Why Ironwood Pharmaceuticals Inc. Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Ironwood Pharmaceuticals (NASDAQ: IRWD  ) , a biopharmaceutical company with a focus on developing therapies to treat gastrointestinal disorders, rose as much as 18% after reporting its first-quarter results before the opening bell.

So what: For the quarter, Ironwood recorded $14.6 million in revenue, up dramatically from the $3.3 million reported in the year-ago period. Its revenue consisted of $8.4 million tied to the sale of Linzess -- a therapy approved for irritable bowel syndrome with constipation and chronic idiopathic constipation for which it's partnered with Forest Laboratories (NYSE: FRX  ) -- as well as $6.2 million from the sale of linaclotide's (the scientific name for Linzess) active pharmaceutical ingredient, and amortized revenue and/or milestone payments associated with Astellas Pharma, AstraZeneca, and Almirall. Net loss for the quarter shrunk noticeably to $49.6 million, or $0.38 per share, from $93.9 million or $0.87 per share in the prior year period. By comparison, Wall Street was expecting just $5 million in Linzess shared revenue and a wider loss of $0.42 per share.

Now what: Sales of Linzess appear to be progressing nicely, which should translate into a growing revenue stream for Ironwood, and hopefully shrinking losses. But with the majority of the revenue share going to Forest Labs (total Linzess sales were $60.8 million) I can't help but point out that it could be years before Ironwood is at breakeven in the profit-versus-loss column. Although the company has $332 million in cash, its midrange operating expense forecast of $230 million for 2014 is hefty. As such, with a $1.4 billion valuation and profits potentially years away, I would suggest sticking to the sidelines until Ironwood proves its worth.

Ironwood may be exploding higher today, but over the long run it may not be able to hold a candle to this top stock
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2935176, ~/Articles/ArticleHandler.aspx, 11/27/2014 8:40:28 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement