Why Ironwood Pharma Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drug developer Ironwood Pharmaceuticals (NASDAQ: IRWD  ) has received an alarming one-star ranking.

With that in mind, let's take a closer look at Ironwood and see what CAPS investors are saying about the stock right now.

Ironwood facts

Headquarters (founded)

Cambridge, Mass. (1998)

Market Cap

$1.6 billion

Industry

Biotechnology

Trailing-12-Month Revenue

$150.2 million

Management

Co-Founder/CEO Peter Hecht
COO/CFO Michael Higgins

Return on Equity (average, past 3 years)

(58.7%)

Cash/Debt

$168.2 million / $569,000

Competitors

Shire
Sucampo Pharmaceuticals
Takedo Pharmaceutical

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 27% of the 45 members who have rated Ironwood believe the stock will underperform the S&P 500 going forward.

Earlier today, one of those Fools, All-Star zzlangerhans, succinctly summed up the Ironwood bear case for our community:

Ironwood will likely continue to be a cyclical stock for the next few quarters as Linzess revenue optimism faces off against the anxiety engendered by large quarterly losses. Meanwhile, the company has initiated a phase II trial of GC-C agonist IW-9179 for functional dyspepsia, a condition which they claim affects a large proportion of Americans. Functional dyspepsia, however, is not a condition that is well-defined in the medical community. One might call it indigestion, and it is unclear how many people out there are actually requiring a chronic medication for this condition above and beyond antacids. For Ironwood to present it as a major source of morbidity in the US seems disingenuous.

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  • Report this Comment On March 01, 2013, at 1:22 PM, Hillstonebailey wrote:

    Don't discount it too much, Linzess is a good drug.

    People who take it will mostly determine it's success. Docs are still learning about it.

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