potential products; ​ ● announcements of the introduction of new products by us or our competitors; ​ ● announcements concerning product development, including clinical trial results or timelines, or intellectual property rights of us or others; ​ ● actual and anticipated fluctuations in our quarterly and annual operating results; ​ ● deviations in our operating results from any guidance we may provide or the estimates of securities analysts; ​ ● sales of additional shares of our Class A Common Stock or sales of securities convertible into Class A Common Stock or the perception that these sales might occur; ​ ● any conversions of our Convertible Senior Notes into Class A Common Stock or activities undertaken by the counterparties to the Capped Calls; ​ ● additions or departures of key personnel; ​ 59 Table of Contents ● developments concerning current or future collaboration, partnership, licensing or other strategic arrangements; ​ ● discussion of us or our stock price in the financial or scientific press or in online investor communities; and ​ ● the impact of public health epidemics, including containment or mitigation measures, or natural disasters. ​ Our business could be negatively affected as a result of a proxy contest or certain other stockholder actions. ​ Responding to certain stockholder actions can be costly, disruptive and time-consuming, and could also impact our ability to attract, retain and motivate our employees.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The Nasdaq Stock Market or other regulatory authorities. ​ We expect that the price of our Class A Common Stock will fluctuate substantially. ​ The market price of our Class A Common Stock may be highly volatile due to many factors, including: ​ ● the commercial performance of our products in the countries in which they are approved, as well as the costs associated with such activities; ​ ● any third-party coverage and reimbursement policies for our products; ​ ● market conditions in the pharmaceutical and biotechnology sectors; ​ ● developments, litigation or public concern about the safety of our products or our potential products; ​ ● announcements of the introduction of new products by us or our competitors; ​ ● announcements concerning product development, including clinical trial results or timelines, or intellectual property rights of us or others; ​ ● actual and anticipated fluctuations in our quarterly and annual operating results; ​ ● deviations in our operating results from any guidance we may provide or the estimates of securities analysts; ​ ● sales of additional shares of our Class A Common Stock or sales of securities convertible into Class A Common Stock or the perception that these sales might occur; ​ ● any conversions of our Convertible Senior Notes into Class A Common Stock or activities undertaken by the counterparties to the Capped Calls; ​ ● additions or departures of key personnel; ​ ● developments concerning current or future collaboration, partnership, licensing or other strategic arrangements; ​ ● discussion of us or our stock price in the financial or scientific press or in online investor communities; ​ ● general economic, industry, and market conditions; and ​ ● the impact of public health epidemics, including containment or mitigation measures, or natural disasters. ​ Our business could be negatively affected as a result of a proxy contest or certain other stockholder actions. ​ Responding to certain stockholder actions can be costly, disruptive and time-consuming, and could also impact our ability to attract, retain and motivate our employees.
Although we believe we have put in place a robust compliance program, which is designed to ensure that all such activities are performed in a legal and compliant manner, we cannot be certain that our program will address all areas of potential exposure and the risks in this area cannot be entirely eliminated. ​ If we fail to comply with healthcare and other regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. ​ The marketing of pharmaceutical and biopharmaceutical products and related arrangements with healthcare providers, third-party payors, patients and other third parties in the healthcare industry are subject to a wide range of healthcare laws and regulations within the U.S. and in foreign jurisdictions in which we operate.
Although we believe we have put in place a robust compliance program, which is designed to ensure that all such activities are performed in a legal and compliant manner, we cannot be certain that our program will address all areas of potential exposure and the risks in this area cannot be entirely eliminated. ​ 43 Table of Contents If we fail to comply with healthcare and other regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. ​ The marketing of pharmaceutical and biopharmaceutical products and related arrangements with healthcare providers, third-party payors, patients and other third parties in the healthcare industry are subject to a wide range of healthcare laws and regulations within the U.S. and in foreign jurisdictions in which we operate.
These transactions are expected generally to reduce the potential dilution upon any conversion of our 2024 Convertible Notes or our 2026 Convertible Notes, as applicable, or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Senior Notes, as the case may be. ​ In connection with these transactions, the financial institutions likely purchased our Class A Common Stock in secondary market transactions and entered into various OTC derivative transactions with respect to our Class A Common Stock.
These transactions are expected generally to reduce the potential dilution upon any conversion of our Convertible Senior Notes, as applicable, or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Senior Notes, as the case may be. ​ In connection with these transactions, the financial institutions likely purchased our Class A Common Stock in secondary market transactions and entered into various OTC derivative transactions with respect to our Class A Common Stock.
New manufacturers would need to develop and implement the necessary production techniques and processes, which along with their facilities, would need to be inspected and approved by the regulatory authorities in each applicable territory. ​ If our partners or the third-party manufacturers we or our partners engage fail to adhere to applicable GMP or other regulatory requirements, experience delays or disruptions in the availability of raw materials or experience manufacturing or distribution problems, we will suffer significant consequences, including product seizures or recalls, loss of product approval, fines and sanctions, reputational damage, shipment delays, inventory shortages, inventory write-offs and other product-related charges and increased manufacturing costs.
New manufacturers would need to develop and implement the necessary production techniques and processes, which along with their facilities, would need to be inspected and approved by the regulatory authorities in each applicable territory. ​ If our partners or the third-party manufacturers we or our partners engage fail to adhere to applicable GMP or other regulatory requirements, experience delays or disruptions in the availability of raw materials or experience 41 Table of Contents manufacturing or distribution problems, we will suffer significant consequences, including product seizures or recalls, loss of product approval, fines and sanctions, reputational damage, shipment delays, inventory shortages, inventory write-offs and other product-related charges and increased manufacturing costs.
These advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us, or may have arrangements with other companies to assist in the development and commercialization of products that may compete with ours. ​ Security breaches and other disruptions to our information technology structure could compromise our information, disrupt our business and expose us to liability, which would cause our business and reputation to suffer. ​ In the ordinary course of our business, we collect, process and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers and business partners, as well as personally identifiable information of our patients, clinical trial participants and employees.
These advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us, or may 57 Table of Contents have arrangements with other companies to assist in the development and commercialization of products that may compete with ours. ​ Security breaches and other disruptions to our information technology structure could compromise our information, disrupt our business and expose us to liability, which would cause our business and reputation to suffer. ​ In the ordinary course of our business, we collect, process and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers and business partners, as well as personally identifiable information of our patients, clinical trial participants and employees.
If we are unable to successfully acquire the rights to additional products or product candidates on terms that we find acceptable, or at all, or execute other value creating transactions, we will remain smaller, less diversified and highly dependent on the commercial success of LINZESS, and our business and prospects would be materially and adversely affected. ​ In addition, such in-licenses, acquisitions or other transactions may entail numerous operational and financial risks, including: ● development, regulatory and commercialization challenges; ​ ● exposure to unknown liabilities; ● disruption of our business and diversion of our management’s time and attention to develop acquired products, product candidates, businesses or technologies; ​ ● incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions; ● higher than expected acquisition and integration costs; ● difficulty in combining the operations and personnel of any acquired businesses with our operations and personnel; ● increased amortization expenses; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ​ ● inability to motivate key employees of any acquired businesses.
If we are unable to successfully acquire the rights to additional products or product candidates on terms that we find acceptable, or at all, or execute other value creating transactions, we will remain smaller, less diversified and highly dependent on the commercial success of LINZESS and apraglutide, if approved, and our business and prospects would be materially and adversely affected. ​ In addition, such in-licenses, acquisitions or other transactions may entail numerous operational and financial risks, including: ● development, regulatory and commercialization challenges; 37 Table of Contents ​ ● exposure to unknown liabilities; ● disruption of our business and diversion of our management’s time and attention to develop acquired products, product candidates, businesses or technologies; ​ ● incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions; ● higher than expected acquisition and integration costs; ● difficulty in combining the operations and personnel of any acquired businesses with our operations and personnel; ● increased amortization expenses; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ​ ● inability to motivate key employees of any acquired businesses.
Finally, any change of control or in management may result in a reprioritization of linaclotide within a partner’s portfolio, or such partner may fail to maintain the financial or other resources necessary to continue supporting its portion of the development, manufacturing or commercialization of linaclotide. ​ If any of our linaclotide partners undergoes a change of control and the acquirer either (i) is unable to perform such partner’s obligations under its collaboration or license agreement with us or (ii) does not comply with the divestiture or certain other provisions of the applicable agreement, we have the right to terminate the collaboration or license agreement and reacquire that partner’s rights with respect to linaclotide.
Finally, any change of control or in management may result in a reprioritization of linaclotide within a partner’s portfolio, or such partner may fail to maintain the financial or other resources necessary to continue supporting its portion of the development, manufacturing or commercialization of linaclotide. ​ If any of our linaclotide partners undergoes a change of control and the acquirer either (i) is unable to perform such partner’s obligations under its collaboration or license agreement with us or (ii) does not comply with the divestiture or certain other provisions of the applicable agreement, we have the right to terminate the collaboration or license agreement and re-acquire that partner’s rights with respect to linaclotide.
Obtaining and maintaining favorable reimbursement can be a time consuming and expensive process, and there is no guarantee that we or AbbVie, with respect to linaclotide in the U.S., will be able to negotiate or continue to negotiate pricing terms with third-party payors at levels that are profitable to us, or at all.
Obtaining and maintaining favorable reimbursement can be a time consuming and expensive process, and there is no guarantee that we or AbbVie, with respect to LINZESS in the U.S., will be able to negotiate or continue to negotiate pricing terms with third-party payors at levels that are profitable to us, or at all.
Although we have entered into such arrangements with respect to the development and commercialization of linaclotide worldwide and of apraglutide in Japan, there can be no assurance that we will be able to do so in the future with respect to other products or product candidates that we either 37 Table of Contents develop internally or in- license or that we will be able to gain the interest of potential partners; establish and maintain development, manufacturing, marketing, sales or distribution relationships on acceptable terms; that such relationships, if established, will be successful or on favorable terms; or that we will gain market acceptance for such products or product candidates.
Although we have entered into such arrangements with respect to the development and commercialization of linaclotide worldwide and of apraglutide in Japan, there can be no assurance that we will be able to do so in the future with respect to other products or product candidates that we either develop internally or in- license or that we will be able to gain the interest of potential partners; establish and maintain development, manufacturing, marketing, sales or distribution relationships on acceptable terms; that such relationships, if established, will be successful or on favorable terms; or that we will gain market acceptance for such products or product candidates.
If we or our partners are unsuccessful in any of the foregoing due to poor process, execution, systems, oversight, communication, adjudication or otherwise, then we may suffer any number of consequences, including the imposition of additional restrictions on the use of linaclotide, removal of linaclotide from the market, criminal prosecution, the imposition of civil monetary penalties, seizure of such products, or delay in approval of future products. 39 Table of Contents ​ We rely entirely on contract manufacturers, our partners and other third parties to manufacture linaclotide, apraglutide, and our other product candidates and to distribute linaclotide.
If we or our partners are unsuccessful in any of the foregoing due to poor process, execution, systems, oversight, communication, adjudication or otherwise, then we may suffer any number of consequences, including the imposition of additional restrictions on the use of linaclotide, removal of linaclotide from the market, criminal prosecution, the imposition of civil monetary penalties, seizure of such products, or delay in approval of future products. ​ We rely entirely on contract manufacturers, our partners and other third parties to manufacture linaclotide, apraglutide, and our other product candidates and to distribute linaclotide.
As a result, a holder, or holders, controlling a majority of our capital stock are not able to call a special meeting. ​ ● A super-majority (80%) of the outstanding shares of Class A Common Stock are required to amend our bylaws, which make it more difficult to change the provisions described above. ​ In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock.
As a result, a holder, or holders, controlling a majority of our capital stock are not able to call a special meeting. 58 Table of Contents ​ ● A super-majority (80%) of the outstanding shares of Class A Common Stock are required to amend our bylaws, which make it more difficult to change the provisions described above. ​ In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock.
For example, we are a party to an amended and restated intellectual property license agreement with Ferring pursuant to which we have exclusive rights to apraglutide including issued composition of matter and method of use patents in the U.S. in lead indications, or the Ferring Agreement.
For example, we are a party to an amended and restated intellectual property license agreement with Ferring pursuant to which we have exclusive rights to apraglutide including an issued composition of matter and method of use patent in the U.S. in lead indications, or the Ferring Agreement.
The revisions to the FADP may result in increased costs of compliance, risks of noncompliance and penalties for noncompliance. ​ The GDPR, United Kingdom’s GDPR and FADP also increase the scrutiny applied to transfers of personal data from the EEA, UK, and Switzerland, respectively (including from clinical trial sites in the EEA) to countries that are considered by the European Commission, United Kingdom or Switzerland, respectively, to lack an adequate level of data protection, such as the U.S.
The revisions to the FADP may result in increased costs of compliance, risks of noncompliance and penalties for noncompliance. ​ 45 Table of Contents The GDPR, United Kingdom’s GDPR and FADP also increase the scrutiny applied to transfers of personal data from the EEA, UK, and Switzerland, respectively (including from clinical trial sites in the EEA) to countries that are considered by the European Commission, United Kingdom or Switzerland, respectively, to lack an adequate level of data protection, such as the U.S.
Risks we may face in connection with the VectivBio Acquisition include, among others: ● failure to successfully implement our business plans for the combined business, including the development of apraglutide for SBS-IF; ● failure of the VectivBio Acquisition to further our business strategy as we expected, including the development and, if approved, the commercialization of apraglutide for SBS-IF; ● unexpected losses of key employees, customers or suppliers, and the complexities associated with integrating personnel from another company; ● unanticipated issues in conforming VectivBio’s standards, processes, procedures and controls with our operations; ● coordinating product candidate and process development; ● increasing the scope, geographic diversity and complexity of our operations; ● diversion of management’s attention from other business concerns; ● adverse effects on our or VectivBio’s existing business relationships; ● unanticipated changes in applicable laws and regulations; ● unanticipated expenses and liabilities associated with the VectivBio Acquisition; and ● other difficulties in the assimilation of VectivBio operations, technologies, product candidates and systems.
Risks we may face in connection with the VectivBio Acquisition include, among others: ● failure to successfully implement our business plans for the combined business, including the development of apraglutide for SBS patients who are dependent on PS; ● failure of the VectivBio Acquisition to further our business strategy as we expected, including the commercialization of apraglutide, if approved, for SBS patients who are dependent on PS; ● unexpected losses of key employees, customers or suppliers, and the complexities associated with integrating personnel from another company; ● unanticipated issues in conforming VectivBio’s standards, processes, procedures and controls with our operations; ● coordinating product candidate and process development; ● increasing the scope, geographic diversity and complexity of our operations; ● diversion of management’s attention from other business concerns; ● adverse effects on our or VectivBio’s existing business relationships; ● unanticipated changes in applicable laws and regulations; ● unanticipated expenses and liabilities associated with the VectivBio Acquisition; and ● other difficulties in the assimilation of VectivBio operations, technologies, product candidates and systems.
This lengthy regulatory approval process, as well as the unpredictability of the results of clinical trials, may result in our failure to obtain regulatory approval to potentially market apraglutide or our other product candidates, which would significantly harm our business, results of operations, and prospects.
This lengthy drug development and regulatory approval process, as well as the unpredictability of the results of clinical trials, may result in our failure to obtain regulatory approval to potentially market apraglutide or our other product candidates, which would significantly harm our business, results of operations, and prospects.
FDA, EMA or other comparable foreign regulatory authorities that a product candidate’s risk-to-benefit ratio for its proposed indications is acceptable; ● the U.S. FDA, EMA or the applicable foreign regulatory authority may disagree regarding the formulation, labeling and/or the specifications of a product candidate; ● the U.S.
FDA, EMA or other comparable foreign regulatory authorities that a product candidate’s risk-to-benefit ratio for its proposed indications is acceptable; ● the U.S. FDA, EMA or other comparable foreign regulatory authorities may disagree regarding the formulation, labeling and/or the specifications of a product candidate; ● the U.S.
In addition, during litigation, the counterparty could obtain a preliminary injunction or other equitable relief which could prohibit us from making, using or selling our products, pending a trial on the merits, which may not occur for several years. ​ 48 Table of Contents There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries generally.
In addition, during litigation, the counterparty could obtain a preliminary injunction or other equitable relief which could prohibit us from making, using or selling our products, pending a trial on the merits, which may not occur for several years. ​ There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries generally.
The repurchase price must be paid in cash, and this obligation may have the effect of discouraging, delaying or preventing an acquisition of our company that would otherwise be beneficial to our security holders. ​ Each of the indentures governing our Convertible Senior Notes also includes cross-default features providing that certain failures to pay for outstanding indebtedness would result in a default under the indentures governing our Convertible Senior Notes.
The repurchase price must be paid in cash, and this obligation may have the effect of discouraging, delaying or preventing an acquisition of our company that would otherwise be beneficial to our security holders. ​ The indenture governing our Convertible Senior Notes also includes cross-default features providing that certain failures to pay for outstanding indebtedness would result in a default under the indenture governing our Convertible Senior Notes.
FDA or European Commission can subsequently approve the same drug with the same active moiety for the same condition if the U.S. FDA or EMA concludes that the later drug is safer, more effective, or makes a major contribution to patient care.
FDA or EMA can subsequently approve the same drug with the same active moiety for the same condition if the U.S. FDA or EMA concludes that the later drug is safer, more effective, or makes a major contribution to patient care.
Further, we and AbbVie must continue to focus our combined sales and marketing efforts on educating customers about the relevant data and information for LINZESS in treating adults with IBS-C and CIC, and taking a measured approach to educating and raising awareness on the FC indication for pediatric patients ages 6-17 years-old.
Further, we and AbbVie must continue to focus the sales and marketing efforts for the brand on educating customers about the relevant data and information for LINZESS in treating adults with IBS-C and CIC, and taking a measured approach to educating and raising awareness on the FC indication for pediatric patients ages 6-17 years-old.
Any delay or disruption in 40 Table of Contents the availability of raw materials or a change in raw material suppliers could result in production disruptions, delays or higher costs with consequent adverse effects on us. ​ The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.
Any delay or disruption in the availability of raw materials or a change in raw material suppliers could result in production disruptions, delays or higher costs with consequent adverse effects on us. ​ The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.
FDA, EMA or other comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials or with our interpretation of data from preclinical studies or clinical trials; ● the population studied in the clinical program may not be sufficiently broad or representative to assure safety or efficacy in the full population for which we seek approval; ● the data collected from our clinical trials may not be sufficient to support the submission of a NDA, MMA, or other submission or to obtain regulatory approval in the U.S., Europe or elsewhere; ● participants in our clinical trials or individuals using drugs similar to our product candidates may experience serious and unexpected drug-related side effects; ● we may be unable to demonstrate to the U.S.
FDA, EMA or other comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials or with our interpretation of data from preclinical studies or clinical 30 Table of Contents trials; ● the population studied in the clinical program may not be sufficiently broad or representative to assure safety or efficacy in the full population for which we seek approval; ● the data collected from our clinical trials may not be sufficient to support the submission of an NDA, MMA, or other submission or to obtain regulatory approval in the U.S., Europe or elsewhere; ● participants in our clinical trials or individuals using drugs similar to our product candidates may experience serious and unexpected drug-related side effects; ● we may be unable to demonstrate to the U.S.
In addition, we and AbbVie must continually assess, modify and adapt our commercialization plan in a coordinated and integrated fashion, including evaluating and adjusting as necessary the level and mix of marketing and promotion efforts, in response to changing business, market or other factors in order to advance the commercial potential of LINZESS, such as the U.S.
In addition, we and AbbVie must continually assess, modify and adapt our commercialization plan in a coordinated and integrated fashion, including evaluating and adjusting as necessary the level and mix of marketing and promotion efforts, in response to changing business, market or other factors in order to advance the commercial potential of LINZESS.
FDA granted marketing authorization for the treatment of CIC in adults who have not experienced relief of their bowel symptoms by using laxative therapies at the recommended dosage for at least one month. OTC laxatives such as MiraLAX® and DULCOLAX®, and lactulose, a prescription laxative treatment, are also available for the treatment of constipation.
FDA for the treatment of CIC in adults who have not experienced relief of their bowel symptoms by using laxative therapies at the recommended dosage for at least one month. OTC laxatives such as MiraLAX® and DULCOLAX®, and lactulose, a prescription laxative treatment, are also available for the treatment of constipation.
Risks Related to Our Dependence on Third Parties ​ Because we work with partners to develop, manufacture and commercialize linaclotide, we and our partners are dependent upon third parties, and our and our partners’ relationships with those third parties, in our and our partners’ efforts to obtain regulatory approval for, and to commercialize, linaclotide, as well as to comply with regulatory and other obligations with respect to linaclotide. ​ AbbVie played a significant role in the conduct of the clinical trials for linaclotide and in the subsequent collection and analysis of data, and AbbVie holds the new drug application, or NDA, for LINZESS.
Risks Related to Our Dependence on Third Parties ​ Because we work with partners to develop, manufacture and commercialize linaclotide, we and our partners are dependent upon third parties, and our and our partners’ relationships with those third parties, in our and our partners’ efforts to obtain regulatory approval for, and to commercialize, linaclotide, as well as to comply with regulatory and other obligations with respect to linaclotide. ​ AbbVie played a significant role in the conduct of the clinical trials for linaclotide and in the subsequent collection and analysis of data, and AbbVie holds the NDA for LINZESS.
The amount and timing of our future funding requirements will depend on many factors, including, but not limited to: ​ ● the level of underlying demand for our products by prescribers and patients in the countries in which they are approved; ​ ● the costs associated with commercializing our products in the U.S.; ● the costs of establishing, maintaining and/or expanding sales, marketing, distribution, and market access capabilities for our products; ​ ● the regulatory approval of linaclotide within new indications, populations and formulations, as well as the associated development and commercial milestones and royalties; ​ ● the rate of progress, the cost of our clinical trials and the other costs associated with our development programs, including our clinical trial of apraglutide in adult patients with SBS-IF, post-approval nonclinical and clinical studies of linaclotide in pediatrics and our investment to enhance the clinical profile of LINZESS within IBS-C and CIC, as well as to study linaclotide in additional indications, populations and formulations to assess its potential to treat various conditions; ​ ● the costs and timing of in-licensing additional products or product candidates or acquiring other complementary companies or assets; ​ ● the achievement and timing of milestone payments and royalties due or payable under our collaboration and license agreements; ​ ● the status, terms and timing of any collaboration, licensing, co-commercialization or other arrangements; ● the timing of any regulatory approvals of apraglutide and our other product candidates; 52 Table of Contents ● whether the holders of our Convertible Senior Notes hold the notes to maturity without conversion into our Class A Common Stock or cash and whether we are required to repurchase any of our Convertible Senior Notes prior to maturity upon a fundamental change, as defined in each of the indentures governing the Convertible Senior Notes; and ​ ● whether we seek to redeem, repurchase or retire all or part of our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise. ​ Additional funding may not be available on acceptable terms or at all.
The amount and timing of our future funding requirements will depend on many factors, including, but not limited to: ​ ● the level of underlying demand and price we are able to charge for our products in the countries in which they are approved; ​ ● the costs associated with commercializing our products in the U.S.; 52 Table of Contents ● the costs of establishing, maintaining and/or expanding sales, marketing, distribution, and market access capabilities for our products; ​ ● the regulatory approval of linaclotide within new indications, populations and formulations, as well as the associated development and commercial milestones and royalties; ​ ● the regulatory approvals of apraglutide; ​ ● the rate of progress, the cost of our clinical trials and the other costs associated with our development programs, including our clinical trial of apraglutide in adult patients with SBS-IF, post-approval nonclinical and clinical studies of linaclotide in pediatrics and our investment to enhance the clinical profile of LINZESS within IBS-C and CIC, as well as to study linaclotide in additional indications, populations and formulations to assess its potential to treat various conditions; ​ ● the costs and timing of in-licensing additional products or product candidates or acquiring other complementary companies or assets; ​ ● the status, terms and timing of any collaboration, licensing, co-commercialization or other arrangements; ● whether the holders of our Convertible Senior Notes hold the notes to maturity without conversion into our Class A Common Stock or cash and whether we are required to repurchase any of our Convertible Senior Notes prior to maturity upon a fundamental change, as defined in each of the indentures governing the Convertible Senior Notes; and ​ ● whether we seek to redeem, repurchase or retire all or part of our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise. ​ Additional funding may not be available on acceptable terms or at all.
Such adjustments could have an adverse effect on our financial results, which could lead to a decline in our Class A Common Stock price. ​ If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price.
Such adjustments could have an adverse effect on our financial results, which could lead to a decline in our Class A Common Stock price. 59 Table of Contents ​ If in the future we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price.
Should we, or any of our partners or any third-party manufacturers we or our partners engage, experience setbacks or challenges in our manufacturing efforts, our development and commercialization efforts may be materially harmed. ​ Each of our partners and the third-party manufacturers we or our partners engage, must comply with GMP and other stringent regulatory requirements enforced by the U.S.
Should we, or any of our partners or any third-party manufacturers we or our partners engage, experience setbacks or challenges in our manufacturing efforts, our development and commercialization efforts may be materially harmed. ​ 40 Table of Contents Each of our partners and the third-party manufacturers we or our partners engage, must comply with GMP and other stringent regulatory requirements enforced by the U.S.
FDA, EMA or other comparable foreign regulatory authorities may fail to approve the 29 Table of Contents manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ● the regulatory approval policies or regulations of the U.S.
FDA, EMA or other comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ● the regulatory approval policies or regulations of the U.S.
FDA or other applicable regulatory agencies. Such “off-label” uses are common across medical specialties. Although the U.S. FDA and other regulatory agencies do not regulate 42 Table of Contents a physician’s choice of treatments, the U.S. FDA and other regulatory agencies do restrict manufacturer communications on off-label use.
FDA or other applicable regulatory agencies. Such “off-label” uses are common across medical specialties. Although the U.S. FDA and other regulatory agencies do not regulate a physician’s choice of treatments, the U.S. FDA and other regulatory agencies do restrict manufacturer communications on off-label use.
Our ability to expand the indication or labeling information for LINZESS will depend on, among other things, our successful completion of pediatric clinical programs. ​ These post-approval requirements impose resource and cost burdens on us.
Our ability to expand the indication or labeling information for LINZESS will depend on, among other things, our successful completion of pediatric clinical programs. 35 Table of Contents ​ These post-approval requirements impose resource and cost burdens on us.
If we are unable to establish successful partnering arrangements when advantageous, we may not gain access to the financial resources and industry experience necessary to develop, commercialize or successfully market our products or product candidates, may be forced to curtail, delay or stop a development program or one or more of our other development programs, delay commercialization, reduce the scope of our planned sales or marketing activities or undertake development or commercialization activities at our own expense, and therefore may be unable to generate revenue from products or product candidates or do so to their full potential. ​ Risks Related to the VectivBio Acquisition We may be unable to successfully integrate the business and personnel of VectivBio, and may not realize the expected benefits and anticipated synergies of such acquisition.
If we are unable to establish successful partnering arrangements when advantageous, we may not gain access to the financial resources and industry experience necessary to develop, commercialize or successfully market our products or product candidates, may be forced to curtail, delay or stop a development program or one or more of our other development programs, delay commercialization, reduce the scope of our planned sales or marketing activities or undertake development or commercialization activities at our own expense, and therefore may be unable to generate revenue from products or product candidates or do so to their full potential. ​ Risks Related to the VectivBio Acquisition We may be unable to successfully integrate the business and personnel of VectivBio, and may not realize the expected benefits and anticipated synergies of such acquisition. 38 Table of Contents In December 2023, we completed the VectivBio Acquisition.
If linaclotide is not approved for all indications or patient populations or with the labeling requested, this would limit the uses of linaclotide and have an adverse effect on its commercial potential or require costly post-marketing studies. ​ 35 Table of Contents Risks Related to Our Growth Strategy ​ If we are unable to execute on our strategy to in-license or acquire externally developed products or product candidates, or engage in other transactions with value creation potential, our business and prospects would be materially adversely affected. ​ Our future success is largely dependent on our ability to successfully execute on our growth strategy, which includes in-licensing or otherwise acquiring the rights to externally developed gastrointestinal products or product candidates or engaging in other transactions with value creation potential.
If linaclotide is not approved for all indications or patient populations or with the labeling requested, this would limit the uses of linaclotide and have an adverse effect on its commercial potential or require costly post-marketing studies. ​ Risks Related to Our Growth Strategy ​ If we are unable to execute on our strategy to in-license or acquire externally developed products or product candidates, or engage in other transactions with value creation potential, our business and prospects would be materially adversely affected. ​ Our future success is largely dependent on our ability to successfully execute on our growth strategy, which includes in-licensing or otherwise acquiring the rights to externally developed GI or rare diseases products or product candidates or engaging in other transactions with value creation potential.
Accordingly, since we cannot guarantee that our company will maintain net income or positive cash flows, we cannot provide assurances for any particular quarterly period that (i) we will have the available funds to fund the interest payment on our outstanding indebtedness, at a minimum, in the event that there is a deficiency in the net quarterly payment received from AbbVie, (ii) there will be a net quarterly payment from AbbVie at all or (iii) we will not also be required to make a true-up payment to AbbVie under the collaboration agreement for North America. ​ Our indebtedness could adversely affect our financial condition or restrict our future operations. ​ As of December 31, 2023, we had total indebtedness of $700.0 million and available cash and cash equivalents of $92.2 million. ​ We incurred significant new indebtedness in connection with the VectivBio Acquisition.
Accordingly, since we cannot guarantee that our company will maintain net income or positive cash flows, we cannot provide assurances for any particular quarterly period that (i) we will have the available funds to fund the interest payment on our outstanding indebtedness, at a minimum, in the event that there is a deficiency in the net quarterly payment received from AbbVie, (ii) there will be a net quarterly payment from AbbVie at all or (iii) we will not also be required to make a true-up payment to AbbVie under the collaboration agreement for North America. ​ Our indebtedness could adversely affect our financial condition or restrict our future operations. ​ As of December 31, 2024, we had total indebtedness of $585.0 million and available cash and cash equivalents of $88.6 million. ​ We incurred significant new indebtedness in connection with the VectivBio Acquisition.
In addition, in May 2023, we entered into the Revolving Credit Facility. As of December 31, 2023, the outstanding principal balance on the Revolving Credit Facility was $300.0 million. We expect that for the next few years, at a minimum, the net quarterly payments from AbbVie will be a significant source of cash flows from operations.
In addition, in 2023, we entered into the Revolving Credit Facility. As of December 31, 2024, the outstanding principal balance on the Revolving Credit Facility was $385.0 million. We expect that for the next few years, at a minimum, the net quarterly payments from AbbVie will be a significant source of cash flows from operations.
The GDPR increases obligations with respect to clinical trials conducted in the EEA, by certain companies that process data in relation to (i) offering goods or services to, or (ii) monitoring the behavior of, individuals located in the EEA.
The GDPR increases obligations with respect to clinical trials and non-clinical studies conducted in the EEA, by certain companies that process data in relation to (i) offering goods or services to, or (ii) monitoring the behavior of, individuals located in the EEA.
Congress, the federal courts, the USPTO, and their foreign counterparts, the laws and regulations governing patents may change, or their interpretation or implementation may change, in unpredictable ways that could impact, potentially adversely, our ability to obtain new patents or to enforce and defend patents that we have already obtained or that we might obtain in the future.
Congress, the federal courts, the USPTO, and their foreign counterparts, the laws and regulations governing patents may change, or their interpretation or implementation may change, in unpredictable ways that could impact, potentially adversely, our ability to obtain new patents or to enforce and defend patents that we have already obtained or that we might obtain in the 47 Table of Contents future.
We may also rely on our licensors and collaboration partners to conduct development activities for certain of our product 36 Table of Contents candidates, and while we may have oversight of such development activities, such licensees or collaboration partners may not effectively develop any such product candidates.
We may also rely on our licensors and collaboration partners to conduct development activities for certain of our product candidates, and while we may have oversight of such development activities, such licensees or collaboration partners may not effectively develop any such product candidates.
If the price of our Class A Common Stock increases such that the hedge transactions settle in our favor, we could also be exposed to credit risk related to the counterparties to the Capped Calls, which would limit or eliminate the benefit of such transactions to us. ​ Our quarterly and annual operating results may fluctuate significantly. ​ We expect our operating results to be subject to frequent fluctuations.
If the price of our Class A Common Stock increases such that the hedge transactions settle in our favor, we could also be exposed to credit risk related to the counterparties to the Capped Calls, which would limit or eliminate the benefit of such transactions to us. ​ Our quarterly and annual operating results may fluctuate significantly. ​ Our operating results have been, and we expect they will continue to be, subject to frequent fluctuations.
Even if we do receive such regulatory approval, we may be unable to successfully commercialize apraglutide or our other product candidates in any approved 31 Table of Contents indications or develop such product candidates for the treatment of additional indications, which would materially adversely impact our business and prospects.
Even if we do receive such regulatory approval, we may be unable to successfully commercialize apraglutide or any other product candidate in any approved indications or develop such product candidates for the treatment of additional indications, which would materially adversely impact our business and prospects.
We currently derive a significant 51 Table of Contents portion of our revenue from our LINZESS collaboration with AbbVie for the U.S. We believe that the revenues from the LINZESS collaboration will continue to constitute a significant portion of our total revenue for the foreseeable future.
We currently derive a significant portion of our revenue from our LINZESS collaboration with AbbVie for the U.S. We believe that the revenues from the LINZESS collaboration will continue to constitute a significant portion of our total revenue for the foreseeable future.
FDA for sale in the U.S. for the treatment of IBS-C, CIC and opioid-induced constipation; Bausch’s TRULANCE (plecanatide) is approved by the U.S. FDA for sale in the U.S. for the treatment of adults with IBS-C and CIC; Takeda’s MOTEGRITY (prucalopride) is approved by the U.S.
For example, Takeda’s AMITIZA (lubiprostone) is approved by the U.S. FDA for sale in the U.S. for the treatment of IBS-C, CIC and opioid-induced constipation; Bausch’s TRULANCE (plecanatide) is approved by the U.S. FDA for sale in the U.S. for the treatment of adults with IBS-C and CIC; Takeda’s MOTEGRITY (prucalopride) is approved by the U.S.
FDA, EMA and other foreign regulatory authorities in other jurisdictions.
FDA, EMA and other comparable foreign regulatory authorities in other jurisdictions.
Our net income (loss) and other operating results will be affected by numerous factors, including: ​ ● the level of underlying demand and price for our products in the countries in which they are approved; ​ ● retail chains’ and wholesalers’ buying patterns, pricing and reimbursement and inventory levels with respect to our products; ​ ● the costs associated with commercializing our products in the U.S.; ​ ● the achievement and timing of milestone payments and royalties due or payable under our collaboration and license agreements; ​ ● our execution of any collaboration, partnership, licensing or other strategic arrangements, and the timing of payments we may make or receive under these arrangements; ​ ● any impairments of assets or goodwill, and associated write-downs; ​ ● any variations in the level of expenses related to our development programs; ​ ● addition or termination of clinical trials; ​ ● any impact on taxes or changes in tax rules; ​ ● regulatory developments affecting our products and product candidates; ​ ● any material lawsuit in which we may become involved; and ​ ● the impact of public health emergencies, including containment or mitigation measures, or natural disasters. ​ 55 Table of Contents If our operating results fall below the expectations of investors or securities analysts for any of the foregoing reasons or otherwise, the price of our Class A Common Stock could decline substantially.
Our net income (loss) and other operating results will be affected by numerous factors, including: ​ ● the level of underlying demand and price for our products in the countries in which they are approved; ​ ● retail chains’ and wholesalers’ buying patterns, pricing and reimbursement and inventory levels with respect to our products; ​ ● the costs associated with commercializing our products in the U.S.; ​ ● the achievement and timing of milestone payments and royalties due or payable under our collaboration and license agreements; ​ ● our execution of any collaboration, partnership, licensing or other strategic arrangements, and the timing of payments we may make or receive under these arrangements; ​ ● any impairments of assets or goodwill, and associated write-downs; ​ 55 Table of Contents ● any variations in the level of expenses related to our development programs; ​ ● addition or termination of clinical trials; ​ ● results of or developments in nonclinical studies and clinical trials of our product candidates or those of our competitors or potential collaborators; ​ ● any impact on taxes or changes in tax rules; ​ ● regulatory developments affecting our products and product candidates; ​ ● the success of competitive products or technologies; ​ ● any material lawsuit in which we may become involved; ​ ● general economic, industry, and market conditions; and ​ ● the impact of public health emergencies, including containment or mitigation measures, or natural disasters. ​ If our operating results fall below the expectations of investors or securities analysts for any of the foregoing reasons or otherwise, the price of our Class A Common Stock could decline substantially.
If we are not able to attract, motivate and retain necessary personnel to accomplish our business objectives, we will experience constraints that will significantly impede the achievement of our objectives. ​ We are highly dependent on the drug research, development, regulatory, commercial, financial and other expertise of our management, particularly Thomas McCourt, our chief executive officer; Sravan Emany, our senior vice president, chief financial officer; Andrew Davis, our senior vice president, chief business officer; John Minardo, our senior vice president, chief legal officer and secretary; and Michael Shetzline, our senior vice president, chief medical officer and head of research and drug development.
If we are not able to attract, motivate and retain necessary personnel to accomplish our business objectives, we will experience constraints that will significantly impede the achievement of our objectives. ​ We are highly dependent on the drug research, development, regulatory, commercial, financial and other expertise of our management, particularly Thomas McCourt, our chief executive officer; Gregory Martini, our senior vice president, chief financial officer; John Minardo, our senior vice president, chief legal officer and secretary; and Michael Shetzline, our senior vice president, chief medical officer and head of research and drug development.
While we have invested in information technology and security and the protection of confidential information, there can be no assurance that our efforts will prevent service interruptions or 57 Table of Contents security breaches.
While we have invested in information technology and security and the protection of confidential information, there can be no assurance that our efforts will prevent service interruptions or security breaches.
Additional U.S. patents related to LINZESS include multiple patents relating to our commercial, room temperature stable formulations of the 72 mcg, 145 mcg and 290 mcg doses of linaclotide and methods of using these formulations, the latest of which expires in the early 2030s, as well as other patents covering processes for making LINZESS, formulations thereof, and molecules related to LINZESS. ​ In addition, we have exclusive rights to apraglutide including issued composition of matter and method of use patents in the U.S. in lead indications.
Additional U.S. patents related to LINZESS include multiple patents relating to our commercial, room temperature stable formulations of the 72 mcg, 145 mcg and 290 mcg doses of linaclotide and methods of using these formulations, the latest of which expires in the early 2030s, as well as other patents and patent applications covering formulations of linaclotide, and molecules related to linaclotide. ​ In addition, we have exclusive rights to apraglutide including issued composition of matter and method of use patents in the U.S. in lead indications.
Further, we expect to continue to incur substantial expenses in connection with our efforts to commercialize linaclotide, research and develop our product candidates, and access externally developed products or product candidates.
Further, we expect to continue to incur substantial expenses in connection with our efforts to commercialize linaclotide and, if approved, apraglutide, research and develop our product candidates, and access externally developed products or product candidates.
If we elect to exercise these rights in such circumstances, we will need to either establish the capability to develop, manufacture and commercialize 41 Table of Contents linaclotide in that partnered territory on our own or we will need to establish a relationship with a new partner.
If we elect to exercise these rights in such circumstances, we will need to either establish the capability to develop, manufacture and commercialize linaclotide in that partnered territory on our own or we will need to establish a relationship with a new partner.
These entities or their affiliates are likely to modify their hedge positions from time to time prior to conversion or maturity of the 2024 Convertible Notes and the 2026 Convertible Notes, as applicable, by purchasing and selling shares of our Class A Common Stock or other instruments they may wish to use in connection with such hedging.
These entities or their affiliates are likely to modify their hedge positions from time to time prior to conversion or maturity of the Convertible Senior Notes by purchasing and selling shares of our Class A Common Stock or other instruments they may wish to use in connection with such hedging.
Moreover, as discussed further below, changes in insurance coverage or reimbursement levels by governmental authorities, private health insurers and other third-party payors, or in the type of such coverage held by patients may materially harm our business and commercialization efforts. ​ We may experience pricing pressures in connection with the sale of our current and future products due to the healthcare reforms discussed below, as well as the trend toward initiatives aimed at reducing healthcare costs, the increasing influence of managed care, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional legislative proposals.
Moreover, as discussed further below and above in Part I, Item 1,under the heading Pricing and Reimbursement , changes in insurance coverage or reimbursement levels by governmental authorities, private health insurers and other third-party payors, or in the type of such coverage held by patients may materially harm our business and commercialization efforts. ​ We have experienced and may experience additional pricing pressures in connection with the sale of our current and future products due to the healthcare reforms discussed below and above in Part I, Item 1,under the heading Pricing and Reimbursement , as well as the trend toward initiatives aimed at reducing healthcare costs, the increasing influence of managed care, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional legislative proposals.
The commercial success of LINZESS depends on a number of factors, including: ​ ● the effectiveness of LINZESS as a treatment for adult patients with IBS-C, or CIC, and as a treatment for pediatric patients aged 6-17 years-old with FC; ​ ● the size of the treatable patient population; ​ ● the effectiveness of the sales, managed markets and marketing efforts by us and AbbVie, including our ability to adapt our commercial model and market strategy to the evolving landscape; ​ ● the coverage and reimbursement levels set by governmental authorities, private health insurers and other third-party payors; ​ ● the adoption of LINZESS by physicians, which depends on whether physicians view it as safe and effective treatment for adult patients with IBS-C and CIC and for pediatric patients ages 6-17 years-old with FC; ​ 26 Table of Contents ● our success in educating and activating adult IBS-C and CIC patients, and children and adolescents ages 6-17 years-old FC patients and their caregivers, to seek physician care for their symptoms; ​ ● our ability to both secure and maintain adequate reimbursement for, and optimize patient access to, LINZESS and our ability to demonstrate that LINZESS is safer, more efficacious and/or more cost-effective than alternative therapies; ​ ● the effectiveness of our partners’ distribution networks; ​ ● the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these or other areas, associated with linaclotide; and ​ ● the development or commercialization of products or therapies that compete with LINZESS. ​ Our revenues from the commercialization of LINZESS are subject to these and other factors, and therefore may be unpredictable from quarter-to-quarter. ​ We are subject to uncertainty relating to pricing and reimbursement policies in the U.S. which, if not favorable for our products, could hinder or prevent our products’ commercial success. ​ Our and our partner’s ability to commercialize our products successfully depends in part on the coverage and reimbursement levels set by governmental authorities, private health insurers and other third-party payors.
The commercial success of LINZESS depends on a number of factors, including: ​ ● the effectiveness of LINZESS as a treatment for adult patients with IBS-C, or CIC, and as a treatment for pediatric patients aged 6-17 years-old with FC; ​ ● the size of the treatable patient population; ​ ● the effectiveness of the sales, managed markets and marketing efforts , including the ability to adapt a commercial model and market strategy to the evolving landscape; ​ ● the coverage and reimbursement levels set by governmental authorities, private health insurers and other third-party payors; ​ ● the status of government regulation in the life sciences industry, particularly with respect to healthcare reform and drug pricing; ​ ● the adoption of LINZESS by physicians, which depends on whether physicians view it as a safe and effective treatment for adult patients with IBS-C and CIC and pediatric patients ages 6-17 years-old with FC; ​ ● our success in educating and activating adult IBS-C and CIC patients, and children and adolescents ages 6-17 years-old FC patients and their caregivers, to seek physician care for their symptoms; ​ ● our ability to both secure and maintain adequate reimbursement for, and optimize patient access to, LINZESS and our ability to demonstrate that LINZESS is safer, more efficacious and/or more cost-effective than alternative therapies; ​ ● the effectiveness of our partners’ distribution networks; ​ ● the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these or other areas, associated with linaclotide; and ​ ● the development or commercialization of products or therapies that compete with LINZESS. ​ Our revenues from the commercialization of LINZESS are subject to these and other factors, and therefore has been and may be unpredictable from quarter-to-quarter and year-to-year. ​ 26 Table of Contents We are subject to uncertainty relating to pricing and reimbursement policies in the U.S., including recent and future healthcare reform measures, which, if not favorable for our products, could hinder or prevent our products’ commercial success. ​ Our and our partner’s ability to commercialize our products successfully depends in part on the coverage and reimbursement levels set by governmental authorities, private health insurers and other third-party payors.
Due to our current limited income in Switzerland, there is a high risk that the tax loss carryforwards will expire in part or in their entirety and will not be used to offset future taxable income.
Due to our current limited income in Switzerland, there is a high risk that the tax loss carryforwards will expire 56 Table of Contents in part or in their entirety and will not be used to offset future taxable income.
If the Ferring Agreement is terminated, we could lose intellectual property rights that are important to our business, be liable for damages to the licensor or be prevented from developing and commercializing our apraglutide.
If the Ferring Agreement is terminated, we could lose intellectual property rights that are important to our business, be liable for damages to the licensor or be prevented from developing and 49 Table of Contents commercializing our apraglutide.
FDA approved LINZESS as a once-daily treatment for pediatric patients ages 6-17 years-old with FC, making LINZESS the first and only FDA-approved prescription therapy for FC in this patient population.
In June 2023, the U.S. FDA approved LINZESS as a once-daily treatment for pediatric patients ages 6-17 years-old with FC, making LINZESS the first and only FDA-approved prescription therapy for FC in this patient population.
Data Privacy Framework for which the European Commission adopted am adequacy decision in July 2023.
Data Privacy Framework for which the European Commission adopted an adequacy decision in July 2023.
This, together with any of the factors described above, could materially and adversely affect our business, financial condition and results of operations. 54 Table of Contents ​ The capped call transactions entered into in connection with our 2024 Convertible Notes and our 2026 Convertible Notes may affect the value of our Class A Common Stock. ​ In connection with the issuance of our 2024 Convertible Notes and our 2026 Convertible Notes, we entered into capped call transactions, or the Capped Calls, with certain financial institutions.
This, together with any of the factors described above, could materially and adversely affect our business, financial condition and results of operations. ​ The capped call transactions entered into in connection with our Convertible Senior Notes may affect the value of our Class A Common Stock. ​ In connection with the issuance of our Convertible Senior Notes, we entered into capped call transactions, or the Capped Calls, with certain financial institutions.
For example, with respect to apraglutide, a marketed GLP-2 product already exists in the U.S., E.U. and other international markets, which may or may not be genericized within the coming years. Additionally, another investigational GLP-2 may be launched in advance of the potential approval of apraglutide in the U.S. and EMA.
For example, with respect to apraglutide, a marketed GLP-2 product already exists in the U.S., E.U. and other international markets, which may or may not be genericized within the coming years. Additionally, it is possible that another investigational GLP-2 may be approved and launched in advance of the potential approval of apraglutide in the U.S., EMA and Japan.
Additionally, the lenders under the Revolving 53 Table of Contents Credit Agreement will be permitted to accelerate all outstanding borrowings and other obligations, terminate outstanding commitments and exercise other specified remedies upon the occurrence of customary events of default. ​ In addition, while none of the indentures governing our Convertible Senior Notes include covenants restricting the operation of our business except in certain limited circumstances, in the event of a default under any of the Convertible Senior Notes, the applicable noteholders or the trustee under the indenture governing the applicable Convertible Senior Notes may accelerate our payment obligations under such Convertible Senior Notes, which could have a material adverse effect on our business, financial condition and results of operations.
Additionally, the lenders under the Revolving Credit Agreement will be permitted to accelerate all outstanding borrowings and other obligations, terminate outstanding commitments and exercise other specified remedies upon the occurrence of customary events of default. ​ In addition, while the indenture governing our Convertible Senior Notes does not include covenants restricting the operation of our business except in certain limited circumstances, in the event of a default under the Convertible Senior Notes, the noteholders or the trustee under the indenture governing the Convertible Senior Notes may accelerate our payment obligations under the Convertible Senior Notes, which could have a material adverse effect on our business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CIO has over 20 years of cybersecurity experience in various roles involving information security, developing cybersecurity strategies, and implementing cybersecurity programs. Our Board of Directors is responsible for overseeing our enterprise risk management activities in general, and each of our Board committees assists the Board in the role of risk oversight.
Biggest changeOur Senior Vice President, Controller and Principal Accounting Officer oversees the cybersecurity team, which include members of our internal IT department and is also supported by third-party service providers. Our Board of Directors is responsible for overseeing our enterprise risk management activities in general, and each of our Board committees assists the Board in the role of risk oversight.
Our business strategy, results of operations and financial condition have not been materially affected as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.
Our business strategy, results of operations and financial condition have not been materially affected as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such cybersecurity risks or any future material incidents.
We have developed an incident response plan designed to coordinate the activities that we and our third-party security service provider take to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate an incident, as well as to comply with potentially applicable legal obligations and mitigate any reputational damage.
We have developed an incident response plan designed to coordinate the activities that we and our third-party service providers take to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate an incident, as well as to comply with potentially applicable legal obligations and mitigate any reputational damage.
The Audit Committee of the Board of Directors oversees our cybersecurity risk and receives regular reports, with a minimum frequency of once per year, from our CIO on various cybersecurity matters, including risk assessments, mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance.
The Audit Committee of the Board of Directors oversees our cybersecurity risk and receives regular reports, with a minimum frequency of once per year, from our Senior Vice President, Controller and Principal Accounting Officer on various cybersecurity matters, including risk assessments, mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance.
For more information on our cybersecurity-related risks, see Item 1A, Risk Factors, elsewhere in this Annual Report on Form 10-K. The Company’s Chief Information Officer, or CIO, is responsible for developing and implementing our information security program and reporting on cybersecurity matters to the Audit Committee of the Board of Directors and management.
For more information on our cybersecurity-related risks, see Item 1A, Risk Factors , elsewhere in this Annual Report on Form 10-K. The Company’s Senior Vice President, Controller and Principal Accounting Officer is responsible for managerial oversight of our cybersecurity program and reporting on cybersecurity matters to the Audit Committee of the Board of Directors and management.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters are located in Boston, Massachusetts, where, as of December 31, 2023, we occupied approximately 39,000 square feet of office space under our lease expiring in June 2030. We also have operations in Basel, Switzerland. We believe that our facilities are suitable and adequate for our needs for the foreseeable future. ​ Item 3.
Biggest changeItem 2. Properties Our corporate headquarters are located in Boston, Massachusetts, where, as of December 31, 2024, we occupied approximately 39,000 square feet of office space under our lease expiring in June 2030. We also have operations in Basel, Switzerland. We believe that our facilities are suitable and adequate for our needs for the foreseeable future. ​
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Legal Proceedings ​ None. ​ Item 4. Mine Safety Disclosures Not applicable. 61 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 61 ​ ​ ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 62 Item 6. Selected Financial Data 63 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 64 Item 7A.
Biggest changeItem 4. Mine Safety Disclosures 63 ​ ​ ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 64 Item 6. [Reserved] 65 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 66 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 80 Item 8.
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Quantitative and Qualitative Disclosures about Market Risk 79 Item 8. Financial Statements and Supplementary Data 80

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal returns reflected in the following graph for periods prior to the date of the Separation have been adjusted for the effect of the Separation to exclude the sGC business. 62 Table of Contents COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN Among The Nasdaq U.S. Benchmark Index, the Nasdaq Biotechnology Index, and Ironwood Pharmaceuticals, Inc. ​ ​ ​ ​
Biggest changeThe stock price performance included in this graph is not necessarily indicative of future stock price performance. ​ 64 Table of Contents COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN Among The Nasdaq U.S. Benchmark Index, the Nasdaq Biotechnology Index, and Ironwood Pharmaceuticals, Inc. ​ ​ ​ ​
Corporate Performance Graph The following performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.
Corporate Performance Graph The following performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, except to the extent that we specifically incorporate it by reference into such filing.
As of January 31, 2024, there were 29 stockholders of record of our Class A Common Stock.
As of January 31, 2025, there were 29 stockholders of record of our Class A Common Stock.
The following graph compares the performance of our Class A Common Stock to the Nasdaq Benchmark TR Index (U.S.) and to the Nasdaq Biotechnology Index (U.S.) from December 31, 2018 through December 31, 2023.
The following graph compares the performance of our Class A Common Stock to the Nasdaq U.S. Benchmark Index and to the Nasdaq Biotechnology Index from December 31, 2019 through December 31, 2024.
The comparison assumes $100 was invested after the market closed on December 31, 2018 in our Class A Common Stock and in each of the presented indices, and it assumes reinvestment of dividends, if any (other than any Cyclerion common stock distributed in connection with the Separation).
The comparison assumes $100 was invested after the market closed on December 31, 2019 in our Class A Common Stock and in each of the presented indices, and it assumes reinvestment of dividends, if any.
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On April 1, 2019, we completed the separation, or the Separation, of our soluble guanylate cyclase, or sGC, business, and certain other assets and liabilities, into a separate, independent publicly traded company, Cyclerion.
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The Separation was effected by means of a distribution of all the outstanding shares of common stock, with no par value, of Cyclerion, through a dividend of Cyclerion’s common stock to our stockholders of record as of the close of business on March 19, 2019.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAny change in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. 73 Table of Contents Results of Operations The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 ​ ​ (in thousands) Revenues: ​ ​ ​ ​ ​ ​ Collaborative arrangements revenue $ 442,735 $ 410,596 Total revenues ​ ​ 442,735 ​ ​ 410,596 Costs and expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 116,085 ​ 44,265 Selling, general and administrative ​ 158,314 ​ 115,994 Restructuring expenses ​ ​ 18,317 ​ ​ — Acquired in-process research and development ​ ​ 1,095,449 ​ ​ — Total costs and expenses ​ 1,388,165 ​ 160,259 Income (loss) from operations ​ (945,430) ​ 250,337 Other income (expense): ​ ​ ​ ​ ​ ​ Interest expense and other financing costs ​ (21,629) ​ (7,598) Interest and investment income ​ 18,971 ​ 9,501 Gain on derivatives ​ 19 ​ 182 Other income (expense), net ​ (2,639) ​ 2,085 Income (loss) before income taxes ​ ​ (948,069) ​ ​ 252,422 Income tax expense ​ ​ (83,490) ​ ​ (77,357) Net income (loss) ​ ​ (1,031,559) ​ ​ 175,065 Less: Net income (loss) attributable to noncontrolling interests ​ ​ (29,320) ​ ​ — Net income (loss) attributable to Ironwood Pharmaceuticals, Inc. ​ $ (1,002,239) ​ $ 175,065 ​ Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ ​ 2023 ​ 2022 ​ $ ​ ​ (in thousands) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ Collaborative arrangements revenue $ 442,735 $ 410,596 $ 32,139 Total revenues ​ $ 442,735 ​ $ 410,596 ​ $ 32,139 ​ Collaborative arrangements revenue.
Biggest changeResults of Operations The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ ​ (in thousands) Revenues: ​ ​ ​ ​ ​ ​ Collaborative arrangements revenue $ 351,410 $ 442,735 Total revenues ​ ​ 351,410 ​ ​ 442,735 Costs and expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 111,421 ​ 116,085 Selling, general and administrative ​ 144,272 ​ 158,314 Restructuring ​ ​ 2,593 ​ ​ 18,317 Acquired in-process research and development ​ ​ — ​ ​ 1,095,449 Total costs and expenses ​ 258,286 ​ 1,388,165 Income (loss) from operations ​ 93,124 ​ (945,430) Other income (expense): ​ ​ ​ ​ ​ ​ Interest expense and other financing costs ​ (33,034) ​ (21,629) Interest and investment income ​ 4,468 ​ 18,971 Gain on derivatives ​ — ​ 19 Other ​ 640 ​ — Other income (expense), net ​ (27,926) ​ (2,639) Income (loss) before income taxes ​ ​ 65,198 ​ ​ (948,069) Income tax expense ​ ​ (64,318) ​ ​ (83,490) Net income (loss) ​ ​ 880 ​ ​ (1,031,559) Less: Net loss attributable to noncontrolling interests ​ ​ — ​ ​ (29,320) Net income (loss) attributable to Ironwood Pharmaceuticals, Inc. ​ $ 880 ​ $ (1,002,239) ​ 75 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ ​ 2024 ​ 2023 ​ $ ​ ​ (in thousands) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ Collaborative arrangements revenue $ 351,410 $ 442,735 $ (91,325) Total revenues ​ $ 351,410 ​ $ 442,735 ​ $ (91,325) ​ Collaborative arrangements revenue.
We cannot currently estimate with any degree of certainty the amount of time or money that we will be required to expend in the future on linaclotide for additional indications, populations or formulations. ​ Given the inherent uncertainties that come with the development of pharmaceutical products, we cannot estimate with any degree of certainty how our programs will evolve, and therefore the amount of time or money that would be required to obtain regulatory approval to market them. ​ As a result of these uncertainties surrounding the timing and outcome of any approvals, we are currently unable to estimate precisely when, if ever, linaclotide’s utility will be expanded within its currently approved indications; if or when linaclotide will be developed outside of its current markets, indications, populations or formulations; or when, if ever, any of our other product candidates will generate revenues and cash flows. ​ We invest carefully in our pipeline, and the commitment of funding for each subsequent stage of our development programs is dependent upon the receipt of clear, supportive data.
We cannot currently estimate with any degree of certainty the amount of time or money that we will be required to expend in the future on linaclotide for additional indications, populations or formulations. ​ Given the inherent uncertainties that come with the development of pharmaceutical products, we cannot estimate with any degree of certainty how our programs will evolve, and therefore the amount of time or money that would be required to obtain regulatory approval to market them. ​ As a result of these uncertainties surrounding the timing and outcome of any approvals, we are currently unable to estimate precisely when, if ever, linaclotide’s utility will be expanded within its currently approved indications; if or when linaclotide will be developed outside of its current markets, indications, populations or formulations; or when, if ever, apraglutide or any of our other product candidates will generate revenues and cash flows. ​ We invest carefully in our pipeline, and the commitment of funding for each subsequent stage of our development programs is dependent upon the receipt of clear, supportive data.
(2) Includes $11.3 million of share-based compensation expense and $3.5 million of employer payroll tax expense recognized in the second quarter of 2023 immediately after the closing of the VectivBio Acquisition in connection with the vesting acceleration and settlement of outstanding stock options and restricted stock units.
(2) Includes $11.4 million of share-based compensation expense and $3.5 million of employer payroll tax expense recognized immediately after the closing of the VectivBio Acquisition in the second quarter of 2023 in connection with the vesting acceleration and settlement of outstanding stock options and restricted stock units.
These expenses consist primarily of compensation, benefits and other employee-related expenses, research and development related facility costs, third-party contract costs relating to nonclinical study and clinical trial activities, development of manufacturing processes, regulatory registration of third-party manufacturing facilities, and licensing fees for our product candidates. ​ 65 Table of Contents Research and development expenses include amounts owed to AbbVie on an ongoing basis under cost-sharing provisions in our collaboration agreement for linaclotide.
These expenses consist primarily of compensation, benefits and other employee-related expenses, research and development related facility costs, third-party contract costs relating to nonclinical study and clinical trial activities, development of manufacturing processes, regulatory registration of third-party manufacturing facilities, and licensing fees for our product candidates. ​ Research and development expenses include amounts owed to AbbVie on an ongoing basis under cost-sharing 67 Table of Contents provisions in our collaboration agreement for linaclotide.
Our funding requirements will depend on many factors, including, but not limited to, the following: ​ ● the revenue generated by sales of LINZESS and CONSTELLA and from any other sources; ​ ● the rate of progress and cost of our commercialization activities, including the expense we incur in marketing and selling LINZESS in the U.S. and from any other sources; ​ ● the success of our third-party manufacturing activities; ​ ● the time and costs involved in developing, and obtaining regulatory approvals for, our product candidates, including apraglutide, as well as the timing and cost of any post-approval development and regulatory requirements; ​ ● the time and cost associated with integrating VectivBio’s business and assets into our business operations; ​ ● the time and costs associated with commercial manufacturing, sales, marketing and distribution of apraglutide, if successfully developed and approved; ​ ● the success of our research and development efforts; ​ ● the emergence of competing or complementary products; ​ ● the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; ​ ● the terms and timing of any collaborative, licensing or other arrangements that we may establish, including milestones, royalties or other payments due or payable under such agreements; ​ ● the settlement method used for our outstanding convertible notes; and ​ ● the acquisition of businesses, products and technologies and the impact of other strategic transactions, as well as the cost and timing of evaluating, acquiring, and, if completed, integrating into our business operations any such assets. ​ Financing Strategy ​ We may, from time to time, consider additional funding through a combination of new collaborative arrangements, strategic alliances, and additional equity and debt financings or from other sources.
Our funding requirements will depend on many factors, including, but not limited to, the following: ​ ● the revenue generated by sales of LINZESS and CONSTELLA and from any other sources; ​ ● the rate of progress and cost of our commercialization activities, including the expense we incur in marketing and selling LINZESS in the U.S. and from any other sources; ​ ● the success of our third-party manufacturing activities; ​ ● the time and costs involved in developing, and obtaining regulatory approvals for, our product candidates, including apraglutide, as well as the timing and cost of any post-approval development and regulatory requirements; ​ ● the time and costs associated with commercial manufacturing, sales, marketing and distribution of apraglutide, if approved; ​ ● the success of our research and development efforts; ​ ● the emergence of competing or complementary products; ​ ● the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; 79 Table of Contents ​ ● the terms and timing of any collaborative, licensing or other arrangements that we may establish, including milestones, royalties or other payments due or payable under such agreements; ​ ● the settlement method used for our outstanding convertible notes; and ​ ● the acquisition of businesses, products and technologies and the impact of other strategic transactions, as well as the cost and timing of evaluating, acquiring, and, if completed, integrating into our business operations any such assets. ​ Financing Strategy ​ We may, from time to time, consider additional funding through a combination of new collaborative arrangements, strategic alliances, and additional equity and debt financings or from other sources.
Discussion and analysis of our financial condition and results of operations for the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021 is included in Part II, Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 16, 2023.
Discussion and analysis of our financial condition and results of operations for the fiscal year ended December 31, 2023 compared to the fiscal year ended December 31, 2022 is included in Part II, Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 16, 2024.
There can be no assurance that any such financing opportunities will also be available on acceptable terms, if at all. ​ Off-Balance Sheet Arrangements We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of 78 Table of Contents facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
There can be no assurance that any such financing opportunities will also be available on acceptable terms, if at all. ​ Off-Balance Sheet Arrangements We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
FDA and comparable agencies in foreign countries impose substantial and varying requirements on the introduction of therapeutic pharmaceutical products, typically requiring lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures; ​ 67 Table of Contents ● Data obtained from nonclinical and clinical activities at any step in the testing process may be adverse and lead to discontinuation or redirection of development activity.
FDA and comparable foreign agencies impose substantial and varying requirements on the introduction of therapeutic pharmaceutical products, typically requiring lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures ; ​ 69 Table of Contents ● Data obtained from nonclinical and clinical activities at any step in the testing process may be adverse and lead to discontinuation or redirection of development activity.
Linaclotide is also available to adult men and women suffering from IBS-C or CIC in certain countries of the world, including China, Japan, and in a number of E.U. countries. ​ We and AbbVie continue to explore ways to enhance the clinical profile of LINZESS by studying linaclotide in additional indications, populations and formulations to assess its potential to treat various conditions.
Linaclotide is also available to adult men and women suffering from IBS-C or CIC in certain countries of the world, including China, Japan, and in a number of European countries. ​ We and AbbVie continue to explore ways to enhance the clinical profile of LINZESS by studying linaclotide in additional indications, populations and formulations to assess its potential to treat various conditions.
We did not otherwise adopt any new accounting pronouncements during the fiscal year ended December 31, 2023 that had a material effect on our consolidated financial statements included in this report. ​
We did not otherwise adopt any new accounting pronouncements during the fiscal year ended December 31, 2024 that had a material effect on our consolidated financial statements included in this report. ​
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ Forward-Looking Information The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those financial statements appearing elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those financial statements appearing elsewhere in this Annual Report on Form 10-K.
Our early research and development efforts have been focused on supporting our development stage GI programs, including exploring strategic options for further development of certain of our internal programs, as well as evaluating external development-stage GI programs. ​ 66 Table of Contents The following table sets forth our research and development expenses related to our product pipeline for the years ended December 31, 2023, 2022, and 2021, respectively.
Our early research and development efforts have been focused on supporting our development stage GI programs, including exploring strategic options for further development of certain of our internal programs, as well as evaluating external development-stage GI programs. 68 Table of Contents ​ The following table sets forth our research and development expenses related to our product pipeline for the years ended December 31, 2024, 2023, and 2022, respectively.
We anticipate that we will make determinations as to which additional programs to pursue and how much funding to direct to each program on an ongoing basis in response to the data of each product candidate, the competitive landscape and ongoing assessments of such product candidate’s commercial potential. ​ We expect to invest in our development programs for the foreseeable future.
We anticipate that we will make determinations as to which additional programs to pursue and how much funding to direct to each program on an ongoing basis in response to the data of each product candidate, the competitive landscape and ongoing assessments of such product candidate’s commercial potential. ​ We expect to invest in our development programs and incur substantial research and development expenses for the foreseeable future.
While ASC 808 provides guidance on classification, the standard is silent on matters of separation, initial measurement, and recognition. Therefore, we apply the separation, initial measurement, and recognition principles of ASC Topic 606, Revenue from Contracts with Customers , to our collaboration agreements.
While ASC 808 provides guidance on classification, the standard is silent on matters of separation, initial measurement, and recognition. Therefore, we apply 72 Table of Contents the separation, initial measurement, and recognition principles of ASC Topic 606, Revenue from Contracts with Customers , to our collaboration agreements.
LINZESS is available to adult men and women suffering from IBS-C or CIC in the U.S., Mexico, and Saudi Arabia, to adult men and women suffering from IBS-C or chronic constipation in Japan, IBS-C in China and for pediatric patients ages 6-17 with FC in the U.S.
LINZESS is available to adult men and women suffering from IBS-C or CIC in the U.S. and Mexico, adult men and women suffering from IBS-C or chronic constipation in Japan, and adult men and women suffering from IBS-C in China, and pediatric patients ages 6-17 with FC in the U.S.
As we continue to invest in the commercialization of LINZESS and other product candidates, we expect our selling, general and administrative expenses will be substantial for the foreseeable future. 68 Table of Contents ​ We include AbbVie’s selling, general and administrative cost-sharing payments in the calculation of the net profits and net losses from the sale of LINZESS in the U.S. and present the net payment to or from AbbVie as collaboration expense or collaborative arrangements revenue, respectively. ​ Restructuring Expenses.
As we continue to invest in the development and commercialization of LINZESS, apraglutide and other product candidates, we expect our selling, general and administrative expenses will be substantial for the foreseeable future. ​ We include AbbVie’s selling, general and administrative cost-sharing payments in the calculation of the net profits and net losses from the sale of LINZESS in the U.S. and present the net payment to or from AbbVie as collaboration expense or collaborative arrangements revenue, respectively. ​ Restructuring Expenses.
The Revolving Credit Facility provides for $500.0 million of borrowing capacity and includes a $10.0 million letter of credit subfacility.
The Revolving Credit Facility provides for $550.0 million of borrowing capacity and includes a $10.0 million letter of credit subfacility.
Cash Flows from Financing Activities Cash provided by financing activities for the year ended December 31, 2023 totaled $277.2 million and was generated primarily from the incurrence of $400.0 million of borrowings under the Revolving Credit Facility, net of $100.0 million of principal repayments.
Cash provided by financing activities for the year ended December 31, 2023 totaled $277.2 million and was generated primarily from the incurrence of $400.0 million of borrowings under the Revolving Credit Facility, net of 78 Table of Contents $100.0 million of principal repayments.
We will continue to invest in our GI-focused product candidates as we advance them through pre-clinical and clinical trials, in addition to funding research and development activities under our external collaboration and license agreements. ​ Acquired In-Process Research and Development.
We will continue to invest in our GI and rare disease-focused product candidates, including apraglutide, as we advance them through pre-clinical and clinical trials, in addition to funding research and development activities under our external collaboration and license agreements. ​ Acquired In-Process Research and Development.
Non-cash interest expense consists of amortization of debt issuance costs. ​ Interest and Investment Income. Interest and investment income consists of interest earned on our cash and cash equivalents, as well as significant financing components of payments due from collaboration partners. ​ Gain (Loss) on Derivatives.
Non-cash interest expense consists of amortization of debt issuance costs. ​ 70 Table of Contents Interest and Investment Income. Interest and investment income consists of interest earned on our cash and cash equivalents, as well as significant financing components of payments due from collaboration partners. ​ Gain on Derivatives.
The nature of the uncertain tax positions is often complex and subject to change, and the amounts at issue can be substantial.
The nature of the uncertain tax 74 Table of Contents positions is often complex and subject to change, and the amounts at issue can be substantial.
Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse.
Income Taxes We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse.
As of December 31, 2023, our debt is comprised of $400.0 million aggregate principal amount of convertible notes, due at various dates between 2024 and 2026, and $300.0 million aggregate principal amount outstanding under our Revolving Credit Facility, which we entered into in May 2023 to partially finance the VectivBio Acquisition.
As of December 31, 2024, our debt is comprised of $200.0 million aggregate principal amount of convertible notes, due in 2026, and $ 385.0 million aggregate principal amount outstanding under our Revolving Credit Facility, which we entered into in May 2023 to partially finance the VectivBio Acquisition.
Research and development expenses are generally expensed as incurred. We capitalize nonrefundable advance payments we make for research and development activities and defer expense recognition until the related goods are received or the related services are performed.
We capitalize nonrefundable advance payments we make for research and development activities and defer expense recognition until the related goods are received or the related services are performed.
We operate in one reportable business segment – human therapeutics. ​ Key 2023 Financial Highlights ​ ● We recognized $442.7 million in total revenues during the year ended December 31 2023, compared to $410.6 million during the year ended December 31, 2022.
We operate in one reportable business segment – human therapeutics. ​ Key 2024 Financial Highlights ​ ● We recognized $351.4 million in total revenues during the year ended December 31 2024, compared to $442.7 million during the year ended December 31, 2023.
During the year ended December 31, 2023, we recorded income tax expense of $83.5 million, comprised of non-cash tax expense of $74.1 million and cash tax expense of $9.4 million for state income taxes in certain states in which state taxable income exceeded available net operating losses.
During the year ended December 31, 2023, we recorded income tax expense of $83.5 million, comprised of non-cash tax expense of $74.1 million and cash tax expense of $9.4 million for state income taxes in certain states in which state taxable income exceeded available net operating losses. ​ Liquidity and Capital Resources As of December 31, 2024, we had $88.6 million of cash and cash equivalents.
We believe that our cash on hand as of December 31, 2023 will be sufficient to meet our projected operating needs at least through the next twelve months from the issuance of these financial statements. ​ Our forecast of the period of time through which our financial resources will be adequate to support our operations, including the underlying revenue expectations and estimates regarding the costs to continue to develop, obtain regulatory approval for, and commercialize linaclotide in the U.S., as well as our expectations regarding revenue 77 Table of Contents from Astellas for Japan and AstraZeneca for China (including Hong Kong and Macau), and our goal to generate and maintain positive cash flows, are forward-looking statements that involve risks and uncertainties.
We believe that our cash on hand as of December 31, 2024 will be sufficient to meet our projected operating needs at least through the next twelve months from the issuance of these financial statements. ​ Our forecast of the period of time through which our financial resources will be adequate to support our operations, including the underlying revenue expectations and estimates regarding the costs to continue to develop, obtain regulatory approval for, and commercialize linaclotide in the U.S., develop and commercialize other product candidates, including apraglutide, and our goal to generate and maintain positive cash flows, are forward-looking statements that involve risks and uncertainties.
During the year ended December 31, 2023, we recorded an insignificant gain on derivatives resulting from a decrease in the fair value of the Note Hedge Warrants, which terminated unexercised upon expiry in April 2023. ​ Income taxes.
During the year ended December 31, 2023, we recorded an insignificant gain on derivatives resulting from a decrease in the fair value of the Note Hedge Warrants, which terminated unexercised upon expiry in April 2023. ​ Other. During the year ended December 31, 2024, we recorded a gain of $0.6 million for pension-related activities. ​ Income taxes.
Restructuring expenses pertain to a workforce reduction in April 2023 and restructuring initiatives, which commenced in June 2023 in connection with the VectivBio Acquisition.
Restructuring expenses pertain to a headquarters-based workforce reduction in April 2023 and restructuring initiatives in connection with the VectivBio Acquisition commencing in June 2023.
Gain (loss) on derivatives consists of the change in fair value of the Convertible Note Hedges and Note Hedge Warrants, which are recorded at fair value at each reporting date and changes in fair value are recorded in our consolidated statements of income (loss).
Gain on derivatives consists of the change in fair value of the Note Hedge Warrants, which are recorded at fair value at each reporting date and changes in fair value are recorded in our consolidated statements of income (loss). The Note Hedge Warrants terminated unexercised upon expiry in April 2023.
Significant judgment is required in making these assessments to maintain or reverse our valuation allowances and, to the extent our future expectations change we would have to assess the recoverability of these deferred tax assets at that time.
Our valuation allowance is comprised primarily of certain tax credits that are expected to expire prior to utilization. Significant judgment is required in making these assessments to maintain or reverse our valuation allowances and, to the extent our future expectations change we would have to assess the recoverability of these deferred tax assets at that time.
If the screen test is not met, further determination is required as to whether we have acquired inputs and processes that have the ability to create outputs that would meet the requirements of a business.
If the screen test is met, a single asset or group of assets is not a business and is accounted for as an asset acquisition. If the screen test is not met, further determination is required as to whether we have acquired inputs and processes that have the ability to create outputs that would meet the requirements of a business.
The decrease was primarily attributable to approximately $1.1 billion in IPR&D expense related to the VectivBio Acquisition. ​ ● We generated $ 183.4 million in cash from operations during the year ended December 31, 2023, ending the year with $ 92.2 million in cash and cash equivalents. Financial Operations Overview Revenues.
The increase was primarily attributable to incurring approximately $1.1 billion in IPR&D expense related to the VectivBio Acquisition in 2023. ​ ● We generated $103.5 million in cash from operations during the year ended December 31, 2024, ending the year with $88.6 million in cash and cash equivalents. Financial Operations Overview Revenues.
Selling, general and administrative expenses for the year ended December 31, 2023 included $25.6 million of acquisition-related costs. ​ Restructuring expenses . Restructuring expenses were $18.3 million for the year ended December 31, 2023 related to employee severance, benefits and related costs for the headquarters-based workforce reduction and VectivBio Acquisition-related workforce reduction. ​ Acquired In-Process Research & Development.
Restructuring expenses were $18.3 million for the year ended December 31, 2023 and were comprised of $3.4 million of employee severance, benefits and related costs for the headquarters-based workforce reduction and $14.9 million of employee severance, benefits and related costs for the VectivBio Acquisition-related workforce reduction. ​ Acquired In-Process Research & Development.
Refer to Note 10, Debt, to our condensed consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for information related to our debt obligations, including the Revolving Credit Facility. ​ Summary of Cash Flows ​ The following table summarizes cash flows from operating, investing, and financing activities for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ (in thousands) Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ 183,427 ​ $ 273,763 ​ $ 261,895 Investing activities ​ ​ (1,026,318) ​ ​ (136) ​ ​ (265) Financing activities ​ ​ 277,160 ​ ​ (237,553) ​ ​ (4,550) Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ ​ (53) ​ ​ — ​ ​ — Net increase (decrease) in cash, cash equivalents and restricted cash ​ $ (565,784) ​ $ 36,074 ​ $ 257,080 ​ 76 Table of Contents Cash Flows from Operating Activities Net cash provided by operating activities is derived by adjusting net income for non-cash items and changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in the results of operations.
Refer to Note 10, Debt , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for information related to our debt obligations. ​ Summary of Cash Flows ​ The following table summarizes cash flows from operating, investing, and financing activities for the years ended December 31, 2024, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 ​ 2023 ​ ​ ​ (in thousands) Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ 103,549 ​ $ 183,427 ​ Investing activities ​ ​ (142) ​ ​ (1,026,318) ​ Financing activities ​ ​ (106,970) ​ ​ 277,160 ​ Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ ​ (32) ​ ​ (53) ​ Net increase (decrease) in cash, cash equivalents and restricted cash ​ $ (3,595) ​ $ (565,784) ​ ​ Cash Flows from Operating Activities Net cash provided by operating activities is derived by adjusting net income (loss) for non-cash items and changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in the results of operations.
Revenue Recognition Upon executing a revenue generating arrangement, we assess whether it is probable we will collect consideration in exchange for the good or service it transfers to the customer and perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligations.
We classify asset acquisitions of acquired IPR&D as investing activities on its consolidated statements of cash flows. 71 Table of Contents Revenue Recognition Upon executing a revenue generating arrangement, we assess whether it is probable we will collect consideration in exchange for the good or service it transfers to the customer and perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligations.
We also anticipate that we will continue to incur substantial expenses for the next several years as we further develop and commercialize linaclotide in the U.S., develop and commercialize other products, including apraglutide, and invest in building our pipeline through internal or external opportunities, including potential payments associated with exercising the Option under the COUR Collaboration Agreement.
We also anticipate that we will continue to incur substantial expenses for the next several years as we further develop and commercialize linaclotide in the U.S., develop and commercialize other product candidates, including apraglutide, and invest in building our pipeline through internal or external opportunities.
We allocate costs related to facilities, depreciation, share-based compensation, research and development support services and certain other costs directly to programs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Linaclotide (1) $ 21,103 ​ $ 17,267 ​ $ 21,075 Apraglutide (2) ​ ​ 58,244 ​ ​ — ​ ​ — IW-3718 ​ ​ — ​ ​ 461 ​ ​ 8,002 IW-3300 ​ ​ 15,091 ​ ​ 15,824 ​ ​ 11,687 CNP-104 (3) ​ ​ 9,461 ​ ​ 1,022 ​ ​ 19,500 Early research and development ​ 12,186 ​ ​ 9,691 ​ ​ 10,141 Total research and development expenses ​ $ 116,085 ​ $ 44,265 ​ $ 70,405 (1) Includes linaclotide in all indications, populations and formulations.
We allocate costs related to facilities, depreciation, share-based compensation, research and development support services and certain other costs directly to programs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Linaclotide (1) $ 17,858 ​ $ 21,103 ​ $ 17,267 Apraglutide (2) ​ ​ 73,008 ​ ​ 58,244 ​ ​ — IW-3718 ​ ​ — ​ ​ — ​ ​ 461 IW-3300 ​ ​ 13,179 ​ ​ 15,091 ​ ​ 15,824 CNP-104 (3) ​ ​ 4,253 ​ ​ 9,461 ​ ​ 1,022 Early research and development (4) ​ 3,123 ​ ​ 12,186 ​ ​ 9,691 Total research and development expenses ​ $ 111,421 ​ $ 116,085 ​ $ 44,265 (1) Includes linaclotide in all indications, populations and formulations.
The safety and effectiveness of LINZESS in patients with FC less than 6 years of age or in patients with IBS-C less than 18 years of age have not been established. Additional clinical pediatric programs in IBS-C and FC are ongoing. ​ Apraglutide . Refer to Acquired In-Process Research and Development . ​ CNP-104 .
The safety and effectiveness of LINZESS in patients with FC less than 6 years of age or in patients with IBS-C less than 18 years of age have not been established. Additional clinical pediatric programs in IBS-C and FC are ongoing. ​ Apraglutide for SBS-IF .
We and AbbVie settle the cost sharing quarterly, such that our consolidated statements of income reflect 50% of the pre-tax net profit or loss generated from sales of LINZESS in the U.S.
We and AbbVie settle the cost sharing quarterly, such that our consolidated statements of income reflect 50% of the pre-tax net profit or loss generated from sales of LINZESS in the U.S. Deferred Revenue Our deferred revenue balance consists of advance billings and payments received from customers in excess of revenue recognized.
The increase in research and development expenses of $71.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily related to $43.3 million of apraglutide program costs, $11.3 million of share-based compensation and $3.5 million in related payroll taxes recognized immediately after the closing of the VectivBio Acquisition in connection with the vesting acceleration of outstanding stock options and RSUs under VectivBio’s 2021 Equity Incentive Plan, a $6.0 million payment to COUR related to CNP-104 in connection with the amendment of the COUR Collaboration Agreement, a $3.3 million increase in linaclotide program costs, and a $3.2 million increase in external costs associated with other pipeline programs.
The decrease in research and development expenses of $4.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily related to $11.3 million of share-based compensation expense and $3.5 million in related payroll taxes recognized in the second quarter of 2023 immediately after the closing of the VectivBio Acquisition in connection with the vesting acceleration of outstanding stock options and RSUs under VectivBio’s 2021 Equity Incentive Plan, a $6.0 million payment to COUR in the second quarter of 2023 related to CNP-104 in connection with the amendment of the COUR Collaboration Agreement, a $4.8 million reduction to research and development expense in connection with the settlement of a license-related contract liability, and a $2.5 million decrease in external linaclotide costs, partially offset by a $15.9 million increase of apraglutide program costs, a $6.0 million increase in compensation, benefits, and other employee-related expenses, and a $2.0 million increase related to an amendment of the COUR Collaboration Agreement. ​ Selling, general and administrative.
Interest expense increased by $14.0 million during the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to $15.3 million of interest expense incurred under the revolving credit facility used to partially finance the VectivBio Acquisition in June 2023. ​ Interest and investment income.
Interest expense increased by $11.4 million during the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to $13.2 million of interest expense incurred under the Revolving Credit Facility used to partially finance the VectivBio Acquisition in June 2023, partially offset by a decrease of $1.3 million of interest expense incurred on the 2024 Convertible Notes. ​ Interest and investment income.
In connection with the issuance of our 2022 Convertible Notes, we entered into convertible note hedge transactions, or the Convertible Note Hedges, and separate note hedge warrant transactions, or the Note Hedge Warrants, with certain financial institutions.
In June 2015, we issued 2.25% Convertible Senior Notes due June 15, 2022, or the 2022 Convertible Notes, and in August 2019, we issued the Convertible Senior Notes. In connection with the issuance of our 2022 Convertible Notes, we entered into note hedge warrant transactions, or the Note Hedge Warrants, with certain financial institutions.
Selling, general and administrative expenses increased $42.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to $16.2 million of share-based compensation and $3.0 million in related payroll taxes recognized immediately after the closing of the VectivBio Acquisition in connection with the vesting acceleration of outstanding stock options and RSUs under VectivBio’s 2021 Equity Incentive Plan, $12.9 million of general and administrative costs incurred for operating activities of the acquired VectivBio entities, a $5.8 million increase in compensation, benefits, and other employee-related expenses, a $3.7 million increase of professional services costs, and a $1.6 million increase in sales and marketing activities.
Selling, general and administrative expenses decreased $14.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to $16.2 million of share-based compensation and $3.0 million in related payroll taxes recognized in the second quarter of 2023 immediately after the closing of the VectivBio Acquisition in connection with the vesting acceleration of outstanding stock options and RSUs under VectivBio’s 2021 Equity Incentive Plan, and a $0.9 million decrease in compensation, benefits, and other employee-related expenses, partially offset by a $8.0 million increase in professional services costs (including $4.5 million related to commercial launch planning for apraglutide, if approved). ​ Restructuring expenses .
Linaclotide is available under the trademarked name CONSTELLA ® to adult men and women suffering from IBS-C or CIC in Canada, and to adult men and women suffering from IBS-C in certain European countries. ​ We have strategic partnerships with leading pharmaceutical companies to support the development and commercialization of linaclotide throughout the world, including with AbbVie in the U.S. and all countries worldwide other than China (including Hong Kong and Macau) and Japan, AstraZeneca in China (including Hong Kong and Macau) and Astellas in Japan. ​ We also aim to leverage our leading development and commercialization capabilities in GI to bring additional treatment options to GI patients. ​ In June 2023, we completed a tender offer to purchase outstanding ordinary shares of VectivBio.
Linaclotide is available under the trademarked name CONSTELLA ® to adult men and women suffering from IBS-C or CIC and pediatric patients ages 6-17 years old with FC in Canada, and to adult men and women suffering from IBS-C in certain European countries. ​ We have strategic partnerships with leading pharmaceutical companies to support the development and commercialization of linaclotide throughout the world, including with AbbVie in the U.S. and all countries worldwide other than China (including Hong Kong and Macau) and Japan, AstraZeneca in China (including Hong Kong and Macau), and Astellas in Japan. ​ We also aim to leverage our development and commercialization capabilities in GI to bring additional treatment options to GI patients. ​ Through the VectivBio Acquisition, we are advancing apraglutide, a next-generation, synthetic long-acting peptide analog of GLP-2 for SBS patients who are dependent on PS.
(3) Includes $6.0 million up-front payment recognized in the second quarter of 2023 in connection with the amendment to the COUR Collaboration Agreement. ​ The lengthy process of securing regulatory approvals for new drugs requires the expenditure of substantial resources.
(3) Includes $6.0 million up-front payment recognized in the second quarter of 2023 in connection with the amendment to the COUR Collaboration Agreement.
We incurred approximately $1.1 billion of expense during the year ended December 31, 2023 in connection with the VectivBio Acquisition to acquire apraglutide. ​ Other Income (Expense), Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 2022 $ ​ ​ (in thousands) Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense and other financing costs ​ $ (21,629) ​ $ (7,598) ​ $ (14,031) Interest and investment income ​ 18,971 ​ 9,501 ​ 9,470 Gain on derivatives ​ 19 ​ 182 ​ (163) Total other income (expense), net ​ $ (2,639) ​ $ 2,085 ​ $ (4,724) ​ Interest expense and other financing costs.
We incurred approximately $1.1 billion of expense during the year ended December 31, 2023 in connection with the VectivBio Acquisition to acquire apraglutide. ​ 76 Table of Contents Other Income (Expense), Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ 2024 2023 $ ​ ​ (in thousands) Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense and other financing costs ​ $ (33,034) ​ $ (21,629) ​ $ (11,405) Interest and investment income ​ 4,468 ​ 18,971 ​ (14,503) Gain on derivatives ​ — ​ 19 ​ (19) Other ​ 640 ​ — ​ 640 Total other income (expense), net ​ $ (27,926) ​ $ (2,639) ​ $ (25,287) ​ Interest expense and other financing costs.
Cash used in investing activities for the year ended December 31, 2022 totaled $0.1 million and pertained to the purchase of property and equipment.
Cash Flows from Investing Activities Cash used in investing activities for the year ended December 31, 2024 was insignificant and pertained to the purchase of property and equipment. Cash used in investing activities for the year ended December 31, 2023 totaled approximately $1.0 billion and pertained primarily to the VectivBio Acquisition.
Funding Requirements ​ We began commercializing LINZESS in the U.S. with our collaboration partner, AbbVie, in the fourth quarter of 2012, and we currently derive a significant portion of our revenue from this collaboration.
Additionally, we paid $26.3 million to acquire subsidiary shares from noncontrolling interests to complete the squeeze-out merger in connection with the VectivBio Acquisition. Funding Requirements ​ We began commercializing LINZESS in the U.S. with our collaboration partner, AbbVie, in the fourth quarter of 2012, and we currently derive a significant portion of our revenue from this collaboration.
The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the 70 Table of Contents contract are satisfied.
Milestone payments that are not within our control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied.
Share-Based Compensation Expense We grant awards under our share-based compensation programs, including stock awards, restricted stock awards, or RSAs, restricted stock units, or RSUs (including performance-based RSUs, or PSUs), stock options, and shares issued under our employee stock purchase plan, or ESPP.
Recognition of expense for such payments requires judgment with respect to when the obligation is probable. 73 Table of Contents Share-Based Compensation Expense We grant awards under our share-based compensation programs, including stock awards, restricted stock awards, or RSAs, restricted stock units, or RSUs (including performance-based RSUs, or PSUs), stock options, and shares issued under our employee stock purchase plan, or ESPP.
Any incremental compensation expense arising from the excess of the fair value of the awards on the modification date compared to the fair value of the awards immediately before the modification date is recognized at the modification date or ratably over the remaining service period, as appropriate. 72 Table of Contents While the assumptions used to calculate and account for share-based compensation awards represent management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgment.
Any incremental compensation expense arising from the excess of the fair value of the awards on the modification date compared to the fair value of the awards immediately before the modification date is recognized at the modification date or ratably over the remaining service period, as appropriate.
Interest and investment income increased by $9.5 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, resulting primarily from an increase in investment interest rates, as well as an increase in investment balances prior to the VectivBio Acquisition. ​ Gain on derivatives.
Interest and investment income decreased by $14.5 million in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily from a decrease in cash and investment balances following the VectivBio Acquisition in June 2023. ​ Gain on derivatives.
We provide a valuation allowance when it is more likely than not that deferred tax assets will not be realized. Prior to 2021, we maintained a valuation allowance on the majority of our net operating losses and other deferred tax assets.
At each quarterly reporting date, we reassess the valuation allowance on our deferred tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. We provide a valuation allowance when it is more likely than not that deferred tax assets will not be realized.
During the year ended December 31, 2022, we recorded income tax expense of $77.4 million, comprised of non-cash tax expense of $73.4 million and cash tax expense of $4.0 million for state income taxes in certain states in which state taxable income exceeded available net operating losses. ​ 75 Table of Contents Liquidity and Capital Resources As of December 31, 2023, we had $92.2 million of cash and cash equivalents.
During the year ended December 31, 2024, we recorded income tax expense of $64.3 million, comprised of non-cash tax expense of $57.8 million and cash tax expense of $6.5 million for state income taxes in certain states in which state taxable income exceeded available net operating losses.
As a result, if revisions are made to our underlying assumptions and estimates, our share-based compensation expense could vary significantly from period to period. Income Taxes We utilize the asset and liability method of accounting for income taxes.
While the assumptions used to calculate and account for share-based compensation awards represent management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if revisions are made to our underlying assumptions and estimates, our share-based compensation expense could vary significantly from period to period.
Net cash inflows during the year ended December 31, 2022 totaled $273.8 million and were derived primarily from collaboration arrangements revenue related to sales of LINZESS in the U.S. Cash Flows from Investing Activities Cash used in investing activities for the year ended December 31, 2023 totaled approximately $1.0 billion and pertained primarily to the VectivBio Acquisition.
Net cash inflows during the year ended December 31, 2024 totaled $103.5 million and were derived primarily from collaboration arrangements revenue related to sales of LINZESS in the U.S., partially offset by research and development expenditures for apraglutide.
The Convertible Note Hedges and Note Hedge Warrants terminated unexercised upon expiry in June 2022 and April 2023, respectively. The Convertible Note Hedges and Note Hedge Warrants are more fully described in Note 10, Debt, to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. ​ Income Taxes.
The Note Hedge Warrants are more fully described in Note 10, Debt , to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. ​ Income Taxes. We prepare our income tax provision based on our interpretation of the income tax accounting rules and each jurisdiction’s enacted tax laws and regulations.
Through the COUR Collaboration Agreement, we and COUR are developing CNP-104 for the treatment of PBC, a rare autoimmune disease targeting the liver. In December 2021, the U.S. FDA granted Fast Track Designation to CNP-104.
In December 2024, we decided to end further development of apraglutide for aGvHD to focus investment on other priorities. ​ CNP-104 . Through the COUR Collaboration Agreement, we and COUR were developing CNP-104 for the treatment of PBC, a rare autoimmune disease targeting the liver.
Asset acquisition costs, license fees and development milestone payments related to acquired and in-licensed products and technology are expensed as acquired in-process research and development at the point that they have no established alternative future use. ​ Through the VectivBio Acquisition, we are advancing apraglutide, a next-generation, long-acting synthetic peptide analog of GLP-2, as a differentiated therapeutic for a wide range of rare diseases, including SBS-IF and aGvHD. ​ Apraglutide for SBS-IF .
Asset acquisition costs, license fees and development milestone payments related to acquired and in-licensed products and technology are expensed as acquired in-process research and development at the point that they have no established alternative future use. ​ Selling, General and Administrative Expense.
Other Our deferred revenue balance consists of advance billings and payments received from customers in excess of revenue recognized. 71 Table of Contents Research and Development Expense We have committed significant resources into the research and development of our product candidates and intend to continue to do so for the foreseeable future.
Research and Development Expense We have committed significant resources into the research and development of our product candidates and intend to continue to do so for the foreseeable future. Research and development expenses are generally expensed as incurred.
Additional information regarding the repurchase program is disclosed in Note 12, Stockholders’ Equity , to our financial statements included elsewhere in this Annual Report on Form 10-K. ​ Sources of Liquidity ​ We had incurred losses since our inception in 1998 and until the year ended December 31, 2019.
Additional information regarding the repurchase program is disclosed in Note 12, Stockholders’ Equity , to our financial statements included elsewhere in this Annual Report on Form 10-K. 77 Table of Contents ​ Sources of Liquidity ​ We have financed our operations to date primarily through both the private sale of our preferred stock and the public sale of our common stock, debt financings, and cash generated from our operations .
Research and development expenses also include up-front payment, non-contingent payment, and milestone payment obligations under the COUR Collaboration Agreement. Recognition of expense for such payments requires judgment with respect to when the obligation is probable.
Research and development expenses also include up-front payment, non-contingent payment, and milestone payment obligations under certain collaboration arrangements.
The increase in collaborative arrangements revenue of $32.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily related to a $31.7 million increase in our share of net profits from the sale of LINZESS in the U.S., which was primarily driven by increased prescription demand, partially offset by inventory channel fluctuations.
The decrease was primarily related to a $90.1 million decrease in our share of net profits from the sale of LINZESS in the U.S., which was driven by decreased net price (including a $43.0 million reduction to collaboration revenue as a result of changes in estimates of sales reserves and allowances associated with governmental and contractual rebates), partially offset by increases from prescription demand. ​ ● We generated income from operations of $93.1 million during the year ended December 31, 2024 compared to a loss from operations of $ 945.4 million during the year ended December 31, 2023.
Cash used in financing activities for the year ended December 31, 2022 totaled $237.6 million and resulted from $126.4 million of share repurchases and repayment of the $120.7 million remaining aggregate principal on the 2022 Convertible Notes upon maturity in June 2022, partially offset by $9.5 million of proceeds from the exercise of stock options and the issuance of shares under our ESPP.
Cash Flows from Financing Activities Cash used in financing activities for the year ended December 31, 2024 totaled $ 107.0 million was comprised primarily of the repayment of $200.0 million aggregate principal on the 2024 Convertible Notes upon their maturity in June 2024, partially offset by $85.0 million of net borrowings under the Revolving Credit Facility and $11.0 million from stock option exercises and employee stock purchases.
We successfully completed Phase I studies to evaluate the safety and tolerability of IW-3300 in healthy volunteers and are continuing the Phase II proof of concept study in IC/BPS. ​ IW-3718 . We were developing IW-3718, a gastric retentive formulation of a bile acid sequestrant, for the potential treatment of refractory gastroesophageal reflux disease, or refractory GERD.
We were developing IW-3718, a gastric retentive formulation of a bile acid sequestrant, for the potential treatment of refractory GERD.
Prior to the year ended December 31, 2019, we incurred net losses in each year since inception. For the year ended December 31, 2023, we recorded net loss of approximately $1.0 billion, which included a charge of approximately $1.1 billion related to acquired in-process research and development, or IPR&D, in connection with the VectivBio Acquisition.
Prior to the year ended December 31, 2019, we incurred net losses in each year since inception. As of December 31, 2024, we had an accumulated deficit of approximately $1.7 billion.
Through the acquisition, the Company is advancing apraglutide, a next-generation, synthetic peptide analog of GLP-2, for rare gastrointestinal diseases, including SBS-IF, as well as several earlier stage assets. ​ In November 2021, we entered into the COUR Collaboration Agreement, with COUR, that grants us an option to acquire an exclusive license to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104, a tolerizing immune modifying nanoparticle, for the treatment of PBC. ​ We are also advancing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, such as IC/BPS, and endometriosis. ​ To date, we have dedicated a majority of our activities to the research, development and commercialization of linaclotide, as well as to the research and development of our other product candidates.
FDA and plan to submit marketing applications to other regulatory authorities for apraglutide for use in adult patients with SBS who are dependent on PS. ​ In November 2021, we entered into the COUR Collaboration Agreement with COUR, that granted us an option to acquire an exclusive license to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104, a tolerizing immune modifying nanoparticle, for the treatment of PBC.
We are conducting a Phase III clinical trial, STARS, to assess the safety and efficacy of apraglutide in adult patients with SBS-IF, and expect to report topline results in March 2024. In October 2023, we presented positive final data from the STARS Nutrition Phase II study of apraglutide in patients with SBS-IF and colon-in-continuity during United European Gastroenterology (UEG) Week.
In February 2024, we announced positive topline results from our pivotal Phase III clinical trial, STARS, which evaluated the efficacy and safety of once-weekly subcutaneous apraglutide in reducing PS dependency in adult patients with SBS-IF.
COUR is currently conducting a clinical study to evaluate the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with topline data expected in the third quarter of 2024. ​ IW-3300 . We are developing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, including IC/BPS and endometriosis.
As a result, the COUR Collaboration Agreement has terminated, and we retain no rights and have no obligations related to CNP-104. ​ We are also advancing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, such as IC/BPS, and endometriosis.
Research and development expenses for the year ended December 31, 2023 included $15.1 million of acquisition-related costs. ​ Selling, general and administrative.
Restructuring expenses were $2.6 million for the year ended December 31, 2024 related to employee severance, benefits and related costs for the VectivBio Acquisition-related workforce reduction.
Removed
Overview We are a GI healthcare company dedicated to advancing the treatment of GI diseases and redefining the standard of care for GI patients.
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Overview We are a biotechnology company developing and commercializing life-changing therapies for people living with gastrointestinal, or GI, and rare diseases.
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In December 2023, we completed a squeeze-out merger to acquire all remaining shares. The VectivBio Acquisition was partially funded with $400.0 million of borrowings under a new revolving credit facility, or the Revolving Credit Facility, as further described in Note 10, Debt , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
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In February 2024, we announced positive topline results from our pivotal Phase III clinical trial, STARS, which evaluated the efficacy and safety of once-weekly subcutaneous apraglutide in reducing parenteral support dependency in adult patients with SBS-IF. In January 2025, we initiated a rolling NDA submission to the U.S.
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For the years ended 2022 and 2021, we recorded net income of $175.1 million and $528.4 million, respectively. As of December 31, 2023, we had an 64 Table of Contents accumulated deficit of approximately $1.7 billion.
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In the third quarter of 2024, we received from COUR the topline data from COUR’s Phase II Clinical study for the treatment of PBC. In September 2024, we notified COUR of our decision not to exercise the option to acquire an exclusive license to CNP-104.
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The increase was primarily driven by an in crease of $31.7 million in collaborative arrangements revenue related to sales of LINZESS in the U.S. ​ ● We recognized $ 430.5 million in collaborative arrangements revenue related to sales of LINZESS in the U.S. during the year ended December 31, 2023, compared to $398.8 million during the year ended December 31, 2022.
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In September 2024, we decided to end further recruitment for the Phase II proof of concept study in IC/BPS and analyze the data once all currently enrolled patients complete the full 12-week study assessment, which will inform the next steps in the program. ​ 66 Table of Contents To date, we have dedicated a majority of our activities to the research, development and commercialization of linaclotide, as well as to the research and development of our other product candidates, including apraglutide.
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The increase was primarily driven by increased prescription demand, partially offset by inventory channel fluctuations. ​ ● We generated a loss from operations of $ 945.4 million during the year ended December 31, 2023 compared to income from operations of $250.3 million during the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Convertible Note Hedges and Note Hedge Warrants terminated unexercised upon expiry in June 2022 and April 2023, respectively. 79 Table of Contents The convertible notes and derivatives are more fully described in Note 10, Debt , in the accompanying notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Biggest changeThe convertible senior notes and Capped Calls are more fully described in Note 10, Debt , in the accompanying notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. Foreign Currency Risk We are also exposed to risks related to changes in foreign currency exchange rates relating to our foreign operations.
Equity Price Risk Our convertible notes include conversion and settlement provisions that are based on the price of our Class A Common Stock at conversion or maturity of the notes. The amount of cash we may be required to pay is determined by the price of our Class A Common Stock.
Equity Price Risk Our convertible senior notes include conversion and settlement provisions that are based on the price of our Class A Common Stock at conversion or maturity of the notes. The amount of cash we may be required to pay is determined by the price of our Class A Common Stock.
We are exposed to market risks related to fluctuations in interest rates relating to our four-year secured $500.0 million Revolving Credit Facility. The increase or decrease in annual interest expense resulting from a 10% increase or decrease in the applicable interest rate is $2.2 million.
We are exposed to market risks related to fluctuations in interest rates relating to our secured $550.0 million Revolving Credit Facility. The increase or decrease in annual interest expense resulting from a 10% increase or decrease in the applicable interest rate is $2.8 million.
Given the potential instability of financial institutions, we cannot provide assurance that we will not experience losses on these deposits.
Given the 80 Table of Contents potential instability of financial institutions, we cannot provide assurance that we will not experience losses on these deposits.
The fair values of our convertible notes are dependent on the price and volatility of our Class A Common Stock and will generally increase or decrease as the market price of our common stock changes.
The fair value of our convertible senior notes is dependent on the price and volatility of our Class A Common Stock and will generally increase or decrease as the market price of our common stock changes.
Foreign Currency Risk We are also exposed to risks related to changes in foreign currency exchange rates relating to our foreign operations. The functional currency of our international subsidiaries is the local currency. We are exposed to foreign currency risk to the extent that we enter into transactions denominated in currencies other than our subsidiaries’ respective functional currencies.
The functional currency of our international subsidiaries is the local currency. We are exposed to foreign currency risk to the extent that we enter into transactions denominated in currencies other than our subsidiaries’ respective functional currencies.
To minimize the impact of potential dilution to our common stock upon conversion of the notes, we entered into the Convertible Note Hedges and Note Hedge Warrants, with respect to the 2022 Convertible Notes, and the Capped Calls, with respect to the 2024 Convertible Notes and 2026 Convertible Notes.
To minimize the impact of potential dilution to our common stock upon conversion of the notes, we entered into the Capped Calls with respect to the 2026 Convertible Notes.

Other IRWD 10-K year-over-year comparisons